<PAGE>
Filed Pursuant to Rule 424(b)(5)
Registration File No.: 333-81595
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 19, 1999)
$1,254,382,118 (APPROXIMATE)
CHASE MANHATTAN BANK-FIRST UNION NATIONAL BANK
COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-1
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
DEPOSITOR
-------------------
Chase Commercial Mortgage Securities Corp. is offering certain classes of the
Series 1999-1 Commercial Mortgage Pass-Through Certificates, which represent
the beneficial ownership interests in a trust. The trust's assets will
primarily be 205 mortgage loans secured by first liens on 217 commercial and
multifamily properties and are generally the sole source of payments on the
certificates. The Series 1999-1 Certificates are not obligations of Chase
Commercial Mortgage Securities Corp. or any of its affiliates, and neither the
certificates nor the underlying mortgage loans are insured or guaranteed by any
governmental agency or any other person or entity.
-------------------
Certain characteristics of the offered certificates include:
<TABLE>
<CAPTION>
INITIAL CLASS CERTIFICATE PASS- EXPECTED
BALANCE OR PASS- THROUGH RATE ASSUMED FINAL RATINGS RATED FINAL
NOTIONAL AMOUNT (1) THROUGH RATE DESCRIPTION DISTRIBUTION DATE (5) (S&P/FITCH) DISTRIBUTION DATE
------------------- ------------ ----------- --------------------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Class A-1 ... $ 210,400,000 7.134% Fixed July 15, 2007 AAA/AAA August 15, 2031
Class A-2 ... $ 816,865,579 7.439%(3) Fixed July 15, 2009 AAA/AAA August 15, 2031
Class X ..... $1,397,640,241 (2) WAC/IO July 15, 2029 AAAr/AAA August 15, 2031
Class B ..... $ 76,870,213 7.619%(3) Fixed August 15, 2009 AA/AA August 15, 2031
Class C ..... $ 62,893,811 7.625%(3) Fixed August 15, 2009 A/A August 15, 2031
Class D ..... $ 20,964,604 7.625%(3) Fixed August 15, 2009 A-/A- August 15, 2031
Class E ..... $ 48,917,408 (4) WAC May 15, 2011 BBB/BBB August 15, 2031
Class F ..... $ 17,470,503 (4) WAC May 15, 2011 BBB-/BBB- August 15, 2031
</TABLE>
- ---------
(Footnotes to table on page S-6)
-------------------
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved of the offered certificates or determined if this
prospectus supplement or the accompanying prospectus are truthful or complete.
Any representation to the contrary is a criminal offense.
-------------------
Chase Commercial Mortgage Securities Corp. will not list the offered
certificates on any securities exchange or on any automated quotation system of
any securities association such as NASDAQ.
-------------------
INVESTING IN THE OFFERED CERTIFICATES INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE S-29 IN THIS PROSPECTUS SUPPLEMENT AND PAGE 14 OF THE
PROSPECTUS.
-------------------
The underwriters, First Union Capital Markets Corp. and Chase Securities Inc.,
will purchase the offered certificates from Chase Commercial Mortgage
Securities Corp. and will offer them to the public at negotiated prices, plus
accrued interest, determined at the time of sale. First Union Capital Markets
Corp. and Chase Securities Inc. are acting as co-lead managers and
co-bookrunners for the offering. The underwriters also expect to deliver the
offered certificates to purchasers in book-entry form only through the
facilities of The Depository Trust Company against payment in New York, New
York on August 26, 1999. We expect to receive from this offering approximately
102.381% of the initial principal amount of the offered certificates, plus
accrued interest from August 1, 1999, before deducting expenses payable by us.
-------------------
FIRST UNION CAPITAL MARKETS CORP. CHASE SECURITIES INC.
Joint Book Running Manager Joint Book Running Manager
AUGUST 19, 1999
<PAGE>
CHASE MANHATTAN BANK -- FIRST UNION NATIONAL BANK
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1999-1
ALASKA OREGON WASHINGTON NEBRASKA
1 Loan 2 Loans 1 Loan 1 Loan
$1,475,853 $17,847,900 $3,320,000 $2,392,831
0.11% of total 1.28% of total 0.24% of total 0.17% of total
MISSOURI MINNESOTA ILLINOIS INDIANA
1 Loan 1 Loan 5 Loans 1 Loan
$24,850,885 $4,155,165 $29,886,424 $17,093,809
1.78% of total 0.30% of total 2.14% of total 1.22% of total
PENNSYLVANIA NEW HAMPSHIRE WISCONSIN MICHIGAN
7 Loans 1 Loan 1 Loan 4 Loans
$81,066,160 $2,242,343 $2,885,533 $59,298,964
5.80% of total 0.16% of total 0.21% of total 4.24% of total
NEW YORK MASSACHUSETTS OHIO CONNECTICUT
8 Loans 4 Loans 8 Loans 3 Loans
$190,933,191 $14,247,255 $55,050,679 $51,094,682
13.66% of total 1.02% of total 3.94% of total 3.66% of total
DISTRICT OF
NEW JERSEY COLUMBIA VIRGINIA MARYLAND
7 Loans 1 Loan 13 Loans 7 Loans
$46,733,286 $751,708 $53,219,190 $31,786,508
3.34% of total 0.05% of total 3.81% of total 2.27% of total
NORTH CAROLINA SOUTH CAROLINA TENNESSEE GEORGIA
6 Loans 2 Loans 6 Loans 6 Loans
$28,040,436 $17,153,523 $28,752,519 $65,149,713
2.01% of total 1.23% of total 2.06% of total 4.66% of total
FLORIDA ALABAMA ARKANSAS LOUISIANA
18 Loans 2 Loans 1 Loan 1 Loan
$81,989,092 $5,636,942 $1,400,000 $5,179,882
5.87% of total 0.40% of total 0.10% of total 0.37% of total
TEXAS COLORADO ARIZONA UTAH
20 Loans 4 Loans 6 Loans 1 Loan
$61,138,639 $13,770,851 $18,655,377 $1,338,000
4.37% of total 0.99% of total 1.33% of total 0.10% of total
CALIFORNIA NEVADA
46 Loans 9 Loans
$323,686,693 $55,416,210
23.16% of total 3.96% of total
GEOGRAPHIC OVERVIEW OF MORTGAGE POOL
----------------------------------------------------------------
greater than or equal to 10.00% of Cut-Off Date Balance [ ]
5.01% - 9.99% of Cut-Off Date Balance [ ]
1.01% - 5.00% of Cut-Off Date Balance [ ]
less than or equal to 1.00% of Cut-Off Date Balance [ ]
----------------------------------------------------------------
<PAGE>
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, which provides general information, some of which may not apply to
the offered certificates; and (b) this prospectus supplement, which describes
the specific terms of the offered certificates. IF THE TERMS OF THE OFFERED
CERTIFICATES VARY BETWEEN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT.
You should rely only on the information contained in this prospectus
supplement and the accompanying prospectus. We have not authorized anyone to
provide you with information that is different from that contained in this
prospectus supplement and the prospectus. The information in this prospectus
supplement is accurate only as of the date of this prospectus supplement.
This prospectus supplement begins with several introductory sections
describing the Series 1999-1 certificates and the trust in abbreviated form:
Summary of Certificates, commencing on page S-6 of this prospectus
supplement, which sets forth important statistical information relating to the
certificates;
Summary of Terms, commencing on page S-7 of this prospectus supplement,
which gives a brief introduction of the key features of the Series 1999-1
certificates and a description of the mortgage loans; and
Risk Factors, commencing on page S-29 of this prospectus supplement, which
describe risks that apply to the Series 1999-1 certificates which are in
addition to those described in the prospectus with respect to the securities
issued by the trust generally.
This prospectus supplement and the accompanying prospectus include cross
references to sections in these materials where you can find further related
discussions. The Tables of Contents in this prospectus supplement and the
prospectus identify the pages where these sections are located.
Certain capitalized terms are defined and used in this prospectus
supplement and the prospectus to assist you in understanding the terms of the
offered certificates and this offering. The capitalized terms used in this
prospectus supplement are defined on the pages indicated under the caption
"Index of Principal Definitions" beginning on page S-134 in this prospectus
supplement. The capitalized terms used in the prospectus are defined on the
pages indicated under the caption "Index of Principal Definitions" beginning on
page 111 in the prospectus.
In this prospectus supplement, the terms "Depositor," "we," "us" and "our"
refer to Chase Commercial Mortgage Securities Corp.
S-3
<PAGE>
TABLE OF CONTENTS
SUMMARY OF TERMS ....................................................... S-7
RISK FACTORS ........................................................... S-29
Geographic Concentration Entails Risks .............................. S-29
Risks Relating to Loan Concentrations ............................... S-29
Risks Relating to Enforceability of Cross-Collateralization ......... S-30
Ability to Effect Other Borrowings Entails Risk ..................... S-31
Borrower May Be Unable to Repay Remaining Principal Balance on
Maturity Date or Anticipated Prepayment Date ..................... S-32
Commercial and Multifamily Lending Is Dependent Upon Net Operating
Income ........................................................... S-33
Tenant Concentration Entails Risk ................................... S-34
Mortgaged Properties Leased to Multiple Tenants Also Have Risks ..... S-34
Tenant Bankruptcy Entails Risks ..................................... S-34
Mortgage Loans Are Nonrecourse and Are Not Insured or Guaranteed .... S-34
Multifamily Properties Have Special Risks ........................... S-35
Retail Properties Have Special Risks ................................ S-35
Office Properties Have Special Risks ................................ S-36
Credit Lease Properties Have Special Risks .......................... S-36
Risks Particular to Healthcare-Related Properties ................... S-37
Industrial Properties Have Special Risks............................. S-38
Hotel Properties Have Special Risks ................................. S-38
Risks Relating to Affiliation with a Franchise or Hotel Management
Company .......................................................... S-39
Certain Additional Risks Relating to Tenants ........................ S-39
Some Mortgaged Properties May Not Be Readily Convertible to
Alternative Uses ................................................. S-39
Lack of Skillful Property Management Entails Risks .................. S-40
Limitations of Appraisals ........................................... S-40
Your Lack of Control Over Trust Fund Can Create Risks ............... S-40
Directing Certificateholder May Direct Special Servicer Actions ..... S-40
Bankruptcy Proceedings Entails Certain Risks ........................ S-41
Risks Relating to Prepayments and Repurchases ....................... S-41
Risks Relating to Enforceability of Prepayment Premiums ............. S-42
Risks Relating to Borrower Default .................................. S-43
Risks Relating to Certain Payments .................................. S-43
Risks of Limited Liquidity and Market Value ......................... S-43
Different Timing of Mortgage Loan Amortization Poses Certain Risks .. S-44
Subordination of Subordinate Offered Certificates ................... S-44
Environmental Risks Relating to the Mortgaged Properties ............ S-44
Tax Considerations Relating to Foreclosure .......................... S-44
Risks Associated with One Action Rules .............................. S-45
Property Insurance .................................................. S-45
Zoning Compliance and Use Restrictions .............................. S-45
Risks Relating to Costs of Compliance with Applicable Laws and
Regulations ...................................................... S-45
No Reunderwriting of the Mortgage Loans ............................. S-46
Litigation .......................................................... S-46
Book-Entry Registration ............................................. S-46
Risks Associated with Year 2000 Compliance .......................... S-46
Property Managers May Experience Conflicts of Interest In Managing
Multiple Properties .............................................. S-47
Other Risks ......................................................... S-47
DESCRIPTION OF THE MORTGAGE POOL ....................................... S-48
General ............................................................. S-48
Significant Borrower Concentration .................................. S-49
Significant Mortgage Loans .......................................... S-50
APD Loans ........................................................... S-50
Credit Lease Loans .................................................. S-50
Section 42 Low-Income Housing Tax Credits ........................... S-54
Certain Terms and Conditions of the Mortgage Loans .................. S-55
Prepayment Provisions ............................................ S-55
Yield Maintenance Charges and Prepayment Premiums ................ S-56
Defeasance; Collateral Substitution .............................. S-59
Due-on-Sale and Due-on-Encumbrance Provisions .................... S-59
Additional Mortgage Loan Information ................................ S-60
Underwritten Net Cash Flow .......................................... S-69
Revenue .......................................................... S-69
Expenses ......................................................... S-69
S-4
<PAGE>
Replacement Reserves ............................................. S-70
Assessments of Property Condition ................................... S-70
Property Inspection .............................................. S-70
Appraisals ....................................................... S-70
Environmental Reports ............................................ S-70
Building Condition Reports ....................................... S-70
Earthquate Analyses .............................................. S-70
The Mortgage Loan Sellers ........................................... S-71
Underwriting Standards .............................................. S-71
General .......................................................... S-71
Loan Analysis .................................................... S-71
Loan Approval .................................................... S-71
Debt Service Coverage Ratio and LTV Ratio ........................ S-72
Escrow Requirements .............................................. S-72
Representations and Warranties; Repurchases and Substitutions ....... S-73
Lock Box Accounts ................................................... S-78
DESCRIPTION OF THE CERTIFICATES ........................................ S-79
General ............................................................. S-79
Paying Agent, Certificate Registrar and Authenticating Agent ........ S-80
Book-Entry Registration and Definitive Certificates ................. S-80
General .......................................................... S-80
Definitive Certificates .......................................... S-82
Distributions ....................................................... S-82
Method, Timing and Amount ........................................ S-82
Priority ......................................................... S-84
Pass-Through Rates ............................................... S-87
Interest Distribution Amount ..................................... S-89
Principal Distribution Amount .................................... S-89
Certain Calculations with Respect to Individual Mortgage Loans ... S-90
Excess Interest .................................................. S-91
Allocation of Prepayment Premiums and Yield Maintenance Charges ..... S-91
Assumed Final Distribution Date; Rated Final Distribution Date ...... S-92
Subordination; Allocation of Collateral Support Deficit ............. S-92
Advances ............................................................ S-94
Appraisal Reductions ................................................ S-96
Reports to Certificateholders; Certain Available Information ........ S-98
Voting Rights ....................................................... S-101
Termination; Retirement of Certificates ............................. S-101
The Trustee ......................................................... S-102
SERVICING OF THE MORTGAGE LOANS ........................................ S-103
General ............................................................. S-103
The Master Servicer ................................................. S-105
The Special Servicer ................................................ S-105
Replacement of the Special Servicer ................................. S-105
Servicing and Other Compensation and Payment of Expenses ............ S-106
Maintenance of Insurance ............................................ S-108
Modifications, Waiver and Amendments ................................ S-109
Realization Upon Defaulted Mortgage Loans ........................... S-110
Inspections; Collection of Operating Information .................... S-112
Certain Matters Regarding the Master Servicer, the Special Servicer
and the Depositor ................................................ S-112
Events of Default ................................................... S-113
Rights Upon Event of Default ........................................ S-114
Amendment ........................................................... S-115
YIELD AND MATURITY CONSIDERATIONS ...................................... S-117
Yield Considerations ................................................ S-117
General .......................................................... S-117
Pass-Through Rate ................................................ S-117
Rate and Timing of Principal Payments ............................ S-117
Losses and Shortfalls ............................................ S-118
Certain Relevant Factors ......................................... S-118
Delay in Payment of Distributions ................................ S-119
Unpaid Distributable Certificate Interest ........................ S-119
Weighted Average Life ............................................... S-119
Yield Sensitivity of the Offered Certificates ....................... S-124
Yield Sensitivity of the Class X Certificates ....................... S-125
CERTAIN FEDERAL INCOME TAX CONSEQUENCES ................................ S-127
METHOD OF DISTRIBUTION ................................................. S-129
LEGAL MATTERS .......................................................... S-130
RATINGS ................................................................ S-130
LEGAL INVESTMENT ....................................................... S-131
ERISA CONSIDERATIONS ................................................... S-131
INDEX OF PRINCIPAL DEFINITIONS ......................................... S-134
S-5
<PAGE>
SUMMARY OF CERTIFICATES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
INITIAL CLASS APPROXIMATE
CERTIFICATE PERCENTAGE OF
BALANCE OR TOTAL APPROXIMATE PASS-THROUGH
NOTIONAL CERTIFICATE CREDIT RATE
CLASS AMOUNT (1) BALANCE SUPPORT DESCRIPTION
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A-1 $ 210,400,000 15.05% 26.50% Fixed
A-2 $ 816,865,579 58.45% 26.50% Fixed (3)
X $1,397,640,241 N/A N/A WAC (Interest-Only)(2)
B $ 76,870,213 5.50% 21.00% Fixed (3)
C $ 62,893,811 4.50% 16.50% Fixed (3)
D $ 20,964,604 1.50% 15.00% Fixed (3)
E $ 48,917,408 3.50% 11.50% WAC (4)
F $ 17,470,503 1.25% 10.25% WAC (4)
G $ 59,399,711 N/A N/A Fixed
H $ 10,482,302 N/A N/A Fixed
I $ 10,482,301 N/A N/A Fixed
J $ 20,964,604 N/A N/A Fixed
K $ 6,988,201 N/A N/A Fixed
L $ 8,735,252 N/A N/A Fixed
M $ 26,205,752 N/A N/A Fixed
- --------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------
INITIAL
ASSUMED PASS- WEIGHTED EXPECTED PRINCIPAL OR
FINAL THROUGH AVERAGE RATINGS NOTIONAL
DISTRIBUTION RATE LIFE (S&P/ PRINCIPAL
CLASS DATE (5) (APPROX.) (APPROX.) (6) CUSIP NO. FITCH) WINDOW (6)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
A-1 7/15/07 7.134% 5.49 yrs 161582AA9 AAA/AAA 9/99-7/07
A-2 7/15/09 7.439% 9.69 yrs 161582AB7 AAA/AAA 7/07-7/09
X 7/15/29 0.522% 9.68 yrs 161582AC5 AAAr/AAA 9/99-7/29
B 8/15/09 7.619% 9.92 yrs 161582AD3 AA/AA 7/09-8/09
C 8/15/09 7.625% 9.97 yrs 161582AE1 A/A 8/09-8/09
D 8/15/09 7.625% 9.97 yrs 161582AF8 A-/A- 8/09-8/09
E 5/15/11 7.796% 10.47 yrs 161582AG6 BBB/BBB 8/09-5/11
F 5/15/11 7.796% 11.72 yrs 161582AH4 BBB-/BBB- 5/11-5/11
G N/A 6.400% N/A N/A N/A N/A
H N/A 6.400% N/A N/A N/A N/A
I N/A 6.400% N/A N/A N/A N/A
J N/A 6.400% N/A N/A N/A N/A
K N/A 6.400% N/A N/A N/A N/A
L N/A 6.400% N/A N/A N/A N/A
M N/A 6.400% N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------
</TABLE>
(1) Approximate, subject to a permitted variance of plus or minus 5%.
(2) The pass-through rate on the Class X certificates will be equal to the
excess, if any, of (1) the weighted average of the net interest rates on
the mortgage loans (in each case adjusted if necessary to accrue on the
basis of a 360-day year consisting of twelve 30-day months), over (2) the
weighted average of the pass-through rates of the other certificates
(other than the residual certificates) as described in this prospectus
supplement.
(3) For any distribution date, if the weighted average of the net interest
rates on the mortgage loans (in each case adjusted if necessary to accrue
on the basis of a 360-day year consisting of twelve 30-day months) as of
the first day of the related due period is less than the rate specified
for the Class A-2, Class B, Class C or Class D certificates with respect
to the distribution date, then the pass-through rate for that class of
certificates on that distribution date will equal the weighted average
net mortgage rate.
(4) The pass-through rate applicable to each of the Class E and Class F
certificates as of each distribution date will equal the weighted average
of the net interest rates on the mortgage loans (in each case adjusted if
necessary to accrue on the basis of a 360-day year consisting of twelve
30-day months) as of the first day of the related due period less 0.05%
per annum.
(5) The assumed final distribution dates set forth in this prospectus
supplement have been determined on the basis of the assumptions described
in "Description of the Certificates--Assumed Final Distribution Date;
Rated Final Distribution Date" in this prospectus supplement. The rated
final distribution date for each class of certificates is August 15,
2031. See "Description of the Certificates--Assumed Final Distribution
Date; Rated Final Distribution Date" in this prospectus supplement.
(6) The weighted average life and period during which distributions of
principal would be received set forth in the foregoing table with respect
to each class of certificates is based on the assumptions set forth under
"Yield and Maturity Considerations--Weighted Average Life" in this
prospectus supplement and on the assumptions that there are no
prepayments (other than on each anticipated prepayment date, if any), or
losses on the mortgage loans and no extensions of maturity dates of
mortgage loans that do not have anticipated prepayment dates.
S-6
<PAGE>
SUMMARY OF TERMS
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, READ THIS ENTIRE DOCUMENT AND THE ACCOMPANYING
PROSPECTUS CAREFULLY.
RELEVANT PARTIES AND DATES
DEPOSITOR................... Chase Commercial Mortgage Securities Corp., a
New York corporation. The depositor's address is
270 Park Avenue, New York, New York 10017, and
its telephone number is (212) 834-5723. See "The
Depositor" in the prospectus.
MASTER SERVICER............. The Chase Manhattan Bank, a New York banking
corporation. The master servicer's principal
address is 270 Park Avenue, New York, New York
10017, and its telephone number is (212)
622-3401. See "Servicing of the Mortgage
Loans--The Master Servicer" in this prospectus
supplement.
SPECIAL SERVICER............ ORIX Real Estate Capital Markets, LLC, a
Delaware limited liability company. The special
servicer's address is 1717 Main Street, Dallas,
Texas 75201 and its telephone number is (214)
237-2000. See "Servicing of the Mortgage
Loans--The Special Servicer" in this prospectus
supplement.
TRUSTEE..................... State Street Bank and Trust Company, a trust
company chartered under the laws of the
commonwealth of Massachusetts. The trustee's
address is 2 Avenue de Lafayette, Boston,
Massachusetts 02111 and its telephone number is
(617) 662-1223. See "Description of the
Certificates--The Trustee" in this prospectus
supplement.
MORTGAGE LOAN SELLERS....... The Chase Manhattan Bank and First Union
National Bank. The Chase Manhattan Bank is an
affiliate of Chase Securities Inc., one of the
underwriters, and First Union National Bank is an
affiliate of First Union Capital Markets Corp.,
the other underwriter. See "Description of the
Mortgage Pool--The Mortgage Loan Sellers" in this
prospectus supplement.
CUT-OFF DATE................ August 10, 1999.
CLOSING DATE................ On or about August 26, 1999.
DISTRIBUTION DATE........... The 15th day of the month or, if that day is
not a business day, the next business day,
beginning in September 1999, provided that the
distribution date will be no earlier than the
fourth business day following the related
determination date.
INTEREST ACCRUAL PERIOD..... Interest will accrue on the offered
certificates during the calendar month prior to
the related distribution date and will be
calculated assuming that each month has 30 days
and each year has 360 days.
DUE PERIOD.................. The period commencing on the 2nd day of the
month preceding the month in which the related
distribution date occurs and ending on the 1st
day of the month in which the related
distribution date occurs, or, with respect to 32
mortgage loans, representing approximately 28.49%
of the
S-7
<PAGE>
aggregate principal balance of all mortgage
loans as of the cut-off date, the period
commencing on the 11th day of the month
preceding the month in which the related
distribution date occurs and ending on the 10th
day of the month in which the related
distribution date occurs.
DETERMINATION DATE.......... The 11th day of the month in which the related
distribution date occurs, or if the 11th day is
not a business day, then the immediately
following business day.
OFFERED SECURITIES
GENERAL..................... We are offering the following eight classes of
commercial mortgage pass-through certificates as
part of Series 1999-1:
o Class A-1
o Class A-2
o Class X
o Class B
o Class C
o Class D
o Class E
o Class F
Series 1999-1 will consist of a total of 17
classes, the following nine of which are not
being offered through this prospectus supplement
and the accompanying prospectus: Class G, Class
H, Class I, Class J, Class K, Class L, Class M,
Class R and Class LR.
The Series 1999-1 certificates will collectively
represent beneficial ownership interests in a
trust created by Chase Commercial Mortgage
Securities Corp. The trust's assets will
primarily be 205 mortgage loans secured by first
liens on 217 commercial and multifamily
properties.
CERTIFICATE PRINCIPAL AMOUNTS
AND NOTIONAL AMOUNT....... Your certificates will have the approximate
aggregate initial principal amount or notional
amount set forth below, subject to a variance of
plus or minus 5%:
Class A-1 ..... $210,400,000 principal amount
Class A-2 ..... $816,865,579 principal amount
Class X ....... $1,397,640,241 notional amount
Class B ....... $76,870,213 principal amount
Class C ....... $62,893,811 principal amount
Class D ....... $20,964,604 principal amount
Class E ....... $48,917,408 principal amount
Class F ....... $17,470,503 principal amount
The notional amount of the Class X certificates
will generally be equal to the aggregate
principal amount of the certificates having
principal balances as of the preceding
distribution date after giving effect to the
distribution of principal on that
S-8
<PAGE>
distribution date or, in the case of the first
distribution date, the closing date.
See "Description of the Certificates--General"
in this prospectus supplement.
PASS-THROUGH RATES
A. OFFERED CERTIFICATES
(OTHER THAN CLASS E,
CLASS F AND CLASS X)... Your certificates will accrue interest at an
annual rate called a pass-through rate which is
set forth below for each class other than the
Class E, Class F and Class X certificates:
Class A-1 ......... 7.134%
Class A-2 ......... 7.439%(1)
Class B ........... 7.619%(1)
Class C ........... 7.625%(1)
Class D ........... 7.625%(1)
------------
(1) For any distribution date, if the weighted
average of the net interest rates on the
mortgage loans (in each case adjusted if
necessary to accrue on the basis of a
360-day year consisting of twelve 30-day
months) as of the first day of the related
due period is less than the rate specified
for the Class A-2, Class B, Class C or Class
D certificates with respect to the
distribution date, then the pass-through
rate for that class of certificates on that
distribution date will equal the weighted
average net mortgage rate.
B. CLASS E, CLASS F AND
CLASS X CERTIFICATES... If you invest in the Class E or Class F
Certificates, your pass-through rate will be
equal to the weighted average interest rate of
the mortgage loans (after the payment of all
servicing fees and trustee fees), less 0.05% per
annum in each case.
If you invest in the Class X certificates, your
pass-through rate will be equal to the excess,
if any, of (1) the weighted average interest
rate of the mortgage loans (after the payment of
all servicing and trustee fees) over (2) the
weighted average of the pass-through rates of
the other certificates (other than the Class R
and Class LR certificates) as described in this
prospectus supplement. The weighting will be
based upon the respective principal amounts of
those classes.
C. INTEREST RATE CALCULATION
CONVENTION............. For purposes of calculating the Class A-2,
Class B, Class C, Class D, Class E, Class F and
Class X pass-through rates, the mortgage loan
interest rates will not reflect any default
interest rate, any rate increase occurring after
an anticipated prepayment date, any loan term
modifications agreed to by the special servicer
or any modifications resulting from a borrower's
bankruptcy or insolvency. In addition, if a
mortgage loan does not accrue interest on a
30/360 basis, its interest rate for any month
will be recalculated so that the amount of
interest that would accrue at that rate in that
month, calculated on a 30/360 basis, will equal
the amount of
S-9
<PAGE>
interest that is required to be paid on that
mortgage loan in that month.
Interest on your certificates will be calculated
based on a 360-day year consisting of twelve
30-day months, or a 30/360 basis.
See "Description of the Certificates--
Distributions--Pass-Through Rates" and
"Description of the Certificates--Distributions
--Certain Calculations with Respect to Individual
Mortgage Loans" in this prospectus supplement.
DISTRIBUTIONS
A. AMOUNT AND ORDER
OF DISTRIBUTIONS...... On each distribution date, funds available for
distribution from the mortgage loans, net of
specified trust expenses, will be distributed in
the following amounts and order of priority:
First/Class A-1, Class A-2 and Class X: To
interest on Class A-1, Class A-2 and Class X,
pro rata, in accordance with their interest
entitlements.
Second/Class A-1 and Class A-2: To the extent of
funds allocated to principal, to principal on
Class A-1 and Class A-2, in that order, until
reduced to zero. If each class of certificates
other than Class A-1 and Class A-2 has been
reduced to zero, funds available for principal
will be distributed to Class A-1 and Class A-2,
pro rata, rather than sequentially.
Third/Class A-1 and Class A-2: After each class
of certificates other than Class A-1 and Class
A-2 has been reduced to zero, to reimburse Class
A-1 and Class A-2, pro rata, for any previously
unreimbursed losses on the mortgage loans
allocable to principal that were previously
borne by those classes, together with interest.
Fourth/Class B: To Class B as follows: (a) to
interest on Class B in the amount of its
interest entitlement; (b) to the extent of funds
allocated to principal remaining after
distributions in respect of principal to each
Class with a higher priority (in this case,
Class A-1 and Class A-2), to principal on Class
B until reduced to zero; and (c) to reimburse
Class B for any previously unreimbursed losses
on the mortgage loans allocable to principal
that were previously borne by that class,
together with interest.
Fifth/Class C: To Class C in a manner analogous
to the Class B allocations of priority Fourth
above.
Sixth/Class D: To Class D in a manner analogous
to the Class B allocations of priority Fourth
above.
Seventh/Class E: To Class E in a manner
analogous to the Class B allocations of priority
Fourth above.
Eighth/Class F: To Class F in a manner analogous
to the Class B allocations of priority Fourth
above.
S-10
<PAGE>
Ninth/Non-offered Certificates: In the amounts
and order of priority described in "Description
of the Certificates--Distributions--Priority" in
this prospectus supplement.
B. INTEREST AND PRINCIPAL
ENTITLEMENTS.......... A description of each class's interest
entitlement can be found in "Description of the
Certificates--Distributions--Interest
Distribution Amount" in this prospectus
supplement. As described in that section, there
are circumstances in which your interest
entitlement for a distribution date could be less
than one full month's interest at the
pass-through rate on your certificate's principal
amount or notional amount.
A description of the amount of principal
required to be distributed to the classes
entitled to principal on a particular
distribution date also can be found in
"Description of the Certificates--Distributions
--Principal Distribution Amount" in this
prospectus supplement.
C. PREPAYMENT PREMIUMS; YIELD
MAINTENANCE CHARGES... Prepayment premiums and yield maintenance
charges with respect to the mortgage loans will
be allocated between the related offered
certificates then entitled to principal
distributions and the Class X certificates as
follows:
On any distribution date, a percentage of all
prepayment premiums with respect to the mortgage
loans will be allocated to each class of offered
certificates then entitled to principal
distributions. That percentage will be equal to
the product of (a) the percentage of the total
principal distribution that class receives out
of the entire principal distribution amount for
that distribution date, and (b) 25%. The
remaining prepayment premiums will be allocated
to the Class X certificates.
On any distribution date, a percentage of all
yield maintenance charges with respect to the
mortgage loans will be allocated to each class
of offered certificates then entitled to
principal distributions. That percentage will be
equal to the product of (a) the percentage of
the total principal distribution that class
receives out of the entire principal
distribution amount for the distribution date,
and (b) a percentage (which can be no greater
than 100%), the numerator of which is the excess
of the pass-through rate of the class of the
certificates currently receiving principal over
the relevant yield rate used in determining the
yield maintenance charge under the applicable
mortgage loan, and the denominator of which is
the excess of the interest rate of the related
mortgage loan over the yield rate. This formula
is set forth below.
yield maintenance charge (pass-through rate - yield rate)
allocation percentage = -------------------------------------
(mortgage interest rate - yield rate)
The remaining yield maintenance charges will be
allocated to the Class X certificates.
S-11
<PAGE>
The yield rate with respect to any mortgage loan
will generally be equal to the rate set forth in
the related mortgage loan documents that is used
to calculate the yield maintenance charge with
respect to a principal prepayment. To the extent
a yield rate is not set forth in the loan
documents, the yield rate will equal the yield
(when compounded monthly) on the U.S. Treasury
issue with a maturity date closest to the
maturity date for the prepaid mortgage loan. In
the event that there are two or more U.S.
Treasury issues (a) with the same coupon, the
issue with the lowest yield will be utilized,
and (b) with maturity dates equally close to the
maturity date for the prepaid mortgage loan, the
issue with the earliest maturity date will be
utilized. See "Description of the Mortgage
Pool--Certain Terms and Conditions of the
Mortgage Loans--Prepayment Provisions" in this
prospectus supplement.
In general, this formula provides for an
increase in the allocation of yield maintenance
charges to the certificates then entitled to
principal distributions relative to the Class X
certificates as yield rates decrease and a
decrease in the allocation to those classes as
yield rates rise.
Example of Allocation of Yield Maintenance
Charges
Mortgage interest rate = 8%
Pass-through rate for applicable class = 6%
Yield rate = 5%
ALLOCATION PERCENTAGE
FOR APPLICABLE CLASS ALLOCATION PERCENTAGE FOR CLASS X
-------------------- ---------------------------------
6% - 5%
------- = 33 1/3% 100% - 33 1/3% = 66 2/3%
8% - 5%
See "Description of the Certificates--Allocation
of Prepayment Premiums and Yield Maintenance
Charges" in this prospectus supplement.
The following table contains general information
regarding the prepayment provisions of the
mortgage loans:
OVERVIEW OF PREPAYMENT PROTECTION(1)
<TABLE>
<CAPTION>
% OF
INITIAL POOL
PREPAYMENT PROVISION BALANCE
-------------------- -------
<S> <C>
Lock-out period followed by defeasance(2) ......... 92.89%
Lock-out period followed by yield
maintenance charge ................................ 3.00%
Lock-out period followed by defeasance
followed by fixed premium percentage .............. 1.97%
Lock-out period followed by a yield
maintenance charge followed by fixed
premium percentage ................................ 1.89%
Other ............................................. 0.25%
</TABLE>
------------
(1) Generally the mortgage loans permit
prepayment without penalty for a specified
period preceding the maturity date or
anticipated prepayment date.
(2) Defeasance involves the substitution of
direct non-callable U.S. Treasury
obligations for the related mortgaged
property as collateral for the mortgage
loans.
S-12
<PAGE>
See "Description of the Mortgage
Pool--Additional Mortgage Loan Information,"
"Description of the Mortgage Pool--Certain Terms
and Conditions of the Mortgage Loans" and
"--Defeasance; Collateral Substitution" in this
prospectus supplement.
SUBORDINATION
A. GENERAL................ The chart below describes the manner in which
the payment rights of certain classes will be
senior or subordinate, as the case may be, to the
payment rights of other classes. The chart shows
the entitlement to receive principal and interest
(other than excess interest) on any distribution
date in descending order (beginning with the
Class A-1, Class A-2 and Class X certificates).
It also shows the manner in which mortgage loan
losses are allocated in ascending order
(beginning with the other Series 1999-1
certificates that are not being offered by this
prospectus supplement). However, no principal
payments or loan losses will be allocated to the
Class X certificates, although loan losses will
reduce the notional amount of the Class X
certificates and, therefore, the amount of
interest they accrue.
-----------------------
Class A-1, Class A-2,
Class X*
-----------------------
|
---------------
Class B
---------------
|
---------------
Class C
---------------
|
---------------
Class D
---------------
|
---------------
Class E
---------------
|
---------------
Class F
---------------
|
---------------
non-offered
certificates
---------------
* The Class X certificates are interest-only
certificates.
NO OTHER FORM OF CREDIT ENHANCEMENT WILL BE
AVAILABLE FOR THE BENEFIT OF THE HOLDERS OF THE
OFFERED CERTIFICATES.
Any allocation of a loss to a class of
certificates will reduce the related principal
amount of that class.
See "Description of the Certificates" in this
prospectus supplement.
S-13
<PAGE>
B. SHORTFALLS IN
AVAILABLE FUNDS....... The following types of shortfalls in available
funds will reduce distributions to the classes of
certificates with the lowest payment priorities:
shortfalls resulting from additional
compensation, other than the servicing fee, which
the master servicer or the special servicer is
entitled to receive; shortfalls resulting from
interest on advances made by the master servicer
or the trustee (to the extent not covered by
default interest paid by the borrower);
shortfalls resulting from extraordinary expenses
of the trust; and shortfalls resulting from a
reduction of a mortgage loan's interest rate by a
bankruptcy court or from other unanticipated or
default-related expenses of the trust.
On any distribution date, distributions of
interest on each class of certificates (other
than the Class X, Class R and Class LR
certificates) will be reduced, pro rata, by any
interest shortfalls resulting from prepayments
that are not accompanied by the payment of a
full month's interest on the amount of the
prepayments, to the extent such shortfalls are
not offset by the master servicer as described
in "Servicing of the Mortgage Loans--Servicing
and Other Compensation and Payment of Expenses"
in this prospectus supplement.
See "Description of the Certificates--
Distributions--Priority" in this prospectus
supplement.
THE MORTGAGE LOANS
THE MORTGAGE POOL........... The trust's primary assets will be 205 fixed
rate mortgage loans, each evidenced by one or
more promissory notes secured by first mortgages,
deeds of trust or similar security instruments on
137 commercial properties and 80 multifamily
properties (or in the case of 3 mortgage loans, a
leasehold estate in a commercial property).
The following tables set forth certain
anticipated characteristics of the mortgage
loans as of the cut-off date (unless otherwise
indicated). The sum in any column may not equal
the indicated total due to rounding. Unless
otherwise indicated, all figures presented in
this summary section are calculated as described
under "Description of the Mortgage
Pool--Additional Mortgage Loan Information" in
this prospectus supplement and all percentages
represent the indicated percentage of the
aggregate principal balance of all mortgage
loans as of the cut-off date. The principal
balance of each mortgage loan as of the cut-off
date assumes the timely receipt of principal
scheduled to be paid in August on each mortgage
loan and no defaults, delinquencies or
prepayments on any mortgage loan as of the
cut-off date.
S-14
<PAGE>
The mortgage loans will have the following
approximate characteristics as of the cut-off
date:
<TABLE>
<S> <C>
Aggregate principal balance(1) ............. $1,397,640,242
Number of mortgage loans ................... 205
Number of mortgaged properties ............. 217
Number of "balloon" mortgage
loans .................................... 192
Range of mortgage loan principal
balances ................................. $649,554 to $82,000,000
Average mortgage loan principal
balance .................................. $6,817,757
Range of mortgage rates .................... 6.51% to 9.13%
Weighted average mortgage rate ............. 7.68%
Range of remaining terms to
maturity date(2) ......................... 82 months to 359 months
Weighted average original term to
maturity date(2) ......................... 130 months
Weighted average remaining term
to maturity date(2) ...................... 127 months
Weighted average original
amortization term ........................ 334 months
Weighted average remaining
amortization term ........................ 331 months
Range of loan to value ratios(3) ........... 41.91% to 84.95%
Weighted average loan to value
ratio(3) ................................. 71.52%
Weighted average loan to value
ratio as of the maturity
date(2)(3) ............................... 62.54%
Weighted average occupancy
rate (4) ................................. 94.74%
Range of debt service coverage
ratios(3) ................................ 1.13x to 2.14x
Weighted average debt service
coverage ratio(3) ........................ 1.34x
</TABLE>
------------
(1) Subject to a permitted variance of plus or
minus 5%.
(2) In the case of 7 mortgage loans, the
anticipated prepayment date.
(3) The loan to value ratio and debt service
coverage ratio information shown above does
not reflect 31 credit lease loans,
representing approximately 6.30% of the
aggregate principal balance of all mortgage
loans as of the cut-off date, which have
debt service coverage ratios at origination
that generally range from 1.00x-1.05x and
loan to value ratios at origination that
generally range from 90%-100%. See
"Description of the Mortgage Pool--Credit
Lease Loans" in this prospectus supplement.
(4) The weighted average occupancy rate
information shown above includes 12 hotel
properties, representing approximately 3.60%
of the aggregate principal balance of all
mortgage loans as of the cut-off date, which
have occupancy rates that generally range
from 50% to 85%, but does not reflect 31
credit lease loans, representing
approximately 6.30% of the aggregate
principal balance of all mortgage loans as
of the cut-off date; if the mortgage loans
secured by hotel properties are excluded,
the weighted average occupancy rate of all
other mortgage loans is 95.59%.
S-15
<PAGE>
CURRENT USES OF THE MORTGAGED PROPERTIES(1)
-------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF AGGREGATE
MORTGAGED PRINCIPAL BALANCE OF % OF INITIAL
CURRENT USE PROPERTIES THE MORTGAGE LOANS POOL BALANCE
- ----------- ---------- ------------------ ------------
<S> <C> <C> <C>
Multifamily .............. 80 $ 532,681,582 38.1%
Anchored Retail .......... 22 293,232,181 21.0
Office ................... 26 243,923,804 17.5
Credit Lease Loans ....... 31 88,004,343 6.3
Healthcare ............... 10 56,953,567 4.1
Unanchored Retail ........ 17 54,853,445 3.9
Industrial ............... 8 54,025,301 3.9
Hotel .................... 12 50,295,435 3.6
Mobile Home Community..... 6 10,188,188 0.7
Mixed Use ................ 3 8,718,118 0.6
Self Storage ............. 2 4,764,278 0.3
--- -------------- -----
TOTAL .................... 217 $1,397,640,242 100.0%
=== ============== =====
</TABLE>
------------
(1) Because this table presents information
relating to the mortgaged properties and not
the mortgage loans, the information for
mortgage loans secured by more than one
mortgaged property is based on allocated
loan amounts (allocating the mortgage loan
principal amount to each of those properties
either as set forth in the related mortgage
note or by the appraised values of the
mortgaged properties).
[PIE CHART]
Property Type
Multifamily 38.11%
Anchored Retail 20.98%
Unanchored Retail 3.92%
Office 17.45%
Credit Lease Loans 6.30%
Healthcare 4.07%
Industrial 3.87%
Hospital 3.60%
Mobile Home Community 0.73%
Mixed Use 0.62%
Self Storage 0.34%
S-16
<PAGE>
The mortgaged properties are located in 33
states and the District of Columbia. The
following table lists the states which have
concentrations of mortgaged properties above 5%:
GEOGRAPHIC DISTRIBUTION
-----------------------
<TABLE>
<CAPTION>
NUMBER OF AGGREGATE
MORTGAGED PRINCIPAL BALANCE OF % OF INITIAL
STATE PROPERTIES THE MORTGAGE LOANS POOL BALANCE
- ----- ---------- ------------------ ------------
<S> <C> <C> <C>
California ........... 52 $ 323,686,693 23.2%
New York ............. 10 190,933,191 13.7
Florida .............. 18 81,989,092 5.9
Pennsylvania ......... 7 81,066,160 5.8
Other States and the
District of Columbia 130 719,965,107 51.5
--- -------------- -----
TOTAL ................ 217 $1,397,640,242 100.0%
=== ============== =====
</TABLE>
RANGE OF MORTGAGE RATES
-----------------------
<TABLE>
<CAPTION>
NUMBER OF AGGREGATE
MORTGAGE PRINCIPAL BALANCE OF % OF INITIAL
RANGE OF MORTGAGE RATES LOANS THE MORTGAGE LOANS POOL BALANCE
- ----------------------- ----- ------------------ ------------
<S> <C> <C> <C>
6.510% to 6.999% ......... 16 $ 88,762,124 6.4%
7.000% to 7.249% ......... 20 98,317,730 7.0
7.250% to 7.499% ......... 19 288,031,308 20.6
7.500% to 7.749% ......... 31 265,771,802 19.0
7.750% to 7.999% ......... 43 334,923,662 24.0
8.000% to 8.499% ......... 53 271,345,865 19.4
8.500% to 9.125% ......... 23 50,487,749 3.6
--- -------------- -----
TOTAL .................... 205 $1,397,640,242 100.0%
=== ============== =====
</TABLE>
RANGE OF PRINCIPAL BALANCES
---------------------------
<TABLE>
<CAPTION>
NUMBER OF AGGREGATE
RANGE OF MORTGAGE PRINCIPAL BALANCE OF % OF INITIAL
CUT-OFF DATE BALANCES LOANS THE MORTGAGE LOANS POOL BALANCE
- --------------------- ----- ------------------ ------------
<S> <C> <C> <C>
$649,554 to
$2,000,000........... 55 $ 81,168,100 5.8%
$2,000,001 to
$5,000,000........... 72 235,144,350 16.8
$5,000,001 to
$10,000,000.......... 44 313,037,870 22.4
$10,000,001 to
$15,000,000.......... 11 126,269,033 9.0
$15,000,001 to
$25,000,000.......... 14 267,579,215 19.1
$25,000,001 to
$50,000,000.......... 8 292,441,675 20.9
$50,000,001 to
$82,000,000.......... 1 82,000,000 5.9
--- -------------- -----
TOTAL ............... 205 $1,397,640,242 100.0%
=== ============== =====
</TABLE>
S-17
<PAGE>
RANGE OF DSCRS(1)
-----------------
<TABLE>
<CAPTION>
% OF
NUMBER OF AGGREGATE INITIAL
MORTGAGE PRINCIPAL BALANCE OF POOL
RANGE OF DSCRS LOANS THE MORTGAGE LOANS BALANCE(1)
- -------------- ----- ------------------ ----------
<S> <C> <C> <C>
1.129x to 1.189x(2) .... 2 $ 7,322,210 0.5%
1.190x to 1.249x ....... 55 450,631,082 32.2
1.250x to 1.299x ....... 47 303,490,133 21.7
1.300x to 1.349x ....... 22 160,726,384 11.5
1.350x to 1.399x ....... 14 106,214,712 7.6
1.400x to 1.599x ....... 27 197,197,073 14.1
1.600x to 2.137x ....... 7 84,054,305 6.0
-- -------------- ----
TOTAL .................. 174 $1,309,635,899 93.7%
=== ============== ====
</TABLE>
------------
(1) Excludes 31 credit lease loans, representing
approximately 6.30% of the aggregate cut-off
date principal balance of all mortgage
loans, secured by credit lease properties
meeting the guidelines described under
"Description of the Mortgage Pool--Credit
Lease Loans" in this prospectus supplement.
The debt service coverage ratios for credit
lease loans at origination range generally
from 1.00x-1.05x.
(2) Water Club Apartments (Loan No. 194), which
has a debt service coverage ratio of 1.13x,
is cross-collateralized and cross-defaulted
with 2 other mortgage loans, and the 3
mortgage loans have a weighted average debt
service coverage ratio of 1.25x. Canal Place
Apartments (Loan No. 32) has a debt service
coverage ratio of 1.16x.
RANGE OF LTV RATIOS(1)
----------------------
<TABLE>
<CAPTION>
% OF
NUMBER OF AGGREGATE INITIAL
MORTGAGE PRINCIPAL BALANCE OF POOL
RANGE OF LTV RATIOS LOANS THE MORTGAGE LOANS BALANCE(1)
- ------------------- ----- ------------------ ----------
<S> <C> <C> <C>
41.91% to 54.99% .... 9 $ 85,739,418 6.1%
55.00% to 64.99% .... 16 81,976,709 5.9
65.00% to 69.99% .... 27 308,131,863 22.0
70.00% to 73.33% .... 25 185,405,714 13.3
73.34% to 76.66% .... 38 245,304,597 17.6
76.67% to 79.99% .... 50 336,135,997 24.1
80.00% to 84.95% .... 9 66,941,600 4.8
-- -------------- ----
TOTAL ............... 174 $1,309,635,899 93.7%
=== ============== ====
</TABLE>
------------
(1) Excludes 31 credit lease loans, representing
approximately 6.30% of the aggregate cut-off
date principal balance of all mortgage
loans, secured by credit lease properties
meeting the guidelines described under
"Description of the Mortgage Pool--Credit
Lease Loans" in this prospectus supplement.
The LTV ratios for credit lease loans at
origination range generally from 90%-100%.
S-18
<PAGE>
RANGE OF REMAINING TERM TO MATURITY DATE OR
ANTICIPATED PREPAYMENT DATE
---------------------------
<TABLE>
<CAPTION>
% OF
RANGE OF NUMBER OF AGGREGATE INITIAL
REMAINING TERMS MORTGAGE PRINCIPAL BALANCE OF POOL
(MOS.) LOANS THE MORTGAGE LOANS BALANCE
- ------ ----- ------------------ -------
<S> <C> <C> <C>
82 to 84 ........... 3 $ 60,743,276 4.4%
85 to 117 .......... 38 327,655,603 23.4
118 to 120 ......... 110 779,821,507 55.8
121 to 180 ......... 21 134,471,932 9.6
181 to 240 ......... 19 56,577,480 4.1
241 to 300 ......... 13 36,875,327 2.6
301 to 359 ......... 1 1,495,117 0.1
--- -------------- -----
TOTAL .............. 205 $1,397,640,242 100.0%
=== ============== =====
</TABLE>
All of the mortgage loans bear interest at fixed
rates.
The mortgage loans require the borrowers to make
scheduled payments of principal and/or interest
on the following days of each month (in some
cases, subject to the indicated grace periods):
173 of the mortgage loans, representing
approximately 71.51% of the aggregate principal
balance of all mortgage loans as of the cut-off
date, provide for scheduled payments of
principal and/or interest due on the first day
of each month, and 32 mortgage loans,
representing approximately 28.49% of the
aggregate principal balance of all the mortgage
loans as of the cut-off date, provide for
scheduled payments of principal and interest due
on the 10th day of each month. All of the
mortgage loans whose due date is the first day
of each month provide for a grace period, none
of which exceeds 10 days. No mortgage loan whose
due date is the 10th day of each month provides
for a grace period. See "Description of the
Mortgage Pool--Certain Terms and Conditions of
the Mortgage Loans" in this prospectus
supplement.
The mortgage loans accrue interest based on the
following conventions:
<TABLE>
<CAPTION>
% OF
NUMBER OF AGGREGATE INITIAL
MORTGAGE PRINCIPAL BALANCE OF POOL
ACCRUAL BASIS LOANS THE MORTGAGE LOANS BALANCE
- ------------- ----- ------------------ -------
<S> <C> <C> <C>
Actual/360 ......... 165 $1,235,713,700 88.4%
30/360 ............. 40 161,926,542 11.6
--- -------------- -----
TOTAL .............. 205 $1,397,640,242 100.0%
=== ============== =====
</TABLE>
1 mortgage loan, representing approximately
3.58% of the aggregate principal balance of all
the mortgage loans as of the cut-off date,
provides for monthly payments of interest-only
over the term of the mortgage loan and the
payment of the entire principal amount of the
mortgage loan at maturity, and 6 mortgage loans,
representing approximately 13.33% of the
aggregate principal balance of all the mortgage
loans as of the cut-off date, provide for
monthly payments of
S-19
<PAGE>
interest-only for a portion of the term of the
related mortgage loan. 3 of those mortgage
loans, representing approximately 6.00% of the
aggregate principal balance of all mortgage
loans as of the cut-off date, which accrue
interest on the basis of the actual number of
days in a month and a 360-day year, require that
interest be paid monthly during such
interest-only period in equal monthly
installments.
9 of the mortgage loans, representing
approximately 2.03% of the aggregate principal
balance of all the mortgage loans as of the
cut-off date, provide for semi-annual payments
of principal and interest. See "Description of
the Mortgage Pool--Certain Terms and Conditions
of the Mortgage Loans" in this prospectus
supplement.
AMORTIZATION TYPES
------------------
<TABLE>
<CAPTION>
NUMBER % OF
OF INITIAL
MORTGAGE AGGREGATE CUT-OFF POOL
TYPE OF AMORTIZATION LOANS DATE BALANCE BALANCE
- -------------------- ----- ------------ -------
<S> <C> <C> <C>
Balloon Loans ......... 185 $1,331,099,327 95.2%
Fully Amortizing
Loans ................. 13 28,816,244 2.1
APD Loans ............. 7 37,724,671 2.7
--- -------------- -----
TOTAL ................. 205 $1,397,640,242 100.0%
=== ============== =====
</TABLE>
7 mortgage loans, representing approximately
2.70% of the aggregate principal balance of all
mortgage loans as of the cut-off date, provide
for an increase in the related interest rate
after a certain date, the anticipated prepayment
date. The interest accrued in excess of the
original rate, together with any related
interest thereon, will be deferred and will not
be paid until the principal balance of the
related mortgage loan has been paid. On each
distribution date, any amount received in
respect of that deferred interest will be
distributed among the holders of the Class A-1,
Class A-2, Class B, Class C, Class D, Class E
and Class F certificates, on a pro rata basis in
accordance with the respective initial
certificate principal amount of those classes of
certificates.
After the anticipated prepayment date, certain
cash flow in excess of that required for debt
service and other expenses with respect to the
related mortgaged properties will be applied
towards the payment of principal of the related
mortgage loans until their principal balance has
been reduced to zero. A substantial principal
payment would be required to pay off these
mortgage loans on their anticipated prepayment
date; however, the amortization term is
generally the same as the remaining term to
maturity if these mortgage loans are not prepaid
on their anticipated prepayment date.
See "Description of the Mortgage
Pool--Additional Mortgage Loan Information" and
"Description of the Mortgage Pool--Certain Terms
and Conditions of the Mortgage Loans" in this
prospectus supplement.
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<PAGE>
SIGNIFICANT LOANS
TEN LARGEST MORTGAGE LOANS
--------------------------
<TABLE>
<CAPTION>
% OF
NO. OF CUT-OFF INITIAL
MORTGAGED DATE POOL PROPERTY
PROPERTY NAME PROPERTIES BALANCE BALANCE TYPE
- ------------- ---------- ------- ------- ----
<S> <C> <C> <C> <C>
Rego Park Plaza ........... 1 $ 82,000,000 5.87% Retail
Capitol Square ............ 1 50,000,000 3.58 Office
90 & 100 John Street ...... 1 50,000,000 3.58 Multifamily
Orange County Office
Portfolio ................ 7 39,151,613 2.80 Office
McCandless Towers I ....... 1 36,984,827 2.65 Office
Albany Mall ............... 1 31,587,489 2.26 Retail
Oaks at Hampton ........... 1 29,146,816 2.09 Multifamily
The Townhouse
Apartments ............... 1 27,986,550 2.00 Multifamily
1845 Walnut Street ........ 1 27,584,379 1.97 Office
Whispering Hills
Apartments ............... 1 24,850,885 1.78 Multifamily
- ------------ -----
TOTAL/WEIGHTED
AVERAGE .................. 16 $399,292,559 28.57%
== ============ =====
<CAPTION>
WEIGHTED AVERAGES
--------------------------------------------------------------
STATED CUT-OFF LTV RATIO
MORTGAGE REMAINING UNDERWRITTEN DATE AT
PROPERTY NAME RATE TERM (MOS.) DSCR LTV RATIO MATURITY
- ------------- ---- ----------- ---- --------- --------
<S> <C> <C> <C> <C> <C>
Rego Park Plaza ........... 7.25% 118 1.58x 65.60% 62.37%
Capitol Square ............ 7.47% 84 2.14x 51.81% 51.81%
90 & 100 John Street ...... 7.27% 117 1.29x 70.42% 62.54%
Orange County Office
Portfolio ................ 7.61% 116 1.30x 68.15% 60.63%
McCandless Towers I ....... 8.24% 119 1.30x 65.46% 59.02%
Albany Mall ............... 8.33% 119 1.25x 70.19% 63.41%
Oaks at Hampton ........... 7.50% 117 1.22x 79.85% 70.83%
The Townhouse
Apartments ............... 7.81% 119 1.21x 75.64% 67.51%
1845 Walnut Street ........ 7.32% 119 1.30x 68.11% 60.06%
Whispering Hills
Apartments ............... 6.90% 162 1.20x 75.31% 56.59%
TOTAL/WEIGHTED
AVERAGE .................. 7.53% 116 1.44x 67.60% 61.13%
</TABLE>
- ----------
Rego Park Plaza............ The Rego Park Plaza loan is secured by a first
lien mortgage on a three story retail property
located in Rego Park, New York. The property
contains a total of approximately 343,049 square
feet of net leaseable area. The retail property
is situated on approximately 5.88 acres of land
and was constructed in 1952 and renovated in
1997. As of May 1999, the property was
approximately 100% occupied. The property is
occupied by 5 tenants: Sears, Marshall's, Bed,
Bath & Beyond, Circuit City and Old Navy. The
sponsor of the borrower is Alexander's, Inc.,
which is partially owned by Vornado Realty Trust.
Capitol Square............. The Capitol Square loan is an interest-only
loan secured by a first lien mortgage on a
twenty-three story class "A" office tower and
parking garage located in Sacramento, California.
The property contains a total of approximately
501,060 square feet of net leaseable area, with a
parking garage containing approximately 711
indoor parking spaces on four levels. The
property was constructed in 1992. As of June
1999, the property was approximately 100% leased
to the State of California. The lease expires on
December 31, 2023 unless terminated earlier in
connection with a purchase option or in the event
the State of California fails to appropriate
funds to be used in connection with the lease.
The sponsor, who is also the borrower, is the
State of California Public Employees' Retirement
System. As of July 1999, the State of California
General Obligation Debt was rated "A+" by S&P and
"Aa3" by Moody's Investors Service, Inc. The
State of California Public Employees' Retirement
System is the largest public pension fund in the
United States.
90 & 100 John Street....... The 90 & 100 John Street loan is secured by a
first lien mortgage on a 29-story mixed use
high-rise building located in New York, New York.
The property contains a total of 221 apartment
units, approximately 137,498 square feet of net
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<PAGE>
leaseable office space, and approximately 47,412
square feet of net leaseable retail space, with
a parking garage containing 55 parking spaces.
The property also includes a health club. The
property was constructed in 1931 and fully
renovated between 1998 and 1999. As of April
1999, the apartment units were approximately
99.1% leased, the office space was approximately
94% leased to 33 tenants, and the retail space
was approximately 100% leased to 7 tenants. The
sponsor of the borrower is The Moinian Group,
which currently owns and operates over 4 million
square feet of commercial properties located
primarily in the northeastern United States.
Orange County
Office Portfolio............ The Orange County Office Portfolio loan is
secured by first lien mortgages on 5 office/flex
properties and 2 office properties located in
Orange County, California. The properties contain
a total of approximately 550,702 square feet of
net leaseable area, ranging in size from
approximately 58,010 square feet to approximately
115,205 square feet. As of June 1999, the
properties had a weighted average occupancy of
approximately 95.9%, ranging from approximately
93.9% to approximately 100%. The properties were
constructed between 1979 and 1990. The sponsor of
the borrower is The Olen Companies, a real estate
management and development company founded in
1973 that owns and operates over 3 million
leasable square feet of commercial property in
southern California.
McCandless Towers I........ The McCandless Towers I loan is secured by a
first lien mortgage on an eleven-story class "A"
office property located in the center of "Silicon
Valley" in Santa Clara, California. The property
contains a total of approximately 201,420 square
feet of net leaseable office space and
approximately 6,400 square feet of net leaseable
restaurant space in an adjacent one-story
building to the office tower. The property is
situated on approximately 4.63 acres and was
constructed in 1985. As of June 1999, the
property was approximately 96.1% occupied. The
sponsor of the borrower is McCandless Management
Corporation.
Albany Mall................ The Albany Mall loan is secured by a first lien
mortgage on an enclosed regional mall located in
Albany, Georgia. The mortgaged property contains
a total of approximately 457,774 square feet of
net leaseable area and is anchored by Dillard's,
Sears, Belk and JC Penney stores. The mall
contains a total of approximately 761,577 square
feet of net leaseable area, of which
approximately 304,000 square feet of net
leaseable space is occupied by three anchor
tenants, Sears, Belk and JC Penney, which are not
collateral for the mortgage loan. The mall was
constructed in 1976, and renovated in 1988 at a
cost of $8,000,000. As of June 1999, the property
was approximately 93.8% occupied. The sponsor of
the borrower is Aronov Realty Management, Inc., a
privately-held real
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<PAGE>
estate company founded in 1952. Aronov Realty
Management, Inc. currently owns and operates
over 12 million leasable square feet of
commercial property.
Oaks at Hampton............ The Oaks at Hampton loan is secured by a first
lien mortgage on a luxury apartment complex
located in Rochester Hills, Michigan. The
property contains a total of 544 units: 144
one-bedroom units, 352 two-bedroom units and 48
three-bedroom units. Amenities available to
residents include tennis courts, an olympic-size
pool with a sundeck, a sauna and shower room, a
clubhouse, a nine-hole golf course and bicycling
and jogging trails. The property was constructed
in 1986. As of March 1999, the complex was
approximately 94.8% occupied. The sponsor of the
borrower is Associated Estates Realty
Corporation.
The Townhouse Apartments... The Townhouse Apartments loan is secured by a
first lien mortgage on an apartment complex
located in Stamford, Connecticut. The buildings
were originally built between 1956 and 1963. 228
of the units were substantially renovated in
1998. The property contains a total of 268 units.
40 units in the three-story building have been,
or are in the process of being, substantially
renovated. 30 of the 40 units were pre-leased as
of July 1999. A cash pledge of $4.654 million was
funded at loan closing and is being held as
additional collateral to be released only upon
the stabilization and achievement of certain
operating thresholds following completion of the
renovation with respect to the 40 units. As of
May 1999, the property was approximately 96.9%
occupied, excluding the 40 units undergoing
renovation. The sponsor of the borrower is
Ceebraid-Signal Corporation, which was founded in
1950. Ceebraid-Signal Corporation currently owns
or operates over 12,000 multifamily units on the
east coast of the United States.
1845 Walnut Street.......... The 1845 Walnut Street loan is secured by a
first lien mortgage on a twenty-five-story office
building located in the Rittenhouse Square area
in Philadelphia, Pennsylvania. The property
contains a total of approximately 352,384 square
feet of net leaseable office space. The property
was constructed in 1968 and renovated in 1995. As
of May 1999, the property was approximately 96.7%
occupied. The sponsors of the borrower are
Frankel Enterprises, a privately held real estate
company founded in 1936, and Resource Commercial
Mortgages, Inc., a subsidiary of Resource
Properties, Inc., which is a subsidiary of
Resource America, Inc. Frankel Enterprises is a
family owned real estate company that has
developed 37 commercial properties since its
inception in 1936. Resource America, Inc. is a
publicly traded finance company that is involved
with real estate finance, energy production and
equipment leasing.
Whispering Hills
Apartments.................. The Whispering Hills Apartments loan is secured
by a first lien mortgage on a 330 unit apartment
complex located in
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<PAGE>
Creve Cour, Missouri. The apartment complex
consists of 29 two- and three-story buildings.
The buildings were constructed between 1968 and
1972. As of May 1999, the apartment units were
approximately 90.0% occupied. The sponsor of the
borrower is The Michelson Organization. The
Michelson Organization was founded in 1927 and
currently owns and operates 31 properties in 13
different states.
ADVANCES
A. P&I ADVANCES........... The master servicer is required to advance
delinquent periodic mortgage loan payments if it
determines that the advance will be recoverable.
With respect to each mortgage loan that pays
interest and principal on a semi-annual basis,
the master servicer will be required to make an
advance each month (other than any month in which
the due date occurs) in an amount equal to
one-sixth of the interest portion of the periodic
payment due on the mortgage loan and will be
entitled to reimbursement for the advances from
the related periodic payment when collected or,
if not recoverable from the periodic payment,
then from general collections; provided that no
interest will accrue on any interest advances
made in respect of the mortgage loan until after
any due date (taking into account any applicable
grace periods) on which no related periodic
payment is collected in respect of that mortgage
loan. The master servicer will be required to
advance the principal portion on each mortgage
loan that pays interest and principal on a
semi-annual basis only in the month the related
periodic payment is due to the extent the
borrower fails to make the related periodic
payment. The master servicer will not be required
to advance balloon payments due at maturity in
excess of the regular periodic payment, interest
in excess of a mortgage loan's regular interest
rate or prepayment premiums or yield maintenance
charges. The master servicer also is not required
to advance amounts deemed non-recoverable. There
may be other circumstances in which the master
servicer will not be required to advance one full
month of principal and interest. If the master
servicer fails to make a required advance, the
trustee will be required to make the advance. See
"Description of the Certificates--Advances" in
this prospectus supplement. If an interest
advance is made, the master servicer will not
advance its servicing fee, but will advance the
trustee's fee.
B. PROPERTY PROTECTION
ADVANCES.............. master servicer also may be required to
make advances to pay delinquent real estate
taxes, assessments and hazard insurance premiums
and similar expenses necessary to protect and
maintain the mortgaged property, to maintain the
lien on the mortgaged property or enforce the
related mortgage loan documents. If the master
servicer fails to make a required advance of this
type, the trustee is required to make this
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<PAGE>
advance. The master servicer is not required to
advance amounts deemed non-recoverable. See
"Description of the Certificates--Advances" in
this prospectus supplement.
C. INTEREST ON ADVANCES.... The master servicer and the trustee, as
applicable, will be entitled to interest on these
advances at the "Prime Rate" published in The
Wall Street Journal as described in this
prospectus supplement. Interest accrued on
outstanding advances may result in reductions in
amounts otherwise payable on the certificates.
See "Description of the Certificates--Advances"
and "--Subordination; Allocation of Collateral
Support Deficit" in this prospectus supplement
and "Description of the Certificates--Advances
in Respect of Delinquencies" and "Description of
the Pooling Agreements--Certificate Account" in
the prospectus.
ADDITIONAL ASPECTS OF CERTIFICATES
DENOMINATIONS............... The offered certificates (other than the Class
X certificates) will be offered in minimum
denominations of $10,000 initial principal
amount. The Class X certificates will be offered
in minimum denominations of $1,000,000 initial
notional amount. Investments in excess of the
minimum denominations may be made in multiples of
$1,000.
REGISTRATION, CLEARANCE AND
SETTLEMENT................ Each class of offered certificates will be
registered in the name of Cede & Co., as nominee
of The Depository Trust Company, or DTC.
You may hold your offered certificates through:
(1) DTC in the United States; or (2) Cedelbank
or The Euroclear System in Europe. Transfers
within DTC, Cedelbank or Euroclear will be made
in accordance with the usual rules and operating
procedures of those systems.
We may elect to terminate the book-entry system
through DTC with respect to all or any portion
of any class of the offered certificates.
See "Description of the Certificates--Book-Entry
Registration and Definitive Certificates" in
this prospectus supplement and in the
prospectus.
INFORMATION AVAILABLE TO
CERTIFICATEHOLDERS........ On each distribution date, the trustee will
prepare and make available to each
certificateholder of record, initially expected
to be Cede & Co., a statement as to the
distributions being made on that date.
Additionally, under certain circumstances,
certificateholders of record may be entitled to
certain other information regarding the trust.
See "Description of the Certificates--Reports to
Certificateholders; Certain Available
Information" in this prospectus supplement.
S-25
<PAGE>
DEAL INFORMATION/ANALYTICS... Certain information concerning the mortgage
loans and the offered certificates will be
available to you through the following services:
o Bloomberg, L.P.
o the trustee's website at
www.corporatetrust.statestreet.com
o or the trustee's website at
www.corporatetrust.statestreet.com (Flow
Systems) for factor information.
OPTIONAL TERMINATION........ On any distribution date on which the aggregate
principal balance of the mortgage loans remaining
in the trust is less than 1% of the aggregate
unpaid balance of the mortgage loans as of the
cut-off date, certain entities specified in this
prospectus supplement will have the option to
purchase all of the remaining mortgage loans at
the price specified in this prospectus supplement
(and all property acquired through exercise of
remedies in respect of any mortgage loan).
Exercise of this option will terminate the trust
and retire the then outstanding certificates.
See "Description of the Certificates--
Termination; Retirement of Certificates" in this
prospectus supplement and "Description of the
Certificates--Termination" in the prospectus.
TAX STATUS.................. An election will be made to treat a portion of
the trust (exclusive of the excess interest and
the related distribution account for this
portion) as two separate REMICs--a Lower-Tier
REMIC and an Upper-Tier REMIC--for federal income
tax purposes. The portion of the trust
representing the excess interest will be treated
as a grantor trust for federal income tax
purposes. In the opinion of counsel, the portion
of the trust referred to above will qualify for
this treatment.
Pertinent federal income tax consequences of an
investment in the offered certificates include:
o Each class of offered certificates (and
the Class G, Class H, Class I, Class J,
Class K, Class L and Class M certificates)
will represent "regular interests" in the
Upper-Tier REMIC.
o The regular interests will be treated as
newly originated debt instruments for
federal income tax purposes.
o You will be required to report income on
the regular interests represented by your
certificates using the accrual method of
accounting.
o The Class X certificates will, and one or
more other classes of offered certificates
may, be issued with original issue
discount.
S-26
<PAGE>
o The offered certificates will also
represent interests in a grantor trust
with respect to interest that is deferred
on loans after their anticipated
prepayment date, for the loans that have
anticipated prepayment dates.
See "Certain Federal Income Tax Consequences" in
this prospectus supplement and "Certain Federal
Income Tax Consequences" in the prospectus.
ERISA CONSIDERATIONS........ Subject to important considerations described
under "ERISA Considerations" in this prospectus
supplement and in the accompanying prospectus,
the Class A-1, Class A-2 and Class X certificates
are eligible for purchase by persons investing
assets of employee benefit plans or individual
retirement accounts.
THE CLASS B, CLASS C, CLASS D, CLASS E AND CLASS
F CERTIFICATES MAY NOT BE PURCHASED BY, OR
TRANSFERRED TO, A PLAN OR ANY PERSON INVESTING
THE ASSETS OF A PLAN. (THIS PROHIBITION DOES NOT
APPLY TO AN INSURANCE COMPANY INVESTING ASSETS
OF ITS GENERAL ACCOUNT UNDER CIRCUMSTANCES WHICH
WOULD QUALIFY FOR AN EXEMPTION UNDER PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60.)
LEGAL INVESTMENT............ The Class A-1, Class A-2, Class X and Class B
certificates will constitute "mortgage related
securities" for purposes of the Secondary
Mortgage Market Enhancement Act of 1984, as
amended, so long as those certificates are rated
in one of the two highest rating categories by
one or more rating agencies. The other classes of
offered certificates will not constitute
"mortgage related securities" within the meaning
of the Secondary Mortgage Market Enhancement Act
of 1984.
See "Legal Investment" in this prospectus
supplement and in the accompanying prospectus.
RATINGS..................... The offered certificates will not be issued
unless each of the offered classes receives the
following ratings from Standard & Poor's Ratings
Services and Fitch IBCA, Inc.:
S&P FITCH
--- -----
Class A-1 .......... AAA AAA
Class A-2 .......... AAA AAA
Class X ............ AAAr AAA
Class B ............ AA AA
Class C ............ A A
Class D ............ A- A-
Class E ............ BBB BBB
Class F ............ BBB- BBB-
A rating agency may downgrade, qualify or
withdraw a security rating at any time. A rating
agency not requested to rate the offered
certificates may nonetheless issue a rating and,
if one does, it may be lower than those stated
above. S&P assigns the additional rating of "r"
to highlight classes of securities that S&P
believes may experience high volatility or
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<PAGE>
high variability in expected returns due to
non-credit risks. The security ratings do not
address the frequency of prepayments (whether
voluntary or involuntary) of mortgage loans, the
degree to which prepayments might differ from
those originally anticipated, the likelihood of
collection of excess interest, default interest,
prepayment premiums or yield maintenance
charges, or the tax treatment of the
certificates. Even though the Class X
certificates will be rated "AAAr/AAA," it is
still possible that you may fail to recover your
full initial investment due to a rapid rate of
prepayments, defaults or liquidations. See
"Yield and Maturity Considerations" in this
prospectus supplement, "Risk Factors" and
"Ratings" in this prospectus supplement and in
the prospectus, and "Yield and Maturity
Considerations" in the prospectus.
See "Ratings" in this prospectus supplement and
the prospectus for a discussion of the basis
upon which ratings are given and the conclusions
that may not be drawn from a rating. See "Legal
Investment" in this prospectus supplement.
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<PAGE>
RISK FACTORS
You should carefully consider the following risks before making an
investment decision. In particular, distributions 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.
The risks and uncertainties described below are not the only ones relating
to your certificates. Additional risks and uncertainties not presently known to
us or that we currently deem immaterial may also impair your investment.
If any of the following risks actually occur, your investment could be
materially and adversely affected.
This prospectus supplement also contains forward-looking statements that
involve risks and uncertainties. Actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including the risks described below and elsewhere in this prospectus
supplement.
GEOGRAPHIC CONCENTRATION ENTAILS RISKS
Mortgaged properties located in California and New York represent 23.16%
and 13.66%, respectively, of the mortgaged properties by allocated loan amount.
Concentrations of mortgaged properties in geographic areas may increase the
risk that adverse economic or other developments or natural disaster affecting
a particular region of the country could increase the frequency and severity of
losses on mortgage loans secured by those properties. In recent periods,
several regions of the United States have experienced significant real estate
downturns. Regional economic declines or conditions in regional real estate
markets could adversely affect the income from, and market value of, the
mortgaged properties. Other regional factors--e.g., earthquakes, floods or
hurricanes or changes in governmental rules or fiscal policies--also may
adversely affect the mortgaged properties. For example, mortgaged properties
located in California may be more susceptible to certain hazards (such as
earthquakes) than properties in other parts of the country.
RISKS RELATING TO LOAN CONCENTRATIONS
The effect of mortgage pool loan losses will be more severe if the losses
relate to loans that account for a disproportionately large percentage of the
pool's aggregate principal balance. In this regard:
o The largest mortgage loan represents approximately 5.87% of the
aggregate principal balance of the mortgage loans as of the cut-off
date. See "Description of the Mortgage Pool-- Significant Mortgage
Loans" in this prospectus supplement.
o The 3 largest mortgage loans represent, in the aggregate,
approximately 13.02% of the aggregate principal balance of the
mortgage loans as of the cut-off date.
o The 10 largest mortgage loans represent, in the aggregate,
approximately 28.57% of the aggregate principal balance of the
mortgage loans as of the cut-off date.
Each of the other mortgage loans represents less than 2% of the cut-off
date aggregate principal balance of the mortgage loans as of the cut-off date.
A concentration of mortgaged property types or of mortgage loans with the
same borrower or related borrowers also can pose increased risks. In that
regard:
o multifamily properties represent approximately 38.11% of the aggregate
principal balance of the pool of mortgage loans as of the cut-off date
(based on the primary property type for multifamily properties);
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<PAGE>
o retail properties represent approximately 24.91% of the aggregate
principal balance of the pool of mortgage loans as of the cut-off date
(based on the primary property type for combined office/retail
properties); and
o office properties represent approximately 17.45% of the aggregate
principal balance of the pool of mortgage loans as of the cut-off date
(based on the primary property type for combined office/retail
properties and allocated loan amounts).
A concentration of mortgaged property types can increase the risk that a
decline in a particular industry or business would have a disproportionately
large impact on the pool of mortgage loans.
With respect to concentration of borrowers:
o 11 mortgage loans (those whose borrower affiliation is designated
"AERC" on Annex A to this prospectus supplement) have borrowers
related to each other and those mortgage loans represent, in the
aggregate, approximately 9.79% of the aggregate principal balance of
the pool of mortgage loans as of the cut-off date. None of these
mortgage loans is cross-defaulted or cross-collateralized with any
other of these mortgage loans. The property manager for all of the
mortgaged properties is Associated Estates Realty Corporation, an
affiliate of each borrower. See "Description of the Mortgage
Pool--Significant Borrowers Concentration" in this prospectus
supplement.
o 9 other groups of mortgage loans have borrowers related to each other,
each of these groups of mortgage loans representing less than 4% of
the aggregate principal balance of the pool of mortgage loans as of
the cut-off date.
o 5 groups of 4, 2, 3, 2 and 4 mortgage loans, representing
approximately 3.72%, 3.55%, 0.93%, 0.77% and 0.62%, respectively, of
the aggregate principal balance of the pool of mortgage loans as of
the cut-off date, are cross-collateralized and cross-defaulted with
each other.
o 3 mortgage loans, representing approximately 4.66% of the aggregate
principal balance of the pool of mortgage loans as of the cut-off
date, are secured by more than one mortgaged property.
See "Description of the Mortgage Pool--Additional Mortgage Loan
Information" in this prospectus supplement.
Mortgaged properties owned by related borrowers are likely to:
o have common management, increasing the risk that financial or other
difficulties experienced by the property manager could have a greater
impact on the pool of mortgage loans; and
o have common general partners which would increase the risk that a
financial failure or bankruptcy filing would have a greater impact on
the pool of mortgage loans.
Except as described below, the terms of the mortgage loans generally
require that the borrowers be single-purpose entities, although in many cases
the borrowers are not required to observe all covenants and conditions which
typically are required in order for them to be viewed under standard rating
agency criteria as "special purpose entities." In addition, in these cases, the
borrowers' organizational documents or the terms of the mortgage loans limit
their activities to the ownership of only the related mortgaged property or
properties and limit the borrowers' ability to incur additional indebtedness.
These provisions are designed to mitigate the possibility that the borrower's
financial condition would be adversely impacted by factors unrelated to the
mortgaged property and the mortgage loan in the pool. However, we cannot assure
you that the related borrowers will comply with these requirements. In
addition, the terms of 10 mortgage loans, representing approximately 6.14% of
the aggregate principal balance of the pool of mortgage loans as of the cut-off
date, do not require the related borrowers to be single-purpose entities. See
"Certain Legal Aspects of Mortgage Loans--Bankruptcy Laws" in the prospectus.
RISKS RELATING TO ENFORCEABILITY OF CROSS-COLLATERALIZATION
As described above, 5 groups of 4, 2, 3, 2 and 4 mortgage loans,
representing approximately 3.72%, 3.55%, 0.93%, 0.77% and 0.62%, respectively,
of the aggregate principal balance of the pool of
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<PAGE>
mortgage loans as of the cut-off date, are cross-collateralized with other
mortgage loans. Cross-collateralization arrangements involving more than one
borrower could be challenged as fraudulent conveyances by creditors of the
related borrower in an action brought outside a bankruptcy case or, if the
borrower were to become a debtor in a bankruptcy case, by the borrower's
representative.
A lien granted by the borrower entity could be avoided if a court were to
determine that:
o the borrower was insolvent when it granted the lien, was rendered
insolvent by the granting of the lien, was left with inadequate
capital, or was not able to pay its debts as they matured; and
o the borrower did not 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 that borrower from the respective mortgage
loan proceeds, as well as the overall cross-collateralization. If a court were
to conclude that the granting of the liens was an avoidable fraudulent
conveyance, that court could:
o subordinate all or part of the pertinent mortgage loan to existing or
future indebtedness of that borrower;
o recover payments made under that mortgage loan; or
o take other actions detrimental to the holders of the certificates,
including, under certain circumstances, invalidating the mortgage loan
or the mortgages securing the cross-collateralization.
ABILITY TO EFFECT OTHER BORROWINGS ENTAILS RISK
The mortgage loans generally prohibit the borrower from incurring any
additional debt secured by the mortgaged property without the consent of the
lender. With respect to 1 mortgage loan, representing approximately 0.18% of
the aggregate principal balance of the pool of mortgage loans as of the cut-off
date, the borrower has debt secured by the related mortgaged property (provided
that such debt is not required to be repaid unless the borrower breaches
certain covenants as to use), with respect to 11 mortgage loans, representing
approximately 12.08% of the aggregate principal balance of the pool of mortgage
loans as of the cut-off date, the related borrower has unsecured debt payable
to an affiliate of the related borrower, and with respect to 2 mortgage loans,
representing approximately 3.41% of the aggregate principal balance of the pool
of mortgage loans as of the cut-off date, members or partners of the borrower
have obtained a loan secured by their equity interests in such borrowers (in
each case, "Subordinate Debt"), in addition to the debt owed under the mortgage
loan. Also, substantially all of the mortgage loans permit the related borrower
to incur limited indebtedness in the ordinary course of business that is not
secured by the related mortgaged property. The terms of 1 mortgage loan,
representing approximately 0.08% of the aggregate principal balance of the pool
of mortgage loans as of the cut-off date, do not restrict the related borrower
from incurring additional debt secured by the related mortgaged property. The
terms of 6 mortgage loans, representing approximately 13.95% of the aggregate
principal balance of the pool of mortgage loans as of the cut-off date, do not
restrict the related borrower from incurring additional unsecured debt.
When a mortgage loan borrower (or its constituent members) also has one or
more other outstanding loans (even if subordinated loans), the trust is
subjected to additional risk. The borrower may have difficulty servicing and
repaying multiple loans. The existence of another loan generally also will make
it more difficult for the borrower to obtain refinancing of the mortgage loan
and may thereby jeopardize repayment of the mortgage loan. Moreover, the need
to service additional debt may reduce the cash flow available to the borrower
to operate and maintain the mortgaged property.
Additionally, if the borrower (or its constituent members) defaults on the
mortgage loan and/or any other loan, actions taken by other lenders such as a
foreclosure by another lender or an
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involuntary petition for bankruptcy against the borrower could impair the
security available to the trust, including the mortgaged property, or stay the
trust's ability to foreclose during the course of the bankruptcy case. The
bankruptcy of another lender also may operate to stay foreclosure by the trust.
The trust may also be subject to the costs and administrative burdens of
involvement in foreclosure or bankruptcy proceedings or related litigation.
Each Subordinate Debt creditor has entered into a subordination agreement
with the lender acknowledging that the Subordinate Debt is non-foreclosable and
non-defaultable and imposing limits on the borrower's ability to incur any
further subordinate debt. Payments on the Subordinate Debt are required to be
made solely out of excess cash flow after periodic payments of principal and
interest have been made and any reserves required by the terms of the related
mortgage loans have been funded as required under the mortgage loan documents.
See "Description of the Mortgage Pool--General" in this prospectus supplement
and "Certain Legal Aspects of Mortgage Loans--Subordinate Financing" in the
prospectus.
Except for the existing Subordinate Debt described above, the mortgage
loans generally prohibit borrowers from incurring any debt that is secured by
the related mortgaged properties without the lender's consent.
BORROWER MAY BE UNABLE TO REPAY REMAINING PRINCIPAL BALANCE ON MATURITY DATE OR
ANTICIPATED PREPAYMENT DATE
192 of the mortgage loans (including 1 mortgage loan, representing
approximately 3.58% of the aggregate principal balance of the pool of mortgage
loans as of the cut-off date, which pays interest only over its term),
representing approximately 97.94% of the aggregate principal balance of the
pool of mortgage loans as of the cut-off date, are expected to have substantial
remaining principal balances as of their respective anticipated prepayment
dates or stated maturity dates. 185 of these mortgage loans, representing
approximately 95.24% of the aggregate principal balance of the pool of mortgage
loans as of the cut-off date, require balloon payments at stated maturity, and
the remaining 7 mortgage loans, representing approximately 2.70% of the
aggregate principal balance of the pool of mortgage loans as of the cut-off
date, require a substantial payment at their anticipated prepayment date to
prepay those mortgage loans. 21 balloon mortgage loans, representing
approximately 4.64% of the aggregate principal balance of the pool of mortgage
loans as of the cut-off date, are credit lease loans with balloon payments that
are insured by residual value insurance policies. Mortgage loans with
substantial remaining principal balances at their stated maturity (i.e.,
"balloon loans") involve greater risk than fully amortizing loans. In addition,
fully amortizing mortgage loans which pay interest on an "actual/360" basis but
have fixed monthly payments will, in fact, have a small balloon payment due at
maturity.
A borrower's ability to repay a loan on its anticipated prepayment date or
stated maturity date typically will depend upon its ability either to refinance
the loan or to sell the mortgaged property at a price sufficient to permit
repayment. A borrower's ability to achieve either of these goals will be
affected by a number of factors, including:
o the availability of, and competition for, credit for commercial 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 prevailing general and regional economic conditions.
The availability of funds in the credit markets fluctuates over time.
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We cannot assure you that each borrower will have the ability to repay the
remaining principal balances on the pertinent date.
See "Description of the Mortgage Pool--Certain Terms and Conditions of the
Mortgage Loans" in this prospectus supplement and "Risk Factors--Borrowers May
Be Unable to Make Balloon Payments" in the prospectus.
COMMERCIAL AND MULTIFAMILY LENDING IS DEPENDENT UPON NET OPERATING INCOME
The mortgage loans are secured by various income-producing commercial
and/or multifamily properties. Commercial and multifamily lending are generally
thought to expose a lender to greater risk than residential one-to-four family
lending because it typically involves larger loans to a single borrower or
groups of related borrowers.
The repayment of a commercial or multifamily loan is typically dependent
upon the ability of the applicable property to produce cash flow through the
collection of rents. Even the liquidation value of a commercial property is
determined, in substantial part, by the capitalization of the property's cash
flow. However, net operating income can be volatile and may be insufficient to
cover debt service on the loan at any given time.
The net operating incomes and property values of the mortgaged properties
may be adversely affected by a large number of factors. Some of these factors
relate to the properties themselves, such as:
o the age, design and construction quality of the properties;
o perceptions regarding the safety, convenience and attractiveness of
the properties;
o the proximity and attractiveness of competing properties;
o the adequacy of the property's management and maintenance;
o increases in operating expenses;
o an increase in the capital expenditures needed to maintain the
properties or make improvements;
o a decline in the financial condition of a major tenant;
o an increase in vacancy rates; and
o a decline in rental rates as leases are renewed or entered into with
new tenants.
Other factors 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;
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o in the case of rental properties, the rate at which new rentals occur;
and
o the property's "operating leverage" which is generally the percentage
of total property expenses in relation to revenue, the ratio of fixed
operating expenses to those that vary with revenues, and the level of
capital expenditures required to maintain the property and to retain
or replace tenants.
A decline in the real estate market or in the financial condition of a
major tenant will tend to have a more immediate effect on the net operating
income of properties with short-term revenue sources, such as short-term or
month to month leases, and may lead to higher rates of delinquency or defaults.
TENANT CONCENTRATION ENTAILS RISK
A deterioration in the financial condition of a tenant can be particularly
significant if a mortgaged property is leased to a single tenant or a small
number of tenants. Mortgaged properties leased to a single tenant or a small
number of tenants also are more susceptible to interruptions of cash flow if a
tenant fails to renew its lease. This is so because the financial effect of the
absence of rental income may be severe; more time may be required to re-lease
the space; and substantial capital costs may be incurred to make the space
appropriate for replacement tenants.
Retail and office properties also may be adversely affected if there is a
concentration of particular tenants among the mortgaged properties or of
tenants in a particular business or industry.
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.
Multi-tenanted mortgaged properties also may experience higher continuing
vacancy rates and greater volatility in rental income and expenses.
TENANT BANKRUPTCY ENTAILS RISKS
The bankruptcy or insolvency of a major tenant, or a number of smaller
tenants, in retail and office properties may adversely affect the income
produced by a mortgaged property. Under the federal 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).
MORTGAGE LOANS ARE NONRECOURSE AND ARE NOT INSURED OR GUARANTEED
The mortgage loans are not insured or guaranteed by any person or entity,
governmental or otherwise.
Each mortgage loan is a nonrecourse loan. 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. Payment prior to maturity is consequently
dependent primarily on the sufficiency of the net operating income of the
mortgaged property. Payment at maturity is primarily dependent upon the market
value of the mortgaged property or the borrower's ability to refinance the
property.
However, with respect to 21 of the mortgage loans which are secured by
credit lease properties, which represent in the aggregate approximately 4.64%
of the aggregate principal balance of the pool of mortgage loans as of the
cut-off date, the trustee will be named as the loss-payee under a
non-cancelable residual value policy obtained to cover the balloon payment due
on the maturity date of the related mortgage loan. The residual value insurance
policy will be or has been issued by either
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R.V.I. America Insurance Company which, as of July 1, 1999, had a rating of "A"
by S&P and "A" by Fitch or Financial Structures, Limited, which possesses a
cut-through endorsement issued by Royal Indemnity Company. Royal Indemnity
Company possesses a rating of "AA--" by S&P and is not publicly rated by Fitch.
See "Description of the Mortgage Pool--General" in this prospectus supplement.
MULTIFAMILY PROPERTIES HAVE SPECIAL RISKS
Multifamily properties secure 76 of the mortgage loans, representing
approximately 38.11% of the aggregate principal balance of the pool of mortgage
loans as of the cut-off date. A large number of factors may adversely affect
the value and successful operation of a multifamily property, including:
o the physical attributes of the apartment building such as its age,
appearance and construction quality;
o the location of the property, for example, a change in the
neighborhood over time;
o the ability of management to provide adequate maintenance and
insurance;
o the types of services or amenities that the property provides;
o the property's reputation;
o the level of mortgage interest rates, which may encourage tenants to
purchase rather than lease housing;
o the presence of competing properties;
o adverse local or national economic conditions; and
o state and local regulations.
RETAIL PROPERTIES HAVE SPECIAL RISKS
Retail properties secure 39 of the underlying mortgage loans, representing
approximately 24.91% of the aggregate principal balance of the pool of mortgage
loans as of the cut-off date.
The quality and success of a retail property's tenants significantly
affect the property's value. For example, if the sales revenue of retail
tenants were to decline, rents tied to a percentage of gross sales may decline
and those tenants may be unable to pay their rent or other occupancy costs.
The presence or absence of an "anchor tenant" in a shopping center also
can be important because anchors play a key role in generating customer traffic
and making a center desirable for other tenants. An "anchor tenant" is usually
proportionately larger in size and is vital in attracting customers to a retail
property, whether or not it is located on the related mortgaged property. 22 of
the mortgage loans, representing approximately 20.98% of the aggregate
principal balance of the pool of mortgage loans as of the cut-off date, are
secured by retail properties that are "anchored" and 17 of the mortgage loans,
representing approximately 3.92% of the aggregate principal balance of the pool
of mortgage loans as of the cut-off date, are secured by retail properties that
are "unanchored".
If anchor stores in a mortgaged property were to close, the related
borrower may be unable to replace those anchors in a timely manner or without
suffering adverse economic consequences.
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: factory outlet centers; discount
shopping centers and clubs; catalogue retailers; home shopping networks;
Internet web sites; and 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 pool of mortgage
loans, 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.
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OFFICE PROPERTIES HAVE SPECIAL RISKS
26 of the mortgaged properties, representing approximately 17.45% of the
aggregate principal balance of the pool of mortgage loans as of the cut-off
date (by allocated loan amount), are secured primarily by office properties.
A large number of factors may adversely affect the value of office
properties, including:
o the quality of an office building's tenants;
o the physical attributes of the building in relation to competing
buildings (e.g., age, condition, design, access to transportation and
ability to offer certain amenities, such as sophisticated building
systems);
o the desirability of the area as a business location; and
o the strength and nature of the local economy, including labor costs
and quality, tax environment and quality of life for employees.
Moreover, the cost of refitting office space for a new tenant is often
higher than the cost of refitting other types of property for new tenants. See
"--Risks Relating to Loan Concentrations" above.
CREDIT LEASE PROPERTIES HAVE SPECIAL RISKS
31 of the mortgage loans, representing approximately 6.30% of the
aggregate principal balance of the pool of mortgage loans as of the cut-off
date, are secured by properties backed by net lease obligations of a tenant, or
credit lease obligations guaranteed by another entity. Payments on credit lease
loans are dependent principally on the payment by each tenant (or guarantor) of
monthly rental payments and other payments due under the terms of its credit
lease.
For information regarding the ratings of any tenant or guarantor see
"Description of the Mortgage Pool--Credit Lease Loans" in this prospectus
supplement. Any rating assigned to the tenant or guarantor, as applicable, by a
rating agency will reflect only that rating agency's assessment of the
long-term unsecured debt obligations of the tenant or its guarantor. That
rating does not imply an assessment of the likelihood that:
o the credit leases will not be terminated or the related mortgage loans
prepaid (through the exercise of a purchase option by the lessee or
otherwise);
o that principal prepayments on the related mortgage loans will be made
by the related borrowers; or
o that any prepayment premium will be paid, or, if paid, will be
sufficient to provide the anticipated yield on the loan.
As a result, a rating will not address the possibility that a prepayment
of a mortgage loan may cause you to experience a lower than anticipated yield.
See "Yield And Maturity Considerations" in this prospectus supplement. See
"Description of the Mortgage Pool--Additional Mortgage Loan Information" in
this prospectus supplement for certain statistical information on mortgage
loans backed by credit leases.
A downgrade in the credit rating of any of the tenants and/or the
guarantors may have a related adverse effect on the rating of your
certificates. If a tenant or guarantor defaults on its obligation to make
monthly rental payments under a credit lease or the related guarantee, the
borrower under a mortgage loan backed by credit leases may not have the ability
to make required payments on the loan. If the default occurs before significant
amortization of the loan has occurred and no recovery is available from the
related borrower, the tenant or any guarantor, it is unlikely in most cases
that the special servicer will be able to recover in full the amounts then due
under the loan. See "Description of the Mortgage Pool--Credit Lease Loans" in
this prospectus supplement.
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Certain mortgage loans backed by credit leases have lease enhancement
policies or residual value policies. Your investment would be adversely
affected by any failure by the insurer to pay under the terms of the related
policies, and any downgrade of the credit rating of the related insurer may
adversely affect the ratings of your certificates.
See "Description of the Mortgage Pool--Credit Lease Loans" in this
prospectus supplement.
RISKS PARTICULAR TO HEALTHCARE-RELATED PROPERTIES
10 of the mortgage loans, representing approximately 4.07% of the
aggregate principal balance of the pool of mortgage loans as of the cut-off
date, are secured by healthcare-related facilities. In addition to risks
generally associated with commercial real estate, the following are some of the
conditions that can adversely impact the performance of healthcare-related
facilities:
o most healthcare-related facilities (including hospitals and nursing
facilities) receive significant revenues from government reimbursement
programs, primarily Medicaid and Medicare, and payments under these
programs are subject to reductions as a result of statutory and
regulatory changes, changes in reimbursement methodologies,
retroactive rate adjustments, administrative rulings, policy
interpretations, delays by payment intermediaries and government
funding restrictions;
o governmental payors have employed cost-containment measures that limit
payments to healthcare providers;
o legislative efforts to further decrease government healthcare
expenditures are expected to continue and could have a material
adverse impact upon the healthcare-related facilities;
o non-government payors have sought to transfer the financial risk of
treating patients to providers and healthcare-related facilities,
which has created profitability pressures in the healthcare industry;
o the care delivery, billing and reimbursement processes may be
particularly affected by any year 2000 computer problems experienced
by payors or the healthcare-related facilities;
o healthcare-related facilities are highly regulated by federal, state,
commonwealth and local law, and these regulations could increase the
cost of operation and limit growth;
o failure to comply with any of the numerous laws and regulations
applicable to healthcare-related facilities could also result in
monetary penalties, civil or criminal sanctions or appointment of a
receiver or temporary manager, the suspension or termination of the
operator from government payment programs, termination of payments or
other actions that could severely impair the ability to make payments
on a mortgage loan; and
o continued focus by government authorities on abuses by
healthcare-related facilities and providers for billing processes,
filings, and relationships among providers, suppliers, and facilities
could increase the possibility that a healthcare facility's operations
are found to be violative of the law.
Federal and state laws and regulations generally prohibit Medicare and
Medicaid reimbursements to any person other than the provider of the related
medical goods and services. Accordingly, after a foreclosure on a
healthcare-related facility, none of the trustee, the master servicer, the
special servicer or a subsequent lessee or operator of the mortgaged property
would receive directly any federal or state government reimbursement payments
for services furnished at the facility prior to foreclosure. This would
increase the risk of loss on a healthcare-related facility after foreclosure.
Furthermore, if there is a foreclosure or other proposed transfer of a
healthcare-related facility, the trustee (or special servicer) or a purchaser
in a foreclosure sale or other transferee may have no rights under any required
licenses and regulatory approvals and may have to apply in its own right for
those licenses and approvals, which may be impossible to obtain. In addition,
healthcare-related facilities are generally "special purpose" properties that
cannot be readily converted to a new use. Transfers of healthcare-related
facilities are subject to regulatory approvals under state, commonwealth and in
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some cases federal law not required for transfers of other types of commercial
operations and other types of real estate. All of these factors may adversely
affect the liquidation value of healthcare-related properties upon foreclosure.
INDUSTRIAL PROPERTIES HAVE SPECIAL RISKS
6 of the mortgage loans, representing approximately 3.87% of the aggregate
principal balance of the pool of mortgage loans as of the cut-off date, are
secured by industrial properties. Significant factors determining the value of
industrial properties are:
o the quality of tenants;
o building design and adaptability; and
o the location of the property.
Concerns about the quality of tenants, particularly major tenants, are
similar in both office properties and industrial properties, although
industrial properties are more frequently dependent on a single tenant.
Industrial properties may be adversely affected by reduced demand for
industrial space occasioned by a decline in a particular industry segment (for
example, a decline in defense spending), and a particular industrial or
warehouse property that suited the needs of its original tenant may be
difficult to relet to another tenant or may become functionally obsolete
relative to newer properties.
Aspects of building site design and adaptability affect the value of an
industrial property. Site characteristics which are valuable to a
warehouse/industrial property include high clear ceiling heights, wide column
spacing, a large number of bays (loading docks) and large bay depths,
divisibility, large minimum truck turning radii 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.
HOTEL PROPERTIES HAVE SPECIAL RISKS
12 of the mortgage loans, representing approximately 3.60% of the
aggregate principal balance of the pool of mortgage loans as of the cut-off
date, are secured by hotel properties.
Various factors may adversely affect the economic performance of a hotel,
including:
o adverse economic and social conditions, either local, regional or
national (which may limit the amount that can be charged for a room
and reduce occupancy levels);
o the construction of competing hotels or resorts;
o continuing expenditures for modernizing, refurbishing and maintaining
existing facilities prior to the expiration of their anticipated
useful lives;
o a deterioration in the financial strength or managerial capabilities
of the owner and operator of a hotel; and
o changes in travel patterns caused by changes in access, energy prices,
strikes, relocation of highways, the construction of additional
highways or other factors.
Because hotel rooms generally are rented for short periods of time, the
financial performance of hotels tends to be affected by adverse economic
conditions and competition more quickly than other commercial properties.
Moreover, the hotel and lodging industry is generally seasonal in nature
and different seasons affect different hotels depending on type and location.
This seasonality can be expected to cause periodic fluctuations in a hotel
property's room and restaurant revenues, occupancy levels, room rates and
operating expenses.
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The liquor licenses for most of the mortgaged properties are held by
affiliates of the mortgagors, unaffiliated managers and operating lessees. The
laws and regulations relating to liquor licenses generally prohibit the
transfer of such licenses to any person. In the event of a foreclosure of a
hotel property that holds a liquor license, the trustee or a purchaser in a
foreclosure sale would likely have to apply for a new license, which might not
be granted or might be granted only after a delay which could be significant.
There can be no assurance that a new license could be obtained promptly or at
all. The lack of a liquor license in a full service hotel could have an adverse
impact on the revenue from the related mortgaged property or on the hotel's
occupancy rate.
RISKS RELATING TO AFFILIATION WITH A FRANCHISE OR HOTEL MANAGEMENT COMPANY
Each of the mortgage loans secured by a hotel property is affiliated 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. 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 the
mortgaged property probably would not be entitled to the rights under any
liquor license for the mortgaged property. The trustee or a purchaser of the
mortgaged property, as applicable, would be required to apply in its own right
for a license, and we cannot assure you that they could obtain a new license.
CERTAIN ADDITIONAL RISKS RELATING TO TENANTS
The income from, and market value of, the mortgaged properties leased to
various tenants would be adversely affected if:
o space in the mortgaged properties could not be leased or re-leased;
o tenants were unable to meet their lease obligations;
o a significant tenant were to become a debtor in a bankruptcy case; or
o rental payments could not be collected for any other reason.
Repayment of the mortgage loans secured by retail and office properties
will be affected by the expiration of leases and the ability of the respective
borrowers to renew the leases or relet the space on comparable terms.
Even if vacated space is successfully relet, the costs associated with
reletting, including tenant improvements and leasing commissions, could be
substantial and could reduce cash flow from the mortgaged properties. Moreover,
if a tenant defaults in its obligations to a borrower, the borrower may incur
substantial costs and experience significant delays associated with enforcing
its rights and protecting its investment, including costs incurred in
renovating and reletting the property.
SOME MORTGAGED PROPERTIES MAY NOT BE READILY CONVERTIBLE TO ALTERNATIVE USES
Some of the mortgaged properties may not be readily convertible to
alternative uses if those properties were to become unprofitable for any
reason. Converting commercial properties to alternate
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uses generally requires substantial capital expenditures. The liquidation value
of a mortgaged property consequently may be substantially less than would be
the case if the property were readily adaptable to other uses.
Zoning or other restrictions also may prevent alternative use.
LACK OF SKILLFUL PROPERTY MANAGEMENT ENTAILS RISKS
The successful operation of a real estate project depends upon the
property manager's performance and viability. The property manager is
responsible for:
o responding to changes in the local market;
o planning and implementing the rental structure;
o operating the property and providing building services;
o managing operating expenses; and
o assuring that maintenance and capital improvements are carried out in
a timely fashion.
Properties deriving revenues primarily from short-term sources, such as
short-term or month-to-month leases, are generally more management intensive
than properties leased to creditworthy tenants under long-term leases.
We make no representation or warranty as to the skills of any present or
future managers. Additionally, we cannot assure you that the property managers
will be in a financial condition to fulfill their management responsibilities
throughout the terms of their respective management agreements.
LIMITATIONS OF APPRAISALS
Appraisals were obtained with respect to each of the mortgaged properties
in connection with the origination of the applicable mortgage loan. In general,
appraisals represent the analysis and opinion of qualified appraisers and are
not guarantees of present or future value. One appraiser may reach a different
conclusion than the conclusion that would be reached if a different appraiser
were appraising that property. Moreover, appraisals seek to establish the
amount a typically motivated buyer would pay a typically motivated seller and,
in certain cases, may have taken into consideration the purchase price paid by
the borrower. That amount could be significantly higher than the amount
obtained from the sale of a mortgaged property under a distress or liquidation
sale. We cannot assure you that the information set forth in this prospectus
supplement regarding appraised values or loan-to-value ratios accurately
reflects past, present or future market values of the mortgaged properties.
YOUR LACK OF CONTROL OVER TRUST FUND CAN CREATE RISKS
You and other certificateholders generally do not have a right to vote and
do not have the right to make decisions with respect to the administration of
the trust. See "Servicing of the Mortgage Loans--General" in this prospectus
supplement. Those decisions are generally made, subject to the express terms of
the pooling and servicing agreement, by the master servicer, the trustee or the
special servicer, as applicable. Any decision made by one of those parties in
respect of the trust, even if that decision is determined to be in your best
interests by that party, may be contrary to the decision that you or other
certificateholders would have made and may negatively affect your interests.
DIRECTING CERTIFICATEHOLDER MAY DIRECT SPECIAL SERVICER ACTIONS
In connection with the servicing of the specially serviced mortgage loans,
the special servicer may, at the direction of the directing certificateholder,
take actions with respect to the specially serviced mortgage loans that could
adversely affect the holders of some or all of the classes of offered
certificates. The directing certificateholder will be controlled by the
controlling class certificateholders, which may have interests in conflict with
those of the certificateholders of the classes of offered
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certificates. As a result, it is possible that the directing certificateholder
may direct the special servicer to take actions which conflict with the
interests of certain classes of the offered certificates. See "Servicing of the
Mortgage Loans--General" in this prospectus supplement.
BANKRUPTCY PROCEEDINGS ENTAILS CERTAIN RISKS
Under federal bankruptcy law, the filing of a petition in bankruptcy by or
against a borrower will stay the sale of the mortgaged property owned by that
borrower, as well as the commencement or continuation of a foreclosure action.
In addition, if a court determines that the value of the mortgaged property is
less than the principal balance of the mortgage loan it secures, the court may
prevent a lender from foreclosing on the mortgaged property (subject to certain
protections available to the lender). As part of a restructuring plan, a court
also may reduce the amount of secured indebtedness to the then-current value of
the mortgaged property, which would make the lender a general unsecured
creditor for the difference between the then-current value and the amount of
its outstanding mortgage indebtedness. A bankruptcy court also may: (1) grant a
debtor a reasonable time to cure a payment default on a mortgage loan; (2)
reduce periodic payments due under a mortgage loan; (3) change the rate of
interest due on a mortgage loan; or (4) otherwise alter the mortgage loan's
repayment schedule.
Moreover, the filing of a petition in bankruptcy by, or on behalf of, a
junior lienholder may stay the senior lienholder from taking action to
foreclose on the junior lien. Additionally, the borrower's trustee or the
borrower, as debtor-in-possession, has certain special powers to avoid,
subordinate or disallow debts. In certain circumstances, the claims of the
trustee may be subordinated to financing obtained by a debtor-in-possession
subsequent to its bankruptcy.
Under federal bankruptcy law, the lender will be stayed from enforcing a
borrower's assignment of rents and leases. Federal bankruptcy law also may
interfere with the master servicer's or special servicer's ability to enforce
lockbox requirements. The legal proceedings necessary to resolve these issues
can be time consuming and costly and may significantly delay or diminish the
receipt of rents. Rents also may escape an assignment to the extent they are
used by the borrower to maintain the mortgaged property or for other court
authorized expenses.
As a result of the foregoing, the trustee's recovery with respect to
borrowers in bankruptcy proceedings may be significantly delayed, and the
aggregate amount ultimately collected may be substantially less than the amount
owed.
RISKS RELATING TO PREPAYMENTS AND REPURCHASES
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 both voluntary prepayments, if
permitted, and involuntary prepayments, such as prepayments resulting from
casualty or condemnation, defaults and liquidations or repurchases upon
breaches of representations and warranties. BECAUSE THE NOTIONAL AMOUNT OF THE
CLASS X CERTIFICATES IS BASED UPON THE OUTSTANDING PRINCIPAL BALANCE OF ALL
OTHER CLASSES OF CERTIFICATES (OTHER THAN THE RESIDUAL CERTIFICATES), THE YIELD
TO MATURITY ON THE CLASS X CERTIFICATES WILL BE EXTREMELY SENSITIVE TO THE RATE
AND TIMING OF PREPAYMENTS OF PRINCIPAL.
The yield on the Class A-2, Class X, Class B, Class C, Class D, Class E
and Class F Certificates could also be adversely affected if mortgage loans
with higher interest rates pay faster than the mortgage loans with lower
interest rates, since those classes bear interest at a rate limited by the
weighted average net mortgage rate of the mortgage loans. The pass-through
rates on the Class A-2, Class B, Class C and Class D Certificates may be
limited by the weighted average of the net interest rates on the mortgage loans
even if principal prepayments do not occur.
The investment performance of your certificates may vary materially and
adversely from your expectations if the actual rate of prepayment on the
mortgage loans is higher or lower than you anticipate.
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Any changes in the weighted average lives of your certificates may
adversely affect your yield. Prepayments resulting in a shortening of weighted
averages of your certificates may be made at a time of low interest rates when
you may be unable to reinvest the resulting payment of principal on your
certificates at a rate comparable to the effective yield anticipated by you in
making your investment in the certificates, while delays and extensions
resulting in a lengthening of those weighted average lives may occur at a time
of high interest rates when you may have been able to reinvest principal
payments that would otherwise have been received by you at higher rates.
Voluntary prepayments, if permitted, generally require payment of a
prepayment premium or yield maintenance charge unless the loan is less than 90
to 180 days from the stated maturity date or anticipated prepayment date or
after the anticipated prepayment date, as the case may be. The terms of 3
mortgage loans permit the related borrower to prepay the mortgage loans without
the payment of a yield maintenance change or prepayment premium if the mortgage
loan is within 5 years of the stated maturity date. Additionally, the terms of
2 mortgage loans provide for the early prepayment of the related mortgage loans
upon the occurence of certain events described under "Description of the
Mortgage Pool--Certain Terms and Conditions of the Mortgage Loans--Prepayment
Provisions" in this prospectus supplement. In any case, we cannot assure you
that the related borrowers will refrain from prepaying their mortgage loans due
to the existence of prepayment premiums or yield maintenance charges. Also, we
cannot assure you that involuntary prepayments will not occur.
The rate at which voluntary prepayments occur on the mortgage loans will
be affected by a variety of factors, including:
o the terms of the mortgage loans;
o the length of any prepayment lockout period;
o the level of prevailing interest rates;
o the availability of mortgage credit;
o the applicable yield maintenance charges or prepayment premiums;
o the master servicer's or special servicer's ability to enforce those
charges or premiums;
o the occurrence of casualties or natural disasters; and
o economic, demographic, tax, legal or other factors.
No yield maintenance charge or prepayment premium will be required for
prepayments in connection with a casualty or condemnation unless, in the case
of most of the mortgage loans, an event of default has occurred and is
continuing. Certain shortfalls in interest as a result of prepayments may
reduce the amount distributable in respect of interest to each class of
certificates (other than the Class X, Class LR and Class R certificates) on a
pro rata basis to the extent such shortfalls are not offset by the master
servicer's payment of compensating interest. In addition, if a mortgage loan
seller repurchases any mortgage from the trust due to breaches of
representations or warranties, the repurchase price paid will be passed through
to the holders of the certificates with the same effect as if the mortgage loan
had been prepaid in part or in full, except that no prepayment premium or yield
maintenance charge would be payable. A repurchase may adversely affect the
yield to maturity on your certificates.
RISKS RELATING TO ENFORCEABILITY OF PREPAYMENT PREMIUMS
Provisions requiring yield maintenance charges or prepayment premiums may
not be enforceable in some states and under federal bankruptcy law. Those
provisions also may be interpreted as constituting the collection of interest
for usury purposes. Accordingly, we cannot assure you that the obligation to
pay a yield maintenance charge or prepayment premium will be enforceable. Also,
we cannot assure you that foreclosure proceeds will be sufficient to pay an
enforceable yield maintenance charge or prepayment premium.
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Additionally, although the collateral substitution provisions related to
defeasance do not have the same effect on the certificateholders as prepayment,
we cannot assure you that a court would not interpret those provisions as
requiring a yield maintenance charge or prepayment premium. In certain
jurisdictions, those collateral substitution provisions might be deemed
unenforceable under applicable law or usurious.
RISKS RELATING TO BORROWER DEFAULT
The rate and timing of delinquencies or defaults on the mortgage loans
will affect:
o the aggregate amount of distributions on the offered certificates;
o their yield to maturity;
o the rate of principal payments; and
o their weighted average life.
If losses on the mortgage loans exceed the aggregate principal amount of
the classes of certificates subordinated to a particular class, that class will
suffer a loss equal to the full amount of the excess (up to the outstanding
principal amount of that class).
If you calculate your anticipated yield based on assumed rates of defaults
and losses that are lower than the default rate and losses actually experienced
and those losses are allocated to your certificates, your actual yield to
maturity will be lower than the assumed yield. Under certain extreme scenarios,
that yield could be negative. In general, the earlier a loss borne by you on
your certificates occurs, the greater the effect on your yield to maturity.
Even if losses on the mortgage loans are not borne by your certificates,
those losses may affect the weighted average life and yield to maturity of your
certificates. This may be so, because those losses lead to your certificates
having a higher percentage ownership interest in the trust and related
distributions of principal payments on the mortgage loans than would otherwise
have been the case. The effect on the weighted average life and yield to
maturity of your certificates will depend upon the characteristics of the
remaining mortgage loans.
Additionally, delinquencies and defaults on the mortgage loans may
significantly delay the receipt of distributions by you on your certificates,
unless advances are made to cover delinquent payments or the subordination of
another class of certificates fully offsets the effects of any delinquency or
default.
RISKS RELATING TO CERTAIN PAYMENTS
To the extent described in this prospectus supplement, the master
servicer, the special servicer or the trustee, as applicable, will be entitled
to receive interest on unreimbursed advances. This interest will generally
accrue from the date on which the related advance is made or the related
expense is incurred through the date of reimbursement. In addition, under
certain circumstances, including delinquencies in the payment of principal and
interest, a mortgage loan will be specially serviced and the special servicer
is entitled to compensation for special servicing activities. The right to
receive interest on advances or special servicing compensation is senior to the
rights of certificateholders to receive distributions on the offered
certificates. The payment of interest on advances and the payment of
compensation to the special servicer may lead to shortfalls in amounts
otherwise distributable on your certificates.
RISKS OF LIMITED LIQUIDITY AND MARKET VALUE
Your certificates will not be listed on any national securities exchange
or traded on any automated quotation systems of any registered securities
association such as NASDAQ, and there is currently no secondary market for your
certificates. While the underwriters currently intend to make a secondary
market in the offered certificates, they are not obligated to do so.
Accordingly, you may not have an active or liquid secondary market for your
certificates. Lack of liquidity could result in a substantial decrease in the
market value of your certificates. The market value of your certificates also
may be affected by many other factors, including the then-prevailing interest
rates.
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DIFFERENT TIMING OF MORTGAGE LOAN AMORTIZATION POSES CERTAIN RISKS
As principal payments or prepayments are made on a mortgage loan that is
part of a pool of mortgage loans, the pool will be subject to more concentrated
risks with respect to the diversity of mortgaged properties, types of mortgaged
properties and number of borrowers, as described above. Classes that have a
later sequential designation or a lower payment priority are more likely to be
exposed to this concentration risk than are classes with an earlier sequential
designation or a higher priority. This is so because principal on the offered
certificates is generally payable in sequential order, and no class entitled to
distribution of principal generally receives principal until the principal
amount of the preceding class or classes entitled to receive principal have
been reduced to zero.
SUBORDINATION OF SUBORDINATE OFFERED CERTIFICATES
As described in this prospectus supplement, unless your certificates are
Class A-1, Class A-2 or Class X certificates, your rights to receive
distributions of amounts collected or advanced on or in respect of the mortgage
loans (other than excess interest) will be subordinated to those of the holders
of the offered certificates with an earlier alphabetical designation.
See "Description of the Certificates--Distributions--Priority" and
"Description of the Certificates--Subordination; Allocation of Collateral
Support Deficit" in this prospectus supplement.
ENVIRONMENTAL RISKS RELATING TO THE MORTGAGED PROPERTIES
All of the mortgaged properties have been subject to recent environmental
site assessments, including Phase I site assessments or updates of previously
performed Phase I site assessments. In some cases, Phase II site assessments
also have been performed. Although those assessments involved site visits and
other types of review, we cannot assure you that all environmental conditions
and risks were identified.
None of the environmental assessments revealed any material adverse
environmental condition or circumstance at any mortgaged property except for
those which will be remediated by the cut-off date, for which an escrow for the
remediation was established or for which the consultant recommended an
operations and maintenance plan or periodic monitoring of nearby properties,
which recommendations are consistent with industrywide practices. Those
conditions could, for example, include the presence of asbestos containing
materials, leaks from storage tanks and on-site spills. Corrective action, as
required by the regulatory agencies, has been undertaken and, in some cases,
the related borrowers have made deposits into environmental reserve accounts.
However, we cannot assure you that the reserve amounts will be sufficient to
remediate the environmental conditions or that all environmental conditions
have been identified.
See "Servicing of the Mortgage Loans--Realization Upon Defaulted Mortgage
Loans" in this prospectus supplement and "Risk Factors--Environmental Risks"
and "Certain Legal Aspects of Mortgage Loans--Environmental Risks" in the
prospectus.
TAX CONSIDERATIONS RELATING TO FORECLOSURE
If the trust acquires a mortgaged property pursuant to a foreclosure or
deed in lieu of foreclosure, the special servicer must retain an independent
contractor to operate the property. Any net income from the operation of the
property (other than qualifying "rents from real property"), or any rental
income based on the net profits of a tenant or sub-tenant or allocable to a
non-customary service, will subject the Lower-Tier REMIC to federal tax (and
possibly state or local tax) on that income at the highest marginal corporate
tax rate (currently 35%). In that event, the net proceeds available for
distribution to certificateholders will be reduced. The special servicer may
permit the Lower-Tier REMIC to earn "net income from foreclosure property" that
is subject to tax if it determines that the net after-tax benefit to
certificateholders is greater than under another method of operating or net
leasing the mortgaged property.
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RISKS ASSOCIATED WITH ONE ACTION RULES
Several states (including California) have laws that prohibit more than
one "judicial action" to enforce a mortgage obligation, and some courts have
construed the term "judicial action" broadly. Accordingly, the special servicer
is required to obtain advice of counsel prior to enforcing any of the trust
fund's rights under any of the mortgage loans that include mortgaged properties
where the rule could be applicable. In the case of either a cross-collateralized
and cross-defaulted mortgage loan or a multi-property mortgage loan which is
secured by mortgaged properties located in multiple states, the special servicer
may be required to foreclose first on properties located in states where "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.
PROPERTY INSURANCE
All of the mortgaged properties are covered by property insurance.
However, the mortgaged properties may suffer casualty losses due to risks which
were not covered by insurance or for which insurance coverage is inadequate. In
addition, approximately 33.40% of the mortgaged properties, by aggregate
principal balance of the pool of mortgage loans as of the cut-off date, are
located in California, Texas and Florida, states that have historically been at
greater risk regarding acts of nature (such as earthquakes, floods and
hurricanes) than other states. We cannot assure you that borrowers will be able
to maintain adequate insurance. Moreover, if reconstruction or any major
repairs are required, changes in laws may materially affect the borrower's
ability to effect any reconstruction or major repairs or may materially
increase the costs of the reconstruction or repairs.
As a result of any of the foregoing, the amount available to make
distributions on your certificates could be reduced.
ZONING COMPLIANCE AND USE RESTRICTIONS
Due to changes in zoning requirements after certain of the mortgaged
properties were constructed or requested variances or special permits, those
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
existing or new law; however, the borrower may not be able to rebuild the
premises "as is" in the event of a substantial casualty loss. This may
adversely affect the cash flow of the property following the loss. If a
substantial casualty were to occur, we cannot assure you that insurance
proceeds would be available to pay the mortgage loan in full. In addition, if
the property were repaired or restored in conformity with the current law, the
value of the property or the revenue-producing potential of the property may
not be equal to that before the casualty.
In addition, certain of the mortgaged properties which are non-conforming
may not be "permitted non-conforming" uses. The failure of a mortgaged property
to comply with zoning laws or to be a "permitted non-conforming" use may
adversely affect market value of the mortgaged property or the borrower's
ability to continue to use it in the manner it is currently being used.
In addition, certain of the mortgaged properties are subject to certain
use restrictions imposed pursuant to reciprocal easement agreements or
operating agreements. Such use restrictions include, for example, limitations
on the character of the improvements or the properties, limitations affecting
noise and parking requirements, among other things, and limitations on the
borrowers' right to operate certain types of facilities within a prescribed
radius. These limitations could adversely affect the ability of the related
borrower to lease the mortgaged property on favorable terms, thus adversely
affecting the borrower's ability to fulfill its obligations under the related
mortgage loan.
RISKS RELATING TO COSTS OF COMPLIANCE WITH APPLICABLE LAWS AND REGULATIONS
A borrower may be required to incur costs to comply with various existing
and future federal, state or local laws and regulations applicable to the
related mortgaged property, for example, zoning
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laws and the Americans with Disabilities Act of 1990, as amended, which
requires all public accommodations to meet certain federal requirements related
to access and use by disabled persons. See "Certain Legal Aspects of Mortgage
Loans--Americans with Disabilities Act" in the prospectus. The expenditure of
these costs or the imposition of injunctive relief, penalties or fines in
connection with the borrower's noncompliance could negatively impact the
borrower's cash flow and, consequently, its ability to pay its mortgage loan.
NO REUNDERWRITING OF THE MORTGAGE LOANS
We have not reunderwritten the mortgage loans. Instead, we have relied on
the representations and warranties made by the mortgage loan sellers, and the
applicable mortgage loan seller's obligation to repurchase or cure a mortgage
loan in the event that a representation or warranty was not true when made.
These representations and warranties do not cover all of the matters that we
would review in underwriting a mortgage loan and you should not view them as a
substitute for reunderwriting the mortgage loans. If we had reunderwritten the
mortgage loans, it is possible that the reunderwriting process may have
revealed problems with a mortgage loan not covered by a representation or
warranty. In addition, we can give no assurance that the applicable mortgage
loan seller will be able to repurchase a mortgage loan if a representation or
warranty has been breached. See "Description of the Mortgage
Pool--Representations and Warranties; Repurchases and Substitutions" in this
prospectus supplement.
LITIGATION
There may be pending or threatened legal proceedings against the borrowers
and managers of the mortgaged properties and their respective affiliates
arising out of the ordinary business of the borrowers, managers and affiliates.
We cannot assure you that litigation will not have a material adverse effect on
your investment.
BOOK-ENTRY REGISTRATION
Your certificates will be initially represented by one or more
certificates registered in the name of Cede & Co., as the nominee for DTC, and
will not be registered in your name. As a result, you will not be recognized as
a certificateholder, or holder of record of your certificates. See "Risk
Factors--Book-Entry System for Certain Classes May Decrease Liquidity and Delay
Payment" in the prospectus for a discussion of important considerations
relating to not being a certificateholder of record.
RISKS ASSOCIATED WITH YEAR 2000 COMPLIANCE
We are aware of the issues associated with the programming code in
existing computer systems as the millennium (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 this information could generate erroneous data or cause a system to
fail. You could be adversely affected if the computer systems of the master
servicer or any special servicer are not fully year 2000 compliant and that
non-compliance disrupts the collection or distribution of receipts on the
related mortgage loans.
We have been advised by each of the master servicer, the special servicer,
the trustee and the paying agent that they are committed either to (1)
implement, or cause to be implemented, modifications to their respective
existing systems to the extent required to cause them to be year 2000 compliant
or (2) acquire computer systems that are year 2000 compliant in each case prior
to August 31, 1999. However, we have not made any independent investigation of
the computer systems of the master servicer, the special servicer, the trustee
or the paying agent. In the event that computer problems arise out of a failure
of those efforts to be completed on time, or in the event that the
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computer systems of the master servicer, the special servicer, the trustee or
the paying agent are not fully year 2000 compliant, the resulting disruptions
in the collection or distribution of receipts or the mortgage loans could
materially and adversely affect your investment.
With respect to the year 2000 problem, DTC has informed members of the
financial community that it has developed and is implementing a program so that
its systems, as they relate to the timely payment of distributions, including
principal and interest payments, to holders of certificates, 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 time frames.
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 you will hold your 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:
o impress upon them the importance of those services being year 2000
compliant; and
o determine the extent of their efforts for year 2000 remediation, and,
as appropriate, testing, of their services.
In addition, DTC has stated that it is in the process of developing those
contingency plans as it deems appropriate.
If problems associated with the year 2000 problem were to occur with
respect to DTC and the services described above, you could experience delays or
shortfalls in the payments due on your certificates.
PROPERTY MANAGERS MAY EXPERIENCE CONFLICTS OF INTEREST IN MANAGING MULTIPLE
PROPERTIES
The managers of the mortgaged properties and the borrowers may experience
conflicts of interest in the management and/or ownership of the mortgaged
properties because:
o a substantial number of the mortgaged properties are managed by
property managers affiliated with the respective borrowers;
o these property managers also may manage and/or franchise additional
properties, including properties that may compete with the mortgaged
properties; and
o affiliates of the managers and/or the borrowers, or the managers
and/or the borrowers themselves, also may own other properties,
including competing properties.
OTHER RISKS
See "Risk Factors" in the prospectus for a description of certain other
risks and special considerations that may be applicable to your certificates.
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DESCRIPTION OF THE MORTGAGE POOL
GENERAL
All percentages of the mortgage loans and mortgaged properties, or of any
specified group of mortgage loans and mortgaged properties, referred to in this
prospectus supplement without further description are approximate percentages
by Initial Pool Balance. The trust will consist primarily of 205 mortgage loans
secured by 137 commercial and 80 multifamily mortgaged properties with an
aggregate principal balance of approximately $1,397,640,242 (the "Initial Pool
Balance") as of the cut-off date. The "Cut-Off Date Balance" of any mortgage
loan will be the unpaid principal balance of that mortgage loan as of the
cut-off date, after application of all payments due on or before that date,
whether or not received. Each mortgage loan is evidenced by a promissory note
(a "Mortgage Note") and secured by a mortgage, deed of trust or other similar
security instrument (a "Mortgage") that creates a first mortgage lien:
(1) on a fee simple estate in one or more commercial or multifamily
properties; or
(2) with respect to 3 mortgage loans, representing approximately 1.40%
of the Initial Pool Balance, the fee simple estate in all or a portion of
the commercial property and a leasehold estate in all or a portion thereof;
or
(3) with respect to 3 mortgage loans, representing approximately 0.73%
of the Initial Pool Balance, a leasehold estate in a commercial property
(each of clauses (1) through (3), a "Mortgaged Property").
The term of any ground lease securing any mortgage loan that is not also
secured by the related fee interest, extends at least 10 years beyond the
stated maturity of that mortgage loan (including extensions at the lender's
option).
On or prior to August 26, 1999 (the "Closing Date"), Chase Commercial
Mortgage Securities Corp. (the "Depositor") will acquire the mortgage loans
from The Chase Manhattan Bank and First Union National Bank (the "Mortgage Loan
Sellers") pursuant to mortgage loan purchase agreements, each dated as of the
cut-off date (the "Purchase Agreements"), between the Depositor and the
applicable Mortgage Loan Seller, and will then assign its interests in the
mortgage loans, without recourse, to State Street Bank and Trust Company, as
trustee (the "Trustee") for the benefit of the holders of the trust
certificates (the "Certificateholders"). See "The Mortgage Loan Sellers" below
and "Description of the Pooling Agreements--Assignment of Mortgage Loans;
Repurchases" in the prospectus. For purposes of the prospectus, each of the
Mortgage Loan Sellers constitutes a Mortgage Asset Seller.
The mortgage loans were originated in the period between January 1998 and
August 1999.
The mortgage loans are not insured or guaranteed by the Mortgage Loan
Sellers or any other person or entity. You should consider all of the mortgage
loans to be nonrecourse loans as to which recourse in the case of default will
be limited to the specific property and other assets, if any, pledged to secure
a mortgage loan.
21 of the mortgage loans, representing approximately 4.64% of the Initial
Pool Balance, all of which are credit lease loans, have a balloon payment which
is insured (an "Insured Balloon Payment") through a related non-cancelable
Residual Value Insurance Policy obtained to cover the balloon payment (each a
"Residual Value Insurance Policy"). With respect to these mortgage loans, the
related tenant is obligated to make a rent payment corresponding to the balloon
payment (a "Tenant Balloon Payment"). If a default occurs under the balloon
loans with respect to an Insured Balloon Payment and no recovery is available
from the related borrower, the Tenant or any Guarantor, the Special Servicer
will be entitled to recover in full the amount of the balloon payment due under
the mortgage loan through the Residual Value Insurance Policy after the
maturity date for the mortgage loan. In the event the insurer who issued a
Residual Value Insurance Policy defaults on an Insured Balloon Payment, the
Special Servicer will still be able to assert whatever other remedies it has
with respect to the related Mortgaged Property and the Residual Value Insurer.
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Residual Value Insurance Policy. With respect to each mortgage loan which
has an Insured Balloon Payment, the Trustee will be named as the loss-payee
under a Residual Value Insurance Policy. The residual value insurance policy
will be or has been issued by either R.V.I. America Insurance Company which, as
of July 1, 1999, had a rating of "A" by S&P and "A" by Fitch or Financial
Structures, Limited (collectively with R.V.I. America Insurance Company, the
"Residual Value Insurers"), which possesses a cut-through endorsement issued by
Royal Indemnity Company. Royal Indemnity Company possesses a rating of "AA--"
by S&P and is not publicly rated by Fitch. Each Residual Value Insurance Policy
is subject to certain limited exclusions. The Residual Value Insurer under each
Residual Value Insurance Policy is not required to pay amounts due under the
mortgage loan other than the related balloon payment and, subject to certain
limitations set forth in the Residual Value Insurance Policy, accrued interest,
and therefore is not required to pay any Prepayment Premium or interest due
thereunder or any amounts the related borrower may be obligated to pay
thereunder as reimbursement for outstanding P&I Advances.
The mortgage loans generally prohibit the borrower from incurring any
additional debt secured by the mortgaged property without the consent of the
lender. With respect to 1 mortgage loan, representing approximately 0.18% of
the Initial Pool Balance, the borrower has debt secured by the related
mortgaged property (provided that such debt is not required to be repaid unless
the borrower breaches certain covenants as to use), with respect to 11 mortgage
loans, representing approximately 12.08% of the Initial Pool Balance, the
related borrower has unsecured debt payable to an affiliate of the related
borrower, and with respect to 2 mortgage loans, representing approximately
3.41% of the Initial Pool Balance, members or partners of the borrower have
obtained a loan secured by their equity interests in such borrower, in addition
to the debt owed under the mortgage loan. Also, substantially all of the
mortgage loans permit the related borrower to incur indebtedness in the
ordinary course of business that is not secured by the related mortgaged
property. The terms of 1 mortgage loan, representing approximately 0.08% of the
Initial Pool Balance, do not restrict the related borrower from incurring
additional indebtedness secured by the related Mortgaged Property. The terms of
6 mortgage loans, representing approximately 13.95% of the Initial Pool
Balance, do not restrict the related borrower from incurring additional
unsecured debt.
Certain risks relating to additional debt are described in "Risk
Factors--Ability to Effect Other Borrowings Entails Risk" in this prospectus
supplement and "Certain Legal Aspects of Mortgage Loans--Subordinate Financing"
in the prospectus.
SIGNIFICANT BORROWER CONCENTRATION
Set forth below is a description of the only borrower concentration which
exceeds 5% of the Initial Pool Balance.
AERC Borrower Concentration. The Associated Estates Realty Corporation
loans (the "AERC Loans") (Loan No.s 35, 38, 45, 57, 65, 116, 122, 126, 127, 140
and 198 on Annex A to this prospectus supplement) consist of 11 mortgage loans,
representing approximately 9.79% of the Initial Pool Balance, with a Cut-off
Date Balance of approximately $136,829,148. All of the AERC Loans are managed
by Associated Estates Realty Corporation, an affiliate of each borrower, and
are secured by 11 Mortgaged Properties which are located in 5 states.
Associated Estates Realty Corporation, a NYSE listed company, manages over 145
multifamily properties in the United States.
The interest rates on the AERC Loans ranges from 7.47% to 7.94% per annum.
The weighted average interest rate of the AERC Loan is 7.60%. The term to
maturity for the AERC Loans range from 8 to 12 years, and the weighted average
term to maturity is 10.0 years. Each AERC Loan has a 30-year amortization term.
The AERC Loans are locked out from voluntary prepayment for the lesser of
four years from origination or 2 years from the Closing Date, and thereafter
permit defeasance until 3 months prior to their related maturity dates, at
which time they may be freely prepaid. See "Certain Terms and Conditions of the
Mortgage Loans--Defeasance; Collateral Substitution" in this prospectus
supplement.
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SIGNIFICANT MORTGAGE LOANS
Set forth below is a description of the only mortgage loan with an
outstanding principal balance as of the cut-off date which exceeds 5% of the
Initial Pool Balance.
Rego Park Plaza. The mortgage loan identified as Loan Number 139 on Annex
A hereto (the "Rego Park Plaza Loan") will have a Cut-off Date Balance of
$82,000,000, representing approximately 5.87% of the Initial Pool Balance. The
Rego Park Plaza Loan is secured by a first lien mortgage on a fee estate known
as Rego Park Plaza, a retail property situated on approximately 5.88 acres of
land in Rego Park, New York. The Rego Park Plaza contains a single three story
building constructed in 1952 and renovated in 1997, with approximately 343,049
square feet of net leaseable area. As indicated in Annex A to this prospectus
supplement, the Rego Park Plaza Loan will have an LTV Ratio as of the cut-off
date of approximately 65.6% and a DSCR as of the cut-off date of approximately
1.58x. As of May 1999, the Mortgaged Property securing the Rego Park Plaza Loan
had an occupancy rate of approximately 100%.
As indicated in Annex A to this prospectus supplement, the interest rate
on the Rego Park Plaza Loan is 7.25% with a five year interest-only period
followed by scheduled principal and interest payments based on a 30-year
amortization schedule. The stated maturity date of the Rego Park Plaza Loan is
June 10, 2009. The Rego Park Plaza Loan provides for defeasance as described in
"--Defeasance; Collateral Substitution" below, and permits the related borrower
to prepay the Rego Park Plaza Loan during the last 3 months prior to its
maturity date without the payment of any Yield Maintenance Charge or Prepayment
Premium.
APD LOANS
7 of the mortgage loans (the "APD Loans"), representing approximately
2.70% of the Initial Pool Balance, provide that, if after a certain date (each,
an "Anticipated Prepayment Date"), the related borrower has not prepaid the APD
Loan in full, any principal outstanding on that date will accrue interest at an
increased interest rate (the "Revised Rate") rather than the stated Mortgage
Rate (the "Initial Rate"). Generally, each Anticipated Prepayment Date is not
more than 120 months after the first due date for the related APD Loan. The
Revised Rate for any APD Loan will generally be equal to the sum of (x) the
Initial Rate plus (y) 1% or, with respect to 3 mortgage loans, representing
approximately 0.85% of the Initial Pool Balance, the greater of (x) the Initial
Rate plus 2% per annum or (y) a base treasury rate plus 2% per annum. After the
Anticipated Prepayment Date, each APD Loan further requires that all cash flow
available from the related Mortgaged Property after payment of the constant
periodic payment required under the terms of the related loan documents and all
escrows and expenses required under the related loan documents will be used to
accelerate amortization of principal on the related APD Loan. While interest at
the Initial Rate continues to accrue and be payable on a current basis on an
APD Loan after the Anticipated Prepayment Date, the payment of interest at the
excess of the Revised Rate over the Initial Rate for the related APD Loan will
be deferred and will be paid, with interest, only after the outstanding
principal balance of the APD Loan has been paid in full. The foregoing
features, to the extent applicable, are designed to increase the likelihood
that the APD Loan will be prepaid by the borrower on or about the applicable
Anticipated Prepayment Date.
CREDIT LEASE LOANS
31 mortgage loans, representing approximately 6.30% of the Initial Pool
Balance, are credit lease loans insofar as they are secured by Mortgages on
Mortgaged Properties that are, in each case, subject to a lease (a "Credit
Lease") to a tenant (each a "Tenant") which possesses (or the parent of which,
or other affiliate of which guarantees the Credit Lease obligation, possesses)
the rating indicated in the table below. Scheduled monthly rent payments (the
"Monthly Rental Payments") under the Credit Leases are generally determined in
underwriting to be sufficient to pay in full and on a timely basis all interest
and principal scheduled to be paid with respect to the related credit lease
loans.
The Credit Leases generally provide that the Tenant is responsible for all
costs and expenses incurred in connection with the maintenance and operation of
the related Mortgaged Property. In the
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event of a casualty or condemnation of a material portion of the related
Mortgaged Property, either (a) the Credit Lease provides that the Tenant is
obligated to continue making payments, and/or the Tenant must make an offer to
purchase the applicable Mortgaged Property for an amount not less than the
unpaid principal balance plus accrued interest on the related credit lease loan
or (b) the Trustee on behalf of the Certificateholders will have the benefit of
certain non-cancelable credit lease enhancement insurance policies (the "Lease
Enhancement Policies") obtained to cover certain casualty and/or condemnation
risks.
The payment of interest and principal on credit lease loans is dependent
principally on the payment by each Tenant or guarantor of the Tenant's Credit
Lease (the "Guarantor"), if any, of Monthly Rental Payments and other payments
due under the terms of its Credit Lease. Each Credit Lease has a primary lease
term that expires on or after the scheduled final maturity date of the related
credit lease loan. The credit lease loans are scheduled to be fully repaid from
(a) Monthly Rental Payments made over the primary lease term of the related
Credit Lease or (b) with respect to credit lease loans which are balloon loans,
Monthly Rental Payments and the related balloon payments (which balloon
payments, in the case of credit lease loans that are guaranteed by a Residual
Value Insurance Policy, may be repaid from amounts paid by the related insurer
pursuant to such policies). Certain of the Credit Leases give the Tenant the
right to extend the term of the Credit Lease by one or more renewal periods
after the end of the primary lease term.
The amount of the Monthly Rental Payments payable by each Tenant (plus, in
the case of certain mortgage loans, the amount in the debt service reserve
account, which will be drawn upon through the date of the termination of any
rent credits) is equal to or greater than the scheduled payment of all
principal, interest and other amounts due each month on the related credit
lease loan. In the case of credit lease loans with debt service reserve
accounts, withdrawals of funds on deposit in the debt service reserve account
will be used to supplement Monthly Rental Payments in an amount necessary to
fully amortize the credit lease loans.
Each credit lease loan which is a balloon loan is insured to the extent of
the related balloon payment through a Residual Value Insurance Policy. Pursuant
to the terms of those policies, if a default occurs under the credit lease
loans and no recovery is available from the related mortgagor, the Tenant or
any Guarantor, the Special Servicer will be entitled to recover in full the
amount of the balloon payment due under the credit lease loan after the
maturity date for the credit lease loan.
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Set forth in the table below for each credit lease loan is the name of the
Tenant, the Cut-Off Date Balance of the related credit lease loan, the
Guarantor, if any, the rating of the Tenant or Guarantor and the Credit Lease
type.
CREDIT LEASE LOAN TABLE
<TABLE>
<CAPTION>
CUT-OFF S&P MOODY'S LEASE
LOAN GUARANTOR DATE RATING RATING TYPE
NO. PROPERTY NAME /TENANT PROPERTY TYPE BALANCE (1) (1) CODE (2)
- ------ -------------------------------- -------------------- ------------------- ------------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
46 CVS Lynchburg Wards CVS Corp. Drug Store $2,276,913 A A3 NN
& Fort
47 CVS Madison Heights CVS Corp. Drug Store $2,180,541 A A3 NN
48 CVS Webster Ridge CVS Corp. Drug Store $1,750,099 A A3 NN
49 CVS Worcester Grafton CVS Corp. Drug Store $1,579,406 A A3 NN
51 Eagle-Joliet Eagle Food Corp. Grocery Store $3,172,803 B+ B2 NNN
53 Eckerd South Plainfield Eckerd Corporation Drug Store $3,301,409 (3) Baa2 NN
87 IHOP Chatsworth IHOP Corp. Restaurant $1,301,296 (3) (3) NNN
Devonshire
88 IHOP San Antonio Loop 1604 IHOP Corp. Restaurant $1,287,004 (3) (3) NNN
107 Motel 6 1124 Baton Rouge Accor SA Hospitality $5,179,882 BBB (3) B
108 Motel 6 1179 Moline Accor SA Hospitality $2,447,838 BBB (3) B
109 Motel 6 1252 Knoxville Accor SA Hospitality $2,035,281 BBB (3) B
110 Motel 6 161 Omaha Accor SA Hospitality $2,392,831 BBB (3) B
111 Motel 6 212 McAllen Accor SA Hospitality $3,520,486 BBB (3) B
112 Motel 6 234 Murfreesboro Accor SA Hospitality $2,081,121 BBB (3) B
113 Motel 6 261 Grand Junction Accor SA Hospitality $3,768,021 BBB (3) B
114 Motel 6 Dallas Grand Accor SA Hospitality $3,052,922 BBB (3) B
Prairie
115 Motel 6 551 Houston Clark Lane Accor SA Hospitality $3,868,868 BBB (3) B
Webster
132 Q- The Sports Club Q Club Inc. Health & Fitness $6,119,172 (3) (3) B
141 Rite Aid Banning Rite Aid Corp. Drug Store $4,832,639 BBB Baa1 B
142 Rite Aid Blythe Rite Aid Corp. Drug Store $4,832,639 BBB Baa1 B
143 Rite Aid California City Rite Aid Corp. Drug Store $2,276,173 BBB Baa1 B
144 Rite Aid Chardon Rite Aid Corp. Drug Store $2,567,186 BBB Baa1 B
145 Rite Aid Danville Riverside Rite Aid Corp. Drug Store $2,236,612 BBB Baa1 NN
146 Rite Aid Fremont Rite Aid Corp. Drug Store $2,054,533 BBB Baa1 B
147 Rite Aid Oakley Rite Aid Corp. Drug Store $5,074,271 BBB Baa1 B
148 Rite Aid Pittsfield Rite Aid Corp. Drug Store $2,242,343 BBB Baa1 B
149 Rite Aid, Baltimore Street, Rite Aid Corp. Drug Store $2,798,079 BBB Baa1 B
Baltimore
150 Rite Aid, Gibbstown Rite Aid Corp. Drug Store $2,464,645 BBB Baa1 B
151 Rite Aid, New Oxford Rite Aid Corp. Drug Store $1,971,716 BBB Baa1 B
166 Southland Gumpert Southland Corp. Convenience Store $1,359,348 BBB- Ba1 NN
Ft. Meyers
172 Stop & Shop Grafton Royal Ahold Grocery Store $1,978,266 A A3 NN
Worchester
</TABLE>
- ----------
(1) Unless otherwise indicated, the ratings were the highest assigned to the
applicable Tenant or Guarantor, as applicable, by S&P and Moody's.
(2) "NNN" means triple net lease; "NN" means double net lease, "B" means
bond-type lease.
(3) Not publicly rated.
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Generally, each Credit Lease provides that the related Tenant is
responsible for all real property taxes and assessments levied or assessed
against the related Mortgaged Property, and except as discussed below in the
case of certain of the Double Net Leases, all charges for utility services,
insurance and other operating expenses incurred in connection with the
operation of the related Mortgaged Property.
Generally, each credit lease loan provides that if the Tenant defaults
beyond applicable notice and grace periods in the performance of any covenant
or agreement in the Credit Lease, then the holder of the related Mortgage may
require the related mortgagor either (a) to terminate the Credit Lease or (b)
refrain from the exercise of any of its rights thereunder. A default under a
Credit Lease will constitute a default under the related credit lease loan,
although in certain cases the mortgagor may possess certain cure rights.
In addition, most of the Credit Leases permit the Tenant, at its own
expense, and generally with the consent of the mortgagor, to make alterations
or improvements on the related Mortgaged Property as the Tenant may deem
necessary or desirable. Such actions, if undertaken by the Tenant, will not
affect the Tenant's obligations under the Credit Lease.
Lease termination rights and rent abatement rights, if any, provide that
Tenants in the Credit Leases may be divided into three categories: (a)
termination and abatement rights directly arising from certain casualty
occurrences or condemnations ("Casualty or Condemnation Rights"), (b)
termination and abatement rights arising from a mortgagor's default relating to
its obligations under a Credit Lease to perform required maintenance, repairs
or replacements with respect to the related Mortgaged Property ("Maintenance
Rights") and (c) termination and abatement rights arising from a mortgagor's
default in the performance of various other obligations under the Credit Lease,
including remediating environmental conditions not caused by the Tenant,
enforcement of restrictive covenants affecting other property owned by the
mortgagor in the area of the related Mortgaged Property and complying with laws
affecting the Mortgaged Property or common areas related to the Mortgaged
Property ("Additional Rights"). Certain Credit Leases ("Bond-Type Leases")
provide neither Casualty or Condemnation Rights, Maintenance Rights nor
Additional Rights and the Tenants thereunder are required, at their expense, to
maintain their related Mortgaged Property in good order and repair. Other
Credit Leases provide Casualty or Condemnation Rights and may provide
Additional Rights ("Triple Net Leases"). The Tenants under Triple Net Leases
are required, at their expense, to maintain their Mortgaged Properties,
including the roof and structure, in good order and repair. Additionally,
certain of the Credit Leases provide Casualty or Condemnation Rights and
Maintenance Rights and may provide Additional Rights ("Double Net Leases"). If
the mortgagor defaults in the performance of certain obligations under a Triple
Net Lease or a Double Net Lease and the Tenant exercises its Additional Rights
or Maintenance Rights, there could be a disruption in the stream of Monthly
Rental Payments available to pay principal and interest to the credit lease
loans. Generally, Additional Rights and Maintenance Rights are mitigated by
repair and maintenance reserves, debt service coverage ratios in excess of 1.0x
and, prior to the disbursement of the mortgage loan, receiving Tenant estoppel
certificates (i.e., Tenant certificates confirming the non-existence of
landlord default).
Credit Leases with respect to 20 mortgage loans, representing
approximately 4.69% of the Initial Pool Balance, are Bond-Type Leases, Credit
Leases with respect to 3 mortgage loans, representing approximately 0.41% of
the Initial Pool Balance, are Triple Net Leases and Credit Leases with respect
to 8 mortgage loans, representing approximately 1.19% of the Initial Pool
Balance, are Double Net Leases.
At the end of the term of the Credit Leases, Tenants are generally
obligated to surrender the related Mortgaged Properties in good order and in
its original condition received by the Tenant, except for ordinary wear and
tear and repairs required to be performed by the mortgagor.
Pursuant to the terms of each assignment of a Credit Lease (the "Credit
Lease Assignment"), the related mortgagor has assigned to the mortgagee of the
related credit lease loan, as security for the mortgagor's obligations
thereunder, the mortgagor's rights under the Credit Leases and its rights to
all income and profits to be derived from the operation and leasing of the
related Mortgaged Property
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including, but not limited to, an assignment of any guarantee of the Tenant's
obligations under the Credit Lease and an assignment of the right to receive
all Monthly Rental Payments due under the Credit Leases. Pursuant to the terms
of the Credit Lease Assignments, each Tenant is obligated under its Credit
Lease to make all Monthly Rental Payments directly to the owner of the related
credit lease loan. Repayment of the credit lease loans and other obligations of
the mortgagors are expected to be funded from the Monthly Rental Payments.
Notwithstanding the foregoing, the mortgagors remain liable for all obligations
under the credit lease loans (subject to the non-recourse provisions of the
related mortgage loan).
Lease Enhancement Policies. Each credit lease loan that provides the
Tenant with a Casualty or Condemnation Right has the benefit of a noncancelable
Lease Enhancement Policy issued by Chubb Custom Insurance Company (the
"Enhancement Insurer"), which, as of July 1, 1999, was rated "AAA" by S&P and
was not publicly rated by Fitch. Each Lease Enhancement Policy provides,
subject to customary exclusions, that in the event of a permitted termination
by a Tenant of its Credit Lease as a result of a casualty or condemnation, the
Enhancement Insurer will pay to the Master Servicer on behalf of the Trustee
the "Loss of Rents" (that is, a lump sum payment of all outstanding principal
plus, subject to the limitation below, accrued interest on the credit lease
loan). The Enhancement Insurer is not required to pay interest for a period
greater than 75 days past the date of the exercise of a Casualty or
Condemnation Right. If the Credit Lease permits the Tenant to abate all or a
portion of the rent in the event of a condemnation, the "Loss of Rents" will be
in an amount equal to the portion of any Monthly Rental Payments not made by
the Tenant for the period from the date the abatement commences until the
earlier of the date the abatement ceases or the expiration dates of the initial
term of the Credit Lease; provided that in the event the payments would exceed
the limits of liability under the policy, then the related Enhancement Insurer
may, at its option, pay the present value of the stream of partial abatement
payments in a lump sum. The Enhancement Insurer is not required to pay amounts
due under the credit lease loan other than principal and, subject to the
limitation above, accrued interest, and therefore is not required to pay any
Prepayment Premium or Yield Maintenance Charge due thereunder or any amounts
the mortgagor is obligated to pay thereunder to reimburse the Master Servicer
or the Trustee for outstanding Advances.
Each Lease Enhancement Policy contains certain exclusions from coverage,
including loss arising from damage or destruction directly or indirectly caused
by war, insurrection, rebellion, revolution, usurped power, pollutants or
radioactive matter, or from a taking (other than by condemnation).
The mortgage loans which are credit lease loans are indicated on Annex A
to this prospectus supplement.
SECTION 42 LOW-INCOME HOUSING TAX CREDITS
4 of the Mortgaged Properties, representing approximately 0.36% of the
Initial Pool Balance, entitle their owners to receive low-income housing tax
credits ("Tax Credits") pursuant to Section 42 of the Internal Revenue Code of
1986 as amended (the "Code"). Section 42 of the Code provides a Tax Credit for
owners of residential rental property meeting the definition of low-income
housing who have received a tax credit allocation from the state or local
allocating agency.
At the time the project is "placed in service", the property owner must
make an irrevocable election of one of two set-aside rules, either (i) at least
20% of the units must be rented to tenants with incomes of 50% or less of the
median income, or (ii) at least 40% of the units must be rented to tenants with
incomes of 60% or less of the median income. The aggregate amount of Tax
Credits the owner is entitled to is based upon the percentage of total units
made available to qualified tenants. Median income is determined by the U.S.
Department of Housing and Urban Development ("HUD") for each metropolitan area
or county in the United States and is adjusted annually.
The Tax Credit provisions require that gross rent for each low-income unit
not exceed 30% of the annual HUD median income, adjusted for household size
based on the number of bedrooms in the
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particular unit. The gross rent charged for a unit must take into account an
allowance for utilities. If utilities are paid by the tenant, then the maximum
allowable Tax Credit rent is reduced according to utility allowances, as
provided in regulations of the Internal Revenue Service.
Under the Tax Credit provisions, a property owner must comply with the
tenant income restrictions and rental restrictions over a minimum of a 15-year
compliance period. In addition, agreements governing the property may require
an "extended use period" which has the effect of extending the income and
rental restrictions for an additional period.
In the event a Tax Credit project does not maintain compliance with the
Tax Credit restrictions on tenant income or rental rates or otherwise satisfy
the Tax Credit provisions of the Code, the owners of the related Mortgaged
Property may suffer a reduction in the amount of available Tax Credits and/or
face the recapture of all or part of the Tax Credits related to the period of
the noncompliance and face the partial recapture of previously taken Tax
Credits. The loss of Tax Credits, and the possibility of recapture of Tax
Credits already taken, may provide significant incentive for project owners to
keep the related Mortgaged Property project in compliance and to fund property
operating deficits.
CERTAIN TERMS AND CONDITIONS OF THE MORTGAGE LOANS
173 of the mortgage loans, representing approximately 71.51% of the
Initial Pool Balance, have due dates that occur on the first day of each month,
and 32 mortgage loans, representing approximately 28.49% of the Initial Pool
Balance, have due dates that occur on the tenth day of each month. All of the
mortgage loans whose due dates are the first day of each month provide for
grace periods, none of which exceeds 10 days. None of the mortgage loans whose
due date is the tenth day of each month provide for grace periods. All of the
mortgage loans bear interest at fixed rates. 165 mortgage loans, representing
approximately 88.41% of the Initial Pool Balance, accrue interest on the basis
of the actual number of days in a month, assuming a 360-day year. The remaining
40 mortgage loans, representing approximately 11.59% of the Initial Pool
Balance, accrue interest on the basis of a 30-day month, assuming a 360-day
year. 185 mortgage loans, representing approximately 95.24% of the Initial Pool
Balance (including the interest-only loan described in this paragraph) provide
for monthly payments (or, in the case of 9 mortgage loans, representing
approximately 2.03% of the Initial Pool Balance, semi-annual payments (those
loans, the "Semi-Annual Loans")) of principal based on amortization schedules
significantly longer than the remaining terms of the related mortgage loans. 1
of these mortgage loans, representing approximately 3.58% of the Initial Pool
Balance, provides for periodic payments of interest-only over its term and the
payment of the entire principal amount at maturity. 6 of these mortgage loans,
representing approximately 13.33% of the Initial Pool Balance, initially
provide for monthly payments of interest-only for periods ranging from 6 to 60
months of the term of the mortgage loan and payments which would amortize a
portion of the principal balance of the related mortgage loans during the
remaining term of the related mortgage loans. 3 of the mortgage loans with an
interest-only period, representing approximately 6.00% of the Initial Pool
Balance, which accrue interest on the basis of the actual number of days in a
month, assuming a 360-day year provide that the interest payments during such
interest-only period may be made in equal monthly installments. Thus, those
mortgage loans will have balloon payments due at their stated maturity dates,
unless earlier prepaid. In addition, the APD Loans provide for monthly payments
of principal that will result in a substantial principal payment at the
Anticipated Prepayment Date if the related borrower prepays the mortgage loan
on that date.
Prepayment Provisions. Each mortgage loan (other than 3 mortgage loans,
representing approximately 0.25% of the Initial Pool Balance) prohibits any
prepayments (including defeasance) for a specified period of time after its
date of origination (a "Lockout Period"). In addition, each mortgage loan
restricts voluntary prepayments in one of the following ways:
(1) 186 of the mortgage loans, representing approximately 92.89% of
the Initial Pool Balance, permit only defeasance after the expiration of
the Lockout Period;
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(2) 13 of the mortgage loans, representing approximately 3.00% of the
Initial Pool Balance, require that any principal prepayment made during a
specified period of time after the Lockout Period (a "Yield Maintenance
Period"), be accompanied by a Yield Maintenance Charge (as defined below);
(3) 1 of the mortgage loans, representing approximately 1.97% of the
Initial Pool Balance, permits defeasance only after the expiration of the
Lockout Period until a specified date, then requires the payment of a
Prepayment Premium; and
(4) 2 of the mortgage loans, representing approximately 1.89% of the
Initial Pool Balance, impose fees or premiums generally equal to a
percentage of the then outstanding principal balance of the mortgage loan
("Prepayment Premiums") in connection with principal prepayments for a
specified period of time after the expiration of the related Lockout Period
and the related Yield Maintenance Period (a "Prepayment Premium Period").
The terms of 3 mortgage loans, representing approximately 0.25% of the
Initial Pool Balance, permit the related borrower to prepay the mortgage loans
without the payment of a yield maintenance charge or prepayment premium during
the last 5 years prior to the stated maturity date.
All of the mortgage loans specify a period of time (generally between
three and six months (or 5 years as described above)) immediately prior to the
maturity date or Anticipated Prepayment Date, as applicable, of the related
mortgage loan during which there are no restrictions on voluntary prepayments.
1 mortgage loan (identified as Loan No. 33 on Annex A to this prospectus
supplement), representing approximately 3.58% of the Initial Pool Balance,
which otherwise only permits defeasance, is subject to a purchase option that
may be exercised by the related tenant any time after December 31, 2003. The
purchase price for the Mortgaged Property is required to be applied as a
principal prepayment on the outstanding principal balance of the related
mortgage loan, plus a 1% prepayment premium. Additionally, the terms of 1
mortgage loan (identified as Loan No. 183 on Annex A to this prospectus
supplement), representing approximately 2.00% of the Initial Pool Balance,
required the related borrower to establish a reserve account in the amount of
$4,654,000 at the origination of the mortgage loan. If the related borrower
does not complete scheduled renovations to the Mortgaged Property and satisfy
certain other conditions prior to July 1, 2003, the sums on deposit in the
reserve account will be used to prepay a portion of the outstanding principal
balance of the mortgage loan without the payment of any Prepayment Premium or
Yield Maintenance Charge.
Yield Maintenance Charges and Prepayment Premiums. The "Yield Maintenance
Charge" will generally be equal to the greater of (A) a fixed percentage
(ranging from 1% - 5%) of the entire unpaid principal balance of the mortgage
loan at the time of prepayment, and (B) the present value as of the date of
prepayment and calculated using the Yield Rate as the discount rate, for each
month, of the difference between (1) the remaining scheduled periodic payments
of interest that would be due on the principal being prepaid at the rate per
annum provided for in the related Mortgage Note from the date of prepayment to
the maturity date and (2) the remaining scheduled periodic payments of interest
that would be due on the principal amount being prepaid at the Yield Rate from
the date of prepayment to the maturity date. However, with respect to 9
mortgage loans, representing approximately 2.03% of the Initial Pool Balance,
the Yield Maintenance Charge will be equal to the amount set forth in clause
(B) above.
The "Yield Rate" with respect to any mortgage loan, is a rate equal to the
yield rate stated in the related mortgage loan documents used in calculating
the Yield Maintenance Charge with respect to the principal prepayment. To the
extent a yield rate is not stated therein, the "Yield Rate" will equal the
yield (when compounded monthly) on the U.S. Treasury issue with a maturity date
closest to the maturity date for the prepaid mortgage loan. In the event that
there are two or more U.S. Treasury issues (a) with the same coupon, the issue
with the lowest yield will be utilized, and (b) with maturity dates equally
close to the maturity date for the prepaid mortgage loan, the issue with the
earliest maturity date will be utilized.
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Prepayment Premiums and Yield Maintenance Charges are distributable as
described in this prospectus supplement under "Description of the
Certificates--Allocation of Prepayment Premiums and Yield Maintenance Charges."
Unless a mortgage loan is relatively near its stated maturity date or
unless the sale price or the amount of the refinancing of the related Mortgaged
Property is considerably higher than the current outstanding principal balance
of the mortgage loan (due to an increase in the value of the Mortgaged Property
or otherwise), the Yield Maintenance Charge or Prepayment Premium may, even in
a relatively low interest rate environment, offset entirely or render
insignificant any economic benefit to be received by the borrower upon a
refinancing or sale of the Mortgaged Property. The Yield Maintenance Charge or
Prepayment Premium provision of a mortgage loan creates an economic
disincentive for the borrower to prepay the mortgage loan voluntarily and,
accordingly, the related borrower may elect not to prepay the mortgage loan.
However, we cannot assure you that the imposition of a Yield Maintenance Charge
or Prepayment Premium will provide a sufficient disincentive to prevent a
voluntary principal prepayment.
Certain state laws limit the amounts that a lender may collect from a
borrower as an additional charge in connection with the prepayment of a
mortgage loan. None of the mortgage loans require the payment of Prepayment
Premiums or Yield Maintenance Charges in connection with a prepayment of the
related mortgage loan as a result of a total casualty or condemnation.
Furthermore, the enforceability, under the laws of a number of states, of
provisions providing for payments comparable to the Prepayment Premiums and/or
Yield Maintenance Charges upon an involuntary prepayment is unclear. We cannot
assure you that, at the time a Prepayment Premium or a Yield Maintenance Charge
is required to be made on a mortgage loan in connection with an involuntary
prepayment, the obligation to pay the Prepayment Premium or Yield Maintenance
Charge will be enforceable under applicable state law. See "Certain Legal
Aspects of Mortgage Loans--Default Interest and Limitations on Prepayments" in
the prospectus.
The following table sets forth for each month indicated in the table, (1)
the aggregate unpaid principal balance and the percentage of the Initial Pool
Balance expected to be outstanding and (2) the percentage of the amounts
subject to a Lockout Period (including any period where only defeasance is
permitted), Yield Maintenance Charge or Prepayment Premium, in each case
assuming no prepayments, defaults or extensions and based also upon the
assumptions set forth preceding the tables appearing under "Yield and Maturity
Considerations--Weighted Average Life " in this prospectus supplement.
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<PAGE>
PERCENTAGE OF REMAINING POOL BALANCE SUBJECT TO PREPAYMENT RESTRICTIONS
(DOLLAR AMOUNTS EXPRESSED IN MILLIONS)
<TABLE>
<CAPTION>
PREPAYMENT RESTRICTIONS
APPLICABLE TO UPB
OUTSTANDING
ON EACH ANNIVERSARY OF
THE CUT-OFF DATE
-------------------------
CUMULATIVE
INITIAL SEQUENTIAL ENDING POOL LOCKOUT
POOL PRINCIPAL BALANCE -------------------------
DATE BALANCE PAYMENTS AMOUNT % OF IPB AMOUNT % UPB
- ---------- ------------- ------------ ------------ ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
8/1/99 $ 1,397.6 $ 0.0 $ 1,397.6 100% $ 1,397.6 100.0%
8/1/00 $ 1,397.6 $ 11.5 $ 1,386.2 99% $ 1,334.1 96.2%
8/1/01 $ 1,397.6 $ 24.4 $ 1,373.2 98% $ 1,322.4 96.3%
8/1/02 $ 1,397.6 $ 38.6 $ 1,359.1 97% $ 1,309.5 96.4%
8/1/03 $ 1,397.6 $ 53.9 $ 1,343.7 96% $ 1,295.6 96.4%
8/1/04 $ 1,397.6 $ 70.4 $ 1,327.2 95% $ 1,280.6 96.5%
8/1/05 $ 1,397.6 $ 89.1 $ 1,308.6 94% $ 1,262.6 96.5%
8/1/06 $ 1,397.6 $ 169.2 $ 1,228.4 88% $ 1,178.0 95.9%
8/1/07 $ 1,397.6 $ 228.7 $ 1,168.9 84% $ 1,120.4 95.8%
8/1/08 $ 1,397.6 $ 259.8 $ 1,137.8 81% $ 1,087.2 95.6%
8/1/09 $ 1,397.6 $ 1,217.4 $ 180.3 13% $ 127.8 70.9%
8/1/10 $ 1,397.6 $ 1,224.3 $ 173.4 12% $ 123.4 71.2%
8/1/11 $ 1,397.6 $ 1,281.8 $ 115.9 8% $ 68.5 59.1%
<CAPTION>
PREPAYMENT RESTRICTIONS APPLICABLE TO
UPB OUTSTANDING ON EACH ANNIVERSARY PREPAYABLE WITHOUT
OF THE CUT-OFF DATE PREMIUM OR CHARGE
------------------------------------- ------------------
YIELD MAINTENANCE PREPAYMENT
CHARGES PREMIUMS
------------------ ------------------
AMOUNT % UPB AMOUNT % UPB AMOUNT % UPB
-------- --------- -------- --------- -------- ---------
<C> <C> <C> <C> <C> <C>
$ 0.0 0.0% $ 0.0 0.0% $ 0.0 0.0%
$ 52.1 3.8% $ 0.0 0.0% $ 0.0 0.0%
$ 50.8 3.7% $ 0.0 0.0% $ 0.0 0.0%
$ 49.6 3.6% $ 0.0 0.0% $ 0.0 0.0%
$ 48.1 3.6% $ 0.0 0.0% $ 0.0 0.0%
$ 46.6 3.5% $ 0.0 0.0% $ 0.0 0.0%
$ 46.0 3.5% $ 0.0 0.0% $ 0.0 0.0%
$ 50.4 4.1% $ 0.0 0.0% $ 0.0 0.0%
$ 48.5 4.2% $ 0.0 0.0% $ 0.0 0.0%
$ 46.7 4.1% $ 0.0 0.0% $ 3.9 0.3%
$ 49.3 27.4% $ 0.0 0.0% $ 3.1 1.7%
$ 26.7 15.4% $ 20.2 11.7% $ 3.1 1.8%
$ 24.7 21.3% $ 0.0 0.0% $ 22.6 19.5%
</TABLE>
- -------
As used above, "IPB" means Initial Pool Balance.
As used above, "UPB" means aggregate unpaid principal balance of all mortgage
loans as of the indicated date.
S-58
<PAGE>
Defeasance; Collateral Substitution. The terms of 187 of the mortgage
loans, representing approximately 94.86% of the Initial Pool Balance (the
"Defeasance Loans"), permit the applicable borrower at any time after a
specified period (the "Defeasance Lock-out Period") to obtain a release of a
Mortgaged Property from the lien of the related Mortgage (a "Defeasance
Option"). The Defeasance Lockout Period is generally the lesser of
approximately three, or in some cases, four years from the date of origination
and two years from the Closing Date, provided no event of default exists. The
release is subject to certain conditions, including, among other conditions,
that the borrower:
(a) pays or delivers to the Master Servicer on any due date (the
"Release Date") (1) all interest accrued and unpaid on the principal
balance of the Mortgage Note to and including the Release Date, (2) all
other sums due under the mortgage loan and all other loan documents
executed in connection with the related mortgage loan, (3) direct
non-callable obligations of the United States of America providing payments
(x) 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 the
date the related balloon payment is due), assuming, in the case of each APD
Loan, that the loan prepays on the related Anticipated Prepayment Date and
(y) in amounts equal to the scheduled payments due on those dates under the
mortgage loan or the related defeased amount of the mortgage loan in the
case of a partial defeasance (including any balloon payment), and (4) any
costs and expenses incurred in connection with the purchase of the U.S.
government obligations; and
(b) delivers a security agreement granting the trust fund a first
priority lien on the U.S. government obligations purchased as substitute
collateral and an opinion of counsel to that effect.
The Defeasance Loans secured by more than one Mortgaged Property generally
require that (1) prior to the release of a related Mortgaged Property, a
specified percentage (generally 125%) of the allocated loan amount for the
Mortgaged Property be defeased and (2) that certain DSCR and LTV Ratio tests
(if applicable) be satisfied with respect to the remaining Mortgaged Properties
after the defeasance.
The related borrower or, if the borrower is not required to do so under
the mortgage loan documents, the Master Servicer, will be responsible for
purchasing the U.S. government obligations on behalf of the borrower at the
borrower's expense. Any amount in excess of the amount necessary to purchase
the U.S. government obligations will be returned to the borrower.
Simultaneously with these actions, the related Mortgaged Property will be
released from the lien of the mortgage loan and the pledged U.S. government
obligations (together with any Mortgaged Property not released, in the case of
a partial defeasance) will be substituted as the collateral securing the
mortgage loan.
In general, a successor borrower established or designated by the related
borrower (or, if the borrower is not required to do so under the mortgage loan
documents, the Master 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 under the mortgage
loan. If a mortgage loan is partially defeased, the related Mortgage Note will
be split and only the defeased portion of the borrower's obligations will be
transferred to the successor borrower.
Although the collateral substitution provisions related to defeasance are
not intended to be, and do not have the same effect on the Certificateholders
as, a prepayment of the related mortgage loan, a court could interpret these
provisions as being equivalent to an unenforceable Yield Maintenance Charge or
Prepayment Premium. We make no representation as to the enforceability of the
defeasance provisions of any mortgage loan.
"Due-on-Sale" and "Due-on-Encumbrance" Provisions. The mortgage loans
contain "due-on-sale" and "due-on-encumbrance" provisions that in each case,
with limited exceptions, permit the holder of the Mortgage to accelerate the
maturity of the related mortgage loan if the borrower sells or otherwise
transfers or encumbers the related Mortgaged Property without the consent of
the holder of the Mortgage; provided, however, under the terms of certain of
the mortgage loans, this consent must be granted if certain conditions are met.
Certain of the Mortgaged Properties have been, or may become, subject to
additional financing. See "--General" above. The Master Servicer, as to
non-specially serviced mortgage loans, or the Special Servicer, as to Specially
Serviced Mortgage Loans, as applicable, will be required to exercise (or waive
its right to exercise, provided that a confirmation has been obtained from S&P
and Fitch with respect to certain mortgage loans) any right it may have with
respect to a mortgage loan containing a "due-on-sale" clause (1) to accelerate
the
S-59
<PAGE>
payments on those mortgage loans, or (2) to withhold its consent to any sale or
transfer, consistent with the Servicing Standards. With respect to a mortgage
loan with a "due-on-encumbrance" clause, the Master Servicer, as to
non-specially serviced mortgage loans, or the Special Servicer, as to Specially
Serviced Mortgage Loans, as applicable, will be required to exercise (or waive
its right to exercise, provided that a confirmation has been obtained from S&P
and Fitch) any right it may have with respect to a mortgage loan containing a
"due-on-encumbrance" clause (1) to accelerate the payments thereon, or (2) to
withhold its consent to the creation of any additional lien or other
encumbrance, consistent with the Servicing Standards.
Notwithstanding the foregoing, the existence of any additional
indebtedness may increase the difficulty of refinancing the related mortgage
loan at maturity and the possibility that reduced cash flow could result in
deferred maintenance. Also, if the holder of the additional debt has filed for
bankruptcy or been placed in involuntary receivership, foreclosure of the
related mortgage loan could be delayed. See "Certain Legal Aspects of Mortgage
Loans--Due-on-Sale and Due-on-Encumbrance" and "--Subordinate Financing" in the
prospectus.
ADDITIONAL MORTGAGE LOAN INFORMATION
The following tables set forth certain anticipated characteristics of the
mortgage loans. The sum in any column may not equal the indicated total due to
rounding. The descriptions in this prospectus supplement of the mortgage loans
and the Mortgaged Properties are based upon the pool of mortgage loans as it is
expected to be constituted as of the close of business on the Closing Date,
assuming that (1) all scheduled principal and interest payments due on or
before the cut-off date will be made, and (2) there will be no principal
prepayments on or before the cut-off date. Prior to the issuance of the
Certificates, mortgage loans may be removed from the pool of mortgage loans as
a result of prepayments, delinquencies, incomplete documentation or otherwise,
if the Depositor or a Mortgage Loan Seller deems the removal necessary,
appropriate or desirable. A limited number of other mortgage loans may be
included in the pool of mortgage loans prior to the issuance of the
Certificates, unless including those mortgage loans would materially alter the
characteristics of the pool of mortgage loans as described in this prospectus
supplement. The Depositor believes that the information set forth in this
prospectus supplement will be representative of the characteristics of the pool
of mortgage loans as it will be constituted at the time the Certificates are
issued, although the range of mortgage rates and maturities as well as other
characteristics of the mortgage loans described in this prospectus supplement
may vary.
A Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the offered certificates on or shortly after the Closing Date and
will be filed, together with the Pooling and Servicing Agreement, with the
Securities and Exchange Commission within fifteen days after the initial
issuance of the Offered Certificates. If mortgage loans are removed from or
added to the pool of mortgage loans as set forth in the preceding paragraph,
the removal or addition will be noted in the Form 8-K.
For a detailed presentation of certain characteristics of the mortgage
loans and the Mortgaged Properties on an individual basis see Annex A.
S-60
<PAGE>
TYPE OF MORTGAGED PROPERTIES(1)
<TABLE>
<CAPTION>
CUT-OFF DATE
NUMBER AGGREGATE % NUMBER BALANCE PER
OF CUT-OFF DATE OF INITIAL OF UNITS NUMBER
PROPERTY TYPE PROPERTIES BALANCE POOL BALANCE OR NRA (2) OF UNITS OR NRA
- -------------------------------- ------------ ------------------ -------------- ------------ -----------------
<S> <C> <C> <C> <C> <C>
Multifamily .................... 80 $ 532,681,582 38.11% 13,422 $ 39,672.42
Anchored Retail ................ 22 293,232,181 20.98 3,597,875 $ 181.50
Office ......................... 26 243,923,804 17.45 2,654,751 $ 91.88
Credit Lease Loan .............. 31 88,004,343 6.30 N/A N/A
Healthcare ..................... 10 56,953,567 4.07 921 $ 61,838.84
Unanchored Retail .............. 17 54,853,445 3.92 611,244 $ 89.74
Industrial ..................... 8 54,025,301 3.87 1,592,380 $ 33.93
Hotel .......................... 12 50,295,435 3.60 1,300 $ 36,688.80
Mobile Home Community .......... 6 10,188,188 0.73 882 $ 11,551.23
Mixed Use ...................... 3 8,718,118 0.62 134,171 $ 64.98
Self Storage ................... 2 4,764,278 0.34 973 $ 4,896.48
-- --------------- ------
TOTAL/WEIGHTED AVERAGE ......... 217 $ 1,397,640,242 100.00%
=== =============== ======
<CAPTION>
WEIGHTED AVERAGES
---------------------------------------------------------------------------------
STATED CUT-OFF
REMAINING DATE LTV
TERM OCCU- LTV RATIO AT
PROPERTY TYPE MTG. RATE (MOS.)(3) PANCY(4)(5) DSCR(5) RATIO(5) MATURITY (3)(5)
- -------------------------------- ----------- ----------- ------------- ------------ ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Multifamily .................... 7.59% 121 94% 1.25x 75.88% 66.75%
Anchored Retail ................ 7.70% 123 96% 1.36x 71.41% 62.92%
Office ......................... 7.74% 117 98% 1.49x 62.97% 55.30%
Credit Lease Loan .............. 7.32% 230 (5) (5) (5) (5)
Healthcare ..................... 7.91% 117 96% 1.42x 78.16% 68.84%
Unanchored Retail .............. 8.05% 122 98% 1.31x 70.97% 61.52%
Industrial ..................... 8.01% 120 96% 1.25x 64.72% 57.23%
Hotel .......................... 7.72% 129 74% 1.56x 68.35% 51.45%
Mobile Home Community .......... 8.31% 118 95% 1.24x 73.06% 62.66%
Mixed Use ...................... 8.16% 118 96% 1.27x 68.50% 60.44%
Self Storage ................... 8.44% 118 93% 1.47x 68.41% 57.34%
TOTAL/WEIGHTED AVERAGE ......... 7.68% 127 95% 1.34x 71.52% 62.54%
</TABLE>
- -----------
(1) Because this table is presented at the Mortgaged Property level, weighted
averages are based on allocated loan amounts (allocated by either the
amount allocated in the related Mortgage Note or the appraised value for
the Mortgaged Property) for mortgage loans secured by more than one
Mortgaged Property and may therefore deviate slightly from weighted
averages presented at the mortgage loan level in other tables in this
prospectus supplement.
(2) "NRA" means net rentable area and is applicable with respect to retail,
office, industrial, credit lease and parking garage properties.
(3) Calculated with respect to the Anticipated Prepayment Date for the APD
Loans.
(4) The weighted average occupancy rate information shown above includes 12
hotel properties, representing approximately 3.60% of the Initial Pool
Balance, which have occupancy rate that generally range from 50% to 85%;
if the mortgage loans secured by hotel properties are excluded, the
weighted average occupancy rate of all other Mortgaged Properties, except
credit lease properties, is 95.59%.
(5) Excludes 31 credit lease loans, representing approximately 6.30% of the
Initial Pool Balance, secured by credit lease properties meeting the
guidelines described under "Description of the Mortgage Pool--Credit
Lease Loans" in this prospectus supplement. The DSCRs for credit lease
loans at origination range generally from 1.00x-1.05x and the LTV ratios
for credit lease loans at origination range generally from 90%-100%.
S-61
<PAGE>
RANGE OF MORTGAGE RATES AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
NUMBER OF AGGREGATE % OF
RANGE OF LOANS/ CUT-OFF DATE INITIAL POOL
MORTGAGE RATES PROPERTIES BALANCE BALANCE
- ------------------ ------------ ----------------- --------------
<S> <C> <C> <C>
6.510% to 6.999% 16 / 16 $ 88,762,124 6.35%
7.000% to 7.249% 20 / 24 98,317,730 7.03
7.250% to 7.499% 19 / 19 288,031,308 20.61
7.500% to 7.749% 31 / 37 265,771,802 19.02
7.750% to 7.999% 43 / 43 334,923,662 23.96
8.000% to 8.499% 53 / 55 271,345,865 19.41
8.500% to 9.125% 23 / 23 50,487,749 3.61
------------ -------------- ------
TOTAL/WEIGHTED
AVERAGE 205 / 217 $1,397,640,242 100.00%
============ ============== ======
<CAPTION>
WEIGHTED AVERAGES
--------------------------------------------------------------------
STATED CUT-OFF
RANGE OF MORTGAGE REMAINING DATE LTV RATIO AT
MORTGAGE RATES RATE TERM (MOS.)(1) DSCR(2) LTV RATIO(2) MATURITY(1)(2)
- ------------------ ---------- ---------------- --------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
6.510% to 6.999% 6.91% 185 1.37x 75.71% 58.69%
7.000% to 7.249% 7.13% 169 1.40x 71.63% 52.82%
7.250% to 7.499% 7.34% 110 1.51x 67.37% 61.85%
7.500% to 7.749% 7.60% 122 1.26x 75.01% 65.99%
7.750% to 7.999% 7.85% 120 1.29x 74.18% 66.27%
8.000% to 8.499% 8.20% 124 1.29x 68.45% 59.06%
8.500% to 9.125% 8.69% 145 1.34x 71.24% 58.54%
TOTAL/WEIGHTED
AVERAGE 7.68% 127 1.34x 71.52% 62.54%
</TABLE>
- ----------
(1) Calculated with respect to the Anticipated Prepayment Date for the APD
Loans.
(2) Excludes 31 credit lease loans, representing approximately 6.30% of the
Initial Pool Balance, secured by credit lease properties meeting the
guidelines described under "Description of the Mortgage Pool--Credit
Lease Loans" in this prospectus supplement. The DSCRs for credit lease
loans at origination range generally from 1.00x-1.05x and the LTV ratios
for credit lease loans at origination range generally from 90%-100%.
S-62
<PAGE>
MORTGAGE LOANS BY STATE
<TABLE>
<CAPTION>
AGGREGATE % OF
NUMBER OF CUT-OFF DATE INITIAL POOL
STATE LOANS/PROPERTIES BALANCE BALANCE
- ---------------- ------------------ ----------------- --------------
<S> <C> <C> <C>
California 46 / 52 $ 323,686,693 23.16%
New York 8 / 10 190,933,191 13.66
Florida 18 / 18 81,989,092 5.87
Pennsylvania 7 / 7 81,066,160 5.80
Georgia 6 / 6 65,149,713 4.66
Texas 20 / 20 61,138,639 4.37
Michigan 4 / 4 59,298,964 4.24
Nevada 9 / 9 55,416,210 3.96
Ohio 8 / 8 55,050,679 3.94
Virginia 13 / 13 53,219,190 3.81
Connecticut 3 / 3 51,094,682 3.66
New Jersey 7 / 7 46,733,286 3.34
Maryland 7 / 7 31,786,508 2.27
Illinois 5 / 9 29,886,424 2.14
Tennessee 6 / 6 28,752,519 2.06
North Carolina 6 / 6 28,040,436 2.01
Missouri 1 / 1 24,850,885 1.78
Arizona 6 / 6 18,655,377 1.33
Oregon 2 / 2 17,847,900 1.28
South Carolina 2 / 2 17,153,523 1.23
Indiana 1 / 1 17,093,809 1.22
Massachusetts 4 / 4 14,247,255 1.02
Colorado 4 / 4 13,770,851 0.99
Alabama 2 / 2 5,636,942 0.40
Louisiana 1 / 1 5,179,882 0.37
Minnesota 1 / 1 4,155,165 0.30
Washington 1 / 1 3,320,000 0.24
Wisconsin 1 / 1 2,885,533 0.21
Nebraska 1 / 1 2,392,831 0.17
New Hampshire 1 / 1 2,242,343 0.16
Alaska 1 / 1 1,475,853 0.11
Arkansas 1 / 1 1,400,000 0.10
Utah 1 / 1 1,338,000 0.10
District of
Columbia 1 / 1 751,708 0.05
------------------ -------------- ------
TOTAL/WEIGHTED
AVERAGE 205 / 217 $1,397,640,242 100.00%
================== ============== ======
<CAPTION>
WEIGHTED AVERAGES
-----------------------------------------------------------------------
STATED CUT-OFF
MORTGAGE REMAINING DATE LTV RATIO AT
STATE RATE TERM (MOS.)(1) DSCR(2) LTV RATIO(2) MATURITY(2)
- ---------------- ---------- ---------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
California 7.77% 122 1.46x 65.66% 58.76%
New York 7.52% 122 1.39x 66.71% 58.91%
Florida 7.63% 134 1.33x 75.41% 61.82%
Pennsylvania 7.43% 116 1.31x 74.41% 64.61%
Georgia 8.04% 125 1.27x 74.78% 65.29%
Texas 8.00% 149 1.37x 71.73% 61.41%
Michigan 7.65% 117 1.21x 78.86% 70.66%
Nevada 7.83% 119 1.25x 75.47% 67.93%
Ohio 7.60% 135 1.22x 76.76% 66.83%
Virginia 7.85% 138 1.32x 73.33% 63.80%
Connecticut 7.84% 119 1.23x 74.99% 66.99%
New Jersey 7.06% 146 1.41x 73.74% 61.08%
Maryland 7.91% 124 1.28x 75.59% 68.36%
Illinois 7.75% 139 1.23x 79.72% 71.82%
Tennessee 7.79% 130 1.26x 77.69% 68.21%
North Carolina 7.50% 122 1.57x 72.96% 58.04%
Missouri 6.90% 162 1.20x 75.31% 56.59%
Arizona 8.09% 119 1.25x 70.39% 63.24%
Oregon 7.78% 118 1.25x 72.62% 64.46%
South Carolina 7.73% 119 1.20x 72.73% 64.79%
Indiana 7.50% 117 1.21x 68.38% 60.64%
Massachusetts 7.63% 161 1.30x 73.91% 63.34%
Colorado 7.87% 142 1.26x 72.88% 65.72%
Alabama 7.66% 111 1.39x 72.65% 60.77%
Louisiana 7.24% 202 (2) (2) (2)
Minnesota 7.88% 118 1.47x 79.91% 71.45%
Washington 7.70% 120 1.22x 78.51% 69.82%
Wisconsin 7.88% 118 1.25x 74.95% 61.96%
Nebraska 7.24% 202 (2) (2) (2)
New Hampshire 6.94% 250 (2) (2) (2)
Alaska 8.25% 118 1.33x 70.28% 60.82%
Arkansas 8.88% 120 1.26x 72.92% 66.62%
Utah 8.65% 120 1.31x 70.42% 64.02%
District of
Columbia 8.38% 119 1.25x 51.84% 46.89%
TOTAL/WEIGHTED
AVERAGE 7.68% 127 1.34x 71.52% 62.54%
</TABLE>
- ----------
(1) Calculated with respect to the Anticipated Prepayment Date for the APD
Loans.
(2) Excludes 31 credit lease loans, representing approximately 6.30% of the
Initial Pool Balance, secured by credit lease properties meeting the
guidelines described under "Description of the Mortgage Pool--Credit
Lease Loans" in this prospectus supplement. The DSCRs for credit lease
loans at origination range generally from 1.00x-1.05x and the LTV ratios
for credit lease loans at origination range generally from 90%-100%.
S-63
<PAGE>
RANGE OF REMAINING TERMS IN MONTHS
<TABLE>
<CAPTION>
RANGE OF NUMBER OF AGGREGATE % OF
REMAINING LOANS/ CUT-OFF DATE INITIAL POOL
TERMS (MOS.)(1) PROPERTIES BALANCE BALANCE
- ----------------- ------------ ----------------- --------------
<S> <C> <C> <C>
82 to 84 3 / 3 $ 60,743,276 4.35%
85 to 117 38 / 48 327,655,603 23.44
118 to 120 110 / 112 779,821,507 55.80
121 to 180 21 / 21 134,471,932 9.62
181 to 240 19 / 19 56,577,480 4.05
241 to 300 13 / 13 36,875,327 2.64
301 to 359 1 / 1 1,495,117 0.11
------------ -------------- ------
TOTAL/WEIGHTED
AVERAGE 205 / 217 $1,397,640,242 100.00%
============ ============== ======
<CAPTION>
WEIGHTED AVERAGES
-----------------------------------------------------------------------
RANGE OF STATED CUT-OFF
REMAINING MORTGAGE REMAINING DATE LTV RATIO AT
TERMS (MOS.)(1) RATE TERM (MOS.)(1) DSCR(2) LTV RATIO(2) MATURITY(1)(2)
- ----------------- ---------- ---------------- ------------ -------------- ---------------
<S> <C> <C> <C> <C> <C>
82 to 84 7.49% 84 2.00x 55.75% 54.85%
85 to 117 7.47% 113 1.30x 74.05% 65.54%
118 to 120 7.87% 119 1.32x 71.50% 63.82%
121 to 180 7.48% 157 1.28x 72.39% 54.92%
181 to 240 7.40% 217 1.31x 72.05% 3.48%
241 to 300 7.10% 252 (2) (2) (2)
301 to 359 8.63% 359 1.19x 84.95% 0.00%
TOTAL/WEIGHTED
AVERAGE 7.68% 127 1.34x 71.52% 62.54%
</TABLE>
- ----------
(1) Calculated with respect to the Anticipated Prepayment Date for the APD
Loans.
(2) Excludes 31 credit lease loans, representing approximately 6.30% of the
Initial Pool Balance, secured by credit lease properties meeting the
guidelines described under "Description of the Mortgage Pool--Credit
Lease Loans" in this prospectus supplement. The DSCRs for credit lease
loans at origination range generally from 1.00x-1.05x and the LTV ratios
for credit lease loans at origination range generally from 90%-100%.
YEARS OF MATURITY
<TABLE>
<CAPTION>
NUMBER OF AGGREGATE % OF
YEARS OF LOANS/ CUT-OFF DATE INITIAL POOL
MATURITY(1) PROPERTIES BALANCE BALANCE
- --------------- ------------ ---------------- --------------
<S> <C> <C> <C>
2006 3 / 3 $ 60,743,276 4.35%
2007 3 / 3 41,709,138 2.98
2008 5 / 5 30,272,922 2.17
2009 140 / 152 1,035,495,050 74.09
2011 7 / 7 58,787,082 4.21
2012 1 / 1 1,359,348 0.10
2013 8 / 8 51,593,963 3.69
2014 5 / 5 22,731,539 1.63
2016 9 / 9 28,347,250 2.03
2018 5 / 5 11,744,262 0.84
2019 5 / 5 16,485,968 1.18
2020 11 / 11 34,287,027 2.45
2022 1 / 1 1,287,004 0.09
2023 1 / 1 1,301,296 0.09
2029 1 / 1 1,495,117 0.11
------------ -------------- ------
TOTAL/WEIGHTED
AVERAGE 205 / 217 $1,397,640,242 100.00%
============ ============== ======
<CAPTION>
WEIGHTED AVERAGES
-----------------------------------------------------------------------
STATED CUT-OFF
YEARS OF MORTGAGE REMAINING DATE LTV RATIO AT
MATURITY(1) RATE TERM (MOS.)(1) DSCR(2) LTV RATIO(2) MATURITY(1)(2)
- --------------- ---------- ---------------- ------------ -------------- ---------------
<S> <C> <C> <C> <C> <C>
2006 7.49% 84 2.00x 55.75% 54.85%
2007 7.71% 94 1.21x 77.76% 71.57%
2008 7.36% 109 1.56x 73.81% 60.60%
2009 7.77% 118 1.31x 71.99% 64.15%
2011 7.69% 142 1.22x 75.25% 64.38%
2012 9.13% 160 (2) (2) (2)
2013 7.09% 165 1.32x 70.46% 52.40%
2014 7.72% 179 1.32x 69.35% 36.17%
2016 7.24% 202 (2) (2) (2)
2018 7.02% 229 1.42x 73.62% 2.96%
2019 7.95% 234 1.26x 71.42% 3.69%
2020 7.04% 250 (2) (2) (2)
2022 8.00% 280 (2) (2) (2)
2023 7.76% 286 (2) (2) (2)
2029 8.63% 359 1.19x 84.95% 0.00%
TOTAL/WEIGHTED
AVERAGE 7.68% 127 1.34x 71.52% 62.54%
</TABLE>
- ----------
(1) Calculated with respect to the Anticipated Prepayment Date for the APD
Loans.
(2) Excludes 31 credit lease loans, representing approximately 6.30% of the
Initial Pool Balance, secured by credit lease properties meeting the
guidelines described under "Description of the Mortgage Pool--Credit
Lease Loans" in this prospectus supplement. The DSCRs for credit lease
loans at origination range generally from 1.00x-1.05x and the LTV ratios
for credit lease loans at origination range generally from 90%-100%.
S-64
<PAGE>
RANGE OF YEARS BUILT(1)
<TABLE>
<CAPTION>
AGGREGATE % OF
RANGE OF NUMBER OF CUT-OFF DATE INITIAL POOL
YEARS BUILT PROPERTIES BALANCE BALANCE
- ---------------- ------------ ----------------- --------------
<S> <C> <C> <C>
1905 to 1960 25 $ 272,064,689 19.47%
1961 to 1970 20 149,027,289 10.66
1971 to 1980 44 200,881,175 14.37
1981 to 1985 28 204,765,413 14.65
1986 to 1990 36 284,347,485 20.34
1991 to 1995 15 114,399,928 8.19
1996 to 1999 49 172,154,262 12.32
- ---------------- --- -------------- ------
TOTAL/WEIGHTED
AVERAGE 217 $1,397,640,242 100.00%
=== ============== ======
<CAPTION>
WEIGHTED AVERAGES
--------------------------------------------------------------------
STATED CUT-OFF
RANGE OF MORTGAGE REMAINING DATE LTV RATIO AT
YEARS BUILT RATE TERM (MOS.)(2) DSCR(3) LTV RATIO(3) MATURITY(2)(3)
- ---------------- ---------- ---------------- --------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
1905 to 1960 7.64% 120 1.35x 68.84% 60.92%
1961 to 1970 7.40% 124 1.31x 71.95% 61.34%
1971 to 1980 7.80% 132 1.32x 71.77% 62.58%
1981 to 1985 7.78% 126 1.32x 71.68% 62.94%
1986 to 1990 7.75% 121 1.27x 75.27% 66.40%
1991 to 1995 7.58% 124 1.70x 64.16% 59.30%
1996 to 1999 7.70% 151 1.35x 73.50% 60.98%
- ----------------
TOTAL/WEIGHTED
AVERAGE 7.68% 127 1.34x 71.52% 62.54%
</TABLE>
- ----------
(1) Because this table is presented at the Mortgaged Property level, weighted
averages are based on allocated loan amounts (allocated by either the
amount allocated in the related Mortgage Note or the appraised value for
the Mortgaged Property) for mortgage loans secured by more than one
Mortgaged Property and may therefore deviate slightly from weighted
averages presented at the mortgage loan level in other tables in this
prospectus supplement.
(2) Calculated with respect to the Anticipated Prepayment Date for the APD
Loans.
(3) Excludes 31 credit lease loans, representing approximately 6.30% of the
Initial Pool Balance, secured by credit lease properties meeting the
guidelines described under "Description of the Mortgage Pool--Credit
Lease Loans" in this prospectus supplement. The DSCRs for credit lease
loans at origination range generally from 1.00x-1.05x and the LTV ratios
for credit lease loans at origination range generally from 90%-100%.
TEN LARGEST MORTGAGE LOANS
<TABLE>
<CAPTION>
WEIGHTED AVERAGES
-----------------------------------------------------------------
% OF STATED CUT-OFF
NUMBER OF CUT-OFF DATE INITIAL POOL MORTGAGE REMAINING UNDERWRITTEN DATE LTV RATIO AT
PROPERTY NAME PROPERTIES BALANCE BALANCE RATE TERM (MOS.) DSCR LTV RATIO MATURITY
- ------------------- ------------ -------------- -------------- ---------- ------------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rego Park Plaza 1 $ 82,000,000 5.87% 7.25% 118 1.58x 65.60% 62.37%
Capitol Square 1 50,000,000 3.58 7.47% 84 2.14x 51.81% 51.81%
90 & 100 John
Street 1 50,000,000 3.58 7.27% 117 1.29x 70.42% 62.54%
Orange County
Office Portfolio 7 39,151,613 2.80 7.61% 116 1.30x 68.15% 60.63%
McCandless
Towers I 1 36,984,827 2.65 8.24% 119 1.30x 65.46% 59.02%
Albany Mall 1 31,587,489 2.26 8.33% 119 1.25x 70.19% 63.41%
Oaks at Hampton 1 29,146,816 2.09 7.50% 117 1.22x 79.85% 70.83%
The Townhouse
Apartments 1 27,986,550 2.00 7.81% 119 1.21x 75.64% 67.51%
1845 Walnut
Street 1 27,584,379 1.97 7.32% 119 1.30x 68.11% 60.06%
Whispering Hills
Apartments 1 24,850,885 1.78 6.90% 162 1.20x 75.31% 56.59%
------------ -----
TOTAL/WEIGHTED
AVERAGE 16 $399,292,559 28.57% 7.53% 116 1.44x 67.60% 61.13%
== ============ =====
</TABLE>
S-65
<PAGE>
The following table sets forth a range of Debt Service Coverage Ratios for
the mortgage loans as of the cut-off date. The "Debt Service Coverage Ratio" or
"DSCR" for any mortgage loan is the ratio of (1) Underwritten Net Cash Flow
produced by the related Mortgaged Property or Mortgaged Properties to (2) the
aggregate amount of the scheduled payments of principal and/or interest (the
"Periodic Payments") due for the 12-month period immediately following the
cut-off date, except with respect to:
o 6 mortgage loans, representing approximately 13.33% of the Initial
Pool Balance, where Periodic Payments are interest-only for a period
ranging from 6 to 60 months after origination, after which date the
mortgage loans generally amortize based upon a 30-year amortization
schedule, and
o 1 mortgage loan, representing approximately 3.58% of the aggregate
principal balance of all the mortgage loans as of the cut-off date,
where periodic payments are interest-only over the term of the
mortgage loan.
See "Description of the Mortgage Pool--Certain Terms and Conditions of the
Mortgage Loans" in this prospectus supplement. (For the purposes of calculating
DSCR, the debt service of the mortgage loans which are interest-only for a
specific initial period will be assumed to include interest and principal
(based on the amortization schedule that would be in effect after the
respective interest-only period)).
RANGE OF DEBT SERVICE COVERAGE RATIOS AS OF THE CUT-OFF DATE(1)
<TABLE>
<CAPTION>
NUMBER OF AGGREGATE % OF
RANGE OF LOANS/ CUT-OFF DATE INITIAL POOL
DSCRS PROPERTIES BALANCE BALANCE
- --------------------- ------------ ----------------- --------------
<S> <C> <C> <C>
1.129x to 1.189x(3) 2 / 2 $ 7,322,210 0.52%
1.190x to 1.249x 55 / 57 450,631,082 32.24
1.250x to 1.299x 47 / 51 303,490,133 21.71
1.300x to 1.349x 22 / 28 160,726,384 11.50
1.350x to 1.399x 14 / 14 106,214,712 7.60
1.400x to 1.599x 27 / 27 197,197,073 14.11
1.600x to 2.137x 7 / 7 84,054,305 6.01
------------ -------------- -----
TOTAL/WEIGHTED
AVERAGE 174 / 186 $1,309,635,899 93.70%
============ ============== =====
<CAPTION>
WEIGHTED AVERAGES
----------------------------------------------------------------
STATED CUT-OFF
RANGE OF MORTGAGE REMAINING DATE LTV RATIO AT
DSCRS RATE TERM (MOS.)(2) DSCR LTV RATIO MATURITY(2)
- --------------------- ---------- ---------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
1.129x to 1.189x(3) 7.53% 124 1.13x 78.77% 68.43%
1.190x to 1.249x 7.73% 122 1.21x 75.25% 65.45%
1.250x to 1.299x 7.82% 121 1.27x 72.41% 63.42%
1.300x to 1.349x 7.84% 119 1.31x 69.49% 61.10%
1.350x to 1.399x 7.60% 127 1.37x 72.27% 60.90%
1.400x to 1.599x 7.57% 122 1.50x 68.98% 60.96%
1.600x to 2.137x 7.43% 98 1.98x 56.58% 51.86%
TOTAL/WEIGHTED
AVERAGE 7.71% 121 1.34x 71.52% 62.54%
</TABLE>
- ----------
(1) Excludes 31 credit lease loans, representing approximately 6.30% of the
Initial Pool Balance, secured by credit lease properties meeting the
guidelines described under "Description of the Mortgage Pool--Credit
Lease Loans" in this prospectus supplement. The DSCRs for credit lease
loans at origination range generally from 1.00x-1.05x and the LTV ratios
for credit lease loans at origination range generally from 90%-100%.
(2) Calculated with respect to the Anticipated Prepayment Date for the APD
Loans.
(3) Water Club Apartments (Loan No. 194) which has a DSCR of 1.13x is
cross-collateralized and cross-defaulted with 2 other mortgage loans, and
the 3 mortgage loans have a weighted average DSCR of 1.25x. Canal Place
Apartments (Loan No. 32) has a DSCR of 1.16x.
S-66
<PAGE>
RANGE OF CURRENT OCCUPANCY RATES(1)(5)
<TABLE>
<CAPTION>
RANGE OF
CURRENT AGGREGATE % OF
OCCUPANCY NUMBER OF CUT-OFF DATE INITIAL POOL
RATES PROPERTIES BALANCE BALANCE
- ------------------ ------------ ----------------- --------------
<S> <C> <C> <C>
50.00% to 79.99% 13 $ 52,446,421 3.75%
80.00% to 89.99% 19 129,251,041 9.25
90.00% to 92.49% 13 103,392,952 7.40
92.50% to 94.99% 22 195,934,519 14.02
95.00% to 97.49% 35 287,212,806 20.55
97.50% to 99.99% 26 215,629,822 15.43
100.00% to 100.00% 58 325,768,337 23.31
--- -------------- -----
TOTAL/WEIGHTED
AVERAGE ......... 186 $1,309,635,899 93.70%
=== ============== =====
<CAPTION>
WEIGHTED AVERAGES(3)
--------------------------------------------------------------------
RANGE OF
CURRENT STATED CUT-OFF
OCCUPANCY MORTGAGE REMAINING DATE LTV RATIO AT
RATES RATE TERM (MOS.)(4) DSCR(5) LTV RATIO(5) MATURITY(4)(5)
- ------------------ ---------- ---------------- --------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
50.00% to 79.99% 7.93% 131 1.41x 64.74% 50.33%
80.00% to 89.99% 7.69% 116 1.31x 73.36% 64.42%
90.00% to 92.49% 7.62% 125 1.25x 75.89% 65.45%
92.50% to 94.99% 7.77% 123 1.27x 73.91% 65.09%
95.00% to 97.49% 7.75% 120 1.29x 74.46% 64.81%
97.50% to 99.99% 7.69% 119 1.29x 70.69% 62.74%
100.00% to 100.00% 7.65% 119 1.50x 67.89% 59.19%
TOTAL/WEIGHTED
AVERAGE ......... 7.71% 121 1.34x 71.52% 62.54%
</TABLE>
- ----------
(1) Current occupancy rates have been calculated in this table based upon
rent rolls made available to the Mortgage Loan Sellers by the related
borrowers as of the dates set forth on Annex A to this prospectus
supplement.
(2) The weighted average occupancy rate information shown above includes 12
hotel properties, representing approximately 3.60% of the Initial Pool
Balance, which have occupancy rates that generally range from 50% to 85%;
if the mortgage loans secured by hotel properties are excluded, the
weighted average occupancy rate of all other mortgaged properties, except
credit lease properties is 95.59%.
(3) Because this table is presented at the Mortgaged Property level, weighted
averages are based on allocated loan amounts (allocated by either the
amount allocated in the related Mortgage Note or the appraised value for
the Mortgaged Property) for mortgage loans secured by more than one
Mortgaged Property and may therefore deviate slightly from weighted
averages presented at the mortgage loan level in other tables in this
prospectus supplement.
(4) Calculated with respect to the Anticipated Prepayment Date for the APD
Loans.
(5) Excludes 31 credit lease loans, representing approximately 6.30% of the
Initial Pool Balance, secured by credit lease properties meeting the
guidelines described under "Description of the Mortgage Pool--Credit
Lease Loans" in this prospectus supplement. The DSCRs for credit lease
loans at origination range generally from 1.00x-1.05x and the LTV ratios
for credit lease loans at origination range generally from 90%-100%.
RANGE OF CUT-OFF DATE BALANCES
<TABLE>
<CAPTION>
NUMBER OF AGGREGATE % OF
RANGE OF LOANS/ CUT-OFF DATE INITIAL POOL
CUT-OFF DATE BALANCES PROPERTIES BALANCE BALANCE
- ---------------------------- ------------ ----------------- --------------
<S> <C> <C> <C>
$ 649,554 to $2,000,000 55 / 55 $ 81,168,100 5.81%
$2,000,001 to $5,000,000 72 / 72 235,144,350 16.82
$5,000,001 to $10,000,000 44 / 48 313,037,870 22.40
$10,000,001 to $15,000,000 11 / 11 126,269,033 9.03
$15,000,001 to $25,000,000 14 / 16 267,579,215 19.15
$25,000,001 to $50,000,000 8 / 14 292,441,675 20.92
$50,000,001 to $82,000,000 1 / 1 82,000,000 5.87
------------ -------------- ------
TOTAL/WEIGHTED AVERAGE 205 / 217 $1,397,640,242 100.00%
============ ============== ======
<PAGE>
<CAPTION>
WEIGHTED AVERAGES
--------------------------------------------------------------------
STATED CUT-OFF
RANGE OF MORTGAGE REMAINING DATE LTV RATIO AT
CUT-OFF DATE BALANCES RATE TERM (MOS.)(1) DSCR(2) LTV RATIO(2) MATURITY(1)(2)
- ---------------------------- ---------- ---------------- --------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
$ 649,554 to $2,000,000 8.01% 149 1.31x 69.53% 55.28%
$2,000,001 to $5,000,000 7.68% 150 1.34x 73.21% 62.53%
$5,000,001 to $10,000,000 7.81% 127 1.29x 74.76% 64.57%
$10,000,001 to $15,000,000 7.52% 132 1.35x 73.97% 62.87%
$15,000,001 to $25,000,000 7.67% 119 1.26x 72.39% 63.61%
$25,000,001 to $50,000,000 7.67% 112 1.42x 67.51% 61.17%
$50,000,001 to $82,000,000 7.25% 118 1.58x 65.60% 62.37%
TOTAL/WEIGHTED AVERAGE 7.68% 127 1.34x 71.52% 62.54%
</TABLE>
- ----------
(1) Calculated with respect to the Anticipated Prepayment Date for the APD
Loans.
(2) Excludes 31 credit lease loans, representing approximately 6.30% of the
Initial Pool Balance, secured by credit lease properties meeting the
guidelines described under "Description of the Mortgage Pool--Credit
Lease Loans" in this prospectus supplement. The DSCRs for credit lease
loans at origination range generally from 1.00x-1.05x and the LTV ratios
for credit lease loans at origination range generally from 90%-100%.
The following two tables set forth the range of LTV Ratios of the mortgage
loans as of the cut-off date and the maturity dates or Anticipated Prepayment
Date of the mortgage loans. An "LTV Ratio" for any mortgage loan, as of any
date of determination, is a fraction, expressed as a percentage, the numerator
of which is the scheduled principal balance of the mortgage loan as of
that date (assuming no defaults or prepayments on the mortgage loan prior to
that date), and the
S-67
<PAGE>
denominator of which is the appraised value of the related Mortgaged Property
or Mortgaged Properties as determined by an appraisal of the property obtained
in connection with the origination of the mortgage loan. The LTV Ratio as of
the mortgage loan maturity dates or Anticipated Prepayment Date, as the case
may be, described below was calculated based on the principal balance of the
related mortgage loan on the maturity date or Anticipated Prepayment Date, as
the case may be, assuming all principal payments required to be made on or
prior to the mortgage loan's maturity date or Anticipated Prepayment Date, as
the case may be (not including the balloon payment), are made. In addition,
because it is based on the value of a Mortgaged Property determined as of loan
origination, the information set forth in the table below is not necessarily a
reliable measure of the related borrower's current equity in each Mortgaged
Property. In a declining real estate market, the appraised value of a Mortgaged
Property could have decreased from the appraised value determined at
origination and the current actual loan-to-value ratio of a mortgage loan may
be higher than its LTV Ratio at origination even after taking into account
amortization since origination.
RANGE OF LTV RATIOS AS OF THE CUT-OFF DATE (1)
<TABLE>
<CAPTION>
WEIGHTED AVERAGES
----------------------------------------------------------------
RANGE OF NUMBER OF AGGREGATE % OF STATED CUT-OFF
CUT-OFF DATE LOANS/ CUT-OFF DATE INITIAL POOL MORTGAGE REMAINING DATE LTV RATIO AT
LTV RATIOS PROPERTIES BALANCE BALANCE RATE TERM (MOS.)(2) DSCR LTV RATIO MATURITY(2)
- ------------------ ------------ ----------------- -------------- ---------- ---------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
41.91% to 54.99% 9 / 11 $ 85,739,418 6.13% 7.72% 101 1.85x 50.03% 46.49%
55.00% to 64.99% 16 / 16 81,976,709 5.87 7.63% 131 1.40x 61.41% 47.78%
65.00% to 69.99% 27 / 33 308,131,863 22.05 7.70% 120 1.38x 67.24% 60.32%
70.00% to 73.33% 25 / 25 185,405,714 13.27 7.80% 121 1.27x 71.24% 61.91%
73.34% to 76.66% 38 / 38 245,304,597 17.55 7.71% 127 1.31x 75.10% 63.95%
76.67% to 79.99% 50 / 54 336,135,997 24.05 7.66% 118 1.25x 78.88% 69.85%
80.00% to 84.95% 9 / 9 66,941,600 4.79 7.78% 124 1.28x 81.80% 71.33%
------------ -------------- -----
TOTAL/WEIGHTED
AVERAGE 174 / 186 $1,309,635,899 93.70% 7.71% 121 1.34x 71.52% 62.54%
============ ============== =====
</TABLE>
- ----------
(1) Excludes 31 credit lease loans, representing approximately 6.30% of the
Initial Pool Balance, secured by credit lease properties meeting the
guidelines described under "Description of the Mortgage Pool--Credit
Lease Loans" in this prospectus supplement. The DSCRs for credit lease
loans at origination range generally from 1.00x-1.05x and the LTV ratios
for credit lease loans at origination range generally from 90%-100%.
(2) Calculated with respect to the Anticipated Prepayment Date for the APD
Loans.
RANGE OF LTV RATIOS AS OF MORTGAGE LOAN MATURITY DATES(1)
<TABLE>
<CAPTION>
WEIGHTED AVERAGES
----------------------------------------------------------------
RANGE OF NUMBER OF AGGREGATE % OF STATED CUT-OFF
MATURITY DATE LOANS/ CUT-OFF DATE INITIAL POOL MORTGAGE REMAINING DATE LTV RATIO AT
LTV RATIOS(2) PROPERTIES BALANCE BALANCE RATE TERM (MOS.)(2) DSCR LTV RATIO MATURITY(2)
- ------------------ ------------ ----------------- -------------- ---------- ---------------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0.00% to 44.99% 13 / 15 $ 53,465,650 3.83% 7.98% 153 1.40x 54.05% 27.81%
45.00% to 54.99% 17 / 17 120,569,518 8.63 7.52% 117 1.70x 59.01% 51.56%
55.00% to 59.99% 20 / 20 146,295,417 10.47 7.85% 130 1.32x 68.28% 57.82%
60.00% to 63.32% 28 / 34 323,487,467 23.15 7.46% 118 1.38x 69.13% 61.57%
63.33% to 66.65% 27 / 27 176,759,547 12.31 7.97% 120 1.27x 73.33% 65.02%
66.66% to 69.99% 29 / 29 187,028,719 13.72 7.84% 119 1.27x 76.14% 67.87%
70.00% to 75.54% 40 / 44 302,029,581 21.61 7.71% 115 1.25x 79.78% 71.62%
------------ -------------- -----
TOTAL/WEIGHTED
AVERAGE 174 / 186 $1,309,635,899 93.70% 7.71% 121 1.34x 71.52% 62.54%
============ ============== =====
</TABLE>
- ----------
(1) Excludes 31 credit lease loans, representing approximately 6.30% of the
Initial Pool Balance, secured by credit lease properties meeting the
guidelines described under "Description of the Mortgage Pool--Credit
Lease Loans" in this prospectus supplement. The DSCRs for credit lease
loans at origination range generally from 1.00x-1.05x and the LTV ratios
for credit lease loans at origination range generally from 90%-100%.
(2) Calculated with respect to the Anticipated Prepayment Date for the APD
Loans.
S-68
<PAGE>
The foregoing characteristics, along with certain additional
characteristics of the mortgage loans presented on a loan-by-loan basis, are
set forth in Annex A to this prospectus supplement. Certain additional
information regarding the mortgage loans is set forth in this prospectus
supplement below under "--Underwriting Standards" and "--Representations and
Warranties; Repurchases and Substitutions" and in the prospectus under
"Description of the Trust Funds--Mortgage Loans" and "Certain Legal Aspects of
Mortgage Loans."
UNDERWRITTEN NET CASH FLOW
The "Underwritten Net Cash Flow" for a Mortgaged Property is the estimated
annual revenue derived from the use and operation of the Mortgaged Property
less estimated annual expenses, including operating expenses (such as
utilities, administrative expenses, repairs and maintenance, tenant improvement
costs, leasing commissions, management fees and advertising), fixed expenses
(such as insurance, real estate taxes and, if applicable, ground lease
payments) and replacement reserves and an allowance for vacancies and credit
losses. In calculating Underwritten Net Cash Flow, certain non-operating items
such as depreciation, amortization, partnership distributions, financing fees
and capital expenditures other than applicable reserves, are not included as
expenses.
Revenue. In determining potential gross revenue for each Mortgaged
Property, the Mortgage Loan Sellers generally relied on the most recent rent
roll supplied and, where the actual vacancy shown on the rent roll and the
market vacancy was less than 5.0%, assumed a 5.0% vacancy in determining
revenue from rents, except that in the case of certain Mortgaged Properties
which are not secured by multifamily properties, space occupied by the anchor
or single tenants or other large creditworthy tenants may have been disregarded
in performing the vacancy adjustment due to the length of the related leases or
creditworthiness of the tenants, in accordance with the respective Mortgage
Loan Seller's underwriting standards. Where the actual or market vacancy was
not less than 5.0%, the Mortgage Loan Sellers determined revenue from rents by
generally relying on the most recent rent roll supplied and the greater of (a)
actual historical vacancy at the related Mortgaged Property, (b) historical
vacancy at comparable properties in the same market as the related Mortgaged
Property, and (c) 5.0%. In determining rental revenue for multifamily, self
storage and mobile home community properties, the Mortgage Loan Sellers
generally either reviewed rental revenue shown on the certified rolling
12-month operating statements or annualized the rental revenue and
reimbursement of expenses shown on rent rolls or operating statements with
respect to the prior one to twelve month periods. For the other rental
properties, the Mortgage Loan Sellers generally annualized rental revenue shown
on the most recent certified rent roll (as applicable), after applying the
vacancy factor, without further regard to the terms (including expiration
dates) of the leases shown on the rent roll. In the case of hotel properties,
gross receipts were generally determined based upon the average occupancy not
to exceed 80.0% and daily rates achieved during the prior two to three year
annual reporting period. In the case of residential healthcare facilities,
receipts were based on historical occupancy levels, historical operating
revenues and the then current occupancy rates. Occupancy rates for the private
healthcare facilities were generally within the then current market ranges and
vacancy levels were generally a minimum of 5%. In general, any non-recurring
items and non-property related revenue were eliminated from the calculation
except in the case residential healthcare facilities.
Expenses. In determining expenses for each Mortgaged Property, the
Mortgage Loan Seller relied on rolling 12-month operating statements and/or
full-year or year-to-date financial statements supplied by the borrower. Except
that (a) if tax or insurance expense information more current than that
reflected in the financial statements was available, the newer information was
used, (b) property management fees were generally assumed to be 3.0% to 7.0% of
effective gross revenue, (except with respect to single tenant properties,
where a minimum of 1.5% to 3.0% of gross receipts was assumed, with respect to
full service hotel properties, where a minimum of 3.5% of gross receipts was
assumed and with respect to limited service hotel properties, where a minimum
of 4.0% of gross receipts was assumed), (c) assumptions were made with respect
to reserves for leasing commissions, tenant improvement expenses and capital
expenditures and (d) expenses were assumed to include annual replacement
reserves.
S-69
<PAGE>
Replacement Reserves. Replacement reserves were funded reserves escrowed
for ongoing items such as repairs and replacements, including, in the case of
hospitality properties, reserves for furniture, fixtures and equipment. In
certain cases, however, the subject reserve will be subject to a maximum
amount, and once that maximum amount is reached the subject reserve will not be
funded except, in some cases, to the extent it is drawn upon.
ASSESSMENTS OF PROPERTY CONDITION
Property Inspection. All of the Mortgaged Properties were inspected in
connection with the origination or acquisition of the related mortgage loan to
assess their general condition. No inspection revealed any patent structural
deficiency or any deferred maintenance considered material and adverse to the
interest of the holders of the offered certificates or for which adequate
reserves have not been established.
Appraisals. All of the Mortgaged Properties were appraised in connection
with the origination of the related mortgage loans. All of these appraisals
were performed in compliance with the Code of Professional Ethics and Standards
of Professional Conduct of the Appraisal Institute and the Uniform Standards of
Professional Appraisal Practice as adopted by the Appraisal Standards Board of
the Appraisal Foundation and accepted and incorporated into the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, as amended
("FIRREA").
The purpose of each appraisal was to provide an opinion as to the market
value of the related Mortgaged Property. We cannot assure you that another
appraiser would have arrived at the same opinion of market value.
Environmental Reports. A "Phase I" environmental site assessment was
performed with respect to each Mortgaged Property and, in some cases, a "Phase
II" environmental site assessment or other additional testing was performed.
See "--Representations and Warranties; Repurchases and Substitutions" below.
Building Condition Reports. In connection with the origination of all
mortgage loans (other than credit lease loans or newly constructed Mortgaged
Properties, as described below), a licensed engineer or consultant inspected
each related Mortgaged Property to assess the condition of the structure,
exterior walls, roofing, interior structure, mechanical and electrical systems
and site improvements. No engineering inspections were made with respect to the
remaining 17 mortgage loans (including credit lease loans) representing
approximately 2.40% of the Initial Pool Balance, which were determined by the
applicable Mortgage Loan Seller to be a credit lease mortgage loan or "new
construction" or "substantially rehabilitated property" pursuant to its
underwriting guidelines. The resulting reports indicated deferred maintenance
items on certain Mortgaged Properties and recommended certain capital
improvements for which escrows were generally established at origination. In
addition, the building condition reports provided a projection of necessary
replacements and repair of structural and mechanical systems over the life of
the related mortgage loans. Generally, with respect to the majority of the
Mortgaged Properties, the related borrowers were required to deposit with the
lender an amount equal to at least 125% of the licensed engineer's estimated
cost of the recommended repairs, corrections or replacements to assure their
completion.
Earthquake Analyses. An architectural and engineering consultant performed
an analysis on the 43 Mortgaged Properties, securing mortgage loans
representing approximately 20.45% of the Initial Pool Balance, located
primarily in the State of California in order to evaluate the structural and
seismic condition of the property and to assess, based primarily on statistical
information, the maximum probable loss for the property in an earthquake
scenario. The resulting reports concluded that in the event of an earthquake,
no Mortgaged Property is likely to suffer a probable maximum loss in excess of
25% of the amount of the estimated replacement cost of the improvements located
on the related Mortgaged Property. 5 of the 43 Mortgaged Properties described
above, representing approximately 5.15% of the Initial Pool Balance, are
covered by earthquake insurance in an amount at least equal to the lesser of
the replacement cost of the improvements on such Mortgaged Property and the
outstanding principal balance of the related mortgage loan.
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THE MORTGAGE LOAN SELLERS
The Mortgage Loan Sellers are The Chase Manhattan Bank ("Chase") and First
Union National Bank ("First Union"). Chase is the parent corporation of the
Depositor and an affiliate of Chase Securities Inc., one of the Underwriters.
See "The Depositor" in the prospectus. First Union is an affiliate of First
Union Capital Markets Corp., one of the Underwriters. All of the mortgage loans
were originated by the Mortgage Loan Sellers, in each case, generally in
accordance with the underwriting criteria described below.
The information set forth in this prospectus supplement concerning the
Mortgage Loan Sellers and their underwriting standards have been provided by
the Mortgage Loan Sellers, and neither the Depositor nor the Underwriters make
any representation or warranty as to the accuracy or completeness of that
information.
UNDERWRITING STANDARDS
General. Each Mortgage Loan Seller's commercial real estate finance or
commercial mortgage banking group has the authority to originate fixed-rate,
first lien mortgage loans for securitization. Each Mortgage Loan Seller's
commercial real estate finance or commercial mortgage banking operation is a
vertically integrated entity, staffed by real estate professionals, many of
whom have completed the credit training programs sponsored by that Mortgage
Loan Seller or that Mortgage Loan Seller's predecessors. Each Mortgage Loan
Seller's loan underwriting group is an integral component of the commercial
real estate finance or commercial mortgage banking group which also includes
distinct groups responsible for loan origination and closing mortgage loans.
Chase's commercial mortgage banking group also includes a distinct group
responsible for servicing of mortgage loans.
Upon receipt of a loan package, the respective Mortgage Loan Seller's loan
underwriters commence an extensive review of the borrower's financial condition
and creditworthiness and the real estate which will secure the loan.
First Union owns a 70% equity interest in the borrower of 1 mortgage loan
(identified as Loan No. 202 on Annex A), representing approximately 0.71% of
the Initial Pool Balance. This mortgage loan was underwritten to the standards
described in this prospectus supplement.
Loan Analysis. Generally, each Mortgage Loan Seller performs both a credit
analysis and collateral analysis with respect to a loan applicant. The credit
analysis of the borrower includes a review of historical financial statements,
including operating statements and rent rolls (generally unaudited), historical
tax returns, third party credit reports, judgment, lien bankruptcy and pending
litigation searches and, if applicable, the loan payment history of the
borrower. Each Mortgage Loan Seller also performs a qualitative analysis which
incorporates independent credit checks, periodical searches, industry research
and published debt and equity information with respect to certain principals of
the borrower as well as the borrower itself. Generally, borrowers are required
to be single-purpose entities. The collateral analysis includes an analysis of
the historical property operating statements, rent rolls and a projection of
future performance and a review of tenant leases. A member of the loan
underwriting team also conducts a site inspection or causes the inspection to
be performed to confirm the occupancy rate of the Mortgaged Property, analyzes
the market and assesses the utility of the Mortgaged Property within the
market. Each Mortgage Loan Seller requires third party appraisals, as well as
environmental and building condition reports. Each report is reviewed for
acceptability by a Mortgage Loan Seller staff member for compliance with
program standards and the staff member approves or rejects the report. The
results of these reviews are incorporated into the underwriting report.
Loan Approval. Prior to commitment, all mortgage loans must be approved by
the applicable Mortgage Loan Seller's credit committee in accordance with its
credit policies. The credit committee may approve a mortgage loan as
recommended, modify the loan terms or decline a loan transaction. All mortgage
loans purchased by either Mortgage Loan Seller from non-affiliated originators
must be reviewed by the underwriting staff and credit committee to determine if
they comply with the Mortgage Loan Seller's underwriting standards.
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Debt Service Coverage Ratio and LTV Ratio. Each Mortgage Loan Seller's
underwriting standards generally require the following minimum debt service
coverage ratios for each of the indicated property types:
<TABLE>
<CAPTION>
PROPERTY TYPE DSCR GUIDELINE LTV RATIO GUIDELINE
- ------------- -------------- -------------------
<S> <C> <C>
Multifamily .................... 1.20x 80%
Anchored Retail ................ 1.20x--1.25x 75--80%
Unanchored Retail .............. 1.25x--1.30x 75%
Office ......................... 1.25x 75%
Industrial/Warehouse ........... 1.25x 75%
Hotel .......................... 1.35x--1.40x 70%
Credit Lease ................... 1.00x 100%
Self-Storage ................... 1.25x 75%
Parking Facility ............... 1.30x 75%
Healthcare ..................... 1.25x 75%
Mixed Use ...................... 1.25x 75%
Mobile Home Community .......... 1.20x 80%
Section 42 Properties .......... 1.15x 85%
</TABLE>
The debt service coverage ratio guidelines listed above are calculated
based on Underwritten Net Cash Flow at the time of origination. In addition,
each Mortgage Loan Seller's underwriting guidelines generally permit a maximum
amortization period of 30 years. However, notwithstanding the foregoing, in
certain circumstances the actual debt service coverage ratios, loan-to-value
ratios and amortization periods for the mortgage loans originated by the
Mortgage Loan Seller may vary from these guidelines. See "Description of the
Mortgage Pool" in this prospectus supplement and Annex A to this prospectus
supplement.
Escrow Requirements. Except with respect to credit lease loans, each
Mortgage Loan Seller requires substantially all borrowers to fund various
escrows for taxes and insurance, capital expenses and replacement reserves.
Generally, the required escrows for mortgage loans originated by each Mortgage
Loan Seller are as follows:
o Taxes--Typically an initial deposit and monthly escrow deposits equal
to 1/12th of the annual property taxes (based on the most recent
property assessment and the current mileage rate) are required to
provide the Mortgage Loan Seller with sufficient funds to satisfy all
taxes and assessments at least one month prior to their respective due
dates.
o Insurance--If the property is insured under an individual policy
(i.e., the property is not covered by a blanket policy), typically an
initial deposit and monthly escrow deposits equal to 1/12th of the
annual property insurance premium are required to provide the Mortgage
Loan Seller with sufficient funds to pay all insurance premiums at
least one month prior to their respective due dates. If the property
is covered by a blanket policy of insurance, the Mortgage Loan Seller
generally reserves the right in the mortgage to require a separate
insurance policy and insurance escrows.
o Replacement Reserves--Replacement reserves are calculated in
accordance with the expected useful life of the components of the
property during the term of the mortgage loan.
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Notwithstanding the actual level of escrowed reserves, the following
minimum reserve levels were generally assumed by each Mortgage Loan Seller in
determining Underwritten Net Cash Flow:
<TABLE>
<S> <C>
Multifamily ................... $250 per unit
Retail ........................ $0.10-0.15 per square foot
Office ........................ $0.10-0.20 per square foot
Industrial/Warehouse .......... $0.10 per square foot
Hospitality ................... 4%-5% of gross revenue
Self-Storage .................. $0.15 per square foot
Parking Facility .............. $45 per space
Healthcare .................... $200-350 per unit
Mixed Use ..................... $0.10-0.20 per square foot
Mobile Home Community ......... $50-100 per pad
</TABLE>
o Completion Repair/Environmental Remediation--Typically, a completion
repair or remediation reserve is required. An initial deposit, upon
funding of the mortgage loan generally in an amount equal to at least
125% of the estimated costs of repairs or replacements to be completed
within the first year of the mortgage loan pursuant to the building
condition report is required.
o Re-tenanting/Debt Service Coverage--In some cases, major tenants have
lease expirations within the mortgage loan term. To mitigate this
risk, special reserves are required to be funded either at closing of
the mortgage loan and/or during the mortgage loan term to cover
certain anticipated leasing commissions or tenant improvement costs
which might be associated with releasing the space occupied by the
Tenants.
REPRESENTATIONS AND WARRANTIES; REPURCHASES AND SUBSTITUTIONS
In each Purchase Agreement, the applicable Mortgage Loan Seller will
represent and warrant with respect to each mortgage loan sold by the Mortgage
Loan Seller, as of the Closing Date, or as of another date specifically
provided in the representation and warranty, among other things, that:
(a) the information set forth in the schedule of mortgage loans
attached to the applicable Purchase Agreement (which contains certain of
the information set forth in Annex A) is true and correct in all material
respects as of the cut-off date;
(b) as of the date of its origination, the mortgage loan complied in
all material respects with, or was exempt from, all requirements of
federal, state or local law relating to the origination of the mortgage
loan;
(c) immediately prior to the sale, transfer and assignment to the
Depositor, the applicable Mortgage Loan Seller had good title to, and was
the sole owner of, each mortgage loan, and is transferring the mortgage
loan free and clear of any and all liens, pledges, charges or security
interests of any nature encumbering the mortgage loan;
(d) the proceeds of the mortgage loan have been fully disbursed and
there is no requirement for future advances thereunder;
(e) each of the related Mortgage Note, related Mortgage, related
assignment of leases, if any, and other agreements executed in connection
with the mortgage loan are the legal, valid and binding obligations of the
related mortgagor (subject to any nonrecourse provisions therein and any
state anti-deficiency legislation), enforceable in accordance with their
terms, except with respect to provisions relating to default interest,
yield maintenance charges or prepayment premiums and except as the
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally, and by general principles of equity (regardless of
whether the enforcement is considered in a proceeding in equity or at law);
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(f) as of the date of its origination, there was no valid offset,
defense, counterclaim or right to rescission with respect to any of the
related Mortgage Note, Mortgage(s) or other agreements executed in
connection therewith, and, as of the cut-off date, to the best knowledge of
the applicable Mortgage Loan Seller there is no valid offset, defense,
counterclaim or right to rescission with respect to the Mortgage Note,
Mortgage(s) or other agreements;
(g) the assignment of the related Mortgage and assignment of leases in
favor of the Trustee constitutes the legal, valid and binding assignment of
the Mortgage to the Trustee (subject to customary limitations);
(h) the related Mortgage is a valid and enforceable first lien on the
related Mortgaged Property subject only to the following title exceptions
(each exception, a "Title Exception") (A) liens for current real property
taxes, ground rents, water charges, sewer rents and assessments not yet due
and payable, (B) covenants, conditions and restrictions, rights of way,
easements and other matters of public record, none of which, individually
or in the aggregate, materially interferes with the current use of the
Mortgaged Property or the security intended to be provided by the Mortgage
or with the borrower's ability to pay its obligations when they become due
or materially and adversely affects the value of the Mortgaged Property and
(C) the exceptions (general and specific) set forth in the related title
insurance policy or appearing of record, none of which, individually or in
the aggregate, materially interferes with the current use of the Mortgaged
Property or the security intended to be provided by the Mortgage or with
the borrower's ability to pay its obligations when they become due or
materially and adversely affects the value of the Mortgaged Property,
except with respect to 2 mortgage loans, representing approximately 5.08%
of the Initial Pool Balance;
(i) except with respect to any credit lease loan, all taxes and
governmental assessments that prior to the cut-off date became due and
owing in respect of the related Mortgaged Property have been paid, or an
escrow of funds in an amount sufficient to cover the payments has been
established;
(j) to the applicable Mortgage Loan Seller's knowledge as of the
cut-off date, after conducting due diligence consistent with the practice
of institutional lenders generally for properties of the same type as the
related Mortgaged Property, except with respect to 1 mortgage loan,
representing approximately 3.58% of the Initial Pool Balance, each related
Mortgaged Property was free and clear of any material damage that would
affect materially and adversely the value of the Mortgaged Property as
security for the mortgage loan and as of the cut-off date there was no
proceeding pending for the total or partial condemnation of the Mortgaged
Property;
(k) as of the date of its origination, all insurance coverage required
under each related Mortgage, which insurance covered those risks as were
customarily acceptable to prudent commercial and multifamily mortgage
lending institutions lending on the security of property comparable to the
related Mortgaged Property in the jurisdiction in which the Mortgaged
Property is located, and with respect to a fire and extended perils
insurance policy, was in an amount (subject to a customary deductible) at
least equal to the replacement cost of improvements located on the
Mortgaged Property, or an amount at least equal to the initial principal
balance of the mortgage loan, was in full force and effect with respect to
each related Mortgaged Property;
(l) as of the cut-off date, the mortgage loan is not, and in the prior
12 months (or since the date of origination if the mortgage loan has been
originated within the past 12 months), has not been, 30 days or more past
due in respect of any scheduled payment;
(m) one or more environmental site assessments were performed by an
environmental consulting firm independent of the applicable Mortgage Loan
Seller and that Mortgage Loan Seller's affiliates with respect to each
related Mortgaged Property during the 18-month period preceding the
origination of the related mortgage loan, and the applicable Mortgage Loan
Seller,
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having made no independent inquiry other than to review the report(s)
prepared in connection with the assessment(s) referenced herein, has no
knowledge and has received no notice of any material and adverse
environmental condition or circumstance affecting the Mortgaged Property
that was not disclosed in those report(s);
(n) the lien of each related Mortgage as a first priority lien in the
original principal amount of the Mortgage Loan (as set forth on the
mortgage loan schedule) is insured by an ALTA lender's title insurance
policy (or a binding commitment therefor), or its equivalent as adopted in
the applicable jurisdiction, insuring the Mortgage Loan Seller, its
successors and assigns, subject only to the Title Exceptions; the Mortgage
Loan Seller or its successors or assigns is the named insured of that
policy; the policy is assignable and will inure to the benefit of the
Trustee as mortgagee of record; and is in full force and effect upon the
consummation of the transactions contemplated by the applicable Purchase
Agreement; no claims have been made under the policy and the Mortgage Loan
Seller has not done anything, by act or omission, and the Mortgage Loan
Seller has no knowledge of any matter, which would impair or diminish the
coverage of that policy;
(o) except with respect to APD Loans, which provide that the rate at
which interest accrues on the APD Loans increases after the Anticipated
Prepayment Date, the Mortgage Rate (exclusive of any default interest, late
charges or prepayment premiums) of the mortgage loan is a fixed rate;
(p) other than payments due but not yet 30 days or more delinquent,
there is, to the Mortgage Loan Seller's knowledge, (A) no material default,
breach, violation or event of acceleration existing under the related
Mortgage Note or each related Mortgage, and (B) no event which, with the
passage of time or with notice and the expiration of any grace or cure
period, would constitute a material default, breach, violation or event of
acceleration under any of the documents; the Mortgage Loan Seller has not
waived any other material default, breach, violation or event of
acceleration under any of those documents; and under the terms of each
mortgage loan, each related Mortgage Note, each related Mortgage and the
other loan documents in the related mortgage file, no person or party other
than the mortgagee may declare an event of default or accelerate the
related indebtedness under that mortgage loan, Mortgage Note or Mortgage;
(q) each mortgage loan is directly secured by a Mortgage on a
commercial or multifamily property, and either (1) substantially all of the
proceeds of the mortgage loan were used to acquire, improve or protect the
portion of the commercial or multifamily residential property that consists
of an interest in real property (within the meaning of Treasury Regulations
Sections 1.856-3(c) and 1.856-3(d)) and the interest in real property was
the only security for the mortgage loan as of the Testing Date (as defined
below), or (2) the fair market value of the interest in real property which
secures the mortgage loan was at least equal to 80% of the principal amount
of the mortgage loan (a) as of the Testing Date, or (b) as of the closing
date. For purposes of the previous sentence, (1) the fair market value of
the referenced interest in real property shall first be reduced by (a) the
amount of any lien on the interest in real property that is senior to the
mortgage loan, and (b) a proportionate amount of any lien on the interest
in real property that is on a parity with the mortgage loan, and (2) the
"Testing Date" shall be the date on which the referenced mortgage loan was
originated unless (a) the mortgage loan was modified after the date of its
origination in a manner that would cause "significant modification" of the
mortgage loan within the meaning of Treasury Regulations Section
1.1001-3(b), and (b) the "significant modification" did not occur at a time
when the mortgage loan was in default or when default with respect to the
mortgage loan was reasonably foreseeable;
(r) except for the mortgage loans eligible to receive low-income
housing tax credits pursuant to Section 42 of the Internal Revenue Code of
1986, each mortgage loan is a whole loan, contains no equity participation
by the lender or shared appreciation feature and does not provide for any
contingent or additional interest in the form of participation in the cash
flow of the related Mortgaged Property or provide for negative
amortization;
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(s) each Mortgage or loan agreement contains provisions for the
acceleration of the payment of the unpaid principal balance of the mortgage
loan if, without complying with the requirements of the Mortgage or loan
agreement, the related Mortgaged Property, or any controlling interest
therein, is directly transferred or sold, or encumbered in connection with
subordinate financing by a lien or security interest against the related
Mortgaged Property, other than any permitted additional debt;
(t) each Mortgaged Property was inspected by or on behalf of the
related originator during the 12-month period prior to the related
origination date;
(u) since origination, no material portion of the related Mortgaged
Property has been released from the lien of the related Mortgage, in each
case, in any manner which materially and adversely affects the value of the
mortgage loan or materially interferes with the security intended to be
provided by the Mortgage, and, except with respect to the mortgage loans
which permit defeasance by means of substituting for the Mortgaged Property
(or, in the case of a mortgage loan secured by multiple Mortgaged
Properties, one or more of the Mortgaged Properties) U.S. Treasury
obligations sufficient to pay the mortgage loans in accordance with their
terms, and with respect to mortgage loans which permit the related
mortgagor to substitute a replacement property, except with respect to 1
mortgage loan, representing approximately 0.49% of the Initial Pool
Balance, the terms of the related Mortgage do not provide for release of
any portion of the Mortgaged Property from the lien of the Mortgage except
in consideration of payment therefor;
(v) except with respect to 2 mortgage loans, representing
approximately 3.82% of the Initial Pool Balance, to the Mortgage Loan
Seller's knowledge, as of the date of origination of the mortgage loan,
and, to the Mortgage Loan Seller's knowledge, as of the cut-off date, there
are no violations of any applicable zoning ordinances, building codes and
land laws applicable to the Mortgaged Property or the use and occupancy
thereof which would have a material adverse effect on the value, operation
or net operating income of the Mortgaged Property;
(w) the Mortgage Rate (exclusive of any default interest, late charges
or prepayment premiums) of the mortgage loan (other than an APD Loan after
the Anticipated Prepayment Date) is a fixed rate, and complied as of the
date of origination with, or is exempt from, applicable state or federal
laws, regulations and other requirements pertaining to usury; and
(x) all escrow deposits and payments required pursuant to the mortgage
loan are in the possession, or under the control, of the applicable
Mortgage Loan Seller or its agent and there are no deficiencies in
connection therewith.
If a Mortgage Loan Seller has been notified of a material breach of any of
the foregoing representations and warranties and if the respective Mortgage
Loan Seller cannot cure the breach within a period of 90 days following the
earlier of its receipt of that notice or its discovery of the breach, then the
respective Mortgage Loan Seller will be obligated pursuant to the respective
Purchase Agreement (the relevant rights under which will be assigned, together
with its interests in the mortgage loans, to the Trustee) to (a) repurchase the
affected mortgage loan within the 90-day period at a price (the "Purchase
Price") equal to the sum of (1) the outstanding principal balance of the
mortgage loan as of the date of purchase, (2) all accrued and unpaid interest
on the mortgage loan at the related mortgage rate, in effect from time to time,
to but not including the due date in the Due Period of purchase, (3) all
related unreimbursed Servicing Advances plus accrued and unpaid interest on
related Advances at the Reimbursement Rate, and unpaid Special Servicing Fees
allocable to the mortgage loan and (4) all reasonable out-of-pocket expenses
reasonably incurred or to be incurred by the Special Servicer, the Depositor
and the Trustee in respect of the breach giving rise to the repurchase
obligation, including any expenses arising out of the enforcement of the
repurchase obligation or (b) substitute a Qualified Substitute Mortgage Loan
and pay any shortfall amount equal to the difference between the Purchase Price
of the mortgage loan calculated as of the date of substitution and the stated
principal balance of the Qualified Substitute Mortgage Loan as of the date of
substitution; provided, that the applicable Mortgage Loan Seller generally has
an additional 90-day period to cure the breach if it is diligently proceeding
with that cure, and has delivered to S&P, Fitch
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and the Trustee an officer's certificate that describes the reasons that a cure
was not effected within the first 90-day cure period and the actions it
proposes to take to effect the cure and which states that it anticipates the
cure will be effected within the additional 90-day period.
A "Qualified Substitute Mortgage Loan" is a mortgage loan which must, on
the date of substitution: (a) have an outstanding principal balance, after
application of all scheduled payments of principal and interest due during or
prior to the month of substitution, not in excess of the outstanding principal
balance of the deleted mortgage loan as of the due date in the calendar month
during which the substitution occurs; (b) have a Mortgage Rate not less than
the Mortgage Rate of the deleted mortgage loan; (c) have the same due date as
the deleted mortgage (as defined in this prospectus supplement) loan; (d)
accrue interest on the same basis as the deleted mortgage loan (for example, on
the basis of a 360-day year consisting of twelve 30-day months); (e) have a
remaining term to stated maturity not greater than, and not more than two years
less than, the remaining term to stated maturity of the deleted mortgage loan;
(f) have an original loan-to-value ratio not higher than that of the deleted
mortgage loan and a current loan-to-value ratio not higher than the
then-current loan-to-value ratio of the deleted mortgage loan; (g) comply as of
the date of substitution with all of the representations and warranties set
forth in the applicable Purchase Agreement; (h) have an environmental report
with respect to the related Mortgaged Property which will be delivered as a
part of the related mortgage file; (i) have an original debt service coverage
ratio not less than the original debt service coverage ratio of the deleted
mortgage loan; (j) be determined by an opinion of counsel to be a "qualified
replacement mortgage" within the meaning of Section 860G(a)(4) of the Code; (k)
not have a maturity date after the date two years prior to the Rated Final
Distribution Date; (l) not be substituted for a deleted mortgage loan unless
the Trustee has received prior confirmation in writing by each of S&P and Fitch
that the substitution will not result in the withdrawal, downgrade, or
qualification of the rating assigned by the either of S&P or Fitch to any Class
of Certificates then rated by the S&P or Fitch, respectively, (the cost, if
any, of obtaining the confirmation to be paid by the applicable Mortgage Loan
Seller); (m) have a date of origination that is not more than 12 months prior
to the date of substitution; (n) has been approved by the Directing
Certificateholder; provided, that the Directing Certificateholder shall cease
to have the right to approve the substitution of a Qualified Substitute
Mortgage Loan for a deleted mortgage loan after the aggregate of the
outstanding principal balance of all Qualified Substitute Mortgage Loans which
were previously substituted for deleted mortgage loans exceeds 10% of the
aggregate outstanding principal balance of all the mortgage loans as of the
cut-off date; and (o) not be substituted for a deleted mortgage loan if it
would result in the termination of the REMIC status of either REMIC or the
imposition of tax on either REMIC other than a tax on income expressly
permitted or contemplated to be received by the terms of the Pooling and
Servicing Agreement. In the event that one or more mortgage loans are
substituted for one or more deleted mortgage loans simultaneously, then the
amounts described in clause (a) shall be determined on the basis of aggregate
principal balances and the rates described in clause (b) above and the
remaining term to stated maturity referred to in clause (e) above shall be
determined on a weighted average basis. When a Qualified Substitute Mortgage
Loan is substituted for a deleted mortgage loan, the applicable Mortgage Loan
Seller shall certify that the mortgage loan meets all of the requirements of
the above definition and shall send the certification to the Trustee.
The foregoing repurchase or substitution obligation will constitute the
sole remedy available to the Certificateholders and the Trustee for any breach
of any Mortgage Loan Seller's representations and warranties regarding the
mortgage loans. Each respective Mortgage Loan Seller will be the sole
warranting party in respect of the mortgage loans sold by that Mortgage Loan
Seller to the Depositor, and none of the Depositor, the Master Servicer, the
Special Servicer, the Trustee, the Underwriters or any of their affiliates
(other than the respective Mortgage Loan Seller) will be obligated to
repurchase any affected mortgage loan in connection with a breach of the
Mortgage Loan Seller's representations and warranties if the Mortgage Loan
Seller defaults on its obligation to do so. However, the Depositor will not
include any mortgage loan in the pool of mortgage loans if anything has come to
the Depositor's attention prior to the Closing Date that causes it to believe
that the representations and warranties made by a Mortgage Loan Seller
regarding the mortgage loan will not be correct in all material respects when
made. See "Description of the Pooling Agreements--Representations and
Warranties; Repurchases" in the prospectus.
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LOCK BOX ACCOUNTS
With respect to 45 mortgage loans (the "Lock Box Loans"), representing
approximately 22.83% of the Initial Pool Balance, one or more accounts
(collectively, the "Lock Box Accounts") have been or may be established into
which the related property manager and/or Tenants directly deposits rents or
other revenues from the Mortgaged Property. Pursuant to the terms of 36 Lock
Box Loans, representing approximately 16.59% of the Initial Pool Balance, the
related Lock Box Accounts were required to be established on the origination
dates of the related mortgage loans. The terms of 9 Lock Box Loans,
representing approximately 6.24% of the Initial Pool Balance, provide for the
establishment of a Lock Box Account upon the occurrence and continuation of
certain events, generally relating to the occurrence of an event of default
under the related mortgage loan documents or the occurrence of an Anticipated
Prepayment Date. Except as set forth above, the agreements which govern the
Lock Box Accounts provide that the borrower has no withdrawal or transfer
rights with respect thereto. The Lock Box Accounts will not be assets of either
REMIC.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to a pooling and servicing
agreement, among the Depositor, the Master Servicer, the Special Servicer and
the Trustee (the "Pooling and Servicing Agreement") and will represent in the
aggregate the entire beneficial ownership interest in the trust fund consisting
of: (1) the mortgage loans and all payments under and proceeds of the mortgage
loans received after the cut-off date (exclusive of payments of principal and
interest due on or before the cut-off date and in the case of Semi-Annual
Loans, interest accrued before the cut-off date); (2) any REO Property; (3)
those funds or assets as from time to time are deposited in the Certificate
Account, the Distribution Accounts, the Interest Reserve Account, the Excess
Interest Distribution Account, and the REO Account, if established; (4) the
rights of the mortgagee under all insurance policies with respect to the
mortgage loans; and (5) certain rights of the Depositor under the Purchase
Agreements relating to mortgage loan document delivery requirements and the
representations and warranties of each Mortgage Loan Seller regarding the
mortgage loans.
The Depositor's Commercial Mortgage Pass-Through Certificates, Series
1999-1 (the "Certificates") will consist of the following seventeen classes
(each, a "Class"): the Class A-1 and Class A-2 Certificates (collectively, the
"Class A Certificates"), the Class X, Class B, Class C, Class D, Class E, Class
F, Class G, Class H, Class I, Class J, Class K, Class L, Class M, Class R and
Class LR Certificates. The Class A Certificates and the Class X Certificates
are referred to collectively in this prospectus supplement as the "Senior
Certificates." The Class B, Class C, Class D, Class E, Class F, Class G, Class
H, Class I, Class J, Class K, Class L and Class M Certificates are referred to
collectively in this prospectus supplement as the "Subordinate Certificates."
The Class B, Class C, Class D, Class E and Class F Certificates are referred to
collectively in this prospectus supplement as the "Subordinate Offered
Certificates." The Class R and Class LR Certificates are referred to
collectively in this prospectus supplement as the "Residual Certificates."
Only the Class A, Class X, Class B, Class C, Class D, Class E and Class F
Certificates are offered hereby (collectively, the "Offered Certificates"). The
Class G, Class H, Class I, Class J, Class K, Class L, Class M, Class R and
Class LR Certificates (collectively, the "Non-Offered Certificates") have not
been registered under the Securities Act of 1933 and are not offered hereby.
The "Certificate Balance" of any Class of Certificates (other than the
Class X and Residual Certificates) outstanding at any time represents the
maximum amount which its holders 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. On each distribution date, the Certificate Balance of
each Class of Certificates will be reduced by any distributions of principal
actually made on, and any Collateral Support Deficit actually allocated to,
that Class of Certificates on that distribution date. The initial Certificate
Balance of each Class of Offered Certificates (other than the Class X
Certificates) is expected to be the balance set forth on the cover of this
prospectus supplement. The Class X Certificates will not have a Certificate
Balance or entitle their holders to distributions of principal.
The Class X Certificates will, however, represent the right to receive
distributions of interest accrued as described in this prospectus supplement on
a notional amount (the "Notional Amount"). The Notional Amount of the Class X
Certificates will be equal to the aggregate of the Certificate Balances of the
other Certificates as of the prior distribution date (after giving effect to
the distribution of principal on that distribution date) or, prior to the first
distribution date, the cut-off date. The Notional Amount of the Class X
Certificates is used solely for purposes of describing the amounts of interest
payable on the Class X Certificates and does not represent an interest in
principal payments on the mortgage loans. The Class G, Class H, Class I, Class
J, Class K, Class L and Class M Certificates will have an aggregate initial
Certificate Balance of approximately $143,258,123. The Class R and Class LR
Certificates will not have Certificate Balances.
The Offered Certificates will be maintained and transferred in book-entry
form and issued in denominations of $10,000 initial Certificate Balance, or in
the case of the Class X Certificates,
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$1,000,000 initial Notional Amount, and integral multiples of $1,000 in excess
of that amount. The "Percentage Interest" evidenced by any Certificate (other
than the Residual Certificates) is equal to its initial denomination as of the
Closing Date, divided by the initial Certificate Balance or Notional Amount of
the Class to which it belongs.
The Offered Certificates will initially be represented by one or more
global Certificates registered in the name of the nominee of The Depository
Trust Company ("DTC"). The Depositor has been informed by DTC that DTC's
nominee will be Cede & Co. No person acquiring an interest in the Offered
Certificates (this person, a "Certificate Owner") will be entitled to receive
an Offered Certificate in fully registered, certificated form, a definitive
certificate, representing its interest in that Class, except as set forth under
"--Book-Entry Registration and Definitive Certificates" below. 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 Certificate Owners through its participating organizations
(together with Cedelbank ("Cedelbank") and the Euroclear System ("Euroclear")
participating organizations, the "Participants"), and all references in this
prospectus supplement to payments, notices, reports and statements to holders
of the 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 Certificate Owners through its Participants
in accordance with DTC procedures. See "Description of the
Certificates--Book-Entry Registration and Definitive Certificates" in the
prospectus.
Until definitive certificates are issued, interests in any Class of
Offered Certificates will be transferred on the book-entry records of DTC and
its Participants.
PAYING AGENT, CERTIFICATE REGISTRAR AND AUTHENTICATING AGENT
Pursuant to the Pooling and Servicing Agreement, the Trustee may appoint
one or more parties to serve as paying agent (in that capacity, the "Paying
Agent") for purposes of making distributions on the Certificates, as
certificate registrar (in that capacity, the "Certificate Registrar") for
purposes of recording and otherwise providing for the registration of the
Offered Certificates and of transfers and exchanges of the definitive
certificates, if issued, and as authenticating agent of the Certificates (in
that capacity, the "Authenticating Agent"). Initially, the Trustee will be
appointed as the Paying Agent, the Certificate Registrar and the Authenticating
Agent pursuant to the Pooling and Servicing Agreement. Pursuant to the Pooling
and Servicing Agreement, in the event that the Trustee resigns or is removed as
Trustee, it will have the right to resign, and in certain circumstances will be
removed as paying agent, certificate registrar and/or authenticating agent.
BOOK-ENTRY REGISTRATION AND DEFINITIVE CERTIFICATES
General. Certificate Owners may hold their Certificates through DTC (in
the United States) or Cedelbank or Euroclear (in Europe) if they are
Participants of that system, or indirectly through organizations that are
Participants in those systems. Cedelbank and Euroclear will hold omnibus
positions on behalf of the Cedelbank Participants and the Euroclear
Participants, respectively, through customers' securities accounts in
Cedelbank's and Euroclear's names on the books of their respective depositories
(collectively, the "Depositories") which in turn will hold those positions in
customers' securities accounts in the Depositories' 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 ("Direct
Participants"). 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").
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Transfers between DTC Participants will occur in accordance with DTC
rules. Transfers between Cedelbank Participants and Euroclear Participants will
occur in accordance with their applicable rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly through Cedelbank Participants or
Euroclear Participants, on the other, will be effected in DTC in accordance
with DTC rules on behalf of the relevant European international clearing system
by its Depository; however, these cross-market transactions will require
delivery of instructions to the relevant European international clearing system
by the counterparty in that system in accordance with its rules and procedures.
If the transaction complies with all relevant requirements, Euroclear or
Cedelbank, as the case may be, will then deliver instructions to the Depository
to take action to effect final settlement on its behalf.
Because of time-zone differences, credits of securities in Cedelbank or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and those credits or any transactions in
those securities settled during those processing will be reported to the
relevant Cedelbank Participant or Euroclear Participant on that business day.
Cash received in Cedelbank or Euroclear as a result of sales of securities by
or through a Cedelbank Participant or a Euroclear Participant to a DTC
Participant will be received with value on the DTC settlement date but will be
available in the relevant Cedelbank or Euroclear cash account only as of the
business day following settlement in DTC.
Certificate Owners that are not Direct or Indirect Participants but desire
to purchase, sell or otherwise transfer ownership of, or other interests in,
the Offered Certificates may do so only through Direct and Indirect
Participants. In addition, Certificate Owners will receive all distributions of
principal of and interest on the Offered Certificates from the Paying Agent
through DTC and its Direct and Indirect Participants. Accordingly, Certificate
Owners may experience delays in their receipt of payments, since those payments
will be forwarded by the Paying Agent to Cede & Co., as nominee of DTC. DTC
will forward those payments to its Participants, which thereafter will forward
them to Indirect Participants or beneficial owners of Offered Certificates.
Except as otherwise provided under "--Reports to Certificateholders; Certain
Available Information" below, Certificate Owners will not be recognized by the
Paying Agent, the Certificate Registrar, the Trustee, the Special Servicer or
the Master Servicer as holders of record of Certificates and Certificate Owners
will be permitted to receive information furnished to Certificateholders and to
exercise the rights of Certificateholders only indirectly through DTC and its
Direct and Indirect Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
the Offered Certificates among Participants and to receive and transmit
distributions of principal of, and interest on, the Offered Certificates.
Direct and Indirect Participants with which Certificate Owners have accounts
with respect to the Offered Certificates similarly are required to make
book-entry transfers and receive and transmit the distributions on behalf of
their respective Certificate Owners. Accordingly, although Certificate Owners
will not possess physical certificates evidencing their interests in the
Offered Certificates, the Rules provide a mechanism by which Certificate
Owners, through their Direct and Indirect Participants, will receive
distributions and will be able to transfer their interests in the Offered
Certificates.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of
Certificateholders to pledge the Certificates to persons or entities that do
not participate in the DTC system, or to otherwise act with respect to the
Certificates, may be limited due to the lack of a physical certificate for the
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 those
actions are taken on behalf of Participants whose holdings include the
undivided interests.
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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.
Although DTC, Euroclear and Cedelbank have implemented the foregoing
procedures in order to facilitate transfers of interests in global Certificates
among Participants of DTC, Euroclear and Cedelbank, they are under no
obligation to perform or to continue to comply with the foregoing procedures,
and the foregoing procedures may be discontinued at any time.
None of the Depositor, the Master Servicer, the Paying Agent, the
Certificate Registrar, the Underwriters, the Special Servicer or the Trustee
will have any liability for any actions taken by DTC, Euroclear or Cedelbank,
their respective Direct or Indirect Participants or their nominees, including,
without limitation, actions 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 that beneficial ownership
interest. The information in this prospectus supplement concerning DTC,
Cedelbank 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 of the information.
Definitive Certificates. Definitive certificates will be issued to
Certificate Owners or their nominees, respectively, rather than to DTC or its
nominee, only under the limited conditions set forth in the prospectus under
"Description of the Certificates--Book-Entry Registration and Definitive
Certificates."
Upon the occurrence of an event described in the prospectus in the last
paragraph under "Description of the Certificates--Book-Entry Registration and
Definitive Certificates," the Paying Agent is required to notify, through DTC,
Direct Participants who have ownership of Offered Certificates as indicated on
the records of DTC of the availability of definitive certificates. Upon
surrender by DTC of the definitive certificates representing the Offered
Certificates and upon receipt of instructions from DTC for re-registration, the
Certificate Registrar and the Authenticating Agent will reissue the Offered
Certificates as definitive certificates issued in the respective Certificate
Balances or Notional Amounts, as applicable, owned by individual Certificate
Owners, and thereafter the Paying Agent, the Certificate Registrar, the
Trustee, the Special Servicer and the Master Servicer will recognize the
holders of those definitive certificates as Certificateholders under the
Pooling and Servicing Agreement.
For additional information regarding DTC and Certificates maintained on
the book-entry records of DTC, see "Description of the Certificates--Book-Entry
Registration and Definitive Certificates" in the prospectus.
DISTRIBUTIONS
Method, Timing and Amount. Distributions on the Certificates are required
to be made by the Paying Agent, to the extent of available funds, on the 15th
day of each month or, if the 15th day is not a business day, then on the next
succeeding business day (but in no event earlier than the fourth business day
following the related Determination Date), commencing in September 1999 (each,
a "Distribution Date"). All distributions (other than the final distribution on
any Certificate) are required to be made to the Certificateholders in whose
names the Certificates are registered at the close of business on each Record
Date. With respect to any Distribution Date, the "Record Date" will be the last
business day of the month preceding the month in which that Distribution Date
occurs. These distributions are required to be made 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 the
Certificateholder has provided the Paying Agent with written wiring
instructions no less than five business days prior to the related Record Date
(which wiring instructions may be in the
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form of a standing order applicable to all subsequent distributions) and is the
registered owner of Certificates with an aggregate initial Certificate Balance
or Notional Amount, as the case may be, of at least $5,000,000, or otherwise by
check mailed to the Certificateholder. The final distribution on any
Certificate is required to be made in like manner, but only upon presentation
and surrender of the Certificate at the location that will be specified in a
notice of the pendency of the final distribution. All distributions made with
respect to a Class of Certificates will be allocated pro rata among the
outstanding Certificates of the related Class based on their respective
Percentage Interests.
The Master Servicer is required to establish and maintain, or cause to be
established and maintained, one or more accounts (collectively, the
"Certificate Account") as described in the Pooling and Servicing Agreement. The
Master Servicer is required to deposit in the Certificate Account on a daily
basis (and in no event later than the business day following receipt in
available funds) all payments and collections due after the cut-off date and
other amounts received or advanced with respect to the mortgage loans
(including, without limitation, all proceeds received under any hazard, title
or other insurance policy that provides coverage with respect to a Mortgaged
Property or the related mortgage loan or in connection with the full or partial
condemnation of a Mortgaged Property (the "Insurance and Condemnation
Proceeds") and other amounts received and retained in connection with the
liquidation of defaulted mortgage loans or property acquired by foreclosure or
otherwise (the "Liquidation Proceeds")), and will be permitted to make
withdrawals therefrom as set forth in the Pooling and Servicing Agreement.
The Paying Agent is required to establish and maintain an account (the
"Lower-Tier Distribution Account"), and a second account (the "Upper-Tier
Distribution Account" and, together with the Lower-Tier Distribution Account,
the "Distribution Accounts") in the name of the Paying Agent and for the
benefit of the Certificateholders. On each Distribution Date, the Paying Agent
is required to apply amounts on deposit in the Upper-Tier Distribution Account
(which will include all funds that were remitted by the Master Servicer from
the Certificate Account plus, among other things, any P&I Advances less
amounts, if any, distributable to the Class LR Certificates as set forth in the
Pooling and Servicing Agreement) generally to make distributions of interest
and principal from the Available Distribution Amount to the Certificateholders
as described in this prospectus supplement. Each of the Certificate Account and
the Distribution Accounts will conform to certain eligibility requirements set
forth in the Pooling and Servicing Agreement.
The Paying Agent is required to establish and maintain an "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 Master Servicer will be required to deposit into
the Interest Reserve Account during the related interest period, in respect of
the mortgage loans (other than the mortgage loans (each, an "Annualized
Actual/360 Loan") identified on Annex A hereto as Loan No. 12, Loan No. 78 and
Loan No. 157), which accrue interest on an Actual/360 basis (collectively, the
"Withheld Loans"), an amount equal to one day's interest at the Mortgage Rate
for each Withheld Loan on its Stated Principal Balance as of the Distribution
Date in the month preceding the month in which the related Servicer Remittance
Date occurs, to the extent a Periodic Payment or P&I Advance is made in respect
of the Withheld Loans (all amounts so deposited in any consecutive January (if
applicable) and February, "Withheld Amounts"). On each Servicer Remittance Date
occurring in March, the Paying Agent will be required to withdraw from the
Interest Reserve Account an amount equal to the Withheld Amounts from the
preceding January (if applicable) and February, if any, and deposit that amount
into the Lower-Tier Distribution Account. The Master Servicer is authorized but
not required to direct the investment of funds held in the Certificate Account
and Interest Reserve Account in U.S. government securities and other
obligations that are acceptable to each of S&P and Fitch ("Permitted
Investments"), and the Master Servicer will be entitled to retain any interest
or other income earned on the funds. The Master Servicer will be required to
bear any losses resulting from the investment of the funds.
The Paying Agent is required to establish and maintain an "Excess Interest
Distribution Account" in the name of the Trustee for the benefit of the
Certificateholders. Prior to the applicable
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Distribution Date, the Master Servicer is required to remit to the Paying Agent
for deposit into the Excess Interest Distribution Account an amount equal to
the Excess Interest received during the related Due Period.
The aggregate amount available for distribution to Certificateholders on
each Distribution Date (the "Available Distribution Amount") will, in general,
equal the sum of the following amounts:
(a) the total amount of all cash received on the mortgage loans and
any REO Properties that is on deposit in the Certificate Account and the
Lower-Tier Distribution Account as of the business day preceding the
related Servicer Remittance Date, exclusive of (without duplication):
(1) all Periodic Payments and balloon payments collected but due
on a due date subsequent to the related Due Period;
(2) all principal prepayments, Liquidation Proceeds, Insurance
and Condemnation Proceeds and other unscheduled recoveries received
subsequent to the related Due Period;
(3) all amounts in the Certificate Account and Lower-Tier
Distribution Account that are due or reimbursable to any person other
than the Certificateholders;
(4) all Prepayment Premiums and Yield Maintenance Charges;
(5) with respect to each Withheld Loan and any Distribution Date
occurring in each February and in any January occurring in a year that
is not a leap year, the related Withheld Amount to the extent those
funds are on deposit in the Certificate Account or the Lower-Tier
Distribution Account;
(6) Excess Interest; and
(7) all amounts deposited in the Certificate Account and
Lower-Tier Distribution Account in error;
(b) all P&I Advances made by the Master Servicer or the Trustee, as
applicable, with respect to the Distribution Date (net of certain amounts
that are due or reimbursable to persons other than the Certificateholders).
See "Description of the Pooling Agreements--Certificate Account" in the
prospectus;
(c) any Compensating Interest Payment made by the Master Servicer to
cover the aggregate of any Prepayment Interest Shortfalls experienced
during the related Due Period; and
(d) for the Distribution Date occurring in each March, the related
Withheld Amounts required to be deposited in the Lower-Tier Distribution
Account pursuant to the Pooling and Servicing Agreement.
The "Due Period" for each Distribution Date will be the period commencing
on the second day of the month preceding the month in which that Distribution
Date occurs and ending on the first day of the month in which that Distribution
Date occurs (or, with respect to 32 mortgage loans, representing approximately
28.49% of the Initial Pool Balance, the period commencing on the eleventh day
of the month preceding the month in which that Distribution Date occurs and
ending on the tenth day of the month in which that Distribution Date occurs).
Notwithstanding the foregoing, in the event that the last day of a Due Period
(or applicable grace period) is not a business day, any payments received with
respect to the mortgage loans relating to the related Due Period on the
business day immediately following that day will be deemed to have been
received during that Due Period and not during any other Due Period. For
purposes of the discussion in the prospectus, the Due Period is also the
Prepayment Period (as defined in the prospectus).
Priority. On each Distribution Date, for so long as the Certificate
Balances of the Certificates have not been reduced to zero, the Paying Agent is
required to apply amounts on deposit in the Upper-Tier Distribution Account, to
the extent of the Available Distribution Amount, in the following order of
priority:
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first, to the Class A-1, Class A-2 and Class X Certificates, pro rata
(based upon their respective entitlements to interest for that Distribution
Date), in respect of interest, up to an amount equal to the aggregate Interest
Distribution Amount for those Classes;
second, (1) to the Class A-1 Certificates, in reduction of its Certificate
Balance, an amount equal to the Principal Distribution Amount until the
Certificate Balance of that Class is reduced to zero and (2) following
reduction of the Certificate Balance of the Class A-1 Certificates to zero, to
the Class A-2 Certificates, in reduction of its Certificate Balance, an amount
equal to the Principal Distribution Amount (or the portion of it remaining
after distributions on the Class A-1 Certificates on that Distribution Date)
until the Certificate Balance of that Class is reduced to zero;
third, to the Class A-1 and Class A-2 Certificates, pro rata (based upon
the aggregate unreimbursed Collateral Support Deficit allocated to that Class),
until all amounts of Collateral Support Deficit previously allocated to those
Classes, but not previously reimbursed, have been reimbursed in full;
fourth, to the Class B Certificates, in respect of interest, up to an
amount equal to the Interest Distribution Amount for that Class;
fifth, following reduction of the Certificate Balances of the Class A
Certificates to zero, to the Class B Certificates, in reduction of its
Certificate Balance, an amount equal to the Principal Distribution Amount (or
the portion of it remaining after distributions on the Class A Certificates on
that Distribution Date), until the Certificate Balance of that Class is reduced
to zero;
sixth, to the Class B Certificates, until all amounts of Collateral
Support Deficit previously allocated to the Class B Certificates, but not
previously reimbursed, have been reimbursed in full;
seventh, to the Class C Certificates, in respect of interest, up to an
amount equal to the Interest Distribution Amount for that Class;
eighth, following reduction of the Certificate Balances of the Class A and
Class B Certificates to zero, to the Class C Certificates, in reduction of its
Certificate Balance, an amount equal to the Principal Distribution Amount (or
the portion of it remaining after distributions on the Class A and Class B
Certificates on that Distribution Date), until the Certificate Balance of that
Class is reduced to zero;
ninth, to the Class C Certificates, until all amounts of Collateral
Support Deficit previously allocated to the Class C Certificates, but not
previously reimbursed, have been reimbursed in full;
tenth, to the Class D Certificates, in respect of interest, up to an
amount equal to the Interest Distribution Amount for that Class;
eleventh, following reduction of the Certificate Balances of the Class A,
Class B and Class C Certificates to zero, to the Class D Certificates, in
reduction of its Certificate Balance, an amount equal to the Principal
Distribution Amount (or the portion of it remaining after distributions on the
Class A, Class B and Class C Certificates on that Distribution Date), until the
Certificate Balance of that Class is reduced to zero;
twelfth, to the Class D Certificates, until all amounts of Collateral
Support Deficit previously allocated to the Class D Certificates, but not
previously reimbursed, have been reimbursed in full;
thirteenth, to the Class E Certificates, in respect of interest, up to an
amount equal to the Interest Distribution Amount for that Class;
fourteenth, following reduction of the Certificate Balances of the Class
A, Class B, Class C and Class D Certificates to zero, to the Class E
Certificates, in reduction of its Certificate Balance, an amount equal to the
Principal Distribution Amount (or the portion of it remaining after
distributions on the Class A, Class B, Class C and Class D Certificates on that
Distribution Date), until the Certificate Balance of that Class is reduced to
zero;
fifteenth, to the Class E Certificates, until all amounts of Collateral
Support Deficit previously allocated to the Class E Certificates, but not
previously reimbursed, have been reimbursed in full;
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sixteenth, to the Class F Certificates, in respect of interest, up to an
amount equal to the Interest Distribution Amount for that Class;
seventeenth, following reduction of the Certificate Balances of the Class
A, Class B, Class C, Class D and Class E Certificates to zero, to the Class F
Certificates, in reduction of its Certificate Balance, an amount equal to the
Principal Distribution Amount (or the portion of it remaining after
distributions on the Class A, Class B, Class C, Class D and Class E
Certificates on that Distribution Date), until the Certificate Balance of that
Class is reduced to zero;
eighteenth, to the Class F Certificates, until all amounts of Collateral
Support Deficit previously allocated to the Class F Certificates, but not
previously reimbursed, have been reimbursed in full;
nineteenth, to the Class G Certificates, in respect of interest, up to an
amount equal to the Interest Distribution Amount for that Class;
twentieth, following reduction of the Certificate Balances of the Class A,
Class B, Class C, Class D, Class E and Class F Certificates to zero, to the
Class G Certificates, in reduction its Certificate Balance, an amount equal to
the Principal Distribution Amount (or the portion of it remaining after
distributions on the Class A, Class B, Class C, Class D, Class E and Class F
Certificates on that Distribution Date), until the Certificate Balance of that
Class is reduced to zero;
twenty-first, to the Class G Certificates, until all amounts of Collateral
Support Deficit previously allocated to the Class G Certificates, but not
previously reimbursed, have been reimbursed in full;
twenty-second, to the Class H Certificates, in respect of interest, up to
an amount equal to the Interest Distribution Amount for that Class;
twenty-third, following reduction of the Certificate Balances of the Class
A, Class B, Class C, Class D, Class E, Class F and Class G Certificates to
zero, to the Class H Certificates, in reduction of its Certificate Balance, an
amount equal to the Principal Distribution Amount (or the portion of it
remaining after distributions on the Class A, Class B, Class C, Class D, Class
E, Class F and Class G Certificates on that Distribution Date), until the
Certificate Balance of that Class is reduced to zero;
twenty-fourth, to the Class H Certificates, until all amounts of
Collateral Support Deficit previously allocated to the Class H Certificates,
but not previously reimbursed, have been reimbursed in full;
twenty-fifth, to the Class I Certificates, in respect of interest, up to
an amount equal to the Interest Distribution Amount for that Class;
twenty-sixth, following reduction of the Certificate Balances of the Class
A, Class B, Class C, Class D, Class E, Class F, Class G and Class H
Certificates to zero, to the Class I Certificates, in reduction of its
Certificate Balance, an amount equal to the Principal Distribution Amount (or
the portion of it remaining after distributions on the Class A, Class B, Class
C, Class D, Class E, Class F, Class G and Class H Certificates on that
Distribution Date), until the Certificate Balance of that Class is reduced to
zero;
twenty-seventh, to the Class I Certificates, until all amounts of
Collateral Support Deficit previously allocated to the Class I Certificates,
but not previously reimbursed, have been reimbursed in full;
twenty-eighth, to the Class J Certificates, in respect of interest, up to
an amount equal to the Interest Distribution Amount for that Class;
twenty-ninth, following reduction of the Certificate Balances of the Class
A, Class B, Class C, Class D, Class E, Class F, Class G, Class H and Class I
Certificates to zero, to the Class J Certificates, in reduction of its
Certificate Balance, an amount equal to the Principal Distribution Amount (or
the portion of it remaining after distributions on the Class A, Class B, Class
C, Class D, Class E, Class F, Class G, Class H and Class I Certificates on that
Distribution Date), until the Certificate Balance of that Class is reduced to
zero;
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thirtieth, to the Class J Certificates, until all amounts of Collateral
Support Deficit previously allocated to the Class J Certificates, but not
previously reimbursed, have been reimbursed in full;
thirty-first, to the Class K Certificates, in respect of interest, up to
an amount equal to the Interest Distribution Amount for that Class;
thirty-second, following reduction of the Certificate Balances of the
Class A, Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class I
and Class J Certificates to zero, to the Class K Certificates, in reduction of
its Certificate Balance, an amount equal to the Principal Distribution Amount
(or the portion of it remaining after distributions on the Class A, Class B,
Class C, Class D, Class E, Class F, Class G, Class H, Class I and Class J
Certificates on that Distribution Date), until the Certificate Balance of that
Class is reduced to zero;
thirty-third, to the Class K Certificates, until all amounts of Collateral
Support Deficit previously allocated to the Class K Certificates, but not
previously reimbursed, have been reimbursed in full;
thirty-fourth, to the Class L Certificates, in respect of interest, up to
an amount equal to the Interest Distribution Amount for that Class;
thirty-fifth, following reduction of the Certificate Balances of the Class
A, Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class I,
Class J and Class K Certificates to zero, to the Class L Certificates, in
reduction of its Certificate Balance, an amount equal to the Principal
Distribution Amount (or the portion of it remaining after distributions on the
Class A, Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class
I, Class J and Class K Certificates on that Distribution Date), until the
Certificate Balance of that Class is reduced to zero;
thirty-sixth, to the Class L Certificates, until all amounts of Collateral
Support Deficit previously allocated to the Class L Certificates, but not
previously reimbursed, have been reimbursed in full;
thirty-seventh, to the Class M Certificates, in respect of interest, up to
an amount equal to the Interest Distribution Amount for that Class;
thirty-eighth, following reduction of the Certificate Balances of the
Class A, Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class
I, Class J, Class K and Class L Certificates to zero, to the Class M
Certificates, in reduction of its Certificate Balance, an amount equal to the
Principal Distribution Amount (or the portion of it remaining after
distributions on the Class A, Class B, Class C, Class D, Class E, Class F,
Class G, Class H, Class I, Class J, Class K and Class L Certificates on that
Distribution Date), until the Certificate Balance of that Class is reduced to
zero;
thirty-ninth, to the Class M Certificates, until all amounts of Collateral
Support Deficit previously allocated to the Class M Certificates, but not
previously reimbursed, have been reimbursed in full; and
fortieth, to the Class R Certificates, the amount, if any, of the
Available Distribution Amount remaining in the Upper-Tier Distribution Account
with respect to that Distribution Date.
Reimbursement of previously allocated Collateral Support Deficit will not
constitute distributions of principal for any purpose and will not result in an
additional reduction in the Certificate Balance of the Class of Certificates in
respect of which a reimbursement is made.
Notwithstanding the distribution priority second set forth above, on and
after the Distribution Date on which the Certificate Balances of the
Subordinate Certificates have all been reduced to zero (that date, the
"Cross-Over Date"), the Principal Distribution Amount will be distributed, pro
rata (based upon their respective Certificate Balances), among the Classes of
Class A Certificates without regard to the priorities set forth above.
Pass-Through Rates. The interest rate (the "Pass-Through Rate") applicable
to each Class of Certificates (other than the Residual Certificates) for any
Distribution Date will equal the rates set forth below.
The Pass-Through Rate on the Class A-1 Certificates is a per annum rate
equal to 7.134%.
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The Pass-Through Rate on the Cass A-2 Certificates is a per annum rate
equal to 7.439%, subject to a cap equal to the WAC Rate.
The Pass-Through Rate on the Class B Certificates is a per annum rate equal
to 7.619%, subject to a cap equal to the WAC Rate.
The Pass-Through Rate on the Class C Certificates is a per annum rate equal
to 7.625%, subject to a cap equal to the WAC Rate.
The Pass-Through Rate on the Class D Certificates is a per annum rate equal
to 7.625%, subject to a cap equal to the WAC Rate.
The Pass-Through Rate on the Class E Certificates is a per annum rate equal
to the WAC Rate less 0.05% per annum.
The Pass-Through Rate on the Class F Certificates is a per annum rate equal
to the WAC Rate less 0.05% per annum.
The Pass-Through Rate on the Class G Certificates is a per annum rate equal
to 6.400%.
The Pass-Through Rate on the Class H Certificates is a per annum rate equal
to 6.400%.
The Pass-Through Rate on the Class I Certificates is a per annum rate equal
to 6.400%.
The Pass-Through Rate on the Class J Certificates is a per annum rate equal
to 6.400%.
The Pass-Through Rate on the Class K Certificates is a per annum rate equal
to 6.400%.
The Pass-Through Rate on the Class L Certificates is a per annum rate equal
to 6.400%.
The Pass-Through Rate on the Class M Certificates is a per annum rate equal
to 6.400%.
The Pass-Through Rate for the Class X Certificates for any Distribution
Date will equal the excess, if any, of (a) the WAC Rate for such Distribution
Date immediately after the preceding Distribution Date, over (b) the weighted
average of the Pass-Through Rates on all of the other Certificates (other than
the Residual Certificates) weighted on the basis of their respective
Certificate Balances immediately prior to that Distribution Date.
The Pass-Through Rate on each Class of Offered Certificates for the first
Distribution Date is expected to be as set forth on page S-6 of this prospectus
supplement.
The "WAC Rate" with respect to any Distribution Date is equal to the
weighted average of the applicable Net Mortgage Rates for the mortgage loans
weighted on the basis of their respective Stated Principal Balances as of the
preceding Distribution Date (after giving effect to the distribution of
principal on such Distribution Date) or, in the case of the first Distribution
Date, the cut-off date.
The "Net Mortgage Rate" for each mortgage loan is equal to the related
Mortgage Rate in effect from time to time less the related Administrative Cost
Rate; provided however, that for purposes of calculating Pass-Through Rates,
the Net Mortgage Rate for any mortgage loan will be determined without regard
to any modification, waiver or amendment of the terms of the mortgage loan,
whether agreed to by the Master Servicer or resulting from a bankruptcy,
insolvency or similar proceeding involving the related borrower.
The "Mortgage Rate" with respect to any mortgage loan is the per annum
rate at which interest accrues on the mortgage loan as stated in the related
Mortgage Note in each case without giving effect to any default rate or an
increased interest rate. Notwithstanding the foregoing, if any mortgage loan
does not accrue interest on the basis of a 360-day year consisting of twelve
30-day months, then, solely for purposes of calculating the Pass-Through Rate
on the Class X Certificates, the Mortgage Rate of the mortgage loan for any
one-month period preceding a related due date will be the annualized rate at
which interest would have to accrue in respect of the mortgage loan on the
basis of a 360-day year consisting of twelve 30-day months in order to produce
the aggregate amount of interest actually required to be paid in respect of the
mortgage loan during the one-month period at the related
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Mortgage Rate; provided, however, that with respect to each Withheld Loan
(other than any Annualized Actual/360 Loan during the related interest-only
period), the Mortgage Rate for the one month period (1) prior to the due dates
in January and February in any year which is not a leap year or in February in
any year which is a leap year, and (2) prior to the due date in March, will be
the per annum rate stated in the related Mortgage Note.
"Excess Interest" with respect to any APD Loan is the interest accrued at
an increased interest rate in respect of that APD Loan in excess of the
interest accrued at the related initial interest rate, plus any related
interest, to the extent permitted by applicable law.
Interest Distribution Amount. Interest will accrue for each Class of
Certificates during the related Interest Accrual Period. The "Interest
Distribution Amount" of any Class of Certificates (other than the Residual
Certificates) for any Distribution Date is an amount equal to all Distributable
Certificate Interest in respect of that Class for that Distribution Date and,
to the extent not previously paid, for all prior Distribution Dates.
The "Accrued Certificate Interest" in respect of each Class of
Certificates (other than the Residual Certificates) for each Distribution Date
is equal to one month's interest at the Pass-Through Rate applicable to that
Class of Certificates for that Distribution Date accrued for the related
Interest Accrual Period on the related Certificate Balance or Notional Amount,
as the case may be, outstanding immediately prior to that Distribution Date.
The "Distributable Certificate Interest" in respect of each Class of
Certificates (other than the Residual Certificates) for each Distribution Date
is equal to the Accrued Certificate Interest for that Class of Certificates and
that Distribution Date, reduced (other than in the case of the Class X
Certificates) (to not less than zero) by such Class's allocable share
(calculated as described below) of the aggregate of any Prepayment Interest
Shortfalls resulting from any voluntary principal prepayments made on the
mortgage loans during the related Due Period that are not covered by the Master
Servicer's Compensating Interest Payment for the related Distribution Date (the
aggregate of the Prepayment Interest Shortfalls that are not so covered, as to
the related Distribution Date, the "Net Aggregate Prepayment Interest
Shortfall"). Accrued Certificate Interest and Distributable Certificate
Interest will be calculated on the basis of a 360-day year consisting of twelve
30-day months.
The portion of the Net Aggregate Prepayment Interest Shortfall for any
Distribution Date that is allocable to each Class of Certificates (other than
the Residual Certificates and the Class X Certificates) will equal the product
of (a) the Net Aggregate Prepayment Interest Shortfall, multiplied by (b) a
fraction, the numerator of which is equal to the Accrued Certificate Interest
in respect of that Class of Certificates for the related Distribution Date, and
the denominator of which is equal to the aggregate Accrued Certificate Interest
in respect of all Classes of Certificates (other than the Residual Certificates
and the Class X Certificates) for the related Distribution Date.
Principal Distribution Amount. The "Principal Distribution Amount" for any
Distribution Date is an amount equal to the sum of (a) the Principal Shortfall
for that Distribution Date, (b) the Scheduled Principal Distribution Amount for
that Distribution Date and (c) the Unscheduled Principal Distribution Amount
for that Distribution Date.
The "Scheduled Principal Distribution Amount" for each Distribution Date
will equal the aggregate of the principal portions of (a) all Periodic Payments
(excluding balloon payments and Excess Interest) due during or, if and to the
extent not previously received or advanced and distributed to
Certificateholders on a preceding Distribution Date, prior to the related Due
Period and all Assumed Scheduled Payments for the related Due Period, in each
case to the extent paid by the related borrower as of the business day
preceding the related Servicer Remittance Date or advanced by the Master
Servicer or the Trustee, as applicable, and (b) all balloon payments to the
extent received during the related Due Period or any applicable grace period,
and to the extent not included in clause (a) above. The Scheduled Principal
Distribution Amount from time to time will include all
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late payments of principal made by a borrower, including late payments in
respect of a delinquent balloon payment, regardless of the timing of those late
payments, except to the extent those late payments are otherwise reimbursable
to the Master Servicer or the Trustee, as the case may be, for prior Advances.
The "Unscheduled Principal Distribution Amount" for each Distribution Date
will equal the aggregate of: (a) all voluntary prepayments of principal
received on the mortgage loans during the related Due Period; and (b) any other
collections (exclusive of payments by borrowers) received on the mortgage loans
and any REO Properties during the related Due Period, whether in the form of
Liquidation Proceeds, Insurance and Condemnation Proceeds, net income, rents,
and profits from REO Property or otherwise, that were identified and applied by
the Master Servicer as recoveries of previously unadvanced principal of the
related mortgage loan.
The "Assumed Scheduled Payment" for any Due Period and with respect to any
mortgage loan that is delinquent in respect of its balloon payment (including
any REO 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 Periodic Payment
that would have been due on that mortgage loan on the related due date based on
the constant payment required by the related Mortgage Note or the original
amortization schedule of the mortgage loan (as calculated with interest at the
related Mortgage Rate), if applicable, assuming the related balloon payment has
not become due, after giving effect to any modification, and (b) interest on
the Stated Principal Balance of that mortgage loan at its Mortgage Rate (net of
the applicable rate at which the Servicing Fee is calculated).
For purposes of the foregoing definitions of Principal Distribution
Amount, the term "Principal Shortfall" for any Distribution Date means the
amount, if any, by which (1) the Principal Distribution Amount for the prior
Distribution Date, exceeds (2) the aggregate amount distributed in respect of
principal on the Class A, Class B, Class C, Class D, Class E, Class F, Class G,
Class H, Class I, Class J, Class K, Class L and Class M Certificates on the
preceding Distribution Date. There will be no Principal Shortfall on the first
Distribution Date.
Certain Calculations with Respect to Individual Mortgage Loans. The Stated
Principal Balance of each mortgage loan outstanding at any time represents the
principal balance of the mortgage loan ultimately due and payable to the
Certificateholders. The "Stated Principal Balance" of each mortgage loan will
initially equal its Cut-Off Date Balance and, on each Distribution Date, will
be reduced by the portion of the Principal Distribution Amount for that date
that is attributable to that mortgage loan. The Stated Principal Balance of a
mortgage loan may also be reduced in connection with any forced reduction of
its actual unpaid principal balance imposed by a court presiding over a
bankruptcy proceeding in which the related borrower is the debtor. See "Certain
Legal Aspects of Mortgage Loans--Bankruptcy Laws" in the prospectus. If any
mortgage loan is paid in full or the mortgage loan (or any Mortgaged Property
acquired in respect of the mortgage loan) is otherwise liquidated, then, as of
the first Distribution Date that follows the end of the Due Period in which
that payment in full or liquidation occurred and notwithstanding that a loss
may have occurred in connection with any liquidation, the Stated Principal
Balance of the mortgage loan will be zero.
For purposes of calculating distributions on, and allocations of
Collateral Support Deficit to, the Certificates, as well as for purposes of
calculating the Servicing Fee and Trustee Fee payable each month, each REO
Property will be treated as if there exists with respect thereto an outstanding
mortgage loan (an "REO Loan"), and all references to mortgage loan, mortgage
loans and pool of mortgage loans in this prospectus supplement and in the
prospectus, when used in that context, will be deemed to also be references to
or to also include, as the case may be, any REO Loans. Each REO Loan will
generally be deemed to have the same characteristics as its actual predecessor
mortgage loan, including the same fixed Mortgage Rate (and, accordingly, the
same Net Mortgage Rate) and the same unpaid principal balance and Stated
Principal Balance. Amounts due on the predecessor mortgage loan, including any
portion of it payable or reimbursable to the Master Servicer, will continue to
be "due" in respect of the REO Loan; and amounts received in respect of the
related
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REO Property, net of payments to be made, or reimbursement to the Master
Servicer or the Special Servicer for payments previously advanced, in
connection with the operation and management of that property, generally will
be applied by the Master Servicer as if received on the predecessor mortgage
loan.
Excess Interest. On each Distribution Date, the Paying Agent is required
to distribute any Excess Interest received with respect to mortgage loans
during the related Due Period, among all the holders of the Class A-1, Class
A-2, Class B, Class C, Class D, Class E and Class F Certificates, on a pro rata
basis in accordance with the respective initial Certificate Balances of those
Classes of Certificates. We cannot assure you that any Excess Interest will be
collected on the APD Loans.
ALLOCATION OF PREPAYMENT PREMIUMS AND YIELD MAINTENANCE CHARGES
On any Distribution Date, Prepayment Premiums collected during the related
Due Period will be required to be distributed by the Paying Agent to the
holders of the Classes of Offered Certificates as follows: to each of the Class
A, Class B, Class C, Class D, Class E and Class F Certificates, for each of
these Classes an amount equal to the product of (a) a fraction, the numerator
of which is the amount distributed as principal to that Class on that
Distribution Date, and the denominator of which is the total amount distributed
as principal to all Classes of Certificates on that Distribution Date, (b) 25%
and (c) the total amount of Prepayment Premiums collected during the related
Due Period. Any Prepayment Premiums collected during the related Due Period
remaining after those distributions will be distributed to the holders of the
Class X Certificates.
On any Distribution Date, Yield Maintenance Charges collected during the
related Due Period will be required to be distributed by the Paying Agent to
the holder of the Classes of Offered Certificates as follows: to each of the
Class A, Class B, Class C, Class D, Class E and Class F Certificates, for each
of these Classes an amount equal to the product of (a) a fraction, the
numerator of which is the amount distributed as principal to that Class on that
Distribution Date, and the denominator of which is the total amount distributed
as principal to all Classes of Certificates on that Distribution Date, (b) the
Base Interest Fraction for the related principal prepayment and that Class of
Offered Certificates and (c) the aggregate amount of Yield Maintenance Charges
collected on that principal prepayment during the related Due Period. Any Yield
Maintenance Charges collected during the related Due Period remaining after
those distributions will be distributed to the holders of the Class X
Certificates.
The "Base Interest Fraction" with respect to any principal prepayment on
any mortgage loan and with respect to any Class of Offered Certificates (other
than the Class X Certificates) is a fraction (A) whose numerator is the greater
of (x) zero and (y) the difference between (1) the Pass-Through Rate on that
Class of Offered Certificates and (2) the Yield Rate used in calculating the
Yield Maintenance Charge with respect to that principal prepayment and (B)
whose denominator is the difference between (1) the Mortgage Rate on the
related mortgage loan and (2) the Yield Rate used in calculating the Yield
Maintenance Charge with respect to that principal prepayment; provided,
however, that under no circumstances will the Base Interest Fraction be greater
than one. If the Yield Rate is greater than the Mortgage Rate on the related
mortgage loan, then the Base Interest Fraction will equal zero.
No Prepayment Premiums or Yield Maintenance Charges will be distributed to
holders of the Class G, Class H, Class I, Class J, Class K, Class L, Class M or
Residual Certificates; instead, after the Certificate Principal Balances of the
Class A, Class B, Class C, Class D, Class E and Class F Certificates have been
reduced to zero, all Prepayment Premiums and Yield Maintenance Charges will be
distributed to holders of the Class X Certificates.
For a description of Prepayment Premiums and Yield Maintenance Charges,
see "Description of the Mortgage Pool--Certain Terms and Conditions of the
Mortgage Loans--Prepayment Provisions" in this prospectus supplement. See also
"Certain Legal Aspects of the Mortgage Loans--Default Interest and Limitations
on Prepayments" in the prospectus regarding the enforceability of Yield
Maintenance Charges and Prepayment Premiums.
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ASSUMED FINAL DISTRIBUTION DATE; RATED FINAL DISTRIBUTION DATE
The "Assumed Final Distribution Date" with respect to any Class of Offered
Certificates is the Distribution Date on which the aggregate Certificate
Balance or Notional Amount, as the case may be, of that Class of Certificates
would be reduced to zero based on the assumptions set forth below. The Assumed
Final Distribution Date will in each case be as follows:
<TABLE>
<CAPTION>
ASSUMED FINAL
CLASS DESIGNATION DISTRIBUTION DATE
- ----------------- -----------------
<S> <C>
Class A-1 ......... July 15, 2007
Class A-2 ......... July 15, 2009
Class X ........... July 15, 2029
Class B ........... August 15, 2009
Class C ........... August 15, 2009
Class D ........... August 15, 2009
Class E ........... May 15, 2011
Class F ........... May 15, 2011
</TABLE>
THE ASSUMED FINAL DISTRIBUTION DATES SET FORTH ABOVE WERE CALCULATED
WITHOUT REGARD TO ANY DELAYS IN THE COLLECTION OF BALLOON PAYMENTS AND WITHOUT
REGARD TO A REASONABLE LIQUIDATION TIME WITH RESPECT TO ANY MORTGAGE LOANS THAT
MAY BECOME DELINQUENT. ACCORDINGLY, IN THE EVENT OF DEFAULTS ON THE MORTGAGE
LOANS, THE ACTUAL FINAL DISTRIBUTION DATE FOR ONE OR MORE CLASSES OF THE
OFFERED CERTIFICATES MAY BE LATER, AND COULD BE SUBSTANTIALLY LATER, THAN THE
RELATED ASSUMED FINAL DISTRIBUTION DATE(S).
In addition, the Assumed Final Distribution Dates set forth above were
calculated on the basis of a 0% CPR and assuming the APD Loans are prepaid in
full on their Anticipated Prepayment Dates. Since the rate of payment
(including prepayments) of the mortgage loans may exceed the scheduled rate of
payments, and could exceed the scheduled rate by a substantial amount, the
actual final Distribution Date for one or more Classes of the Offered
Certificates may be earlier, and could be substantially earlier, than the
related Assumed Final Distribution Date(s). The rate of payments (including
prepayments) on the mortgage loans will depend on the characteristics of the
mortgage loans, as well as on the prevailing level of interest rates and other
economic factors, and we cannot assure you as to actual payment experience.
Finally, the Assumed Final Distribution Dates were calculated assuming that
there would not be an early termination of the trust fund.
The "Rated Final Distribution Date" for each Class of Offered Certificates
will be August 15, 2031, the first Distribution Date after the 24th month
following the end of the amortization term for the mortgage loan that, as of
the cut-off date, will have the longest remaining amortization term.
SUBORDINATION; ALLOCATION OF COLLATERAL SUPPORT DEFICIT
The rights of holders of the Subordinate Certificates to receive
distributions of amounts collected or advanced on the mortgage loans (other
than Excess Interest) will be subordinated, to the extent described in this
prospectus supplement, to the rights of holders of the Senior Certificates.
Moreover, to the extent described in this prospectus supplement:
o the rights of the holders of the Class M Certificates will be
subordinated to the rights of the holders of the Class L Certificates,
o the rights of the holders of the Class L and Class M Certificates will
be subordinated to the rights of the holders of the Class K
Certificates,
o the rights of the holders of the Class K, Class L and Class M
Certificates will be subordinated to the rights of the holders of the
Class J Certificates,
o the rights of the holders of the Class J, Class K, Class L and Class M
Certificates will be subordinated to the rights of the holders of the
Class I Certificates,
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o the rights of the holders of the Class I, Class J, Class K, Class L
and Class M Certificates will be subordinated to the rights of the
holders of the Class H Certificates,
o the rights of the holders of the Class H, Class I, Class J, Class K,
Class L and Class M Certificates will be subordinated to the rights of
the holders of the Class G Certificates,
o the rights of the holders of the Class G, Class H, Class I, Class J,
Class K, Class L and Class M Certificates will be subordinated to the
rights of the holders of the Class F Certificates,
o the rights of the holders of the Class F, Class G, Class H, Class I,
Class J, Class K, Class L and Class M Certificates will be
subordinated to the rights of the holders of the Class E Certificates,
o the rights of the holders of the Class E, Class F, Class G, Class H,
Class I, Class J, Class K, Class L and Class M Certificates will be
subordinated to the rights of the holders of the Class D Certificates,
o the rights of the holders of the Class D, Class E, Class F, Class G,
Class H, Class I, Class J, Class K, Class L and Class M Certificates
will be subordinated to the rights of the holders of the Class C
Certificates,
o the rights of the holders of the Class C, Class D, Class E, Class F,
Class G, Class H, Class I, Class J, Class K, Class L and Class M
Certificates will be subordinated to the rights of the holders of the
Class B Certificates, and
o the rights of the holders of the Class B, Class C, Class D, Class E,
Class F, Class G, Class H, Class I, Class J, Class K, Class L and
Class M Certificates will be subordinated to the rights of the holders
of the Senior Certificates.
This subordination is intended to enhance the likelihood of timely receipt
by the holders of the Senior Certificates of the full amount of all interest
payable in respect of the Senior Certificates on each Distribution Date, and
the ultimate receipt by the holders of the Class A Certificates of principal in
an amount equal to, in each case, the entire Certificate Balance of the Class A
Certificates. Similarly, but to decreasing degrees, this subordination is also
intended to enhance the likelihood of timely receipt by the holders of the
Class B Certificates, the holders of the Class C Certificates, the holders of
the Class D Certificates, the holders of the Class E Certificates and the
holders of the Class F Certificates of the full amount of interest payable in
respect of those Classes of Certificates on each Distribution Date, and the
ultimate receipt by the holders of the Class B Certificates, the holders of the
Class C Certificates, the holders of the Class D Certificates, the holders of
the Class E Certificates and the holders of Class F Certificates, of principal
equal to, in each case, the entire Certificate Balance of each of those Classes
of Certificates.
The protection afforded to the holders of the Class F Certificates by
means of the subordination of the Non-Offered Certificates that are Subordinate
Certificates (the "Non-Offered Subordinate Certificates"), to the holders of
the Class E Certificates by the subordination of the Class F Certificates and
the Non-Offered Subordinate Certificates, to the holders of the Class D
Certificates by means of the subordination of the Class E and Class F
Certificates and the Non-Offered Subordinate Certificates, to the holders of
the Class C Certificates by means of the subordination of the Class D, Class E
and Class F Certificates and the Non-Offered Subordinate Certificates, to the
holders of the Class B Certificates by the subordination of the Class C, Class
D, Class E and Class F Certificates and the Non-Offered Subordinate
Certificates and to the holders of the Senior Certificates by means of the
subordination of the Subordinate Certificates, will be accomplished by the
application of the Available Distribution Amount on each Distribution Date in
accordance with the order of priority described under "--Distributions" above
and by the allocation of Collateral Support Deficits in the manner described
below. No other form of credit support will be available for the benefit of the
holders of the Offered Certificates.
Allocation to the Class A Certificates (unless the Cross-Over Date has
occurred, first to the Class A-1 Certificates until the Certificate Balance has
been reduced to zero and then to the Class A-2 Certificates until the
Certificate Balance has been reduced to zero), for so long as they are
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outstanding, of the entire Principal Distribution Amount for each Distribution
Date will have the effect of reducing the aggregate Certificate Balance of the
Class A Certificates at a proportionately faster rate than the rate at which
the aggregate Stated Principal Balance of the pool of mortgage loans will
reduce. Thus, as principal is distributed to the holders of the Class A
Certificates, the percentage interest in the trust fund evidenced by the Class
A Certificates will be decreased (with a corresponding increase in the
percentage interest in the trust fund evidenced by the Subordinate
Certificates), thereby increasing, relative to their respective Certificate
Balances, the subordination afforded the Class A Certificates by the
Subordinate Certificates.
Following retirement of the Class A Certificates, the successive
allocation on each Distribution Date of the remaining Principal Distribution
Amount to the Class B Certificates, the Class C Certificates, the Class D
Certificates, the Class E Certificates and the Class F Certificates, in that
order, in each case for so long as they are outstanding, will provide a similar
benefit to each of those Classes of Certificates as to the relative amount of
subordination afforded by the outstanding Classes of Certificates (other than
the Class X and the Residual Certificates) with later alphabetical Class
designations.
On each Distribution Date, immediately following the distributions to be
made to the Certificateholders on that date, the Paying Agent is required to
calculate the amount, if any, by which (1) the aggregate Stated Principal
Balance of the mortgage loans expected to be outstanding immediately following
that Distribution Date is less than (2) the aggregate Certificate Balance of
the Certificates after giving effect to distributions of principal on that
Distribution Date (any deficit, "Collateral Support Deficit"). The Paying Agent
will be required to allocate any Collateral Support Deficit among the
respective Classes of Certificates as follows: to the Class M, Class L, Class
K, Class J, Class I, Class H, Class G, Class F, Class E, Class D, Class C and
Class B Certificates in that order, and in each case in respect of and until
the remaining Certificate Balance of that Class has been reduced to zero.
Following the reduction of the Certificate Balances of all Classes of
Subordinate Certificates to zero, the Paying Agent will be required to allocate
the Collateral Support Deficit among the Classes of Class A Certificates, pro
rata (based upon their respective Certificate Balances), until the remaining
Certificate Balances of the Class A Certificates have been reduced to zero. Any
Collateral Support Deficit allocated to a Class of Certificates will be
allocated among respective Certificates of the Class in proportion to the
Percentage Interests evidenced by those Certificates.
In general, Collateral Support Deficits could result from the occurrence
of: (1) losses and other shortfalls on or in respect of the mortgage loans,
including as a result of defaults and delinquencies on the mortgage loans,
Nonrecoverable Advances made in respect of the mortgage loans, the payment to
the Special Servicer of any compensation as described in "Servicing of the
Mortgage Loans--Servicing and Other Compensation and Payment of Expenses" in
this prospectus supplement, and the payment of interest on Advances and certain
servicing expenses; and (2) certain unanticipated, non-mortgage loan specific
expenses of the trust fund, including certain reimbursements to the Trustee as
described under "Description of the Pooling Agreements--Certain Matters
Regarding the Trustee" in the prospectus, certain reimbursements to the Master
Servicer and the Depositor as described under "Description of the Pooling
Agreements--Certain Matters Regarding the Master Servicer and the Depositor" in
the prospectus, and certain federal, state and local taxes, and certain
tax-related expenses, payable out of the trust fund as described under "Certain
Federal Income Tax Consequences--Federal Income Tax Consequences for REMIC
Certificates" and "Certain Federal Income Tax Consequences--Taxes That May Be
Imposed on the REMIC Pool" in the prospectus. Accordingly, the allocation of
Collateral Support Deficit as described above will constitute an allocation of
losses and other shortfalls experienced by the trust fund.
A Class of Offered Certificates will be considered outstanding until its
Certificate Balance or Notional Amount, as the case may be, is reduced to zero.
However, reimbursement of any previously allocated Collateral Support Deficit
may thereafter be made to that Class in accordance with the payment priorities
set forth in "Distributions--Priority" above.
ADVANCES
On the business day immediately preceding each Distribution Date (the
"Servicer Remittance Date"), the Master Servicer will be obligated, subject to
the recoverability determination described
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below, to make advances (each, a "P&I Advance") out of its own funds or,
subject to the replacement of those funds as provided in the Pooling and
Servicing Agreement, certain funds held in the Certificate Account that are not
required to be part of the Available Distribution Amount for that Distribution
Date, in an amount equal to (but subject to reduction as described in the
following paragraph) the aggregate of: (1) all Periodic Payments (net of any
applicable Servicing Fees), other than balloon payments, which were due on the
mortgage loans during the related Due Period and delinquent (or not advanced by
any sub-servicer) as of the business day preceding the related Servicer
Remittance Date; and (2) in the case of each mortgage loan delinquent in
respect of its balloon payment as of the end of the related Due Period
(including any applicable grace period and including any REO Loan as to which
the balloon payment would have been past due), an amount equal to its Assumed
Scheduled Payment. With respect to each Semi-Annual Loan, the Master Servicer
will make a P&I Advance each month (other than any month in which its due date
occurs) in an amount equal to one-sixth of the interest portion of the Periodic
Payment due on the mortgage loan (net of the related Servicing Fee) and will be
entitled to reimbursement for the advances from the related Periodic Payment
when collected or, if non-recoverable from the Periodic Payment, then from
general collections. The Master Servicer will advance principal for each
Semi-Annual Loan only in the month the related Periodic Payment is due. No
interest will accrue on P&I Advances made in respect of any Semi-Annual Loan
until after the due date (including any applicable grace period) on which no
related Periodic Payment is collected in respect of that Semi-Annual Loan. The
Master Servicer's obligations to make P&I Advances in respect of any mortgage
loan or REO Property will continue through liquidation of the mortgage loan or
disposition of the REO Property, as the case may be. To the extent that the
Master Servicer fails to make a P&I Advance that it is required to make under
the Pooling and Servicing Agreement, the Trustee will make the required P&I
Advance pursuant to the Pooling and Servicing Agreement.
The amount required to be advanced in respect of delinquent Periodic
Payments or Assumed Scheduled Payments on a mortgage loan with respect to any
Distribution Date that has been subject to an Appraisal Reduction Event will
equal the amount that would be required to be advanced by the Master Servicer
without giving effect to the Appraisal Reduction less any Appraisal Reduction
Amount with respect to the mortgage loan for that Distribution Date. Neither
the Master Servicer nor the Trustee will be required to make a P&I Advance for
default interest, Yield Maintenance Charges, Prepayment Premiums or Excess
Interest.
In addition to P&I Advances, the Master Servicer will also be obligated
(subject to the limitations described in this prospectus supplement) to make
advances ("Servicing Advances" and, collectively with P&I Advances, "Advances")
in connection with the servicing and administration of any mortgage loan in
respect of which a default, delinquency or other unanticipated event has
occurred or is reasonably foreseeable or in connection with the servicing and
administration of any Mortgaged Property or REO Property, 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 or enforce the
related mortgage loan documents or to protect, lease, manage and maintain the
related Mortgaged Property. To the extent that the Master Servicer fails to
make a Servicing Advance that it is required to make under the Pooling and
Servicing Agreement and the Trustee has notice of this failure, the Trustee
will make the required Servicing Advance pursuant to the Pooling and Servicing
Agreement.
The Master Servicer or the Trustee, as applicable, will be entitled to
recover (after payment of any outstanding Special Servicing Fees due) any
Advance made out of its own funds from any amounts collected in respect of the
mortgage loan as to which that Advance was made, whether in the form of late
payments, Insurance and Condemnation Proceeds, Liquidation Proceeds or
otherwise from the mortgage loan ("Related Proceeds"). Notwithstanding the
foregoing, neither the Master Servicer nor the Trustee will be obligated to
make any Advance that it determines in its reasonable good faith judgment
would, if made, not be recoverable (including interest on the Advance) out of
Related Proceeds (a "Nonrecoverable Advance"), and the Master Servicer or the
Trustee will be entitled to recover any Advance that it so determines to be a
Nonrecoverable Advance out of general
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funds on deposit in the Certificate Account. The Trustee will be entitled to
rely conclusively on any non-recoverability determination of the Master
Servicer. Nonrecoverable Advances will represent a portion of the losses to be
borne by the Certificateholders. See "Description of the Certificates--Advances
in Respect of Delinquencies" and "Description of the Pooling
Agreements--Certificate Account" in the prospectus.
In connection with its recovery of any Advance, each of the Master
Servicer and the Trustee will be entitled to be paid, out of any amounts then
on deposit in the Certificate Account, interest at the Prime Rate (the
"Reimbursement Rate") accrued on the amount of the Advance from the date made
to but not including the date of reimbursement. The "Prime Rate" will be the
rate, for any day, set forth in The Wall Street Journal, New York edition.
Each Distribution Date Statement furnished or made available by the Paying
Agent to the Certificateholders will contain information relating to the
amounts of Advances made with respect to the related Distribution Date. See
"Description of the Certificates--Reports to Certificateholders; Certain
Available Information" in this prospectus supplement and "Description of the
Certificates--Reports to Certificateholders" in the prospectus.
APPRAISAL REDUCTIONS
After an Appraisal Reduction Event has occurred, an Appraisal Reduction is
required to be calculated. An "Appraisal Reduction Event" will occur on the
earliest of:
(1) 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 the related mortgage loan by the Special Servicer, which
extension does not change the amount of Periodic Payments on the mortgage
loan;
(2) 120 days after an uncured delinquency (without regard to the
application of any grace period) occurs in respect of a mortgage loan;
(3) the date on which a reduction in the amount of Periodic Payments
on a mortgage loan, or a change in any other material economic term of the
mortgage loan (other than an extension of its maturity), becomes effective
as a result of a modification of the related mortgage loan by the Special
Servicer;
(4) the date on which a receiver has been appointed;
(5) 60 days after a borrower declares bankruptcy;
(6) the date on which an involuntary petition of bankruptcy is filed
with respect to the borrower;
(7) 30 days after an uncured delinquency occurs in respect of a
balloon payment for a mortgage loan; and
(8) immediately after a mortgage loan becomes an REO Loan.
No Appraisal Reduction Event may occur at any time when the aggregate
Certificate Balances of all Classes of Certificates (other than the Class A
Certificates) has been reduced to zero.
The "Appraisal Reduction" for any Distribution Date and for any mortgage
loan as to which any Appraisal Reduction Event has occurred will be an amount
equal to the excess of (a) the outstanding Stated Principal Balance of that
mortgage loan over (b) the excess of (1) 90% of the appraised value of the
related Mortgaged Property as determined (A) by one or more independent
Appraisal Institute ("MAI") appraisals with respect to any mortgage loan with
an outstanding principal balance equal to or in excess of $2,000,000 (the costs
of which will be paid by the Master Servicer as an Advance), and (B) by an
internal valuation performed by the Special Servicer with respect to any
mortgage loan with an outstanding principal balance less than $2,000,000, over
(2) the sum as of the due date occurring in the month of that Distribution Date
of (A) to the extent not previously advanced by the Master Servicer or the
Trustee, all unpaid interest on that mortgage loan at a per annum rate equal to
the
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Mortgage Rate, (B) all unreimbursed Advances and interest on those Advances at
the Reimbursement Rate in respect of that mortgage loan and (C) all currently
due and unpaid real estate taxes and assessments, insurance premiums and ground
rents and all other amounts due and unpaid under the mortgage loan (which tax,
premiums, ground rents and other amounts have not been the subject of an
Advance by the Master Servicer and/or for which funds have not been escrowed).
Within 60 days after the Appraisal Reduction Event, the Special Servicer
will be required to receive an appraisal; provided, however, that with respect
to an Appraisal Reduction Event described in clause (2), the Special Servicer
will be required to receive an appraisal within the 120-day period set forth in
clause (2). On the first Determination Date occurring on or after the delivery
of the MAI appraisal, the Special Servicer will be required to calculate and
report to the Master Servicer, and the Master Servicer will be required to
report to the Paying Agent, the Appraisal Reduction to take into account the
appraisal. In the event that the Special Servicer has not received the MAI
appraisal within the timeframe described above (or, in the case of an appraisal
in connection with an Appraisal Reduction Amount described in clause (2),
within the 120-day period set forth in clause (2)), the amount of the Appraisal
Reduction will be deemed to be an amount equal to 25% of the current Stated
Principal Balance of the related mortgage loan until the MAI appraisal is
received. The "Determination Date" for each Distribution Date is the 11th day
of the month in which the Distribution Date occurs or, if the 11th day is not a
business day, then the immediately succeeding business day.
As a result of calculating one or more Appraisal Reductions, the amount of
any required P&I Advance will be reduced by an amount equal to the Appraisal
Reduction Amount, which will have the effect of reducing the amount of interest
available to the most subordinate Class of Certificates then outstanding (i.e.,
first to the Class M Certificates, then to the Class L Certificates, then to
the Class K Certificates, then to the Class J Certificates, then to the Class I
Certificates, then to the Class H Certificates, then to the Class G
Certificates, then to the Class F Certificates, then to the Class E
Certificates, then to the Class D Certificates, then to the Class C
Certificates and then to the Class B Certificates). See "--Advances" above. The
"Appraisal Reduction Amount" for any Distribution Date will equal the product
of (1) the applicable per annum Pass-Through Rate (i.e., for any month, one
twelfth of the Pass-Through Rate) on the Class of Certificates to which the
Appraisal Reduction is allocated, and (2) the sum of all Appraisal Reductions
with respect to the related Distribution Date. In addition, Appraisal
Reductions will be allocated to the most subordinate Class of Certificates then
outstanding (i.e., first to the Class M Certificates, then to the Class L
Certificates, then to the Class K Certificates, then to the Class J
Certificates, then to the Class I Certificates, then to the Class H
Certificates, then to the Class G Certificates, then to the Class F
Certificates, then to the Class E Certificates, then to the Class D
Certificates, then to the Class C Certificates and then to the Class B
Certificates) for purposes of determining Voting Rights. See "--Voting Rights"
below and "Servicing of the Mortgage Loans--General" in this prospectus
supplement.
With respect to each mortgage loan as to which an Appraisal Reduction has
occurred (unless the mortgage loan has become a Corrected Mortgage Loan and has
remained current for twelve consecutive Periodic Payments (or two consecutive
Periodic Payments with respect to the Semi-Annual Loans), and with respect to
which no other Appraisal Reduction Event has occurred with respect thereto
during the preceding twelve months), the Special Servicer is required, within
30 days of each anniversary of the related Appraisal Reduction Event, to order
an appraisal (which may be an update of a prior appraisal), the cost of which
will be a Servicing Advance. Based upon the appraisal, the Special Servicer is
required to redetermine and report to the Paying Agent the amount of the
Appraisal Reduction with respect to the mortgage loan. Notwithstanding the
foregoing, the Special Servicer will not be required to obtain an appraisal
with respect to a mortgage loan which is the subject of an Appraisal Reduction
Event to the extent the Special Servicer has obtained an appraisal with respect
to the related Mortgaged Property within the 12-month period prior to the
occurrence of the Appraisal Reduction Event. Instead, the Special Servicer may
use the prior appraisal in calculating any Appraisal Reduction with respect to
the mortgage loan, provided that the Special Servicer is not aware of any
material change to the Mortgaged Property that has occurred that would affect
the validity of such appraisal.
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With respect to each mortgage loan as to which an Appraisal Reduction has
occurred and which has become current and has remained current for twelve
consecutive Periodic Payments (or two consecutive Periodic Payments with
respect to the Semi-Annual Loans), and with respect to which no other Appraisal
Reduction Event has occurred and is continuing, the Special Servicer may within
30 days of the date of the twelfth Periodic Payment, order an appraisal (which
may be an update of a prior appraisal), the cost of which will be a Servicing
Advance. Based upon the appraisal, the Special Servicer is required to
redetermine and report to the Paying Agent the amount of the Appraisal
Reduction with respect to the mortgage loan.
REPORTS TO CERTIFICATEHOLDERS; CERTAIN AVAILABLE INFORMATION
On each Distribution Date, the Trustee will be required to furnish or make
available to each holder of a Certificate, the Underwriters, the Special
Servicer and a financial market publisher (which is anticipated to initially be
Bloomberg, L.P.), if any, a statement (a "Distribution Date Statement") based
upon information provided by the Master Servicer setting forth, among other
things:
(1) the amount of the distribution on the Distribution Date to the
holders of the Class of Certificates in reduction of the Certificate
Balance of the Certificates;
(2) the amount of the distribution on the Distribution Date to the
holders of the Class of Certificates allocable to Distributable Certificate
Interest;
(3) the aggregate amount of Advances made in respect of the
Distribution Date;
(4) the aggregate amount of compensation paid to the Trustee and
servicing compensation paid to the Master Servicer and the Special Servicer
during the Due Period for the Distribution Date;
(5) the aggregate Stated Principal Balance of the mortgage loans and
any REO Loans outstanding immediately before and immediately after the
Distribution Date;
(6) the number, aggregate principal balance, weighted average
remaining term to maturity and weighted average mortgage rate of the
mortgage loans as of the end of the related Due Period for the Distribution
Date;
(7) the number and aggregate principal balance of mortgage loans (A)
delinquent 30-59 days, (B) delinquent 60-89 days, (C) delinquent 90 days or
more and (D) current but specially serviced or in foreclosure but not an
REO Property;
(8) the value of any REO Property included in the trust fund as of the
end of the related Due Period for the Distribution Date, on a loan-by-loan
basis, based on the most recent appraisal or valuation;
(9) the Available Distribution Amount for the Distribution Date;
(10) the amount of the distribution on the Distribution Date to the
holders of the Class of Certificates allocable to (A) Prepayment Premiums,
(B) Yield Maintenance Charges and (C) Excess Interest;
(11) the Pass-Through Rate for the Class of Certificates for the
Distribution Date and the next succeeding Distribution Date;
(12) the Scheduled Principal Distribution Amount and the Unscheduled
Principal Distribution Amount for the Distribution Date;
(13) the Certificate Balance or Notional Amount, as the case may be,
of each Class of Certificates immediately before and immediately after the
Distribution Date, separately identifying any reduction in these amounts as
a result of the allocation of any Collateral Support Deficit on the
Distribution Date;
(14) the fraction, expressed as a decimal carried to eight places, the
numerator of which is the then related Certificate Balance, and the
denominator of which is the related initial aggregate Certificate Balance,
for each Class of Certificates (other than the Residual Certificates)
immediately following the Distribution Date;
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(15) the amount of any Appraisal Reductions effected in connection
with the Distribution Date on a loan-by-loan basis, the total Appraisal
Reduction effected in connection with the Distribution Date and the total
Appraisal Reduction Amounts as of that Distribution Date;
(16) the number and related principal balances of any mortgage loans
extended or modified during the related Due Period on a loan-by-loan basis;
(17) the amount of any remaining unpaid interest shortfalls for the
Class as of the Distribution Date;
(18) a loan-by-loan listing of each mortgage loan which was the
subject of a principal prepayment during the related Due Period and the
amount and the type of principal prepayment occurring;
(19) a loan-by-loan listing of any mortgage loan which was defeased
during the related Due Period;
(20) all deposits into, withdrawals from, and the balance of the
Interest Reserve Account on the related Servicer Remittance Dates;
(21) the amount of the distribution on the Distribution Date to the
holders of each Class of Certificates in reimbursement of Collateral
Support Deficit;
(22) the aggregate unpaid principal balance of the pool of mortgage
loans outstanding as of the close of business on the related Determination
Date;
(23) with respect to any mortgage loan as to which a liquidation
occurred during the related due period (other than a payment in full), (A)
the loan number thereof, (B) the aggregate of all Liquidation Proceeds
which are included in the available distribution amount and other amounts
received in connection with such liquidation (separately identifying the
portion thereof allocable to distributions on the Certificates), and (C)
the amount of any realized loss in connection with such liquidation;
(24) with respect to any REO Property included in the trust as to
which the Special Servicer determined, in accordance with accepted
servicing standards, that all payments or recoveries with respect to the
Mortgaged Property have been ultimately recovered during the related Due
Period, (A) the loan number of the related mortgage loan, (B) the aggregate
of all Liquidation Proceeds and other amounts received in connection with
that determination (separately identifying the portion thereof allocable to
distributions on the Certificates), and (C) the amount of any realized loss
in respect of the related REO Loan in connection with that determination;
(25) the aggregate amount of interest on P&I Advances paid to the
Master Servicer and the Trustee during the related Due Period;
(26) the aggregate amount of interest on Servicing Advances paid to
the Master Servicer, the Trustee and the Special Servicer during the
related Due Period;
(27) the original and then current credit support levels for each
Class of Certificates;
(28) the original and then current ratings for each Class of
Certificates; and
(29) the aggregate amount of Prepayment Premiums and Yield Maintenance
Charges collected during the related Due Period.
The Trustee will make available the Distribution Date Statement through
its corporate trust home page on the internet, which is located at
"corporatetrust.statestreet.com". CMBS information is available by clicking the
"Investor Information & Reporting" button, and selecting the appropriate
transaction. In addition, the Trustee may make certain other information and
reports related to the mortgage loans available through its corporate trust
home page.
In the case of information furnished pursuant to clauses (1), (2), (10),
(17) and (21) above, the amounts will be expressed as a dollar amount in the
aggregate for all Certificates of each applicable Class and per definitive
certificate.
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In addition, within a reasonable period of time after the end of each
calendar year, the Paying Agent is required to furnish to the Trustee and each
person or entity who at any time during the calendar year was a holder of a
Certificate, a statement containing the information set forth in clauses (1),
(2) and (10) above as to the applicable Class, aggregated for the related
calendar year or applicable partial year during which that person was a
Certificateholder, together with any other information as the Paying Agent
deems necessary or desirable, or that a Certificateholder or Certificate Owner
reasonably requests, to enable Certificateholders to prepare their tax returns
for that calendar year. This obligation of the Paying Agent will be deemed to
have been satisfied to the extent that substantially comparable information
will be provided by the Paying Agent pursuant to any requirements of the Code
as from time to time are in force.
The Master Servicer will be required to provide a financial market
publisher, which is anticipated to initially be Bloomberg, L.P., quarterly with
certain current information with respect to the Mortgaged Properties, including
current and original net operating income, debt service coverage ratios based
upon borrowers' annual operating statements and occupancy rates, to the extent
it has received the information from the borrowers pursuant to the related loan
documents.
The Pooling and Servicing Agreement requires that the Trustee make
available at its offices primarily responsible for administration of the trust
fund, during normal business hours upon prior written request, for review by
any holder of an Offered Certificate, the Depositor, the Special Servicer, the
Master Servicer, S&P, Fitch or any other person to whom the Trustee believes
the disclosure is appropriate, originals or copies of, among other things, the
following items:
(1) the Pooling and Servicing Agreement and any amendments to that
agreement;
(2) all Distribution Date Statements made available to holders of the
relevant Class of Offered Certificates since the Closing Date;
(3) all officer's certificates delivered to the Paying Agent since the
Closing Date as described under "Description of the Pooling
Agreements--Evidence as to Compliance" in the prospectus;
(4) all accountants' reports delivered to the Paying Agent since the
Closing Date as described under "Description of the Pooling
Agreements--Evidence as to Compliance" in the prospectus;
(5) the most recent property inspection report prepared by or on
behalf of the Master Servicer or the Special Servicer and delivered to the
Paying Agent in respect of each Mortgaged Property;
(6) copies of the mortgage loan documents;
(7) any and all modifications, waivers and amendments of the terms of
a mortgage loan entered into by the Master Servicer or the Special Servicer
and delivered to the Paying Agent; and
(8) any and all statements and reports delivered to, or collected by,
the Master Servicer or the Special Servicer, from the borrowers, including
the most recent annual property operating statements, rent rolls and
borrower financial statements, but only to the extent the statements and
reports have been delivered to the Paying Agent.
Copies of any and all of the foregoing items will be available to
Certificateholders 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 the copies. Pursuant to the Pooling and Servicing
Agreement, the Master Servicer will be responsible for enforcing all provisions
of the mortgage loan documents relating to the submission of financial and
property information.
The Pooling and Servicing Agreement will require the Master Servicer and
the Paying Agent, subject to certain restrictions set forth in the Pooling and
Servicing Agreement, to provide the reports available to Certificateholders set
forth above, as well as certain other information received by the Master
Servicer or the Paying Agent, as the case may be, to any Certificateholder, the
Underwriters,
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any Certificate Owner or any prospective investor so identified by a
Certificate Owner or an Underwriter, that requests reports or information;
provided that the Master Servicer or the Paying Agent, as the case may be, will
be permitted to require payment of a sum sufficient to cover the reasonable
costs and expenses of providing copies of these reports or information. Except
as otherwise set forth in this paragraph, until the time definitive
certificates are issued, notices and statements required to be mailed to
holders of Certificates will be available to Certificate Owners of Offered
Certificates only to the extent they are forwarded by or otherwise available
through DTC and its Participants. Conveyance of notices and other
communications by DTC to Participants, and by Participants to Certificate
Owners, will be governed by arrangements among them, subject to any statutory
or regulatory requirements as may be in effect from time to time. Except as
otherwise set forth in this paragraph, the Master Servicer, the Special
Servicer, the Trustee, the Depositor, the Paying Agent and the Certificate
Registrar are required to recognize as Certificateholders only those persons in
whose names the Certificates are registered on the books and records of the
Certificate Registrar. The initial registered holder of the Offered
Certificates will be Cede & Co., as nominee for DTC.
VOTING RIGHTS
At all times during the term of the Pooling and Servicing Agreement, the
voting rights for the Certificates (the "Voting Rights") will be allocated
among the respective Classes of Certificateholders as follows: (1) 4% in the
case of the Class X Certificates, and (2) in the case of any other Class of
Certificates (other than the Residual Certificates), a percentage equal to the
product of 96% and a fraction, the numerator of which is equal to the aggregate
Certificate Balance of the Class, in each case, determined as of the prior
Distribution Date, and the denominator of which is equal to the aggregate
Certificate Balance of all Classes of Certificates, each determined as of the
prior Distribution Date. Neither the Class R nor the Class LR Certificates will
be entitled to any Voting Rights. For purposes of determining Voting Rights,
the Certificate Balance of any Class will be deemed to be reduced by the amount
allocated to the Class of any Appraisal Reductions related to mortgage loans as
to which Liquidation Proceeds or other final payment has not yet been received.
Voting Rights allocated to a Class of Certificateholders will be allocated
among the Certificateholders in proportion to the Percentage Interests
evidenced by their respective Certificates. Solely for purposes of giving any
consent, approval or waiver pursuant to the Pooling and Servicing Agreement,
neither the Master Servicer, the Special Servicer nor the Depositor will be
entitled to exercise any Voting Rights with respect to any Certificates
registered in its name, if the consent, approval or waiver would in any way
increase its compensation or limit its obligations in that capacity under the
Pooling and Servicing Agreement; provided, however, that the restrictions will
not apply to the exercise of the Special Servicer's rights, if any, as a member
of the Controlling Class.
TERMINATION; RETIREMENT OF CERTIFICATES
The obligations created by the Pooling and Servicing Agreement will
terminate upon payment (or provision for payment) to all Certificateholders of
all amounts held by or on behalf of the Trustee and required to be paid
following the earlier of (1) the final payment (or related advance) or other
liquidation of the last mortgage loan or REO Property subject thereto or (2)
the purchase of all of the assets of the trust fund by the holders of the
Controlling Class, the Special Servicer, the Master Servicer or the holders of
the Class LR Certificates. Written notice of termination of the Pooling and
Servicing Agreement will be given to each Certificateholder, and the final
distribution will be made only upon surrender and cancellation of the
Certificates at the office of the Certificate Registrar or other location
specified in the notice of termination.
The holders of the Controlling Class, the Special Servicer, the Master
Servicer and the holders of the Class LR Certificates (in that order) will have
the right to purchase all of the assets of the trust fund. This purchase of all
the mortgage loans and other assets in the trust fund is required to be made at
a price equal to the sum of (1) the aggregate Purchase Price of all the
mortgage loans (exclusive of REO Loans) then included in the trust fund and (2)
the aggregate fair market value of all REO
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Properties then included in the trust fund (which fair market value for any REO
Property may be less than the Purchase Price for the corresponding REO Loan),
as determined by an appraiser selected and mutually agreed upon by the Master
Servicer and the Trustee, and approved by more than 50% of the Voting Rights of
the Classes of Certificates then outstanding, other than the Controlling Class,
unless the Controlling Class is the only Class of Certificates outstanding.
This purchase will effect early retirement of the then outstanding Offered
Certificates, but the right of the Master Servicer, the Special Servicer, the
holders of the Controlling Class or the holders of the Class LR Certificates to
effect the termination is subject to the requirement that the then aggregate
Stated Principal Balance of the pool of mortgage loans be less than 1% of the
Initial Pool Balance.
On the final Distribution Date, the aggregate amount paid by the holders
of the Controlling Class, the Special Servicer, the Master Servicer or the
holders of the Class LR Certificates, as the case may be, for the mortgage
loans and other assets in the trust fund (if the trust fund is to be terminated
as a result of the purchase described in the preceding paragraph), together
with all other amounts on deposit in the Certificate Account and not otherwise
payable to a person other than the Certificateholders (see "Description of the
Pooling Agreements--Certificate Account" in the prospectus), will be applied
generally as described under "--Distributions--Priority" above.
Any optional termination by the holders of the Controlling Class, the
Special Servicer, the Master Servicer, the Depositor or the holders of the
Class LR Certificates would result in prepayment in full of the Certificates
and would have an adverse effect on the yield of the Class X Certificates
because a termination would have an effect similar to a principal prepayment in
full of the mortgage loans (without, however, the payment of any Prepayment
Premiums or Yield Maintenance Charges) and, as a result, investors in the Class
X Certificates and any other Certificates purchased at premium might not fully
recoup their initial investment. See "Yield and Maturity Considerations" in
this prospectus supplement.
THE TRUSTEE
State Street Bank and Trust Company will act as Trustee of the trust fund.
The corporate trust office of the Trustee responsible for administration of the
Trust is located at 2 Avenue de Lafayette, 6th Floor, Boston, Massachusetts
02111, Attention: Global Investor Services Group, Corporate Trust Department,
Ref. Chase Manhattan Bank-First Union National Bank Commercial Mortgage Trust,
Series 1999-1. In its Consolidated Report of condition as of December 31, 1998,
State Street Bank and Trust Company, a Massachusetts chartered institution, and
foreign and domestic subsidiaries reported total assets of $43,184,638,000. As
compensation for the performance of its routine duties, the Trustee will be
paid a fee (the "Trustee Fee"). The Trustee Fee will be payable monthly from
amounts received in respect of the mortgage loans and will accrue at a rate
(the "Trustee Fee Rate"), calculated on the basis of a 360-day year consisting
of twelve 30-day months (other than in respect of mortgage loans that are the
subject of principal prepayments applied on a date other than a date on which
the mortgage loans are due) equal to 0.001% per annum, and will be computed on
the basis of the Stated Principal Balance of the related mortgage loan. In
addition, the Trustee will be entitled to recover from the trust fund all
reasonable unanticipated expenses and disbursements incurred or made by the
Trustee in accordance with any of the provisions of the Pooling and Servicing
Agreement, but not including routine expenses incurred in the ordinary course
of performing its duties as Trustee under the Pooling and Servicing Agreement,
and not including any expense, disbursement or advance as may arise from its
willful misconduct, negligence or bad faith. See "Description of the Pooling
Agreements--The Trustee," "--Duties of the Trustee," "--Certain Matters
Regarding the Trustee" and "--Resignation and Removal of the Trustee" in the
prospectus.
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SERVICING OF THE MORTGAGE LOANS
GENERAL
The servicing of the mortgage loans and any REO Properties will be
governed by the Pooling and Servicing Agreement. The following summaries
describe certain provisions of the Pooling and Servicing Agreement relating to
the servicing and administration of the mortgage loans and any REO Properties.
The summaries do not purport to be complete and are subject, and qualified in
their entirety by reference, to the provisions of the Pooling and Servicing
Agreement. Reference is made to the prospectus for additional information
regarding the terms of the Pooling and Servicing Agreement relating to the
servicing and administration of the mortgage loans and any REO Properties,
provided that the information in this prospectus supplement supersedes any
contrary information set forth in the prospectus. See "Description of the
Pooling Agreements" in the prospectus.
Each of the Master Servicer (directly or through one or more
sub-servicers) and the Special Servicer will be required to service and
administer the mortgage loans for which it is responsible. The Master Servicer
will appoint First Union National Bank as sub-servicer with respect to the
mortgage loans sold by First Union National Bank to the Depositor. In addition
to the sub-servicing by First Union National Bank of the mortgage loans, the
Master Servicer may delegate and/or assign some or all of its servicing
obligations and duties with respect to some or all of the mortgage loans to one
or more affiliates so long as delegation and/or assignment, in and of itself,
does not cause the qualification, withdrawal or downgrading of the then-current
ratings assigned to any Class of Certificates as confirmed in writing by each
of S&P and Fitch. Except in certain limited circumstances set forth in the
Pooling and Servicing Agreement, the Special Servicer will not be permitted to
appoint sub-servicers with respect to any of its servicing obligations and
duties.
The Master Servicer and the Special Servicer will be required to service
and administer the mortgage loans for which each is responsible on behalf of
the Trustee in the best interests of and for the benefit of the
Certificateholders (as determined by the Master Servicer or the Special
Servicer in the exercise of its good faith and reasonable judgment) in
accordance with applicable law, the terms of the Pooling and Servicing
Agreement and the mortgage loans and, to the extent consistent with the
foregoing, in accordance with the higher of the following standards of care:
(1) the same manner in which, and with the same care, skill, prudence and
diligence with which the Master Servicer or the Special Servicer, as the case
may be, services and administers similar mortgage loans for other third-party
portfolios, giving due consideration to the customary and usual standards of
practice of prudent institutional commercial and multifamily mortgage lenders
servicing their own mortgage loans and (2) the same care, skill, prudence and
diligence with which the Master Servicer or the Special Servicer, as the case
may be, services and administers commercial and multifamily mortgage loans
owned by the Master Servicer or the Special Servicer, as the case may be, in
either case exercising reasonable business judgment and acting in accordance
with applicable law, the terms of the Pooling and Servicing Agreement, the
respective mortgage loans or Specially Serviced Mortgage Loans, as applicable,
and with a view to the maximization of timely recovery of principal and
interest on the mortgage loans or Specially Serviced Mortgage Loans, as
applicable, and the best interests of the Trust and the Certificateholders, as
determined by the Master Servicer or the Special Servicer, as the case may be,
in its reasonable judgment, but without regard to: (A) any relationship that
the Master Servicer or the Special Servicer, as the case may be, or any
affiliate of either, may have with the related borrower, any Mortgage Loan
Seller or any other party to the Pooling and Servicing Agreement; (B) the
ownership of any Certificate by the Master Servicer or the Special Servicer, as
the case may be, or any affiliate of either; (C) the Master Servicer's
obligation to make Advances, whether in respect of delinquent payments of
principal and/or interest or to cover certain servicing expenses; (D) the
Master Servicer's or the Special Servicer's, as the case may be, right to
receive compensation for its services under the Pooling and Servicing Agreement
or with respect to any particular transaction; and (E) any obligation of the
Master Servicer (in its capacity as a Mortgage Loan Seller) to cure a breach of
a representation or warranty or repurchase a mortgage loan (the foregoing,
collectively referred to as the "Servicing Standards").
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Except as otherwise described under "--Inspections; Collection of
Operating Information" below, the Master Servicer initially will be responsible
for the servicing and administration of the entire pool of mortgage loans. With
respect to any mortgage loan (1) as to which a payment default has occurred at
its original maturity date, or, if the original maturity date has been
extended, at its extended maturity, (2) as to which any Periodic Payment (other
than a balloon payment) is more than 60 days delinquent, (3) as to which the
borrower has entered into or consented to bankruptcy, appointment of a receiver
or conservator or a similar insolvency proceeding, or the borrower has become
the subject of a decree or order for that proceeding (provided that if the
involuntary appointment, decree or order is stayed or discharged, within 60
days that mortgage loan will not be considered a Specially Serviced Mortgage
Loan during that period), or the related borrower has admitted in writing its
inability to pay its debts generally as they become due, (4) as to which the
Master Servicer will have received notice of the foreclosure or proposed
foreclosure of any other lien on the Mortgaged Property, (5) as to which, in
the judgment of the Master Servicer, a payment default has occurred or is
reasonably foreseeable and is not likely to be cured by the borrower within 60
days, and prior to acceleration of amounts due under the related Mortgage Note
or commencement of any foreclosure or similar proceedings or (6) as to which a
default of which the Master Servicer has notice (other than a failure by the
related borrower to pay principal or interest) and which materially and
adversely affects the interests of the Certificateholders has occurred and
remains unremediated for the applicable grace period specified in the mortgage
loan (or if no grace period is specified, 60 days), the Master Servicer will be
required to transfer its servicing responsibilities to the Special Servicer,
but will be required to continue to receive payments on the mortgage loan
(including amounts collected by the Special Servicer), to make certain
calculations with respect to the mortgage loan and to make remittances and
prepare certain reports to the Certificateholders with respect to the mortgage
loan. If the related Mortgaged Property is acquired in respect of any mortgage
loan (upon acquisition, an "REO Property") whether through foreclosure,
deed-in-lieu of foreclosure or otherwise, the Special Servicer will continue to
be responsible for its operation and management. The mortgage loans serviced by
the Special Servicer and any mortgage loans that have become REO Properties are
referred to in this prospectus supplement as the "Specially Serviced Mortgage
Loans". The Master Servicer will have no responsibility for the performance by
the Special Servicer of its duties under the Pooling and Servicing Agreement.
If any Specially Serviced Mortgage Loan, in accordance with its original
terms or as modified in accordance with the Pooling and Servicing Agreement,
becomes a performing mortgage loan for at least 90 days (provided no additional
event of default is foreseeable in the reasonable judgment of the Special
Servicer), the Special Servicer will be required to return servicing of that
mortgage loan (a "Corrected Mortgage Loan") to the Master Servicer.
The Special Servicer will be required to prepare a report (an "Asset
Status Report") for each mortgage loan which becomes a Specially Serviced
Mortgage Loan not later than 30 days after the servicing of the mortgage loan
is transferred to the Special Servicer. Each Asset Status Report will be
delivered to the Directing Certificateholder (as defined below), S&P and Fitch,
provided however, the Special Servicer will not be required to deliver an Asset
Status Report to the Directing Certificateholder if they are the same entity.
If the Directing Certificateholder does not disapprove an Asset Status Report
within 10 business days, the Special Servicer will be required to implement the
recommended action as outlined in the Asset Status Report. The Directing
Certificateholder may object to any Asset Status Report within 10 business days
of receipt; provided, however, that the Special Servicer will be required to
implement the recommended action as outlined in the Asset Status Report if it
makes a determination in accordance with the Servicing Standards that the
objection is not in the best interest of all the Certificateholders. If the
Directing Certificateholder disapproves the Asset Status Report and the Special
Servicer has not made the affirmative determination described above, the
Special Servicer will be required to revise the Asset Status Report as soon as
practicable thereafter, but in no event later than 30 days after the
disapproval. The Special Servicer will be required to revise the Asset Status
Report until the Directing Certificateholder fails to disapprove the revised
Asset Status Report as described above or until the Special Servicer makes a
determination that the objection is not in the best interests of the
Certificateholders; provided,
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however, in the event that the Directing Certificateholder and the Special
Servicer have not agreed upon an Asset Status Report with respect to a
Specially Serviced Mortgage Loan within 90 days of the Directing
Certificateholder's receipt of the initial Asset Status Report with respect to
such Specially Serviced Mortgage Loan, the Special Servicer will implement the
actions described in the most recent Asset Status Report submitted to the
Directing Certificateholder by the Special Servicer.
The "Directing Certificateholder" will be the Controlling Class
Certificateholder selected by more than 50% of the Controlling Class
Certificateholders, by Certificate Balance, as certified by the Trustee from
time to time; provided, however, that (1) absent that selection, or (2) until a
Directing Certificateholder is so selected or (3) upon receipt of a notice from
a majority of the Controlling Class Certificateholders, by Certificate Balance,
that a Directing Certificateholder is no longer designated, the Controlling
Class Certificateholder that owns the largest aggregate Certificate Balance of
the Controlling Class will be the Directing Certificateholder.
A "Controlling Class Certificateholder" is each holder (or Certificate
Owner, if applicable) of a Certificate of the Controlling Class as certified to
the Trustee from time to time by the holder (or Certificate Owner).
The "Controlling Class" will be as of any time of determination the most
subordinate Class of Certificates then outstanding that has a Certificate
Balance at least equal to the greater of (a) 1% of the Initial Pool Balance or
(b) 25% of the initial Certificate Balance of that Class. For purposes of
determining identity of the Controlling Class, the Certificate Balance of each
Class will not be reduced by the amount allocated to that Class of any
Appraisal Reductions relating to mortgage loans as to which Liquidation
Proceeds or other final payment has not yet been received.
The Controlling Class as of the Closing Date will be the Class M
Certificates.
The Special Servicer will not be required to take or refrain from taking
any action pursuant to instructions from the Directing Certificateholder that
would cause it to violate applicable law, the Pooling and Servicing Agreement,
including the Servicing Standards, or the REMIC Provisions.
THE MASTER SERVICER
The Chase Manhattan Bank will act as servicer (in that capacity, the
"Master Servicer") and in that capacity will be responsible for servicing the
mortgage loans. The principal offices of the Master Servicer are located at 270
Park Avenue, New York, New York 10017. As of June 30, 1999, the Master Servicer
had a total commercial and multifamily mortgage loan servicing portfolio of
approximately $6,000,000,000. The Master Servicer will appoint First Union as
sub-servicer with respect to the mortgage loans sold by First Union to the
Depositor.
THE SPECIAL SERVICER
ORIX Real Estate Capital Markets, LLC will act as special servicer (in
that capacity, the "Special Servicer") and in that capacity will be responsible
for servicing the Specially Serviced Mortgage Loans. The principal offices of
the Special Servicer are located at 1717 Main Street, Suite 1200, Dallas, Texas
75201. As of May 31, 1999, the Special Servicer had a total commercial and
multifamily mortgage loan servicing portfolio of approximately $42,800,000,000.
As of May 31, 1999, the Special Servicer has been named Special Servicer on 65
securitized transactions encompassing 15,133 loans.
The information set forth in this prospectus supplement concerning the
Special Servicer has been provided by the Special Servicer, and neither the
Depositor nor the Underwriters make any representation or warranty as to the
accuracy or completeness of that information.
REPLACEMENT OF THE SPECIAL SERVICER
The Special Servicer may be removed, and a successor Special Servicer
appointed, at any time by the holders of Certificates representing more than
50% of the aggregate Certificate Balance of the Controlling Class, provided
that each of S&P and Fitch confirms in writing that the replacement of the
Special Servicer, in and of itself, will not cause a qualification, withdrawal
or downgrading of the then-current ratings assigned to any Class of
Certificates.
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SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES
The fee of the Master Servicer (the "Servicing Fee") will be payable
monthly (or with respect to the Semi-Annual Loans, semi-annually) from amounts
received in respect of the mortgage loans, and will accrue at a rate (the
"Servicing Fee Rate"), calculated on a basis of a 360-day year consisting of
twelve 30-day months equal to a per annum rate ranging from 0.020% to 0.205%.
As of the cut-off date the weighted average Servicing Fee Rate will be 0.058%
per annum. As of any date of determination, the "Administrative Cost Rate" will
be equal to the sum of the Servicing Fee Rate and the Trustee Fee Rate. In
addition to the Servicing Fee, the Master Servicer will be entitled to retain,
as additional servicing compensation, (1) all assumption fees paid by the
borrowers on mortgage loans that are not Specially Serviced Mortgage Loans and
modification fees with respect to certain modifications permitted to be
performed by the Master Servicer under the Pooling and Servicing Agreement with
respect to non-Specially Serviced Mortgage Loans and (2) late payment charges
and default interest paid by the borrowers (other than on Specially Serviced
Mortgage Loans), but only to the extent the amounts are not needed to pay
interest on Advances. The Master Servicer also is authorized but not required
to invest or direct the investment of funds held in the Certificate Account and
Interest Reserve Account in Permitted Investments, and the Master Servicer will
be entitled to retain any interest or other income earned on those funds and
will bear any losses resulting from the investment of these funds. The Master
Servicer also is entitled to retain any interest earned on any servicing escrow
account to the extent the interest is not required to be paid to the related
borrowers.
The principal compensation to be paid to the Special Servicer in respect
of its special servicing activities will be the Special Servicing Fee, the
Workout Fee and the Liquidation Fee.
The "Special Servicing Fee" will accrue with respect to each Specially
Serviced Mortgage Loan at a rate equal to 0.25% per annum (the "Special
Servicing Fee Rate") calculated on the basis of the Stated Principal Balance of
the related Specially Serviced Mortgage Loans and on the basis of a 360-day
year consisting of twelve 30-day months, and will be payable monthly from the
trust fund. The Special Servicing Fee will be calculated on a basis of a
360-day year consisting of twelve 30-day months.
The "Workout Fee" will generally be payable with respect to each Corrected
Mortgage Loan and will be calculated by application of a "Workout Fee Rate" of
1% to each collection of interest and principal (including scheduled payments,
prepayments, balloon payments, and payments at maturity) received on the
respective mortgage loan for so long as it remains a Corrected Mortgage Loan.
The Workout Fee with respect to any Corrected Mortgage Loan will cease to be
payable if the Corrected Mortgage Loan again becomes a Specially Serviced
Mortgage Loan but will become payable again if and when the mortgage loan again
becomes a Corrected Mortgage Loan.
If a borrower voluntarily prepays a mortgage loan on a date that is prior
to its due date in any Due Period, the amount of interest (net of related
Servicing Fees) that accrues on the mortgage loan during such Due Period will
be less (such shortfall, a "Prepayment Interest Shortfall") than the amount of
interest (net of related Servicing Fees and without regard to any Prepayment
Premium or Yield Maintenance Charge actually collected) that would have been
accrued on the mortgage loan through its due date (or, with respect to any
Semi-Annual Loan, the first day of the month). If such a principal prepayment
occurs during any Due Period after the related due date (or, with respect to
any Semi-Annual Loan, the first day of the month) for such mortgage loan in
such Due Period, the amount of interest (net of related Servicing Fees) that
accrues and is collected on the mortgage loans during such Due Period will
exceed (such excess, a "Prepayment Interest Excess") the amount of interest
(net of related Servicing Fees, and without regard to any Prepayment Premium or
Yield Maintenance Charge actually collected) that would have been collected on
the mortgage loan during such Due Period if the borrower had not prepaid. Any
Prepayment Interest Excesses collected will be paid to the Master Servicer as
additional servicing compensation. However, with respect to each Distribution
Date, the Master Servicer is required to deposit into the Certificate Account
(such deposit, a "Compensating Interest Payment"), without any right of
reimbursement therefor, with respect to each mortgage loan (other than a
Specially Serviced Mortgage Loan) that was subject to a
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voluntary principal prepayment during the most recently ended Due Period
creating a Prepayment Interest Shortfall, an amount equal to the lesser of (i)
the sum of (A) the Servicing Fee (up to a Servicing Fee Rate of 0.03% per
annum) received by the Master Servicer during such Due Period on such mortgage
loan and (B) investment income earned by the Master Servicer on the related
principal prepayment through the most recent Determination Date, and (ii) the
amount of the related Prepayment Interest Shortfall. Compensating Interest
Payments will not cover shortfalls in mortgage loan interest accruals that
result from any liquidation of a defaulted mortgage loan, or of any REO
Property acquired in respect thereof, that occurs during a Due Period prior to
the related due date therein or involuntary prepayments.
A "Liquidation Fee" will be payable with respect to each Specially
Serviced Mortgage Loan as to which the Special Servicer obtains a full or
discounted payoff or partial payment or unscheduled payment with respect
thereto 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. The Liquidation
Fee for each Specially Serviced Mortgage Loan will be payable from, and will be
calculated by application of a "Liquidation Fee Rate" of 1% to the related
payment or proceeds. Notwithstanding anything to the contrary described above,
no Liquidation Fee will be payable based on, or out of, Liquidation Proceeds
received in connection with the repurchase of any mortgage loan by a Mortgage
Loan Seller for a breach of representation or warranty or for defective or
deficient mortgage loan documentation, the purchase of any Specially Serviced
Mortgage Loan by the majority holder of the Controlling Class, the Special
Servicer or the purchase of all of the mortgage loans and REO Properties in
connection with an optional termination of the trust fund. If, however,
Liquidation Proceeds are received with respect to any Corrected Mortgage Loan
and the Special Servicer is properly entitled to a Workout Fee, the Workout Fee
will be payable based on and out of the portion of the Liquidation Proceeds
that constitutes principal and/or interest.
The Special Servicer will also be entitled to additional servicing
compensation in the form of all assumption fees, extension fees and
modification fees received on or with respect to Specially Serviced Mortgage
Loans and all modification fees with respect to all non-Specially Serviced
Mortgage Loans, except for the modification fees that the Master Servicer is
entitled to receive, as described above. The Special Servicer will also be
entitled to late payment charges and default interest paid by the borrowers on
Specially Serviced Mortgage Loans, but only to the extent those amounts are not
needed to pay interest on Advances. The Special Servicer will not be entitled
to retain any portion of Excess Interest paid on the APD Loans.
Although the Master Servicer and the Special Servicer are each required to
service and administer the pool of mortgage loans in accordance with the
Servicing Standards above and, accordingly, without regard to its right to
receive compensation under the Pooling and Servicing Agreement, additional
servicing compensation in the nature of assumption and modification fees may
under certain circumstances provide the Master Servicer or the Special
Servicer, as the case may be, with an economic disincentive to comply with this
standard.
As and to the extent described in this prospectus supplement under
"Description of the Certificates--Advances," the Master Servicer will be
entitled to receive interest on Advances, which will be paid contemporaneously
with the reimbursement of the related Advance.
Each of the Master Servicer and the Special Servicer generally will be
required to pay all expenses incurred by it in connection with its servicing
activities under the Pooling and Servicing Agreement and will not be entitled
to reimbursement for any expense of this type except as expressly provided in
the Pooling and Servicing Agreement. In connection therewith, the Master
Servicer will be responsible for all fees of any sub-servicers. See
"Description of the Certificates--Distributions-- Method, Timing and Amount" in
this prospectus supplement and "Description of the Pooling
Agreements--Certificate Account" and "--Servicing Compensation and Payment of
Expenses" in the prospectus.
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MAINTENANCE OF INSURANCE
To the extent permitted by the related mortgage loan and required by the
Servicing Standards, the Master Servicer will be required to use its reasonable
best efforts to (1) cause each borrower to maintain, and if the borrower does
not maintain, will be required to (2) itself maintain to the extent available
at commercially reasonable rates (as determined by the Master Servicer in
accordance with the servicing standards), a fire and hazard insurance policy
with extended coverage covering the related Mortgaged Property. The coverage of
that kind of policy will be in an amount that is not less than the lesser of
the full replacement cost of the improvements securing that mortgage loan or
the outstanding principal balance owing on that mortgage loan, but in any
event, in an amount sufficient to avoid the application of any co-insurance
clause unless otherwise noted in the related mortgage loan documents. During
all times as the Mortgaged Property is located in an area identified as a
federally designated special flood hazard area (and flood insurance has been
made available), the Master Servicer will be required to use its reasonable
best efforts to (1) cause each borrower to maintain (to the extent required by
the related mortgage loan), and if the borrower does not so maintain, will be
required to (2) itself maintain to the extent available at commercially
reasonable rates (as determined by the Master Servicer in accordance with the
servicing standards) a flood insurance policy in an amount representing
coverage not less than the lesser of (1) the outstanding principal balance of
the related mortgage loan and (2) the maximum amount of insurance which is
available under the Flood Disaster Protection Act of 1973, as amended, but only
to the extent that the related mortgage loan permits the lender to require the
coverage and maintaining coverage is consistent with the Servicing Standards.
The Special Servicer will be required to maintain (or cause to be
maintained), fire and hazard insurance on each REO Property, to the extent
obtainable, in an amount which is at least equal to the lesser of (1) an amount
necessary to avoid the application of any co-insurance clause and (2) the full
replacement cost of the improvements on the REO Property. In addition, while
the REO Property is located in an area identified as a federally designated
special flood hazard area, the Special Servicer will be required to cause to be
maintained, to the extent available at commercially reasonable rates (as
determined by the Special Servicer in accordance with the Servicing Standards),
a flood insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration in an amount representing coverage not
less than the maximum amount of insurance which is available under the Flood
Disaster Protection Act of 1973, as amended.
The Pooling and Servicing Agreement provides that the Master Servicer and
the Special Servicer may satisfy their respective obligations to cause each
borrower to maintain a hazard insurance policy by maintaining a blanket or
master single interest policy insuring against hazard losses on the mortgage
loans and REO Properties. Any losses incurred with respect to mortgage loans or
REO Properties due to uninsured risks (including earthquakes, mudflows and
floods) or insufficient hazard insurance proceeds may adversely affect payments
to Certificateholders. Any cost incurred by the Master Servicer in maintaining
that kind of insurance policy if the borrower defaults on its obligation to do
so will be advanced by the Master Servicer as a Servicing Advance and will be
charged to the related borrower. Generally, no borrower is required by the
mortgage loan documents to maintain earthquake insurance on any Mortgaged
Property and the Special Servicer will not be required to maintain earthquake
insurance on any REO Properties. Any cost of maintaining that kind of required
insurance or other earthquake insurance obtained by the Special Servicer will
be paid out of a segregated custodial account created and maintained by the
Special Servicer on behalf of the Trustee in trust for the Certificateholders
(the "REO Account") or advanced by the Master Servicer as a Servicing Advance.
The costs of the insurance may be recovered by the Master Servicer from
reimbursements received from the borrower or, if the borrower does not pay
those amounts, as Servicing Advances as set forth in the Pooling and Servicing
Agreement.
No pool insurance policy, special hazard insurance policy, bankruptcy
bond, repurchase bond or certificate guarantee insurance will be maintained
with respect to the mortgage loans, nor will any mortgage loan be subject to
FHA insurance.
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MODIFICATIONS, WAIVER AND AMENDMENTS
The Special Servicer may agree to extend the maturity date of a mortgage
loan that is not a Specially Serviced Mortgage Loan; except that any extension
entered into by the Special Servicer will not extend the maturity date beyond
the earlier of (1) two years prior to the Rated Final Distribution Date and (2)
in the case of a mortgage loan secured by a leasehold estate, the date twenty
years prior to the expiration of the leasehold estate (or the date 10 years
prior to the expiration of the leasehold estate if the Special Servicer
determines, in accordance with the Servicing Standard, that such extension is
reasonably likely to produce a greater recovery on a net present value basis);
provided that, if the extension would extend the maturity date of a mortgage
loan for more than twelve months from and after the original maturity date of
the mortgage loan, the Special Servicer must obtain the opinion of counsel
described in the next sentence. Except as otherwise set forth in this
paragraph, the Special Servicer (or in certain circumstances the Master
Servicer) may not waive, modify or amend any provision of a mortgage loan which
is not in default or as to which default is not reasonably foreseeable except
for (1) the waiver of any due-on-sale clause or due-on-encumbrance clause to
the extent permitted in the Pooling and Servicing Agreement, and (2) any
waiver, modification or amendment that would not be a "significant
modification" of the mortgage loan within the meaning of Treasury Regulations
Section 1.860G-2(b) and as to which the Special Servicer has provided the
Trustee with an opinion of counsel that the waiver, modification or amendment
will not constitute a "significant modification."
If, but only if, the Special Servicer determines that a modification,
waiver or amendment (including the forgiveness or deferral of interest or
principal or the substitution or release of collateral or the pledge of
additional collateral) of the terms of a Specially Serviced Mortgage Loan with
respect to which a payment default or other material default has occurred or a
payment default or other material default is, in the Special Servicer's
judgment, reasonably foreseeable, is reasonably likely to produce a greater
recovery on a present value basis (the relevant discounting to be performed at
the related Mortgage Rate) than liquidation of the Specially Serviced Mortgage
Loan, then the Special Servicer may, but is not required to, agree to a
modification, waiver or amendment of the Specially Serviced Mortgage Loan,
subject to the restrictions and limitations described below. The Special
Servicer will use its best efforts to the extent possible to fully amortize a
modified mortgage loan prior to the Rated Final Distribution Date.
The Special Servicer may not agree to a modification, waiver or amendment
of any term of any Specially Serviced Mortgage Loan if that modification,
waiver or amendment would:
(1) extend the maturity date of the Specially Serviced Mortgage Loan
to a date occurring later than the earlier of (A) two years prior to the
Rated Final Distribution Date and (B) if the Specially Serviced Mortgage
Loan is secured by a leasehold estate, the date twenty years prior to the
expiration of the leasehold (or the date 10 years prior to the expiration
of the leasehold estate if the Special Servicer determines, in accordance
with the Servicing Standard, that such extension is reasonably likely to
produce a greater recovery on a net present value basis);
(2) reduce the related Net Mortgage Rate to less than the lesser of
(A) the original Net Mortgage Rate and (B) the highest Pass-Through Rate on
any Class of Certificates (other than the Class X Certificates); or
(3) provide for the deferral of interest unless (A) interest accrues
on the mortgage loan, generally, at the related Mortgage Rate and (B) the
aggregate amount of deferred interest does not exceed 10% of the unpaid
principal balance of the Specially Serviced Mortgage Loan.
In the event of a modification which creates a deferral of interest, the
Pooling and Servicing Agreement will provide that the amount of deferred
interest will be allocated to reduce the Distributable Certificate Interest of
the Class or Classes (other than the Class X Certificates) with the latest
alphabetical designation then outstanding, and to the extent so allocated, will
be added to the Certificate Balance of the Class or Classes.
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The Special Servicer or the Master Servicer, as the case may be, will be
required to notify each other, S&P, Fitch and the Trustee of any modification,
waiver or amendment of any term of any mortgage loan and will be required to
deliver to the Trustee for deposit in the related mortgage file, an original
counterpart of the agreement related to the modification, waiver or amendment,
promptly following the execution. Copies of each agreement whereby the
modification, waiver or amendment of any term of any mortgage loan is effected
are required to be available for review during normal business hours at the
offices of the Trustee. See "Description of the Certificates--Reports to
Certificateholders; Certain Available Information" in this prospectus
supplement.
REALIZATION UPON DEFAULTED MORTGAGE LOANS
Pursuant to the Pooling and Servicing Agreement, if a default on a
mortgage loan has occurred or, in the Special Servicer's judgment, a payment
default is imminent, the Special Servicer, on behalf of the Trustee, may at any
time institute foreclosure proceedings, exercise any power of sale contained in
the related Mortgage, obtain a deed in lieu of foreclosure or otherwise acquire
title to the related Mortgaged Property, by operation of law or otherwise. The
Special Servicer is not permitted, however, to acquire title to any Mortgaged
Property or take any other action with respect to any Mortgaged Property that
would cause the Trustee, for the benefit of the Certificateholders, or any
other specified person to be considered to hold title to, to be a
"mortgagee-in-possession" of or to be an "owner" or an "operator" of the
Mortgaged Property within the meaning of certain federal environmental laws,
unless the Special Servicer has previously received a report prepared by a
person who regularly conducts environmental audits (which report will be paid
by the Master Servicer as a Servicing Advance) and either:
(1) the report indicates that (a) the Mortgaged Property is in
compliance with applicable environmental laws and regulations and (b) there
are no circumstances or conditions present at the Mortgaged Property that
have resulted in any contamination for which investigation, testing,
monitoring, containment, clean-up or remediation could be required under
any applicable environmental laws and regulations; or
(2) the Special Servicer, based solely (as to environmental matters
and related costs) on the information set forth in the report, determines
that taking those actions as are necessary to bring the Mortgaged Property
into compliance with applicable environmental laws and regulations and/or
taking the actions contemplated by clause (1)(b) above, is reasonably
likely to produce a greater recovery, taking into account the time value of
money, than not taking those actions. See "Certain Legal Aspects of
Mortgage Loans--Environmental Risks" in the prospectus.
The Pooling and Servicing Agreement grants to the majority holder of the
Controlling Class and the Special Servicer, in that order, a right of first
refusal to purchase from the trust fund, at the Purchase Price, any mortgage
loan as to which a specified number of scheduled payments are delinquent. In
addition, the Special Servicer may offer to sell any defaulted mortgage loan if
and when the Special Servicer determines, consistent with the Servicing
Standards, that the sale would produce a greater recovery, taking into account
the time value of money, than would liquidation of the related Mortgaged
Property. In the absence of the sale, the Special Servicer will generally be
required to proceed against the related Mortgaged Property, subject to the
discussion above.
If title to any Mortgaged Property is acquired by the trust fund, the
Special Servicer, 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 (1) the Internal Revenue Service (the
"IRS") grants an extension of time to sell the property or (2) the Trustee
receives an opinion of independent counsel to the effect that the holding of
the property by the trust fund longer than the above-referenced three year
period will not result in the imposition of a tax on either the Upper-Tier
REMIC or the Lower-Tier REMIC or cause the trust fund (or either the Upper-Tier
REMIC or the Lower-Tier REMIC) to fail to qualify as a REMIC under the Code at
any time that any Certificate is outstanding. Subject to the foregoing and any
other tax-related limitations, pursuant to the Pooling and Servicing Agreement,
the Special Servicer will generally be required to attempt to sell any
Mortgaged Property so acquired on the same terms and conditions it would if it
were the owner. The
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Special Servicer will also be required to ensure that any Mortgaged Property
acquired by the trust fund is administered so that it constitutes "foreclosure
property" within the meaning of Code Section 860G(a)(8) at all times, that the
sale of the property does not result in the receipt by the trust fund of any
income from nonpermitted assets as described in Code Section 860F(a)(2)(B). If
the trust fund acquires title to any Mortgaged Property, the Special Servicer,
on behalf of the trust fund, will retain, at the expense of the trust fund, an
independent contractor to manage and operate the property. The independent
contractor generally will be permitted to perform construction (including
renovation) on a foreclosed property only if the construction was at least 10%
completed at the time default on the related mortgage loan became imminent. The
retention of an independent contractor, however, will not relieve the Special
Servicer of its obligation to manage the Mortgaged Property as required under
the Pooling and Servicing Agreement.
Generally, neither the Upper-Tier REMIC nor the Lower-Tier REMIC will be
taxable on income received with respect to a Mortgaged Property acquired by the
trust fund to the extent that it constitutes "rents from real property," within
the meaning of Code Section 856(c)(3)(A) and Treasury regulations under the
Code. "Rents from real property" include fixed rents and rents based on the
receipts or sales of a Tenant but do not include the portion of any rental
based on the net income or profit 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." "Rents from real property" also do not include income from
the operation of a trade or business on the Mortgaged Property, such as a
hotel. 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. The Pooling and Servicing Agreement provides
that the Special Servicer will be permitted to cause the Lower-Tier REMIC to
earn "net income from foreclosure property" that is subject to tax if it
determines that the net after-tax benefit to Certificateholders is greater than
another method of operating or net leasing the Mortgaged Property. Because
these sources of income, if they exist, are already in place with respect to
the Mortgaged Properties, it is generally viewed as beneficial to
Certificateholders to permit the trust fund to continue to earn them if it
acquires a Mortgaged Property, even at the cost of this tax. These taxes would
be chargeable against the related income for purposes of determining the
proceeds available for distribution to holders of Certificates. See "Certain
Federal Income Tax Consequences--Federal Income Tax Consequences for REMIC
Certificates--Taxes That May Be Imposed on the REMIC Pool" in the prospectus.
To the extent that Liquidation Proceeds collected with respect to any
mortgage loan are less than the sum of: (1) the outstanding principal balance
of the mortgage loan, (2) interest accrued on the mortgage loan and (3) the
aggregate amount of outstanding reimbursable expenses (including any
unreimbursed Servicing Advances and unpaid and accrued interest on those
Servicing Advances) incurred with respect to the mortgage loan, then the trust
fund will realize a loss in the amount of the shortfall. The Trustee, the
Master Servicer and/or the Special Servicer will be entitled to reimbursement
out of the Liquidation Proceeds recovered on any mortgage loan, prior to the
distribution of those Liquidation Proceeds to Certificateholders, of any and
all amounts that represent unpaid servicing compensation in respect of the
related mortgage loan, certain unreimbursed expenses incurred with respect to
the mortgage loan and any unreimbursed Advances made with respect to the
mortgage loan. In addition, amounts otherwise distributable on the Certificates
will be further reduced by interest payable to the Master Servicer or Trustee
on these Advances.
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If any Mortgaged Property suffers damage and the proceeds, if any, of the
related hazard insurance policy are insufficient to restore fully the damaged
property, the Master Servicer will not be required to expend its own funds to
effect the restoration unless (1) the Special Servicer determines that the
restoration will increase the proceeds to Certificateholders on liquidation of
the mortgage loan after reimbursement of the Special Servicer or the Master
Servicer, as the case may be, for its expenses and (2) the Master Servicer
determines that the expenses will be recoverable by it from related Insurance
and Condemnation Proceeds and Liquidation Proceeds.
INSPECTIONS; COLLECTION OF OPERATING INFORMATION
The Master Servicer will be required to perform or cause to be performed
(at its own expense), physical inspections of each Mortgaged Property securing
a Mortgage Note with a Stated Principal Balance of (A) $2,000,000 or more at
least once every 12 months and (B) less than $2,000,000 at least once every 24
months, in each case commencing in August 2000; provided, however, that if the
Master Servicer has a reasonable basis to believe that (1) the DSCR with
respect to any Mortgaged Property has decreased by 25% or more from the DSCR as
of the cut-off date, (2) the DSCR with respect to any Mortgaged Property has
decreased to 0.90x or less, or (3) the rating of the Tenant or Guarantor with
respect to any Credit Lease loan as of the cut-off date is (x) downgraded by
more than one rating category or (y) downgraded from a rating of "BBB-" or
higher to below "BBB-" or (z) withdrawn (or, with respect to Tenants or
Guarantors rated below "BBB-", the rating has been downgraded, withdrawn or
qualified) the Master Servicer will inspect the related Mortgaged Property as
soon as practicable thereafter (the cost of which inspection will be a
Servicing Advance); provided, further, however, that if any scheduled payment
becomes more than 60 days delinquent on the related mortgage loan, the Special
Servicer is required to inspect the related Mortgaged Property as soon as
practicable after such mortgage loan becomes a Specially Serviced Mortgage Loan
(the cost of which inspection will be a Servicing Advance). The Special
Servicer or the Master Servicer, as applicable, will be required to prepare a
written report of the inspection describing, among other things, the condition
of and any damage to the Mortgaged Property and specifying the existence of any
material vacancies in the Mortgaged Property of which it has knowledge, of any
sale, transfer or abandonment of the Mortgaged Property, of any material change
in the condition of the Mortgaged Property, or of any waste committed on the
Mortgaged Property.
With respect to each mortgage loan that requires the borrower to deliver
those statements, the Special Servicer or the Master Servicer, as applicable,
is also required to collect and review the annual operating statements of the
related Mortgaged Property. Most of the Mortgages obligate the related borrower
to deliver annual property operating statements. However, we cannot assure you
that any operating statements required to be delivered will in fact be
delivered, nor is the Special Servicer or the Master Servicer likely to have
any practical means of compelling the delivery in the case of an otherwise
performing mortgage loan.
Copies of the inspection reports and operating statements referred to
above are to be available for review by Certificateholders during normal
business hours at the offices of the Trustee. See "Description of the
Certificates--Reports to Certificateholders; Certain Available Information" in
this prospectus supplement.
CERTAIN MATTERS REGARDING THE MASTER SERVICER, THE SPECIAL SERVICER AND THE
DEPOSITOR
The Pooling and Servicing Agreement permits the Master Servicer and the
Special Servicer to resign from their respective obligations only upon (a) in
the case of the Master Servicer only, the appointment of, and the acceptance of
the appointment by, a successor and receipt by the Trustee of written
confirmation from each of S&P and Fitch that the resignation and appointment
will, in and of itself, not cause a downgrade, withdrawal or qualification of
the rating assigned by S&P or Fitch to any class of certificates; provided that
with respect to the resignation of the Master Servicer, First Union will have
been offered the opportunity to accept the appointment and First Union and the
Master Servicer have been unable to agree upon terms or First Union has
declined or otherwise been unable to accept that appointment, or (b) a
determination that their respective obligations are no
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longer permissible with respect to the Master Servicer or the Special Servicer,
as the case may be, under applicable law. No resignation will become effective
until the Trustee or other successor has assumed the obligations and duties of
the resigning Master Servicer or Special Servicer, as the case may be, under
the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement will provide that none of the Master
Servicer, the Special Servicer (or the Special Servicer's members and
managers), the Depositor or any member, manager, director, officer, employee or
agent of any of them will be under any liability to the trust fund or the
Certificateholders for any action taken, or not taken, in good faith pursuant
to the Pooling and Servicing Agreement or for errors in judgment; provided,
however, that none of the Master Servicer, the Special Servicer, the Depositor
or similar person will be protected against any liability that would otherwise
be imposed by reason of willful misfeasance, bad faith or negligence in the
performance of obligations or duties under the Pooling and Servicing Agreement
or by reason of negligent disregard of the obligations and duties. The Pooling
and Servicing Agreement will also provide that the Master Servicer, the Special
Servicer (or the Special Servicer's members and managers), the Depositor and
any director, officer, employee or agent of any of them will be entitled to
indemnification by the trust fund against any loss, liability or expense
incurred in connection with any legal action or claim that relates to the
Pooling and Servicing Agreement or the Certificates; provided, however, that
the indemnification will not extend to any loss, liability or expense incurred
by reason of willful misfeasance, bad faith or negligence in the performance of
obligations or duties under the Pooling and Servicing Agreement, by reason of
negligent disregard of the obligations or duties, or in the case of the
Depositor and any of its directors, officers, members, managers, employees and
agents, any violation by any of them of any state or federal securities law.
In addition, the Pooling and Servicing Agreement will provide that none of
the Master Servicer, the Special Servicer or the Depositor will be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its respective responsibilities under the Pooling and Servicing
Agreement or that in its opinion may involve it in any expense or liability.
However, each of the Master Servicer, the Special Servicer and the Depositor
will be permitted, in the exercise of its discretion, to undertake any action
that it may deem necessary or desirable with respect to the enforcement and/or
protection of the rights and duties of the parties to the Pooling and Servicing
Agreement and the interests of the Certificateholders under the Pooling and
Servicing Agreement. In that event, the legal expenses and costs of the action,
and any liability resulting therefrom, will be expenses, costs and liabilities
of the Certificateholders, and the Master Servicer, the Special Servicer or the
Depositor, as the case may be, will be entitled to charge the Certificate
Account for the expenses.
Pursuant to the Pooling and Servicing Agreement, the Master Servicer and
Special Servicer will each be required to maintain a fidelity bond and errors
and omissions policy or their equivalent 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, subject to certain
limitations as to amount of coverage, deductible amounts, conditions,
exclusions and exceptions permitted by the Pooling and Servicing Agreement.
Notwithstanding the foregoing, the Master Servicer will be allowed to
self-insure with respect to a fidelity bond so long as certain conditions set
forth in the Pooling and Servicing Agreement are met.
Any person into which the Master Servicer, the Special Servicer or the
Depositor may be merged or consolidated, or any person resulting from any
merger or consolidation to which the Master Servicer, the Special Servicer or
the Depositor is a party, or any person succeeding to the business of the
Master Servicer, the Special Servicer or the Depositor, will be the successor
of the Master Servicer, the Special Servicer or the Depositor, as the case may
be, under the Pooling and Servicing Agreement. The Master Servicer and the
Special Servicer may have other normal business relationships with the
Depositor or the Depositor's affiliates.
EVENTS OF DEFAULT
"Events of Default" under the Pooling and Servicing Agreement with respect
to the Master Servicer or the Special Servicer, as the case may be, will
include, without limitation:
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(a) any failure by the Master Servicer to make any remittance on the
day and time the remittance is required to be made under the terms of the
Pooling and Servicing Agreement;
(b) any failure by the Special Servicer to deposit into the REO
Account or to remit to the Master Servicer for deposit in the Certificate
Account any remittance required to be made by the Special Servicer on the
day a remittance is required to be made under the Pooling and Servicing
Agreement;
(c) any failure by the Master Servicer or the Special Servicer duly to
observe or perform in any material respect any of its other covenants or
obligations under the Pooling and Servicing Agreement, which failure
continues unremedied for thirty days after written notice of the failure
has been given to the Master Servicer or the Special Servicer, as the case
may be, by any other party to the Pooling and Servicing Agreement, or to
the Master Servicer or the Special Servicer, as the case may be, with a
copy to each other party to the related Pooling and Servicing Agreement, by
Certificateholders of any Class, evidencing, as to that Class, percentage
interests aggregating not less than 25%; provided, however, if that failure
is capable of being cured and the Master Servicer or Special Servicer, as
applicable, is diligently pursuing that cure, that 30-day period will be
extended an additional 30 days;
(d) any breach on the part of the Master Servicer or the Special
Servicer of any representation or warranty in the Pooling and Servicing
Agreement which materially and adversely affects the interests of any Class
of Certificateholders and which continues unremedied for a period of 30
days after the date on which notice of that breach, requiring the same to
be remedied, will have been given to the Master Servicer or the Special
Servicer, as the case may be, by the Depositor or the Trustee, or to the
Master Servicer, the Special Servicer, the Depositor and the Trustee by the
holders of Certificates of any Class evidencing, as to that Class,
percentage interests aggregating not less than 25%; provided, however, if
that breach is capable of being cured and the Master Servicer or Special
Servicer, as applicable, is diligently pursuing that cure, that 30-day
period will be extended an additional 30 days;
(e) certain events of insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings in respect of or relating to
the Master Servicer or the Special Servicer, and certain actions by or on
behalf of the Master Servicer or the Special Servicer indicating its
insolvency or inability to pay its obligations;
(f) the Trustee will have received written notice from Fitch that the
continuation of the Master Servicer or the Special Servicer in that
capacity would result, or has resulted, in a downgrade, qualification or
withdrawal of any rating then assigned by Fitch to any Class of
Certificates; and
(g) the Master Servicer or the Special Servicer is removed from S&P's
approved master servicer list or approved special servicer list, as
applicable, and the removal coincides with the downgrade, qualification
(including, without limitation, "negative credit watch") or withdrawal of
the ratings of any of the Certificates by S&P.
RIGHTS UPON EVENT OF DEFAULT
If an Event of Default occurs with respect to the Master Servicer or the
Special Servicer under the Pooling and Servicing Agreement, then, so long as
the Event of Default remains unremedied, the Depositor or the Trustee will be
authorized, and at the direction of Certificateholders entitled to not less
than 51% of the Voting Rights, the Trustee will be required, to terminate all
of the rights and obligations of the defaulting party as Master Servicer or
Special Servicer, as applicable, under the Pooling and Servicing Agreement. The
Trustee then will succeed to all of the responsibilities, duties and
liabilities of the defaulting party as Master Servicer or Special Servicer, as
applicable, under the Pooling and Servicing Agreement and will be entitled to
similar compensation arrangements. If the Trustee is unwilling or unable so to
act, it may (or, at the written request of Certificateholders entitled to not
less than 51% of the Voting Rights, it will be required to) appoint, or
petition a court of competent jurisdiction to appoint, a loan servicing
institution or other entity that would not result in
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the downgrading, qualification or withdrawal of the ratings assigned to any
Class of Certificates by either of S&P or Fitch to act as successor to the
Master Servicer or Special Servicer, as the case may be, under the Pooling and
Servicing Agreement.
No Certificateholder will have any right under the Pooling and Servicing
Agreement to institute any proceeding with respect to the Certificates or the
Pooling and Servicing Agreement unless the holder previously has given to the
Trustee written notice of default and the continuance of the default and unless
the holders of Certificates of any Class evidencing not less than 25% of the
aggregate Percentage Interests constituting the Class have made written request
upon the Trustee to institute a proceeding in its own name (as Trustee) and
have offered to the Trustee reasonable indemnity, and the Trustee for 60 days
after receipt of the request and indemnity has neglected or refused to
institute the proceeding. However, the Trustee will be under no obligation to
exercise any of the trusts or powers vested in it by the Pooling and Servicing
Agreement or to institute, conduct or defend any related litigation at the
request, order or direction of any of the Certificateholders, unless the
Certificateholders have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred as a result.
AMENDMENT
The Pooling and Servicing Agreement may be amended by the parties thereto,
without the consent of any of the holders of Certificates:
(a) to cure any ambiguity;
(b) to correct or supplement any of its provisions which may be
inconsistent with any other provisions or to correct any error;
(c) to change the timing and/or nature of deposits in the Certificate
Account, the Distribution Accounts or the REO Account, provided that (A)
the change would not adversely affect in any material respect the interests
of any Certificateholder, as evidenced by an opinion of counsel (at the
expense of the party requesting the amendment) and (B) the change would not
result in the downgrading, qualification or withdrawal of the ratings
assigned to any Class of Certificates by either of S&P or Fitch, as
evidenced by a letter from each of S&P and Fitch;
(d) to modify, eliminate or add to any of its provisions (A) to the
extent as will be necessary to maintain the qualification of either the
Upper-Tier REMIC or Lower-Tier REMIC as a REMIC, to maintain the grantor
trust portion of the trust fund as a grantor trust or to avoid or minimize
the risk of imposition of any tax on the trust fund, provided that the
Trustee has received an opinion of counsel (at the expense of the party
requesting the amendment) to the effect that (1) the action is necessary or
desirable to maintain qualification or to avoid or minimize the risk and
(2) the action will not adversely affect in any material respect the
interests of any holder of the Certificates or (B) to restrict the transfer
of the Residual Certificates, provided that the Depositor has determined
that the amendment will not give rise to any tax with respect to the
transfer of the Residual Certificates to a non-permitted transferee (see
"Certain Federal Income Tax Consequences--Federal Income Tax Consequences
for REMIC Certificates-- Taxation of Residual Certificates--Tax-Related
Restrictions on Transfer of Residual Certificates" in the prospectus);
(e) to make any other provisions with respect to matters or questions
arising under the Pooling and Servicing Agreement or any other change,
provided that the required action will not adversely affect in any material
respect the interests of any Certificateholder, as evidenced by an opinion
of counsel and written confirmation that the change would not result in the
downgrading, qualification or withdrawal of the ratings assigned to any
Class of Certificates by either of S&P or Fitch; or
(f) to amend or supplement any provision of the Pooling and Servicing
Agreement to the extent necessary to maintain the ratings assigned to each
Class of Certificates by each of S&P and Fitch as evidenced by written
confirmation that the change would not result in the downgrading,
qualification or withdrawal of the ratings assigned to any Class of
Certificates by either of S&P or Fitch.
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The Pooling and Servicing Agreement may also be amended by the parties
thereto with the consent of the holders of Certificates of each Class affected
thereby evidencing, in each case, not less than 66 2/3% of the aggregate
Percentage Interests constituting the Class 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 of modifying in any manner the rights of
the holders of the Certificates, except that the amendment may not (1) 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 a Certificate of any
Class without the consent of the holder of that Certificate, (2) reduce the
aforesaid percentage of Certificates of any Class the holders of which are
required to consent to the amendment without the consent of the holders of all
Certificates of that Class then outstanding, (3) adversely affect the Voting
Rights of any Class of Certificates or (4) amend the Servicing Standard without
the consent of the holders of all Certificates of the Class then outstanding.
Notwithstanding the foregoing, the Trustee will not be required to consent
to any amendment to the Pooling and Servicing Agreement without having first
received an opinion of counsel (at the trust fund's expense) to the effect that
the amendment or the exercise of any power granted to the Master Servicer, the
Special Servicer, the Depositor, the Trustee or any other specified person in
accordance with the amendment, will not result in the imposition of a tax on
any portion of the trust fund or cause either the Upper-Tier REMIC or
Lower-Tier REMIC to fail to qualify as a REMIC or cause the grantor trust
portion of the trust fund to fail to qualify as a grantor trust.
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YIELD AND MATURITY CONSIDERATIONS
YIELD CONSIDERATIONS
General. The yield on any Offered Certificate will depend on: (1) the
Pass-Through Rate for the Certificate; (2) the price paid for the Certificate
and, if the price was other than par, the rate and timing of payments of
principal on the Certificate; (3) the aggregate amount of distributions on the
Certificate; (4) the aggregate amount of Collateral Support Deficit amounts
allocated to a Class of Offered Certificates and (5) the timing and severity of
any Net Aggregate Prepayment Interest Shortfalls and the extent to which such
shortfalls are allocable in reduction of the Distributable Certificate Interest
payable on the related Class.
Pass-Through Rate. The Pass-Through Rate applicable to each Class of
Offered Certificates for any Distribution Date will equal the rate set forth on
the cover of this prospectus supplement. See "Description of the Certificates"
in this prospectus supplement.
Rate and Timing of Principal Payments. The yield to holders of Offered
Certificates that are purchased at a discount or premium will be affected by
the rate and timing of principal payments on the mortgage loans (including
principal prepayments on the mortgage loans resulting from both voluntary
prepayments by the mortgagors and involuntary liquidations). The rate and
timing of principal payments on the mortgage loans will in turn be affected by
their amortization schedules, the dates on which balloon payments are due, any
extensions of maturity dates by the Master Servicer or the Special Servicer and
the rate and timing of principal prepayments and other unscheduled collections
on the mortgage loans (including for this purpose, collections made in
connection with liquidations of mortgage loans due to defaults, casualties or
condemnations affecting the Mortgaged Properties, or purchases of mortgage
loans out of the trust fund). In addition, although the borrowers under an APD
Loan may have certain incentives to prepay APD Loans on their Anticipated
Prepayment Dates, we cannot assure you that the related Borrowers will be able
to prepay the APD Loans on their Anticipated Prepayment Date. The failure of a
Borrower to prepay the APD Loans on their Anticipated Prepayment Dates will not
be an event of default under the terms of the APD Loans, and pursuant to the
terms of the Pooling and Servicing Agreement, neither the Master Servicer nor
the Special Servicer will be permitted to take any enforcement action with
respect to a Borrower's failure to pay Excess Interest or principal in excess
of the principal component of the constant Periodic Payment, other than
requests for collection, until the scheduled maturity of the APD Loans;
provided, that the Master Servicer or the Special Servicer, as the case may be,
may take action to enforce the trust fund's right to apply excess cash flow to
principal in accordance with the terms of the APD Loans documents. See "Risk
Factors--Borrower May Be Unable to Repay Remaining Principal Balance on
Maturity Date or Anticipated Prepayment Date" in this prospectus supplement.
Prepayments and, assuming the respective stated maturity dates for the
mortgage loans have not occurred, liquidations and purchases of the mortgage
loans, will result in distributions on the Offered Certificates of amounts that
would otherwise be distributed over the remaining terms of the mortgage loans.
Defaults on the mortgage loans, particularly at or near their stated maturity
dates, may result in significant delays in payments of principal on the
mortgage loans (and, accordingly, on the Offered Certificates) while work-outs
are negotiated or foreclosures are completed. See "Servicing of the Mortgage
Loans--Modifications, Waiver and Amendments" and "--Realization Upon Defaulted
Mortgage Loans" in this prospectus supplement and "Certain Legal Aspects of
Mortgage Loans--Foreclosure" in the prospectus. In general, the Class X
Certificates will be extremely sensitive to the rate of principal prepayments,
principal losses and interest rate reductions due to modifications on the
mortgage loans. Because the rate of principal payments on the mortgage loans
will depend on future events and a variety of factors (as described below), we
cannot assure you as to the rate or the rate of principal prepayments in
particular. We are not aware of any relevant publicly available or
authoritative statistics with respect to the historical prepayment experience
of a large group of mortgage loans comparable to the mortgage loans.
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The extent to which the yield to maturity of any Class of Offered
Certificates may vary from the anticipated yield will depend upon the degree to
which the Certificates are purchased at a discount or premium and when, and to
what degree, payments of principal on the mortgage loans are in turn
distributed on the Certificates. An investor should consider, in the case of
any Offered Certificate purchased at a discount, the risk that a slower than
anticipated rate of principal payments on the mortgage loans will result in an
actual yield to the investor that is lower than the anticipated yield and, in
the case of any Offered Certificate purchased at a premium, particularly the
Class X Certificates, the risk that a faster than anticipated rate of principal
payments on the mortgage loans will result in an actual yield to the investor
that is lower than the anticipated yield. In general, the earlier a payment of
principal is distributed on an Offered Certificate purchased at a discount or
premium, the greater will be the effect on an investor's yield to maturity. As
a result, the effect on an investor's yield of principal payments distributed
on an investor's Offered Certificates occurring at a rate higher (or lower)
than the rate anticipated by the investor during any particular period would
not be fully offset by a subsequent like reduction (or increase) in the rate of
principal payments.
Principal payments (whether resulting from differences in amortization
terms, prepayments following expirations of the respective prepayment lockout
periods or otherwise) on the mortgage loans will affect the Pass-Through Rate
of the Class X, Class E and Class F Certificates and, to the extent the
weighted average Net Mortgage Rate would be reduced below the fixed
Pass-Through Rate on those Classes, the Class A-2, Class B, Class C and Class D
Certificates, for one or more future periods and therefore will also affect the
yield on those Classes.
Losses and Shortfalls. The yield to holders of the Offered Certificates
will also depend on the extent to which the holders are required to bear the
effects of any losses or shortfalls on the mortgage loans. Losses and other
shortfalls on the mortgage loans will, with the exception of any Net Aggregate
Prepayment Interest Shortfalls, generally be borne by the holders of the Class
M, Class L, Class K, Class J, Class I, Class H, Class G, Class F, Class E,
Class D, Class C and Class B Certificates, in that order, and in each case to
the extent of amounts otherwise distributable in respect of the Class of
Certificates. In the event of the reduction of the Certificate Balances of all
those Classes of Certificates to zero, the resulting losses and shortfalls will
then be borne, pro rata, by the Class A-1 and Class A-2 Certificates (and Class
X Certificates with respect to shortfalls of interest). Net Aggregate
Prepayment Interest Shortfalls will generally be borne by the respective
Classes of Certificates (other than the Residual Certificates and the Class X
Certificates) on a pro rata basis.
Certain Relevant Factors. The rate and timing of principal payments and
defaults and the severity of losses on the mortgage loans may be affected by a
number of factors, including, without limitation, prevailing interest rates,
the terms of the mortgage loans (for example, due-on-sale clauses, Lockout
Periods, Prepayment Premiums or Yield Maintenance Charges and amortization
terms that require balloon payments), the demographics and relative economic
vitality of the areas in which the Mortgaged Properties are located and the
general supply and demand for rental properties in those areas, the quality of
management of the Mortgaged Properties, the servicing of the mortgage loans,
possible changes in tax laws and other opportunities for investment. See "Risk
Factors" and "Description of the Mortgage Pool" in this prospectus supplement
and "Risk Factors" and "Yield and Maturity Considerations--Yield and Prepayment
Considerations" in the prospectus.
The rate of prepayment on the pool of mortgage loans is likely to be
affected by prevailing market interest rates for mortgage loans of a comparable
type, term and risk level as the mortgage loans. When the prevailing market
interest rate is below a mortgage coupon, a borrower may have an increased
incentive to refinance its mortgage loan. However, under all of the mortgage
loans, voluntary prepayments are subject to Lockout Periods and/or Prepayment
Premium Periods and/or Yield Maintenance Periods. See "Description of the
Mortgage Pool--Certain Terms and Conditions of the Mortgage Loans--Prepayment
Provisions" in this prospectus supplement.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
Mortgaged Properties in order to realize their
S-118
<PAGE>
equity in the Mortgaged Property, to meet cash flow needs or to make other
investments. In addition, some borrowers may be motivated by federal and state
tax laws (which are subject to change) to sell Mortgaged Properties prior to
the exhaustion of tax depreciation benefits.
The Depositor makes no representation as to the particular factors that
will affect the rate and timing of prepayments and defaults on the mortgage
loans, as to the relative importance of those factors, as to the percentage of
the principal balance of the mortgage loans that will be prepaid or as to which
a default will have occurred as of any date or as to the overall rate of
prepayment or default on the mortgage loans.
Delay in Payment of Distributions. Because each monthly distribution is
made on each Distribution Date, which is at least fifteen days after the end of
the related Interest Accrual Period, the effective yield to the holders of the
Offered Certificates will be lower than the yield that would otherwise be
produced by the applicable Pass-Through Rates and purchase prices (assuming the
prices did not account for the delay).
Unpaid Distributable Certificate Interest. As described under "Description
of the Certificates--Distributions--Priority" in this prospectus supplement, if
the portion of the Available Distribution Amount distributable in respect of
interest on any Class of Offered Certificates on any Distribution Date is less
than the Distributable Certificate Interest then payable for that Class, the
shortfall will be distributable to holders of that Class of Certificates on
subsequent Distribution Dates, to the extent of available funds. The shortfall
will not bear interest, however, so it will negatively affect the yield to
maturity of the Class of Certificates for so long as it is outstanding.
WEIGHTED AVERAGE LIFE
The weighted average life of an Offered Certificate (other than the Class
X Certificates) refers to the average amount of time that will elapse from the
date of its issuance until each dollar allocable to principal of the
Certificate is distributed to the investor. The weighted average life of an
Offered Certificate will be influenced by, among other things, the rate at
which principal on the mortgage loans is paid or otherwise collected, which may
be in the form of scheduled amortization, voluntary prepayments, Insurance and
Condemnation Proceeds and Liquidation Proceeds.
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 each
of the following tables, the column headed "0% CPR" assumes that none of the
mortgage loans is prepaid before maturity or the Anticipated Prepayment Date,
as the case may be. The columns headed "3% CPR", "6% CPR", "9% CPR" and "12%
CPR" assume that prepayments on the mortgage loans are made at those levels of
CPR following the expiration of any Lockout Period. We cannot assure you,
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 following tables indicate the percentage of the initial Certificate
Balance of each Class of the Offered Certificates (other than the Class X
Certificates) that would be outstanding after each of the dates shown at
various CPRs and the corresponding weighted average life of each Class of
Certificates. The tables have been prepared on the basis of the following
assumptions, among others:
(a) scheduled periodic payments of principal and/or interest on the
mortgage loans (or, with respect to 1 mortgage loan, representing
approximately 3.58% of the Initial Pool Balance, periodic payments of
interest-only over the term of the mortgage loan and the payment of the
entire principal amount of the mortgage loan at maturity, and with respect
to 6 mortgage loans, representing approximately 13.33% of the Initial Pool
Balance, scheduled periodic payments of interest over the specified
interest-only period and then payments of principal and interest in
accordance with the applicable amortization schedule) will be received on a
timely basis and will be distributed on each Distribution Date, beginning
in September, 1999;
S-119
<PAGE>
(b) the Mortgage Rate in effect for each mortgage loan as of the
cut-off date will remain in effect to maturity or the Anticipated
Prepayment Date, as the case may be, and will be adjusted as required
pursuant to the definition of Mortgage Rate;
(c) the periodic principal and/or interest payment due for each
mortgage loan on the first due date following the cut-off date will
continue to be due on each due date until maturity or the Anticipated
Prepayment Date, as the case may be, except in the case of the 16 mortgage
loans representing approximately 2.85% of the Initial Pool Balance, which
mortgage loans are assumed to amortize in accordance with the amortization
schedule set forth on Annex B;
(d) any principal prepayments on the mortgage loans will be received
on their respective due dates after the expiration of any applicable
Lockout Period at the respective levels of CPR set forth in the tables;
(e) the Mortgage Loan Seller will not be required to repurchase any
mortgage loan, and none of the Master Servicer, the Special Servicer, the
holders of the Controlling Class or the holders of the Class LR
Certificates will exercise its option to purchase all the mortgage loans
and thereby cause an early termination of the trust fund;
(f) no Prepayment Premiums or Yield Maintenance Charges are included
in any allocations or calculations;
(g) any principal prepayments received on the mortgage loans are
prepayments in full and there are no Prepayment Interest Shortfalls;
(h) the Closing Date is August 26, 1999;
(i) the APD Loans prepay on their Anticipated Prepayment Date;
(j) the purchase option on the Capital Square loan is not exercised
and the renovations reserve fund on the Townhouse Apartments loan is not
applied as a principal prepayment on that mortgage loan; and
(k) the Pass-Through Rates and initial Certificate Balances of the
respective Classes of Certificates are as described in this Prospectus
Supplement.
To the extent that the mortgage loans have characteristics that differ from
those assumed in preparing the tables set forth below, a Class of Offered
Certificates (other than the Class X Certificates) may mature earlier or later
than indicated by the tables. It is highly unlikely that the mortgage loans
will prepay at any constant rate until maturity or that all the mortgage loans
will prepay at the same rate. In addition, variations in the actual prepayment
experience and the balance of the mortgage loans that prepay may increase or
decrease the percentages of initial Certificate Balances (and weighted average
lives) shown in the following tables. These variations may occur even if the
average prepayment experience of the mortgage loans were to equal any of the
specified CPR percentages. Investors are urged to conduct their own analyses of
the rates at which the mortgage loans may be expected to prepay. Based on the
foregoing assumptions, the following tables indicate the resulting weighted
average lives of each Class of Offered Certificates (other than the Class X
Certificates) and set forth the percentage of the initial Certificate Balance
of the Class of the Offered Certificate that would be outstanding after each of
the dates shown at the indicated CPRs.
S-120
<PAGE>
PERCENT OF THE INITIAL CERTIFICATE BALANCE
OF THE CLASS A-1 CERTIFICATES AT THE RESPECTIVE CPRS
SET FORTH BELOW:
<TABLE>
<CAPTION>
DATE 0% CPR 3% CPR 6% CPR 9% CPR 12% CPR
- ---- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
Initial Percent ............................. 100 100 100 100 100
August 15, 2000 ............................. 95 94 94 94 94
August 15, 2001 ............................. 88 87 87 86 85
August 15, 2002 ............................. 82 80 79 77 76
August 15, 2003 ............................. 74 72 70 68 66
August 15, 2004 ............................. 67 64 61 59 57
August 15, 2005 ............................. 58 54 52 49 47
August 15, 2006 ............................. 20 16 13 10 8
August 15, 2007 ............................. 0 0 0 0 0
Weighted Average Life (Years)(1) ............ 5.49 5.33 5.19 5.07 4.96
Estimated Month of First Principal .......... 9/99 9/99 9/99 9/99 9/99
Estimated Month of Maturity ................. 7/07 5/07 5/07 5/07 5/07
</TABLE>
- ----------
(1) The weighted average life of the Class A-1 Certificates is determined by
(a) multiplying the amount of each principal distribution on it by the
number of years from the date of issuance of the Class A-1 Certificates
to the related Distribution Date, (b) summing the results and (c)
dividing the sum by the aggregate amount of the reductions in the
principal balance of the Class A-1 Certificates.
PERCENT OF THE INITIAL CERTIFICATE BALANCE
OF THE CLASS A-2 CERTIFICATES AT THE RESPECTIVE CPRS
SET FORTH BELOW:
<TABLE>
<CAPTION>
DATE 0% CPR 3% CPR 6% CPR 9% CPR 12% CPR
- ---- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
Initial Percent ............................. 100 100 100 100 100
August 15, 2000 ............................. 100 100 100 100 100
August 15, 2001 ............................. 100 100 100 100 100
August 15, 2002 ............................. 100 100 100 100 100
August 15, 2003 ............................. 100 100 100 100 100
August 15, 2004 ............................. 100 100 100 100 100
August 15, 2005 ............................. 100 100 100 100 100
August 15, 2006 ............................. 100 100 100 100 100
August 15, 2007 ............................. 98 97 96 95 95
August 15, 2008 ............................. 94 93 92 91 90
August 15, 2009 ............................. 0 0 0 0 0
Weighted Average Life (Years)(1) ............ 9.69 9.66 9.64 9.62 9.61
Estimated Month of First Principal .......... 7/07 5/07 5/07 5/07 5/07
Estimated Month of Maturity ................. 7/09 7/09 7/09 7/09 7/09
</TABLE>
- ----------
(1) The weighted average life of the Class A-2 Certificates is determined by
(a) multiplying the amount of each principal distribution on it by the
number of years from the date of issuance of the Class A-2 Certificates
to the related Distribution Date, (b) summing the results and (c)
dividing the sum by the aggregate amount of the reductions in the
principal balance of the Class A-2 Certificates.
S-121
<PAGE>
PERCENT OF THE INITIAL CERTIFICATE BALANCE
OF THE CLASS B CERTIFICATES AT THE RESPECTIVE CPRS
SET FORTH BELOW:
<TABLE>
<CAPTION>
DATE 0% CPR 3% CPR 6% CPR 9% CPR 12% CPR
- ---- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
Initial Percent ............................. 100 100 100 100 100
August 15, 2000 ............................. 100 100 100 100 100
August 15, 2001 ............................. 100 100 100 100 100
August 15, 2002 ............................. 100 100 100 100 100
August 15, 2003 ............................. 100 100 100 100 100
August 15, 2004 ............................. 100 100 100 100 100
August 15, 2005 ............................. 100 100 100 100 100
August 15, 2006 ............................. 100 100 100 100 100
August 15, 2007 ............................. 100 100 100 100 100
August 15, 2008 ............................. 100 100 100 100 100
August 15, 2009 ............................. 0 0 0 0 0
Weighted Average Life (Years)(1) ............ 9.92 9.90 9.89 9.89 9.89
Estimated Month of First Principal .......... 7/09 7/09 7/09 7/09 7/09
Estimated Month of Maturity ................. 8/09 8/09 8/09 8/09 7/09
</TABLE>
- ----------
(1) The weighted average life of the Class B Certificates is determined by
(a) multiplying the amount of each principal distribution on it by the
number of years from the date of issuance of the Class B Certificates to
the related Distribution Date, (b) summing the results and (c) dividing
the sum by the aggregate amount of the reductions in the principal
balance of the Class B Certificates.
PERCENT OF THE INITIAL CERTIFICATE BALANCE
OF THE CLASS C CERTIFICATES AT THE RESPECTIVE CPRS
SET FORTH BELOW:
<TABLE>
<CAPTION>
DATE 0% CPR 3% CPR 6% CPR 9% CPR 12% CPR
- ---- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
Initial Percent ............................. 100 100 100 100 100
August 15, 2000 ............................. 100 100 100 100 100
August 15, 2001 ............................. 100 100 100 100 100
August 15, 2002 ............................. 100 100 100 100 100
August 15, 2003 ............................. 100 100 100 100 100
August 15, 2004 ............................. 100 100 100 100 100
August 15, 2005 ............................. 100 100 100 100 100
August 15, 2006 ............................. 100 100 100 100 100
August 15, 2007 ............................. 100 100 100 100 100
August 15, 2008 ............................. 100 100 100 100 100
August 15, 2009 ............................. 0 0 0 0 0
Weighted Average Life (Years)(1) ............ 9.97 9.97 9.97 9.97 9.96
Estimated Month of First Principal .......... 8/09 8/09 8/09 8/09 7/09
Estimated Month of Maturity ................. 8/09 8/09 8/09 8/09 8/09
</TABLE>
- ----------
(1) The weighted average life of the Class C Certificates is determined by
(a) multiplying the amount of each principal distribution on it by the
number of years from the date of issuance of the Class C Certificates to
the related Distribution Date, (b) summing the results and (c) dividing
the sum by the aggregate amount of the reductions in the principal
balance of the Class C Certificates.
S-122
<PAGE>
PERCENT OF THE INITIAL CERTIFICATE BALANCE
OF THE CLASS D CERTIFICATES AT THE RESPECTIVE CPRS
SET FORTH BELOW:
<TABLE>
<CAPTION>
DATE 0% CPR 3% CPR 6% CPR 9% CPR 12% CPR
- ---- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
Initial Percent ............................. 100 100 100 100 100
August 15, 2000 ............................. 100 100 100 100 100
August 15, 2001 ............................. 100 100 100 100 100
August 15, 2002 ............................. 100 100 100 100 100
August 15, 2003 ............................. 100 100 100 100 100
August 15, 2004 ............................. 100 100 100 100 100
August 15, 2005 ............................. 100 100 100 100 100
August 15, 2006 ............................. 100 100 100 100 100
August 15, 2007 ............................. 100 100 100 100 100
August 15, 2008 ............................. 100 100 100 100 100
August 15, 2009 ............................. 0 0 0 0 0
Weighted Average Life (Years)(1) ............ 9.97 9.97 9.97 9.97 9.97
Estimated Month of First Principal .......... 8/09 8/09 8/09 8/09 8/09
Estimated Month of Maturity ................. 8/09 8/09 8/09 8/09 8/09
</TABLE>
- ----------
(1) The weighted average life of the Class D Certificates is determined by
(a) multiplying the amount of each principal distribution on it by the
number of years from the date of issuance of the Class D Certificates to
the related Distribution Date, (b) summing the results and (c) dividing
the sum by the aggregate amount of the reductions in the principal
balance of the Class D Certificates.
PERCENT OF THE INITIAL CERTIFICATE BALANCE
OF THE CLASS E CERTIFICATES AT THE RESPECTIVE CPRS
SET FORTH BELOW:
<TABLE>
<CAPTION>
DATE 0% CPR 3% CPR 6% CPR 9% CPR 12% CPR
- ---- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
Initial Percent ............................. 100 100 100 100 100
August 15, 2000 ............................. 100 100 100 100 100
August 15, 2001 ............................. 100 100 100 100 100
August 15, 2002 ............................. 100 100 100 100 100
August 15, 2003 ............................. 100 100 100 100 100
August 15, 2004 ............................. 100 100 100 100 100
August 15, 2005 ............................. 100 100 100 100 100
August 15, 2006 ............................. 100 100 100 100 100
August 15, 2007 ............................. 100 100 100 100 100
August 15, 2008 ............................. 100 100 100 100 100
August 15, 2009 ............................. 40 19 3 0 0
August 15, 2010 ............................. 26 3 0 0 0
August 15, 2011 ............................. 0 0 0 0 0
Weighted Average Life (Years)(1) ............ 10.47 10.10 9.97 9.97 9.97
Estimated Month of First Principal .......... 8/09 8/09 8/09 8/09 8/09
Estimated Month of Maturity ................. 5/11 11/10 11/09 8/09 8/09
</TABLE>
- ----------
(1) The weighted average life of the Class E Certificates is determined by
(a) multiplying the amount of each principal distribution on it by the
number of years from the date of issuance of the Class E Certificates to
the related Distribution Date, (b) summing the results and (c) dividing
the sum by the aggregate amount of the reductions in the principal
balance of the Class E Certificates.
S-123
<PAGE>
PERCENT OF THE INITIAL CERTIFICATE BALANCE
OF THE CLASS F CERTIFICATES AT THE RESPECTIVE CPRS
SET FORTH BELOW:
<TABLE>
<CAPTION>
DATE 0% CPR 3% CPR 6% CPR 9% CPR 12% CPR
- ---- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
Initial Percent ............................. 100 100 100 100 100
August 15, 2000 ............................. 100 100 100 100 100
August 15, 2001 ............................. 100 100 100 100 100
August 15, 2002 ............................. 100 100 100 100 100
August 15, 2003 ............................. 100 100 100 100 100
August 15, 2004 ............................. 100 100 100 100 100
August 15, 2005 ............................. 100 100 100 100 100
August 15, 2006 ............................. 100 100 100 100 100
August 15, 2007 ............................. 100 100 100 100 100
August 15, 2008 ............................. 100 100 100 100 100
August 15, 2009 ............................. 100 100 100 71 44
August 15, 2010 ............................. 100 100 61 25 0
August 15, 2011 ............................. 0 0 0 0 0
Weighted Average Life (Years)(1) ............ 11.72 11.66 11.17 10.55 10.19
Estimated Month of First Principal .......... 5/11 11/10 11/09 8/09 8/09
Estimated Month of Maturity ................. 5/11 5/11 5/11 3/11 8/10
</TABLE>
- ----------
(1) The weighted average life of the Class F Certificates is determined by
(a) multiplying the amount of each principal distribution on it by the
number of years from the date of issuance of the Class F Certificates to
the related Distribution Date, (b) summing the results and (c) dividing
the sum by the aggregate amount of the reductions in the principal
balance of the Class F Certificates.
YIELD SENSITIVITY OF THE OFFERED CERTIFICATES
The tables beginning on page E-1 hereto (the "Yield Tables") indicate the
sensitivity of the pre-tax corporate bond equivalent yields to maturity of the
Class A-1, Class A-2, Class B, Class C, Class D, Class E and Class F
Certificates at various prices and constant prepayment rates. The allocations
and calculations do not take account of any Prepayment Premiums or Yield
Maintenance Charges. The Yield Tables have been prepared based on the
assumption that distributions are made in accordance with "Description of the
Certificates" in this prospectus supplement, the assumptions described in
clauses (a) through (k) on pages S-119 and S-120 and, where applicable, the
specified assumed purchase prices (which prices do not include accrued
interest). Assumed purchase prices are expressed in 32nds (i.e., 100/04 means
100 4/32%) as a percentage of the initial Certificate Balance of each Class of
Offered Certificates.
The yields set forth in the Yield Tables were calculated by determining
the monthly discount rates which, when applied to the assumed stream of cash
flows to be paid on each Class of Offered Certificates, would cause the
discounted present value of such assumed stream of cash flows to equal the
assumed purchase prices, plus accrued interest from and including August 1,
1999 to, but excluding August 26, 1999, and by converting such monthly rates to
semi-annual corporate bond equivalent rates. Such calculation does not take
into account variations that may occur in the interest rates at which investors
may be able to reinvest funds received by them as distributions on the Offered
Certificates and consequently does not purport to reflect the return on any
investment in such Classes of Offered Certificates when such reinvestment rates
are considered. For purposes of the Yield Tables (except in the case of the
Class X Certificates), "modified duration" has been calculated using the
modified Macaulay Duration as specified in the "PSA Standard Formulas." The
Macaulay Duration is calculated as the present value weighted average time to
receive future payments of principal and interest, and the PSA Standard Formula
modified duration is calculated by dividing the Macaulay Duration by the
appropriate semi-annual compounding factor. The duration of a security
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<PAGE>
may be calculated according to various methodologies; accordingly, no
representation is made by the Depositor or any other person that the "modified
duration" approach used in this prospectus supplement is appropriate. Duration,
like yield, will be affected by the prepayment rate of the mortgage loans and
extensions in respect of balloon payments that actually occur during the life
of the Class A-1, Class A-2, Class B, Class C, Class D, Class E and Class F
Certificates and by the actual performance of the mortgage loans, all of which
may differ, and may differ significantly, from the assumptions used in
preparing the Yield Tables.
The characteristics of the mortgage loans differ in certain respects from
those assumed in preparing the Yield Tables, and the Yield Tables are presented
for illustrative purposes only. In particular, none of the mortgage loans
permit voluntary partial prepayments. Thus neither the pool of mortgage loans
nor any mortgage loan will prepay at any constant rate, and it is unlikely that
the mortgage loans will prepay in a manner consistent with the designated
Scenario for the Yield Tables. In addition, it is unlikely that the mortgage
loans will prepay at any of the specified percentages of CPR until maturity or
that all the mortgage loans will so prepay at the same rate, that the actual
pre-tax yields on, or any other payment characteristics of, any Class of
Offered Certificates will correspond to any of the information shown in the
Yield Tables, or that the aggregate purchase prices of the Offered Certificates
will be as assumed. Accordingly, investors must make their own decisions as to
the appropriate assumptions (including prepayment assumptions) to be used in
deciding whether to purchase the Offered Certificates.
YIELD SENSITIVITY OF THE CLASS X CERTIFICATES
The yield to maturity on the Class X Certificates will be extremely
sensitive to the rate and timing of principal payments (including prepayments),
principal losses and interest rate reductions due to modifications on the
mortgage loans and to other factors set forth above. Investors should fully
consider the associated risks, including the risk that a rapid rate of
principal payments or principal losses on the pool of mortgage loans could
result in the failure by investors in the Class X Certificates to fully recoup
their initial investments.
ANY OPTIONAL TERMINATION BY THE SPECIAL SERVICER, THE MASTER SERVICER, THE
HOLDERS OF THE CONTROLLING CLASS, THE DEPOSITOR OR THE HOLDERS OF THE CLASS LR
CERTIFICATES WOULD RESULT IN PREPAYMENT IN FULL OF THE CERTIFICATES AND WOULD
HAVE AN ADVERSE EFFECT ON THE YIELD OF THE CLASS X CERTIFICATES BECAUSE A
TERMINATION WOULD HAVE AN EFFECT SIMILAR TO A PRINCIPAL PREPAYMENT IN FULL OF
THE MORTGAGE LOANS (WITHOUT, HOWEVER, THE PAYMENT OF ANY PREPAYMENT PREMIUMS OR
YIELD MAINTENANCE CHARGES) AND, AS A RESULT, INVESTORS IN THE CLASS X
CERTIFICATES AND ANY OTHER CERTIFICATES PURCHASED AT PREMIUM MIGHT NOT FULLY
RECOUP THEIR INITIAL INVESTMENT. SEE "DESCRIPTION OF THE CERTIFICATES--
TERMINATION; RETIREMENT OF CERTIFICATES" IN THIS PROSPECTUS SUPPLEMENT.
The table below indicates the sensitivity of the pre-tax corporate bond
equivalent yields to maturity of the Class X Certificates at various prices and
constant prepayment rates. The allocations and calculations do not take account
of any Prepayment Premiums or Yield Maintenance Charges. The yields set forth
in the table were calculated by determining the monthly discount rates that,
when applied to the assumed stream of cash flows to be paid on the Class X
Certificates, would cause the discounted present value of the assumed stream of
cash flows to equal the assumed purchase prices plus accrued interest of the
respective Class of Certificates and converting the monthly rates to corporate
bond equivalent rates. These calculations do not take into account variations
that may occur in the interest rates at which investors may be able to reinvest
funds received by them as distributions on the Class X Certificates and
consequently do not purport to reflect the return on any investment in the
Class of Certificates when the reinvestment rates are considered.
The table below has been prepared based on the assumption that
distributions are made in accordance with "Description of the Certificates" in
this prospectus supplement and on the assumptions described in clauses (a)
through (k) on pages S-119 and S-120 and with the assumed respective purchase
prices (as a percentage of the initial Notional Amount of the Class X
Certificates) of the Class X Certificates set forth in the table, plus accrued
interest thereon from August 1, 1999 to the Closing Date.
S-125
<PAGE>
SENSITIVITY TO PRINCIPAL PREPAYMENTS OF THE PRE-TAX YIELDS TO MATURITY
OF THE CLASS X CERTIFICATES
<TABLE>
<CAPTION>
ASSUMED
PURCHASE PRICE 0% CPR 3% CPR 6% CPR 9% CPR 12% CPR
-------------- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
2.25% 12.45% 12.45% 12.45% 12.45% 12.45%
2.50% 9.90% 9.89% 9.88% 9.88% 9.87%
2.75% 7.74% 7.72% 7.70% 7.69% 7.68%
</TABLE>
We cannot assure you that the mortgage loans will prepay at any of the
rates shown in the table or at any other particular rate, that the cash flows
on the Class X Certificates will correspond to the cash flows assumed for
purposes of the above table or that the aggregate purchase price of the Class X
Certificates will be as assumed. In addition, it is unlikely that the mortgage
loans will prepay at any of the specified percentages of CPR until maturity or
that all the mortgage loans will so prepay at the same rate. Timing of changes
in the rate of prepayments may significantly affect the actual yield to
maturity to investors, even if the average rate of principal prepayments is
consistent with the expectations of investors. Investors must make their own
decisions as to the appropriate prepayment assumption to be used in deciding
whether to purchase the Class X Certificates.
S-126
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Upon the issuance of the Certificates, Cadwalader, Wickersham & Taft,
special counsel to the Depositor, will deliver its opinion that, assuming (1)
the making of appropriate elections, (2) compliance with the provisions of the
Pooling and Servicing Agreement and (3) compliance with applicable changes in
the Internal Revenue Code of 1986, as amended (the "Code"), including the REMIC
Provisions, for federal income tax purposes, the trust fund, exclusive of the
Excess Interest and the Excess Interest Distribution Account, will qualify as
two separate real estate mortgage investment conduits (the "Upper-Tier REMIC"
and the "Lower-Tier REMIC," respectively, and each a "REMIC") within the
meaning of Sections 860A through 860G (the "REMIC Provisions") of the Code, and
(1) the Class A-1, Class A-2, Class X, Class B, Class C, Class D, Class E,
Class F, Class G, Class H, Class I, Class J, Class K, Class L and Class M
Certificates will evidence the "regular interests" in the Upper-Tier REMIC and
(2) the Class R and Class LR Certificates will be the sole classes of "residual
interests" in the Upper-Tier REMIC and Lower-Tier REMIC, respectively, within
the meaning of the REMIC Provisions in effect on the date of this prospectus
supplement. The Offered Certificates are "Regular Certificates" as defined in
the prospectus. In addition, in the opinion of Cadwalader, Wickersham & Taft,
the portion of the trust fund consisting of the Excess Interest and the Excess
Interest Distribution Account will be treated as a grantor trust for federal
income tax purposes under subpart E, Part I of subchapter J of the Code.
Because they represent regular interests, each Class of Offered
Certificates generally will be treated as newly originated debt instruments for
federal income tax purposes. Holders of the Classes of Offered Certificates
will be required to include in income all interest on the regular interests
represented by their Certificates in accordance with the accrual method of
accounting, regardless of a Certificateholder's usual method of accounting. It
is anticipated that the regular interests represented by the Class E and Class
F Certificates will be issued with original issue discount ("OID") for federal
income tax purposes in an amount equal to the excess of the initial Certificate
Balances of those Certificates (plus 11 days of interest at the Pass-Through
Rates thereon) over their respective issue prices (including accrued interest).
It is also anticipated that the Class A-1, Class A-2, and Class B Certificates
will be issued at a premium and that the Class C and Class D Certificates will
be issued with de minimis original issue discount for federal income tax
purposes. The prepayment assumption that will be used in determining the rate
of accrual of OID or whether the OID is de minimis and that may be used to
amortize premium, if any, for federal income tax purposes will be based on the
assumption that subsequent to the date of any determination the mortgage loans
will prepay at a rate equal to a CPR of 0%; provided, that it is assumed that
the APD Loans prepay on their Anticipated Prepayment Dates (the "Prepayment
Assumption"). No representation is made that the mortgage loans will prepay at
that rate or at any other rate. See "Certain Federal Income Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates--Taxation
of Regular Certificates" in the prospectus.
Although unclear for federal income tax purposes, it is anticipated that
the regular interests represented by the Class X Certificates will be
considered to be issued with OID in an amount equal to the excess of all
distributions of interest expected to be received on it (assuming the weighted
average of the Pass-Through Rates changes in accordance with the Prepayment
Assumption) over their issue price (including accrued interest). Any "negative"
amounts of OID on the Class X Certificates attributable to rapid prepayments
with respect to the mortgage loans will not be deductible currently, but may be
offset against future positive accruals of OID, if any. Finally, a holder of a
Class X Certificate may be entitled to a loss deduction to the extent it
becomes certain that the holder will not recover a portion of its basis in its
Certificate, assuming no further prepayments. In the alternative, it is
possible that rules similar to the "noncontingent bond method" of the
contingent interest rules in the OID Regulations, as amended on June 12, 1996,
may be promulgated with respect to the Class X Certificates. See "Certain
Federal Income Tax Consequences--Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Original Issue Discount" in the
prospectus. Under the noncontingent bond method, if the interest payable for
any period is greater or less than the amount projected, the amount of income
included for that period would be
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either increased or decreased accordingly. Any net reduction in the income
accrual for the taxable year below zero (a "Negative Adjustment") would be
treated by a Certificateholder as ordinary loss to the extent of prior income
accruals and would be carried forward to offset future interest accruals. At
maturity, any remaining Negative Adjustment would be treated as a loss on
retirement of the Certificate. The legislative history of relevant Code
provisions indicates, however, that negative amounts of OID on an instrument
such as a REMIC regular interest may not give rise to taxable losses in any
accrual period prior to the instrument's disposition or retirement. Thus, it is
not clear whether any losses resulting from a Negative Adjustment would be
recognized currently or be carried forward until disposition or retirement of
the debt obligation.
Prepayment Premiums and Yield Maintenance Charges actually collected will
be distributed among the holders of the respective Classes of Certificates as
described under "Description of the Certificates--Allocation of Prepayment
Premiums and Yield Maintenance Charges" in this prospectus supplement. It is
not entirely clear under the Code when the amount of Prepayment Premiums or
Yield Maintenance Charges so allocated should be taxed to the holder of an
Offered Certificate, but it is not expected, for federal income tax reporting
purposes, that Prepayment Premiums and Yield Maintenance Charges will be
treated as giving rise to any income to the holder of an Offered Certificate
prior to the Master Servicer's actual receipt of a Prepayment Premium or Yield
Maintenance Charge. It appears that Prepayment Premiums and Yield Maintenance
Charges, if any, will be treated as ordinary income rather than capital gain.
However, that is not entirely clear and Certificateholders should consult their
own tax advisers concerning the treatment of Prepayment Premiums and Yield
Maintenance Charges.
The Offered Certificates will be treated as "real estate assets" within
the meaning of Section 856(c)(4)(A) of the Code, and interest (including OID,
if any) on the Offered Certificates will be interest described in Section
856(c)(3)(B) of the Code. Moreover, the Offered Certificates will be "qualified
mortgages" for another REMIC within the meaning of Section 860G(a)(3) of the
Code and "permitted assets" for a "financial asset securitization investment
trust" within the meaning of Section 860L(c) of the Code. The Offered
Certificates will be treated as "loans... secured by an interest in real
property which is... residential real property" to the extent the loans are
secured by multifamily properties, healthcare properties and mobile home
communities. As of the cut-off date, 80, 10 and 6 mortgage loans representing
approximately 38.11%, 4.07% and 0.73%, respectively, of the Initial Pool Balance
are secured by multifamily properties, healthcare properties and mobile home
communities, respectively. Investors should consult their own tax advisors as to
the treatment of their interest in Excess Interest under the foregoing Code
Sections. See "Certain Federal Income Tax Consequences--Federal Income Tax
Consequences for REMIC Certificates--Status of REMIC Certificates" and "Certain
Federal Income Tax Consequences--Federal Income Tax Consequences for
Certificates as to Which No REMIC Election Is Made--Stripped
Certificates--Status of Stripped Certificates" in the prospectus.
In addition, the Offered 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 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, we anticipate that the rights to
Excess Interest will have negligible value as of the closing date. It is
anticipated that the Trustee will report Excess Interest, if any, as it
accrues, irrespective of whether the investor uses the accrual or cash method.
It is anticipated that Excess Interest will not be reportable as income prior
to the period in which it actually accrues.
For further information regarding the federal income tax consequences of
investing in the Offered Certificates, see "Certain Federal Income Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates--Taxation
of Regular Certificates" in the prospectus.
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<PAGE>
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in the underwriting
agreement, dated as of the date of this prospectus supplement (the
"Underwriting Agreement"), among First Union Capital Markets Corp. and Chase
Securities Inc. (the "Underwriters") and the Depositor, the Depositor has
agreed to sell to the Underwriters, and each Underwriter has severally but not
jointly agreed to purchase from the Depositor the respective Certificate
Balances, or Notional Amounts, as applicable, of each Class of the Offered
Certificates set forth below subject in each case to a variance of 5%.
<TABLE>
<CAPTION>
CLASS FIRST UNION CAPITAL MARKETS CORP. CHASE SECURITIES INC.
- ----- --------------------------------- ---------------------
<S> <C> <C>
Class A-1 ..... $142,934,924 $ 67,465,076
Class A-2 ..... $436,050,419 $380,815,160
Class X ....... $949,484,802 $448,155,439
Class B ....... $ 52,221,664 $ 24,648,549
Class C ....... $ 42,726,816 $ 20,166,995
Class D ....... $ 14,242,272 $ 6,722,332
Class E ....... $ 33,231,968 $ 15,685,440
Class F ....... $ 11,868,560 $ 5,601,943
</TABLE>
In the Underwriting Agreement, the Underwriters have severally but not
jointly agreed, subject to the terms and conditions set forth in the
Underwriting Agreement, to purchase all of the Offered Certificates if any
Offered Certificates are purchased. In the event of a default by any
Underwriter, the Underwriting Agreement provides that, in certain
circumstances, purchase commitments of the non-defaulting Underwriter may be
increased or the Underwriting Agreement may be terminated. Further, the
Depositor has agreed to indemnify the Underwriters, and the Mortgage Loan
Sellers and the Underwriters have agreed to indemnify the Depositor, against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended.
The Depositor has been advised by the Underwriters that they propose to
offer the Offered Certificates to the public from time to time in one or more
negotiated transactions, or otherwise, at varying prices to be determined at
the time of sale. Proceeds to the Depositor from the sale of Offered
Certificates before deducting expenses payable by the Depositor estimated to be
approximately $3,500,000, will be 102.381% of the initial aggregate Certificate
Balance of the Offered Certificates, plus accrued interest on the Offered
Certificates from August 1, 1999. The Underwriters may effect the transactions
by selling the Offered Certificates to or through dealers, and the dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Underwriters. In connection with the purchase and sale of
the Offered Certificates offered hereby, the Underwriters may be deemed to have
received compensation from the Depositor in the form of underwriting discounts.
Chase Securities Inc. is an affiliate of the Depositor and one of the
Mortgage Loan Sellers which is also acting as the Master Servicer.
First Union Capital Markets Corp. is an affiliate of First Union, one of
the Mortgage Loan Sellers.
We cannot assure you that a secondary market for the Offered Certificates
will develop or, if it does develop, that it will continue. The Underwriters
expect to make, but are not obligated to make, a secondary market in the
Offered Certificates. The primary source of ongoing information available to
investors concerning the Offered Certificates will be the monthly statements
discussed in the prospectus under "Description of the Certificates--Reports to
Certificateholders," which will include information as to the outstanding
principal balance of the Offered Certificates and the status of the applicable
form of credit enhancement. Except as described in this prospectus supplement
under "Description of the Certificates--Reports to Certificateholders; Certain
Available Information," we cannot assure you that any additional information
regarding the Offered Certificates will be available through any other source.
In addition, we are not aware of any source through which price
S-129
<PAGE>
information about the Offered Certificates will be generally available on an
ongoing basis. The limited nature of that information regarding the Offered
Certificates may adversely affect the liquidity of the Offered Certificates,
even if a secondary market for the Offered Certificates becomes available.
If and to the extent required by applicable law or regulation, this
prospectus supplement and the prospectus will be used by Chase Securities Inc.
in connection with offers and sales related to market-making transactions in
the Offered Certificates with respect to which Chase Securities Inc. acts as
principal. Chase Securities Inc. may also act as agent in those transactions.
Sales may be made at negotiated prices determined at the time of sale.
LEGAL MATTERS
The validity of the Certificates will be passed upon for the Depositor by
Cadwalader, Wickersham & Taft, New York, New York, and for the Underwriters by
Brown & Wood LLP, New York, New York. In addition, certain federal income tax
matters will be passed upon for the Depositor by Cadwalader, Wickersham & Taft.
RATINGS
It is a condition to issuance that the Offered Certificates be rated not
lower than the following ratings by Standard & Poor's Rating Services ("S&P")
and Fitch IBCA, Inc. ("Fitch"):
<TABLE>
<CAPTION>
CLASS S&P FITCH
- ----- --- -----
<S> <C> <C>
A-1 ....................................................... AAA AAA
A-2 ....................................................... AAA AAA
X ......................................................... AAAr AAA
B ......................................................... AA AA
C ......................................................... A A
D ......................................................... A- A-
E ......................................................... BBB BBB
F ......................................................... BBB- BBB-
</TABLE>
A securities rating on mortgage pass-through certificates addresses the
likelihood of the timely receipt by their holders of interest and the ultimate
repayment of principal to which they are entitled by the Rated Final
Distribution Date. The rating takes into consideration the credit quality of
the pool of mortgage loans, structural and legal aspects associated with the
certificates, and the extent to which the payment stream from the pool of
mortgage loans is adequate to make payments required under the certificates.
S&P assigns the additional rating of "r" to highlight classes of securities
that S&P believes may experience high volatility or high variability in
expected returns due to non-credit risks. The ratings on the Offered
Certificates do not, however, constitute a statement regarding the likelihood,
timing or frequency of prepayments (whether voluntary or involuntary) on the
mortgage loans or the degree to which the payments might differ from those
originally contemplated. In addition, a rating does not address the likelihood
or frequency of voluntary or mandatory prepayments of mortgage loans, payment
of Excess Interest or net default interest or whether and to what extent
payments of Prepayment Premiums or Yield Maintenance Charges will be received
or the corresponding effect on yield to investors. As described in this
prospectus supplement, the amounts payable with respect to the Class X
Certificates consist only of interest. If the entire pool were to prepay in the
initial month, with the result that the Class X Certificateholders receive only
a single month's interest and thus suffer a nearly complete loss of their
investment, all amounts "due" to those holders will nevertheless have been
paid, and the result is consistent with the rating received on the Class X
Certificates. Accordingly, the ratings of the Class X Certificates should be
evaluated independently from similar ratings on other types of securities. A
downgrade, withdrawal or qualification of a rating with respect to a Lease
Enhancement Insurer, a Residual Value Insurance Policy provider, a Tenant or a
Guarantor of a Credit Lease may adversely affect the ratings of the Offered
Certificates.
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<PAGE>
We cannot assure you as to whether any rating agency not requested to rate
the Offered Certificates will nonetheless issue a rating to any Class of
Offered Certificates and, if so, what the rating would be. A rating assigned to
any Class of Offered Certificates by a rating agency that has not been
requested by the Depositor to do so may be lower than the rating assigned
thereto by Fitch or S&P.
The ratings on the Offered Certificates should be evaluated independently
from similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision
or withdrawal at any time by the assigning rating agency.
LEGAL INVESTMENT
Any Class of Certificates rated in the two highest rating categories 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 representations are 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.
ERISA CONSIDERATIONS
A fiduciary of any retirement plan or other employee benefit plan or
arrangement, including individual retirement accounts and annuities, Keogh
plans and collective investment funds and separate accounts in which those
plans, annuities, accounts or arrangements are invested, including insurance
company general accounts, that is subject to the fiduciary responsibility rules
of Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Code (an "ERISA Plan") or which is a governmental plan, as
defined in Section 3(32) of ERISA, 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 (collectively, with an ERISA Plan, a "Plan")
should review with its legal advisors whether the purchase or holding of
Offered Certificates could give rise to a transaction that is prohibited or is
not otherwise permitted either under ERISA, the Code or Similar Law or whether
there exists any statutory or administrative exemption applicable thereto.
Moreover, each Plan fiduciary should determine whether an investment in the
Offered Certificates is appropriate for the Plan, taking into account the
overall investment policy of the Plan and the composition of the Plan's
investment portfolio.
The U.S. Department of Labor has issued to Chase Securities Inc. an
individual prohibited transaction exemption, PTE 90-33, 55 Fed. Reg. 23, 151
(June 6, 1990) (the "Chase Exemption") as subsequently amended, and to First
Union Capital Markets Corp. an individual prohibited transaction exemption, PTE
96-22, 61 Fed. Reg. 14827 (April 3, 1996) (the "First Union Exemption" and
together with the Chase Exemption, the "Exemptions") as subsequently amended.
Each of the Exemptions generally exempts from the application of the prohibited
transaction provisions of Sections 406 and 407 of ERISA, and the excise taxes
imposed on the prohibited transactions pursuant to Sections 4975(a) and (b) of
the Code, certain transactions, among others, relating to the servicing and
operation of the pools of mortgage loans, such as the pool of mortgage loans,
and the purchase, sale and holding of mortgage pass-through certificates, such
as the Senior Certificates, underwritten by the respective Underwriter,
provided that certain conditions set forth in either of the Exemptions are
satisfied.
Each of the Exemptions sets forth six general conditions which must be
satisfied for a transaction involving the purchase, sale and holding of the
Senior Certificates to be eligible for exemptive relief.
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<PAGE>
First, the acquisition of the Senior Certificates by a Plan must be on terms
that are at least as favorable to the Plan as they would be in an arm's-length
transaction with an unrelated party. Second, the rights and interests evidenced
by the Senior Certificates must not be subordinated to the rights and interests
evidenced by the other certificates of the same trust. Third, the Senior
Certificates at the time of acquisition by the Plan must be rated in one of the
three highest generic rating categories by Standard & Poor's Rating Services
("S&P"), Moody's Investors Service, Inc. ("Moody's"), Duff & Phelps Credit
Rating Co. ("DCR") or Fitch IBCA, Inc. ("Fitch"). Fourth, the Trustee cannot be
an affiliate of any other member of the "Restricted Group" which consists of
any Underwriter, the Depositor, the Trustee, the Master Servicer, the Special
Servicer, any sub-servicer, any entity that provides insurance or other credit
support to the trust fund and any mortgagor with respect to mortgage loans
constituting more than 5% of the aggregate unamortized principal balance of the
mortgage loans as of the date of initial issuance of the Senior Certificates,
and any affiliate of any of the foregoing entities. Fifth, the sum of all
payments made to and retained by the Underwriters must represent not more than
reasonable compensation for underwriting the Senior Certificates, the sum of
all payments made to and retained by the Depositor pursuant to the assignment
of the mortgage loans to the trust fund must represent not more than the fair
market value of obligations and the sum of all payments made to and retained by
the Master Servicer, the Special Servicer and any sub-servicer must represent
not more than reasonable compensation for that person's services under the
Pooling and Servicing Agreement and reimbursement of the person's reasonable
expenses in connection therewith. Sixth, the investing Plan must be an
accredited investor as defined in Rule 501(a)(1) of Regulation D of the
Securities and Exchange Commission under the Securities Act of 1933, as
amended.
Because the Class A and Class X Certificates are not subordinated to any
other Class of Certificates, the second general condition set forth above is
satisfied with respect to those Certificates. It is a condition of the issuance
of the Class A Certificates that they be rated not lower than "AAA" by S&P and
Fitch, and it is a condition of the issuance of the Class X Certificates that
they be rated no lower than "AAAr" by S&P and "AAA" by Fitch. As of the Closing
Date, the fourth general condition set forth above will be satisfied with
respect to the Senior Certificates. A fiduciary of a Plan contemplating
purchasing a Class A or Class X Certificate in the secondary market must make
its own determination that, at the time of purchase, that the Class A or Class
X Certificates continue to satisfy the third and fourth general conditions set
forth above. A fiduciary of a Plan contemplating purchasing a Senior
Certificate, whether in the initial issuance of the related Certificates or in
the secondary market, must make its own determination that the first, fifth and
sixth general conditions set forth above will be satisfied with respect to the
related Senior Certificate.
The Exemptions also require that the trust fund meet the following
requirements: (1) the trust fund must consist solely of assets of the type that
have been included in other investment pools; (2) certificates in those other
investment pools must have been rated in one of the three highest categories of
S&P's, Moody's, Fitch or DCR for at least one year prior to the Plan's
acquisition of Senior Certificates; and (3) certificates in those other
investment pools must have been purchased by investors other than Plans for at
least one year prior to any Plan's acquisition of Senior Certificates.
If the general conditions of the Exemptions are satisfied, the Exemptions
may provide an exemption from the restrictions imposed by Sections 406(a) and
407(a) of ERISA (as well as the excise taxes imposed by Sections 4975(a) and
(b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of the Code) in
connection with (1) the direct or indirect sale, exchange or transfer of Senior
Certificates in the initial issuance of Certificates between the Depositor or
the Underwriters and a Plan when the Depositor, either of the Underwriters, the
Trustee, the Master Servicer, the Special Servicer, a sub-servicer or a
borrower is a Party in Interest with respect to the investing Plan, (2) the
direct or indirect acquisition or disposition in the secondary market of the
Senior Certificates by a Plan and (3) the holding of Senior Certificates by a
Plan. However, no exemption is provided from the restrictions of Sections
406(a)(1)(E), 406(a)(2) and 407 of ERISA for the acquisition or holding of a
Senior Certificate on behalf of an "Excluded Plan" or any person who has
discretionary authority or renders investment advice with respect to the assets
of the Excluded Plan. For purposes of this prospectus supplement, an "Excluded
Plan" is a Plan sponsored by any member of the Restricted Group.
S-132
<PAGE>
If certain specific conditions of the Exemptions are also satisfied, the
Exemptions may provide an exemption from the restrictions imposed by Sections
406(b)(1) and (b)(2) of ERISA and the taxes imposed by Section 4975(c)(1)(E) of
the Code in connection with (1) the direct or indirect sale, exchange or
transfer of Senior Certificates in the initial issuance of Certificates between
the Depositor or the Underwriters and a Plan when the person who has
discretionary authority or renders investment advice with respect to the
investment of Plan assets in those Certificates is (a) a borrower with respect
to 5% or less of the fair market value of the mortgage loans or (b) an
affiliate of that person, (2) the direct or indirect acquisition or disposition
in the secondary market of Senior Certificates by a Plan and (3) the holding of
Senior Certificates by a Plan.
Further, if certain specific conditions of the Exemptions are satisfied,
the Exemptions may provide an exemption from the restrictions imposed by
Sections 406(a), 406(b) and 407(a) of ERISA, and the taxes imposed by Sections
4975(a) and (b) of the Code by reason of Section 4975(c) of the Code for
transactions in connection with the servicing, management and operation of the
pool of mortgage loans.
Before purchasing a Senior Certificate, a fiduciary of a Plan should
itself confirm that (1) the Senior Certificates constitute "certificates" for
purposes of the Exemptions and (2) the specific and general conditions and the
other requirements set forth in the Exemptions would be satisfied. In addition
to making its own determination as to the availability of the exemptive relief
provided in the Exemptions, the Plan fiduciary should consider the availability
of any other prohibited transaction exemptions, including with respect to
governmental plans, any exemptive relief afforded under Similar Laws. See
"Certain ERISA Considerations" in the prospectus. A purchaser of a Senior
Certificate should be aware, however, that even if the conditions specified in
one or more exemptions are satisfied, the scope of relief provided by an
exemption may not cover all acts which might be construed as prohibited
transactions.
Because the characteristics of the Subordinate Offered Certificates do not
meet the requirements of the Exemptions, the purchase or holding of those
Certificates by a Plan may result in prohibited transactions or the imposition
of excise taxes or civil penalties. In no event may any transfer of a
Subordinate Offered Certificate or any interest in it be made to a Plan or to
any person who is directly or indirectly purchasing the Certificate or interest
in it on behalf of, as named fiduciary of, as trustee of, or with assets of a
Plan, unless the purchase and holding of the Certificate or interest in it is
exempt from the prohibited transaction provisions of Section 406 of ERISA and
the related excise tax provisions of Section 4975 of the Code under Prohibited
Transaction Class Exemption 95-60, which provides an exemption from the
prohibited transaction rules for certain transactions involving an insurance
company general account. The Plan or person to whom a transfer of the
Certificate or interest in it is made will be deemed to have represented to the
Depositor, the Master Servicer, the Special Servicer, the Trustee, each of the
Underwriters, any sub-servicer and any borrower with respect to the mortgage
loans that the purchase and holding of the Certificate or interest in it is so
exempt on the basis of Prohibited Transaction Class Exemption 95-60. See
"Certain ERISA Considerations" in the prospectus. Any Plan fiduciary
considering whether to purchase an Offered Certificate on behalf of a Plan
should consult with its counsel regarding the applicability of the fiduciary
responsibility and prohibited transaction provisions of ERISA and the Code to
the investment.
The sale of Certificates to a Plan is in no respect a representation by
the Depositor or either of 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.
S-133
<PAGE>
INDEX OF PRINCIPAL DEFINITIONS
Accrued Certificate Interest ................................... S-89
Additional Rights .............................................. S-53
Administrative Cost Rate ....................................... S-106
Advances ....................................................... S-95
AERC Loans ..................................................... S-49
Annualized Actual/360 Loan ..................................... S-83
Anticipated Prepayment Date .................................... S-50
APD Loans ...................................................... S-50
Appraisal Reduction ............................................ S-96
Appraisal Reduction Amount ..................................... S-97
Appraisal Reduction Event ...................................... S-96
Asset Status Report ............................................ S-104
Assumed Final Distribution Date ................................ S-92
Assumed Scheduled Payment ...................................... S-90
Authenticating Agent ........................................... S-80
Available Distribution Amount .................................. S-84
Base Interest Fraction ......................................... S-91
Bond-Type Leases ............................................... S-53
Casualty or Condemnation Rights ................................ S-53
Cedelbank ...................................................... S-80
Certificate Account ............................................ S-83
Certificate Balance ............................................ S-79
Certificate Owner .............................................. S-80
Certificate Registrar .......................................... S-80
Certificateholders ............................................. S-48
Certificates ................................................... S-79
Chase .......................................................... S-71
Chase Exemption ................................................ S-131
Class .......................................................... S-79
Class A Certificates ........................................... S-79
Closing Date ................................................... S-48
Code ........................................................... S-54, S-127
Collateral Support Deficit ..................................... S-94
Compensating Interest Payment .................................. S-106
Constant Prepayment Rate ....................................... S-119
Controlling Class .............................................. S-105
Controlling Class Certificateholder ............................ S-105
Corrected Mortgage Loan ........................................ S-104
CPR ............................................................ S-119
Credit Lease ................................................... S-50
Credit Lease Assignment ........................................ S-53
Cross-Over Date ................................................ S-87
Cut-Off Date Balance ........................................... S-48
DCR ............................................................ S-132
Debt Service Coverage Ratio .................................... S-66
Defeasance Loans ............................................... S-59
Defeasance Lock-out Period ..................................... S-59
Defeasance Option .............................................. S-59
Depositor ...................................................... S-48
Depositories ................................................... S-80
Determination Date ............................................. S-97
Direct Participants ............................................ S-80
Directing Certificateholder .................................... S-105
Distributable Certificate Interest ............................. S-89
Distribution Accounts .......................................... S-83
Distribution Date .............................................. S-82
Distribution Date Statement .................................... S-98
Double Net Leases .............................................. S-53
DSCR ........................................................... S-66
DTC ............................................................ S-80
Due Period ..................................................... S-84
Enhancement Insurer ............................................ S-54
ERISA .......................................................... S-131
ERISA Plan ..................................................... S-131
Euroclear ...................................................... S-80
Events of Default .............................................. S-113
Excess Interest ................................................ S-89
Excess Interest Distribution Account ........................... S-83
Excluded Plan .................................................. S-132
Exemptions ..................................................... S-131
FIRREA ......................................................... S-70
First Union .................................................... S-71
First Union Exemption .......................................... S-131
Fitch .......................................................... S-130, S-132
Form 8-K ....................................................... S-60
Guarantor ...................................................... S-51
HUD ............................................................ S-54
Indirect Participants .......................................... S-80
Initial Pool Balance ........................................... S-48
Initial Rate ................................................... S-50
Insurance and Condemnation Proceeds ............................ S-83
Insured Balloon Payment ........................................ S-48
Interest Distribution Amount ................................... S-89
Interest Reserve Account ....................................... S-83
IRS ............................................................ S-110
Lease Enhancement Policies ..................................... S-51
Liquidation Fee ................................................ S-107
Liquidation Fee Rate ........................................... S-107
Liquidation Proceeds ........................................... S-83
Lock Box Accounts .............................................. S-78
Lock Box Loans ................................................. S-78
Lockout Period ................................................. S-55
Lower-Tier Distribution Account ................................ S-83
Lower-Tier REMIC ............................................... S-127
LTV Ratio ...................................................... S-67
MAI ............................................................ S-96
Maintenance Rights ............................................. S-53
Master Servicer ................................................ S-105
Monthly Rental Payments ........................................ S-50
Moody's ........................................................ S-132
S-134
<PAGE>
Mortgage ....................................................... S-48
Mortgage Loan Sellers .......................................... S-48
Mortgage Note .................................................. S-48
Mortgage Rate .................................................. S-88
Mortgaged Property ............................................. S-48
Negative Adjustment ............................................ S-128
Net Aggregate Prepayment Interest Shortfall .................... S-89
Net Mortgage Rate .............................................. S-88
Non-Offered Certificates ....................................... S-79
Non-Offered Subordinate Certificates ........................... S-93
Nonrecoverable Advance ......................................... S-95
Notional Amount ................................................ S-79
Offered Certificates ........................................... S-79
OID ............................................................ S-127
Participants ................................................... S-80
Pass-Through Rate .............................................. S-87
Paying Agent ................................................... S-80
Percentage Interest ............................................ S-80
Periodic Payments .............................................. S-66
Permitted Investments .......................................... S-83
P&I Advance .................................................... S-95
Plan ........................................................... S-131
Pooling and Servicing Agreement ................................ S-79
Prepayment Assumption .......................................... S-127
Prepayment Interest Excess ..................................... S-106
Prepayment Interest Shortfall .................................. S-106
Prepayment Premium Period ...................................... S-56
Prepayment Premiums ............................................ S-56
Prime Rate ..................................................... S-96
Principal Distribution Amount .................................. S-89
Principal Shortfall ............................................ S-90
PSA Standard Formulas .......................................... S-124
Purchase Agreements ............................................ S-48
Purchase Price ................................................. S-76
Qualified Substitute Mortgage Loan ............................. S-77
Rated Final Distribution Date .................................. S-92
Record Date .................................................... S-82
Rego Park Plaza Loan ........................................... S-50
Regular Certificates ........................................... S-127
Reimbursement Rate ............................................. S-96
Related Proceeds ............................................... S-95
Release Date ................................................... S-59
REMIC .......................................................... S-127
REMIC Provisions ............................................... S-127
REO Account .................................................... S-108
REO Loan ....................................................... S-90
REO Property ................................................... S-104
Residual Certificates .......................................... S-79
Residual Value Insurance Policy ................................ S-48
Residual Value Insurers ........................................ S-49
Restricted Group ............................................... S-132
Revised Rate ................................................... S-50
Rules .......................................................... S-81
Scheduled Principal Distribution Amount ........................ S-89
Semi-Annual Loans .............................................. S-55
Senior Certificates ............................................ S-79
Servicer Remittance Date ....................................... S-94
Servicing Advances ............................................. S-95
Servicing Fee .................................................. S-106
Servicing Fee Rate ............................................. S-106
Servicing Standards ............................................ S-103
Similar Law .................................................... S-131
S&P ............................................................ S-130, S-132
Special Servicer ............................................... S-105
Special Servicing Fee .......................................... S-106
Special Servicing Fee Rate ..................................... S-106
Specially Serviced Mortgage Loans .............................. S-104
Stated Principal Balance ....................................... S-90
Subordinate Certificates ....................................... S-79
Subordinate Debt ............................................... S-31
Subordinate Offered Certificates ............................... S-79
Tax Credits .................................................... S-54
Tenant ......................................................... S-50
Tenant Balloon Payment ......................................... S-48
Terms and Conditions ........................................... S-82
Testing Date ................................................... S-75
Title Exception ................................................ S-74
Triple Net Leases .............................................. S-53
Trustee ........................................................ S-48
Trustee Fee .................................................... S-102
Trustee Fee Rate ............................................... S-102
Underwriters ................................................... S-129
Underwriting Agreement ......................................... S-129
Underwritten Net Cash Flow ..................................... S-69
Unscheduled Principal Distribution Amount ...................... S-90
Upper-Tier Distribution Account ................................ S-83
Upper-Tier REMIC ............................................... S-127
Voting Rights .................................................. S-101
WAC Rate ....................................................... S-88
Withheld Amounts ............................................... S-83
Withheld Loans ................................................. S-83
Workout Fee .................................................... S-106
Workout Fee Rate ............................................... S-106
<PAGE>
Yield Maintenance Charge ....................................... S-56
Yield Maintenance Period ....................................... S-56
Yield Rate ..................................................... S-56
Yield Tables ................................................... S-124
S-135
<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
<TABLE>
<CAPTION>
CHASE MANHATTAN BANK - FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGE TRUST SERIES 1999-1
ANNEX A CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS AND MORTGAGED PROPERTIES
% OF
INITIAL MORTGAGE
POOL # OF LOAN
ID PROPERTY NAME BALANCE PROPERTIES SELLER (1)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 1845 Walnut Street 1.97% 1 FUNB
2 19 Sentry Parkway 0.43% 1 CMB
3 200 N Maryland 0.10% 1 FUNB
4 302 West Fifth Street 0.13% 1 FUNB
5 39-41 North Fullerton Avenue 0.21% 1 FUNB
- -------------------------------------------------------------------------------------------------------
6 4220 East Craig Road 0.07% 1 CMB
7 4480 W. Spring Mountain Road 0.05% 1 FUNB
8 5350 & 5400 Shawnee Road 0.46% 1 CMB
9 560 East McKinley Avenue 0.07% 1 FUNB
10 745 64th Street 0.54% 1 CMB
- -------------------------------------------------------------------------------------------------------
11 8899 Beverly Boulevard Building 0.36% 1 CMB
12 90 & 100 John Street 3.58% 1 FUNB
13 Affordable Self Storage 0.26% 1 FUNB
14 Albany Mall 2.26% 1 FUNB
15 Anacuitas Manor Apartments 0.08% 1 FUNB
- -------------------------------------------------------------------------------------------------------
16 Anza Center 0.13% 1 FUNB
17 Aquatic Park Center - Phase III 1.50% 1 CMB
18 Arleta Shopping Center 0.10% 1 FUNB
19 Arrow Citrus Shopping Center 0.51% 1 FUNB
20 Ashford Manor Apartments 0.51% 1 CMB
- -------------------------------------------------------------------------------------------------------
21 Ashton Ridge Apartments 0.11% 1 FUNB
22 Ashwood Court 0.30% 1 FUNB
23 Avondale Manors 0.11% 1 FUNB
24 Baker Hill Shopping Center 1.17% 1 FUNB
25 Beacon Pointe 0.40% 1 FUNB
- -------------------------------------------------------------------------------------------------------
26 Bel Aire Apartments 0.18% 1 FUNB
27 Bentwood Apartments 0.20% 1 FUNB
28 Blue Angel Crossing 0.35% 1 FUNB
29 Breckenridge Apartments 0.39% 1 CMB
30 Bridgewood Apartments 0.31% 1 FUNB
- -------------------------------------------------------------------------------------------------------
31 Butterfield Plaza 0.34% 1 FUNB
32 Canal Place Apartments 0.09% 1 FUNB
33 Capitol Square 3.58% 1 CMB
34 Cedarwood Apartments 0.12% 1 FUNB
35 Central Park Place 0.51% 1 CMB
- -------------------------------------------------------------------------------------------------------
36 Chambrel @ Island Lake 1.44% 1 FUNB
37 Chapel Trail Commerce Center II 0.19% 1 FUNB
38 Chestnut Ridge 1.14% 1 CMB
39 Clover Apartments 0.09% 1 FUNB
40 Collegiate Suites Apartments, Phases 3 & 4 0.36% 1 FUNB
- -------------------------------------------------------------------------------------------------------
41 Columbard Apartments 0.12% 1 FUNB
42 Continental Plaza 0.12% 1 FUNB
43 Continental Terrace Apartments 0.19% 1 FUNB
44 Cooper Street Shopping Center 0.07% 1 FUNB
45 Country Club 0.87% 1 CMB
- -------------------------------------------------------------------------------------------------------
46 CVS Lynchburg_Wards & Fort 0.16% 1 FUNB
47 CVS Madison Heights 0.16% 1 FUNB
48 CVS Webster Ridge 0.13% 1 FUNB
49 CVS Worcester Grafton 0.11% 1 FUNB
50 Do It Yourself Storage 0.09% 1 FUNB
- -------------------------------------------------------------------------------------------------------
51 Eagle - Joliet 0.23% 1 FUNB
52 Eastridge Court Office Building 0.10% 1 FUNB
53 Eckerd South Plainfield 0.24% 1 FUNB
54 Elwood Shopping Center 0.73% 1 FUNB
55 Finchley Gardens 0.24% 1 FUNB
- -------------------------------------------------------------------------------------------------------
56 Fire Lake Plaza 0.11% 1 FUNB
57 Fleetwood 0.35% 1 CMB
58 Forest Glen Apartments 0.24% 1 CMB
59 Forest View MHC 0.14% 1 FUNB
60 Fountain Head MHC 0.14% 1 FUNB
- -------------------------------------------------------------------------------------------------------
61 Gardena Gateway Center 0.49% 1 FUNB
62 Gaston Place Assisted Living Facility 0.30% 1 FUNB
63 Gateway Business Park C1 0.26% 1 FUNB
64 Georgetown Apartments 0.12% 1 FUNB
65 Georgetown Park Apartments 1.50% 1 CMB
- -------------------------------------------------------------------------------------------------------
66 Golden Oaks Apartments 0.21% 1 FUNB
67 Governor's Ridge Assisted Living Facility 0.12% 1 FUNB
68 Graduate Court Apartments 0.21% 1 FUNB
69 Green Acres Mobile Home Park 0.08% 1 FUNB
70 Greentree Apartments 0.48% 1 FUNB
- -------------------------------------------------------------------------------------------------------
71 Gresham Town Fair 1.20% 1 FUNB
72 Hamden Center II 0.33% 1 FUNB
73 Hampton House 0.45% 1 FUNB
74 Hampton Inn 0.71% 1 FUNB
75 Hampton Inn - Montgomery 0.34% 1 FUNB
- -------------------------------------------------------------------------------------------------------
76 Hampton Inn - Staunton 0.26% 1 FUNB
77 Harbour Financial Centre 0.92% 1 FUNB
78 Hidden Cove Apartments 0.74% 1 FUNB
79 Highland Park 0.57% 1 FUNB
80 Hilldale Plaza Shopping Center 0.21% 1 FUNB
81 Hillview Apartments 0.09% 1 FUNB
82 Holiday Inn Express - Thornburg 0.10% 1 FUNB
83 Holiday Inn Express Monroe 0.14% 1 FUNB
84 Holiday Inn Southern Pines 0.26% 1 FUNB
- -------------------------------------------------------------------------------------------------------
85 Homewood Suites - Austin 0.39% 1 FUNB
86 Hunter's Ridge Apartments 0.41% 1 FUNB
87 IHOP Chatsworth Devonshire 0.09% 1 FUNB
88 IHOP San Antonio Loop 1604 0.09% 1 FUNB
89 Jackson Square Center 0.10% 1 FUNB
- -------------------------------------------------------------------------------------------------------
90 Johnston Square 0.13% 1 FUNB
91 Jumping Brook 0.92% 1 FUNB
92 Kendall Lake Towers 0.60% 1 FUNB
93 Kings Courtyard Apartments 0.08% 1 FUNB
94 KMart Plaza Shopping Center 0.34% 1 CMB
- -------------------------------------------------------------------------------------------------------
95 Lodi Shopping Center 0.84% 1 FUNB
96 Loma Square Center 1.33% 1 FUNB
97 Madison Estates 0.71% 1 FUNB
98 Magic City Shopping Center 0.38% 1 FUNB
99 Magnolia Plaza 0.11% 1 FUNB
- -------------------------------------------------------------------------------------------------------
100 Manhattan Bridge Overpass - Industrial 1.36% 3 CMB
100 a Garr 3 & 4 1
100 b Garr 5 1
100 c Garr 6 1
101 Manor Shopping Center 1.09% 1 FUNB
- -------------------------------------------------------------------------------------------------------
102 Mariners Village Apartments 0.14% 1 FUNB
103 Marsh Cove Apartments 0.58% 1 FUNB
104 McCandless Towers I 2.65% 1 CMB
105 Meadow Oaks Apartments 0.32% 1 FUNB
106 Ming Tree Apartments 0.13% 1 FUNB
- -------------------------------------------------------------------------------------------------------
107 Motel 6 1124 Baton Rouge 0.37% 1 FUNB
108 Motel 6 1179 Moline 0.18% 1 FUNB
109 Motel 6 1252 Knoxville 0.15% 1 FUNB
110 Motel 6 161 Omaha 0.17% 1 FUNB
111 Motel 6 212 McAllen 0.25% 1 FUNB
- -------------------------------------------------------------------------------------------------------
112 Motel 6 234 Murfreesboro 0.15% 1 FUNB
113 Motel 6 261 Grand Junction 0.27% 1 FUNB
114 Motel 6 446 Dallas Grand Prarie 0.22% 1 FUNB
115 Motel 6 551 Houston Clark Lake Webster 0.28% 1 FUNB
116 Muirwood Village - Zanesville 0.47% 1 CMB
- -------------------------------------------------------------------------------------------------------
117 New Plaza Apartments 0.05% 1 FUNB
118 Newberry Commons Shopping Center 0.50% 1 FUNB
119 North Street Shopping Center 1.32% 1 FUNB
120 Norwest Bank Office Building 0.29% 1 FUNB
121 Nottingham Lakes Apartments 0.19% 1 FUNB
- -------------------------------------------------------------------------------------------------------
122 Oaks at Hampton 2.09% 1 CMB
123 Oasis Apartments 0.17% 1 FUNB
124 Orange County Office Portfolio 2.80% 7 FUNB
124 a Corporate Park Plaza 1
124 b Airway Business Center - East 1
- -------------------------------------------------------------------------------------------------------
124 c Irvine Corporate Park 1
124 d Jamboree Business Center 1
124 e Lake Forest Corporate Park 1
124 f Mesa West Business Park 1
124 g San Clemente Commerce Center 1
- -------------------------------------------------------------------------------------------------------
125 Patrick Lane Industrial Center, Phase I 0.25% 1 CMB
126 Pendleton Lakes East 0.54% 1 CMB
127 Perimeter Lakes 0.46% 1 CMB
128 Phillips Place Hampton Inn 0.77% 1 FUNB
129 Pilgrim Hill Martketplace 0.28% 1 CMB
- -------------------------------------------------------------------------------------------------------
130 Piney Ridge Apartments 0.38% 1 FUNB
131 Plaza at the Commons 0.09% 1 FUNB
132 Q - The Sports Club 0.44% 1 FUNB
133 Quarterdeck Apartments 0.71% 1 FUNB
134 Red Roof Inn - Anaheim 0.12% 1 FUNB
- -------------------------------------------------------------------------------------------------------
135 Red Roof Inn - Ontario 0.11% 1 FUNB
136 Red Roof Inn - San Dimas 0.25% 1 FUNB
137 Red Roof Inn - Victorville 0.14% 1 FUNB
138 Redstone Park Assisted Living Facility 0.15% 1 FUNB
139 Rego Park Plaza 5.87% 1 CMB
- -------------------------------------------------------------------------------------------------------
140 Residence at Turnberry 0.65% 1 CMB
141 Rite Aid Banning 0.35% 1 FUNB
142 Rite Aid Blythe 0.35% 1 FUNB
143 Rite Aid California City 0.16% 1 FUNB
144 Rite Aid Chardon 0.18% 1 FUNB
- -------------------------------------------------------------------------------------------------------
145 Rite Aid Danville Riverside 0.16% 1 FUNB
146 Rite Aid Fremont 0.15% 1 FUNB
147 Rite Aid Oakley 0.36% 1 FUNB
148 Rite Aid Pittsfield 0.16% 1 FUNB
149 Rite Aid, Baltimore Street, Baltimore 0.20% 1 FUNB
- -------------------------------------------------------------------------------------------------------
150 Rite Aid, Gibbstown 0.18% 1 FUNB
151 Rite Aid, New Oxford 0.14% 1 FUNB
152 Royal Garden Apartments 0.14% 1 FUNB
153 Saint Paul Court 0.13% 1 FUNB
154 Saint Paul Regency 0.21% 1 FUNB
- -------------------------------------------------------------------------------------------------------
155 Salisbury Gardens Assisted Living Facility 0.28% 1 FUNB
156 San Francisco Executive Park 1.43% 1 FUNB
157 Sandpiper Apartments 1.68% 1 FUNB
158 Sandy Park 0.14% 1 FUNB
159 Shaker Heights 0.08% 1 FUNB
- -------------------------------------------------------------------------------------------------------
160 Shasta Executive Plaza Center 0.30% 1 CMB
161 Shop City 1.01% 1 CMB
162 Shops at Kenilworth, The 0.75% 1 CMB
163 Sierra Hills Mobile Estates 0.06% 1 FUNB
164 Sierra Pacific Spectrum 0.42% 1 CMB
- -------------------------------------------------------------------------------------------------------
165 Smoke Tree Apts 0.22% 1 FUNB
166 Southland Gumpert Ft. Myers 0.10% 1 FUNB
167 Southoaks Pointe Apartments 0.20% 1 FUNB
168 Southpointe Plaza 0.70% 1 FUNB
169 Southpointe Shopping Center 0.08% 1 FUNB
- -------------------------------------------------------------------------------------------------------
170 Sports Authority - Braintree 0.49% 1 CMB
171 Spring Mountain Durango Plaza 0.22% 1 FUNB
172 Stop & Shop Grafton Worcester 0.14% 1 FUNB
173 Story Road Retail 0.17% 1 FUNB
174 Summercrest Apartments 0.69% 1 FUNB
- -------------------------------------------------------------------------------------------------------
175 SummersGate 0.54% 1 FUNB
176 Tamarac Marketplace 0.36% 1 FUNB
177 Texas Central Bank 0.24% 1 FUNB
178 The Bloomington Apartment Portfolio 0.50% 5 FUNB
178 a 1 - 7 Keisha Drive Apartments 1
- -------------------------------------------------------------------------------------------------------
178 b 326-336 E. Vernon Street Apartments 1
178 c 503 S Main Street Apartments 1
178 d 604 Dale Steet Apartments 1
178 e 712 Adelaide Street Apartments 1
179 The Gardens at Palisades 0.29% 1 FUNB
- -------------------------------------------------------------------------------------------------------
180 The Gardens Shopping Center 0.15% 1 FUNB
181 The North Charles Building 0.21% 1 FUNB
182 The Oaks Apartments 0.06% 1 FUNB
183 The Townhouse Apartments 2.00% 1 FUNB
184 Triple T Mobile Home Park 0.17% 1 FUNB
- -------------------------------------------------------------------------------------------------------
185 Twin Lakes MHC 0.14% 1 FUNB
186 Union Park Assisted Living Facility 0.26% 1 FUNB
187 Vaquero Place 0.19% 1 FUNB
188 Venice/National Center 0.22% 1 FUNB
189 Villa Park III 0.49% 1 FUNB
- -------------------------------------------------------------------------------------------------------
190 Village Square Apartments 0.76% 1 FUNB
191 Vinci Plaza 0.14% 1 FUNB
192 Vista Medical Office Building 0.49% 1 CMB
193 VPC Center 0.20% 1 FUNB
194 Water Club 0.43% 1 FUNB
- -------------------------------------------------------------------------------------------------------
195 Waterford Landing @ Hermitage 0.64% 1 FUNB
196 Waters Edge Apartments 0.51% 1 FUNB
197 Waterside Gardens 0.73% 1 FUNB
198 Waterstone 1.22% 1 CMB
199 West Park Royale Apartments 0.12% 1 FUNB
- -------------------------------------------------------------------------------------------------------
200 West Wind Landing Apartments 0.66% 1 FUNB
201 Whispering Hills 1.78% 1 FUNB
202 Willows of West Hills Apartments 0.71% 1 FUNB
203 Wilshire Robertson 0.15% 1 FUNB
204 Windsor Gardens 0.36% 1 FUNB
205 Windstar Apartments 0.08% 1 FUNB
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATED
ORIGINAL REMAINING
INTEREST TERM TO TERM TO
ORIGINAL CUT-OFF DATE MORTGAGE ACCRUAL MATURITY OR MATURITY OR
ID BALANCE BALANCE RATE BASIS APD (MO.) APD (MO.)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 27,600,000 27,584,379 7.320% ACT/360 120 119
2 6,000,000 6,000,000 8.100% ACT/360 120 120
3 1,355,000 1,355,000 8.125% ACT/360 120 120
4 1,800,000 1,799,335 8.500% ACT/360 120 119
5 2,960,000 2,954,609 7.500% ACT/360 120 117
- ---------------------------------------------------------------------------------------------------------
6 1,030,000 1,029,584 8.280% ACT/360 120 119
7 650,000 649,554 8.750% ACT/360 120 119
8 6,400,000 6,400,000 8.000% ACT/360 120 120
9 953,000 952,671 8.660% ACT/360 120 119
10 7,500,000 7,500,000 8.300% ACT/360 180 180
- ---------------------------------------------------------------------------------------------------------
11 5,000,000 5,000,000 7.750% ACT/360 120 120
12 50,000,000 50,000,000 7.270% ACT/360 120 117
13 3,570,000 3,567,384 8.500% ACT/360 120 119
14 31,600,000 31,587,489 8.330% ACT/360 120 119
15 1,120,000 1,118,740 8.875% 30/360 180 178
- ---------------------------------------------------------------------------------------------------------
16 1,750,000 1,748,607 8.170% ACT/360 121 120
17 21,000,000 21,000,000 7.875% ACT/360 120 120
18 1,350,000 1,348,897 8.060% ACT/360 120 119
19 7,071,000 7,067,663 7.860% ACT/360 120 119
20 7,155,000 7,149,243 8.125% ACT/360 120 119
- ---------------------------------------------------------------------------------------------------------
21 1,496,000 1,495,117 8.625% 30/360 360 359
22 4,160,000 4,155,165 7.875% ACT/360 120 118
23 1,560,000 1,557,467 8.750% ACT/360 120 118
24 16,335,000 16,335,000 7.940% ACT/360 120 119
25 5,550,000 5,547,371 7.850% ACT/360 120 119
- ---------------------------------------------------------------------------------------------------------
26 2,550,000 2,549,073 8.540% ACT/360 120 119
27 2,800,000 2,795,075 7.625% ACT/360 120 117
28 4,900,000 4,856,750 7.240% ACT/360 239 234
29 5,500,000 5,500,000 7.650% ACT/360 84 84
30 4,408,000 4,399,692 7.375% ACT/360 120 117
- ---------------------------------------------------------------------------------------------------------
31 4,690,000 4,688,099 8.270% ACT/360 120 119
32 1,275,000 1,273,565 8.875% 30/360 180 178
33 50,000,000 50,000,000 7.470% ACT/360 84 84
34 1,656,000 1,655,116 7.500% ACT/360 120 119
35 7,200,000 7,187,210 7.590% ACT/360 144 141
- ---------------------------------------------------------------------------------------------------------
36 20,090,000 20,090,000 7.920% ACT/360 120 120
37 2,688,000 2,686,876 8.190% ACT/360 120 119
38 15,920,000 15,890,763 7.470% ACT/360 96 93
39 1,304,000 1,300,442 8.000% ACT/360 120 117
40 5,100,000 5,094,072 7.875% ACT/360 120 118
- ---------------------------------------------------------------------------------------------------------
41 1,704,000 1,700,788 7.375% ACT/360 120 117
42 1,625,000 1,624,310 8.150% ACT/360 120 119
43 2,590,000 2,590,000 7.750% ACT/360 120 120
44 1,040,000 1,038,131 8.250% ACT/360 120 118
45 12,150,000 12,128,417 7.590% ACT/360 144 141
- ---------------------------------------------------------------------------------------------------------
46 2,289,655 2,276,913 7.875% 30/360 232 229
47 2,188,215 2,180,541 7.810% 30/360 236 233
48 1,771,782 1,750,099 7.000% 30/360 243 233
49 1,600,000 1,579,406 6.830% 30/360 241 233
50 1,200,000 1,196,894 8.250% ACT/360 120 117
- ---------------------------------------------------------------------------------------------------------
51 3,205,999 3,172,803 8.110% 30/360 264 252
52 1,338,000 1,338,000 8.650% ACT/360 120 120
53 3,365,888 3,301,409 6.510% 30/360 237 228
54 10,275,000 10,268,092 7.990% 30/360 120 119
55 3,300,000 3,293,128 7.000% ACT/360 120 117
- ---------------------------------------------------------------------------------------------------------
56 1,478,000 1,475,853 8.250% ACT/360 120 118
57 4,917,000 4,907,970 7.470% ACT/360 96 93
58 3,320,000 3,320,000 7.700% ACT/360 120 120
59 1,949,000 1,947,662 8.750% ACT/360 120 119
60 1,988,000 1,986,543 8.500% ACT/360 120 119
- ---------------------------------------------------------------------------------------------------------
61 6,900,000 6,891,713 7.750% ACT/360 120 118
62 4,200,000 4,195,278 8.000% ACT/360 120 118
63 3,600,000 3,595,676 7.750% ACT/360 120 118
64 1,614,000 1,614,000 8.000% ACT/360 120 120
65 20,920,000 20,910,405 7.940% ACT/360 96 95
- ---------------------------------------------------------------------------------------------------------
66 2,952,000 2,946,436 7.375% ACT/360 120 117
67 1,750,000 1,746,911 8.340% ACT/360 120 118
68 2,900,000 2,900,000 7.875% ACT/360 120 120
69 1,070,000 1,068,077 8.250% ACT/360 120 118
70 6,719,000 6,715,681 7.730% ACT/360 120 119
- ---------------------------------------------------------------------------------------------------------
71 16,800,000 16,779,823 7.750% ACT/360 120 118
72 4,635,000 4,629,634 7.890% ACT/360 120 118
73 6,300,000 6,300,000 8.170% ACT/360 120 120
74 10,000,000 9,992,765 8.550% ACT/360 120 119
75 4,800,000 4,747,814 7.500% ACT/360 120 110
- ---------------------------------------------------------------------------------------------------------
76 3,675,000 3,641,706 7.990% ACT/360 120 111
77 12,900,000 12,810,210 7.000% ACT/360 180 171
78 10,400,000 10,400,000 7.880% ACT/360 120 119
79 8,000,000 8,000,000 7.700% ACT/360 120 120
80 2,888,000 2,885,533 7.875% ACT/360 119 118
81 1,300,000 1,297,593 8.100% ACT/360 120 118
82 1,390,000 1,375,012 7.000% ACT/360 180 171
83 1,985,000 1,951,061 7.000% ACT/360 240 231
84 3,700,000 3,645,802 7.750% ACT/360 120 106
- ---------------------------------------------------------------------------------------------------------
85 5,500,000 5,492,273 8.300% ACT/360 120 119
86 5,700,000 5,693,375 7.875% ACT/360 120 118
87 1,302,615 1,301,296 7.760% 30/360 299 286
88 1,289,524 1,287,004 8.000% 30/360 294 280
89 1,400,000 1,400,000 8.875% ACT/360 120 120
- ---------------------------------------------------------------------------------------------------------
90 1,825,000 1,820,201 8.125% ACT/360 120 115
91 12,880,000 12,813,429 7.240% ACT/360 120 113
92 8,400,000 8,384,167 7.375% ACT/360 120 117
93 1,075,000 1,075,000 7.750% ACT/360 120 120
94 4,750,000 4,750,000 8.270% ACT/360 120 120
- ---------------------------------------------------------------------------------------------------------
95 11,750,000 11,727,309 7.000% 30/360 180 178
96 18,550,000 18,527,721 7.750% ACT/360 120 118
97 9,900,000 9,895,178 7.770% ACT/360 120 119
98 5,300,000 5,291,318 7.875% ACT/360 120 117
99 1,600,000 1,600,000 8.125% ACT/360 120 120
- ---------------------------------------------------------------------------------------------------------
100 18,965,000 18,965,000 8.130% ACT/360 120 120
100 a
100 b
100 c
101 15,200,000 15,181,207 6.990% 30/360 120 119
- ---------------------------------------------------------------------------------------------------------
102 2,020,000 2,020,000 7.750% ACT/360 120 120
103 8,160,000 8,155,970 7.730% ACT/360 120 119
104 37,000,000 36,984,827 8.240% ACT/360 120 119
105 4,500,000 4,494,324 7.560% ACT/360 120 118
106 1,840,000 1,836,532 7.375% ACT/360 120 117
- ---------------------------------------------------------------------------------------------------------
107 5,572,939 5,179,882 7.235% 30/360 216 202
108 2,633,583 2,447,838 7.235% 30/360 216 202
109 2,189,721 2,035,281 7.235% 30/360 216 202
110 2,574,402 2,392,831 7.235% 30/360 216 202
111 3,787,625 3,520,486 7.235% 30/360 216 202
- ---------------------------------------------------------------------------------------------------------
112 2,239,039 2,081,121 7.235% 30/360 216 202
113 4,053,943 3,768,021 7.235% 30/360 216 202
114 3,284,581 3,052,922 7.235% 30/360 216 202
115 4,162,443 3,868,868 7.235% 30/360 216 202
116 6,580,000 6,580,000 7.800% ACT/360 144 144
- ---------------------------------------------------------------------------------------------------------
117 752,000 751,708 8.380% ACT/360 120 119
118 6,960,000 6,957,223 8.310% ACT/360 120 119
119 18,500,000 18,478,497 7.875% ACT/360 120 118
120 4,090,000 4,090,000 7.940% ACT/360 120 119
121 2,635,000 2,635,000 7.750% ACT/360 120 120
- ---------------------------------------------------------------------------------------------------------
122 29,200,000 29,146,816 7.500% ACT/360 120 117
123 2,400,000 2,400,000 8.500% ACT/360 120 120
124 39,250,000 39,151,613 7.610% ACT/360 120 116
124 a
124 b
- ---------------------------------------------------------------------------------------------------------
124 c
124 d
124 e
124 f
124 g
- ---------------------------------------------------------------------------------------------------------
125 3,450,000 3,448,480 8.050% ACT/360 120 119
126 7,575,000 7,561,203 7.500% ACT/360 120 117
127 6,400,000 6,388,631 7.590% ACT/360 144 141
128 10,875,000 10,756,728 6.950% ACT/360 120 111
129 3,900,000 3,865,583 7.450% ACT/360 180 167
- ---------------------------------------------------------------------------------------------------------
130 5,250,000 5,243,276 7.500% ACT/360 84 82
131 1,300,000 1,300,000 8.250% ACT/360 120 120
132 6,259,631 6,119,172 9.120% 30/360 252 236
133 9,964,000 9,959,079 7.730% ACT/360 120 119
134 1,756,000 1,728,024 7.640% ACT/360 180 165
- ---------------------------------------------------------------------------------------------------------
135 1,578,000 1,552,859 7.640% ACT/360 180 165
136 3,490,000 3,434,398 7.640% ACT/360 180 165
137 2,009,000 1,976,993 7.640% ACT/360 180 165
138 2,100,000 2,096,294 8.340% ACT/360 120 118
139 82,000,000 82,000,000 7.250% ACT/360 120 118
- ---------------------------------------------------------------------------------------------------------
140 9,050,000 9,033,923 7.590% ACT/360 144 141
141 4,912,699 4,832,639 6.942% 30/360 264 250
142 4,912,699 4,832,639 6.942% 30/360 264 250
143 2,313,881 2,276,173 6.942% 30/360 264 250
144 2,607,435 2,567,186 6.828% 30/360 264 250
- ---------------------------------------------------------------------------------------------------------
145 2,300,407 2,236,612 7.125% 30/360 239 225
146 2,086,232 2,054,533 6.942% 30/360 264 250
147 5,158,334 5,074,271 6.942% 30/360 264 250
148 2,279,491 2,242,343 6.942% 30/360 264 250
149 2,841,250 2,798,079 6.942% 30/360 264 250
- ---------------------------------------------------------------------------------------------------------
150 2,505,475 2,464,645 6.942% 30/360 264 250
151 2,004,380 1,971,716 6.942% 30/360 264 250
152 1,900,000 1,897,792 7.875% ACT/360 120 118
153 1,750,000 1,750,000 8.250% ACT/360 120 120
154 3,000,000 2,998,592 7.875% ACT/360 120 119
- ---------------------------------------------------------------------------------------------------------
155 3,900,000 3,895,615 8.000% ACT/360 120 118
156 20,000,000 19,976,105 7.770% ACT/360 120 118
157 23,500,000 23,500,000 7.600% ACT/360 120 119
158 1,980,000 1,969,789 7.250% ACT/360 120 113
159 1,093,000 1,091,000 8.160% ACT/360 120 118
- ---------------------------------------------------------------------------------------------------------
160 4,200,000 4,200,000 8.040% ACT/360 120 120
161 14,150,000 14,150,000 8.150% ACT/360 120 120
162 10,460,000 10,449,190 8.310% ACT/360 120 118
163 875,000 874,709 8.750% ACT/360 120 119
164 5,915,000 5,908,385 8.020% ACT/360 120 118
- ---------------------------------------------------------------------------------------------------------
165 3,072,000 3,070,591 7.940% ACT/360 120 119
166 1,389,948 1,359,348 9.125% 30/360 171 160
167 2,800,000 2,796,746 7.875% ACT/360 120 118
168 9,750,000 9,738,290 7.750% ACT/360 120 118
169 1,165,000 1,162,830 8.070% ACT/360 120 118
- ---------------------------------------------------------------------------------------------------------
170 6,824,000 6,824,000 8.160% ACT/360 120 120
171 3,100,000 3,094,600 7.660% ACT/360 120 117
172 2,000,000 1,978,266 6.780% 30/360 240 232
173 2,425,000 2,424,013 8.260% ACT/360 120 119
174 9,700,000 9,681,841 7.400% ACT/360 120 117
- ---------------------------------------------------------------------------------------------------------
175 7,600,000 7,480,873 7.375% ACT/360 120 106
176 5,000,000 4,996,050 8.200% ACT/360 120 119
177 3,300,000 3,294,397 7.750% ACT/360 120 117
178 6,992,000 6,978,112 7.180% ACT/360 120 117
178 a
- ---------------------------------------------------------------------------------------------------------
178 b
178 c
178 d
178 e
179 4,000,000 3,998,385 8.280% ACT/360 120 119
- ---------------------------------------------------------------------------------------------------------
180 2,120,000 2,118,496 8.625% ACT/360 120 119
181 3,000,000 3,000,000 8.125% ACT/360 120 120
182 890,000 889,128 8.500% ACT/360 120 118
183 28,000,000 27,986,550 7.810% ACT/360 120 119
184 2,425,000 2,420,583 7.500% ACT/360 120 117
- ---------------------------------------------------------------------------------------------------------
185 1,892,000 1,890,613 8.500% ACT/360 120 119
186 3,600,000 3,595,952 8.000% ACT/360 120 118
187 2,700,000 2,694,911 7.375% ACT/360 120 117
188 3,065,000 3,062,531 8.120% ACT/360 121 120
189 6,900,000 6,895,361 7.990% 30/360 120 119
- ---------------------------------------------------------------------------------------------------------
190 10,600,000 10,586,901 7.640% ACT/360 144 142
191 1,992,000 1,992,000 8.320% ACT/360 120 120
192 6,882,000 6,882,000 8.170% ACT/360 144 144
193 2,800,000 2,796,746 7.875% ACT/360 120 118
194 6,080,000 6,048,645 7.250% ACT/360 120 113
- ---------------------------------------------------------------------------------------------------------
195 9,000,000 8,986,816 8.250% ACT/360 120 117
196 7,198,000 7,194,445 7.730% ACT/360 120 119
197 10,200,000 10,178,758 7.000% ACT/360 120 117
198 17,125,000 17,093,809 7.500% ACT/360 120 117
199 1,628,000 1,624,931 7.375% ACT/360 120 117
- ---------------------------------------------------------------------------------------------------------
200 9,200,000 9,195,456 7.730% ACT/360 120 119
201 25,250,000 24,850,885 6.900% 30/360 180 162
202 9,860,000 9,854,978 7.640% ACT/360 120 119
203 2,100,000 2,096,484 8.600% ACT/360 120 118
204 5,040,000 5,014,008 7.250% ACT/360 120 113
205 1,114,452 1,111,925 8.875% 30/360 180 176
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
REMAINING ANNUAL
ORIGINAL REMAINING INTEREST FIRST MATURITY PRINCIPAL
AMORTIZATION AMORTIZATION ONLY PAYMENT DATE OR & INTEREST
ID TERM (MO.) TERM (MO.) MONTHS DATE APD PAYMENTS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 360 359 08/01/99 07/01/09 2,275,114
2 360 360 09/10/99 08/10/09 533,338
3 270 270 09/01/99 08/01/09 131,331
4 360 359 08/01/99 07/01/09 166,085
5 360 357 06/01/99 05/01/09 248,361
- ---------------------------------------------------------------------------------------------------------
6 360 359 08/10/99 07/10/09 93,117
7 300 299 08/01/99 07/01/09 64,127
8 360 360 09/10/99 08/10/09 563,531
9 360 359 08/01/99 07/01/09 89,233
10 178 178 09/10/99 08/10/14 881,802
- ---------------------------------------------------------------------------------------------------------
11 360 360 09/10/99 08/10/09 429,847
12 360 360 3 06/01/99 05/01/09 4,101,200
13 300 299 08/01/99 07/01/09 344,959
14 360 359 08/01/99 07/01/09 2,870,157
15 360 358 07/01/99 06/01/14 106,935
- ---------------------------------------------------------------------------------------------------------
16 300 299 08/01/99 08/01/09 164,453
17 360 360 09/10/99 08/10/09 1,827,175
18 300 299 08/01/99 07/01/09 125,679
19 360 359 08/01/99 07/01/09 614,353
20 300 299 08/10/99 07/10/09 669,807
- ---------------------------------------------------------------------------------------------------------
21 360 359 08/01/99 07/01/29 139,629
22 360 358 07/01/99 06/01/09 361,955
23 300 298 07/01/99 06/01/09 153,905
24 360 360 11 08/01/99 07/01/09 1,430,135
25 360 359 08/01/99 07/01/09 481,741
- ---------------------------------------------------------------------------------------------------------
26 360 359 08/01/99 07/01/09 236,156
27 360 357 06/01/99 05/01/09 237,819
28 240 235 04/01/99 02/01/19 464,385
29 360 360 09/10/99 08/10/06 468,279
30 360 357 06/01/99 05/01/09 365,340
- ---------------------------------------------------------------------------------------------------------
31 360 359 08/01/99 07/01/09 423,604
32 360 358 07/01/99 06/01/14 121,734
33 - - 84 09/01/99 08/01/06 3,786,875
34 360 359 08/01/99 07/01/09 138,948
35 360 357 06/10/99 05/10/11 609,455
- ---------------------------------------------------------------------------------------------------------
36 360 360 09/01/99 08/01/09 1,755,533
37 360 359 08/01/99 07/01/09 240,969
38 360 357 06/10/99 05/10/07 1,331,857
39 300 297 06/01/99 05/01/09 120,774
40 360 358 07/01/99 06/01/09 443,742
- ---------------------------------------------------------------------------------------------------------
41 360 357 06/01/99 05/01/09 141,229
42 360 359 08/01/99 07/01/09 145,128
43 360 360 09/01/99 08/01/09 222,661
44 300 298 07/01/99 06/01/09 98,399
45 360 357 06/10/99 05/10/11 1,028,455
- ---------------------------------------------------------------------------------------------------------
46 232 229 06/01/99 09/01/18 230,946
47 236 233 06/01/99 01/01/19 201,399
48 243 233 11/01/98 01/01/19 149,368
49 241 233 01/01/99 01/01/19 139,615
50 300 297 06/01/99 05/01/09 113,537
- ---------------------------------------------------------------------------------------------------------
51 329 317 09/01/98 08/01/20 291,987
52 360 360 09/01/99 08/01/09 125,168
53 237 228 12/01/98 08/01/18 303,243
54 360 359 08/01/99 07/01/09 903,872
55 360 357 06/01/99 05/01/09 263,460
- ---------------------------------------------------------------------------------------------------------
56 324 322 07/01/99 06/01/09 136,794
57 360 357 06/10/99 05/10/07 411,353
58 360 360 09/10/99 08/10/09 284,043
59 300 299 08/01/99 07/01/09 192,283
60 300 299 08/01/99 07/01/09 192,095
- ---------------------------------------------------------------------------------------------------------
61 360 358 07/01/99 06/01/09 593,189
62 360 358 07/01/99 06/01/09 369,817
63 360 358 07/01/99 06/01/09 309,490
64 360 360 09/01/99 08/01/09 142,116
65 360 359 08/10/99 07/10/07 1,831,553
- ---------------------------------------------------------------------------------------------------------
66 360 357 06/01/99 05/01/09 244,665
67 300 298 07/01/99 06/01/09 166,839
68 360 360 09/01/99 08/01/09 252,324
69 300 298 07/01/99 06/01/09 101,237
70 360 359 08/01/99 07/01/09 576,515
- ---------------------------------------------------------------------------------------------------------
71 360 358 07/01/99 06/01/09 1,444,287
72 360 358 07/01/99 06/01/09 403,863
73 360 360 09/01/99 08/01/09 563,711
74 300 299 08/01/99 07/01/09 970,319
75 300 290 11/01/98 10/01/08 425,659
- ---------------------------------------------------------------------------------------------------------
76 300 291 12/01/98 11/01/08 340,079
77 360 351 12/01/98 11/01/13 1,029,888
78 360 360 11 08/01/99 07/01/09 905,320
79 360 360 09/01/99 08/01/09 684,442
80 300 299 08/01/99 06/01/09 264,617
81 300 298 07/01/99 06/01/09 121,439
82 300 291 12/01/98 11/01/13 117,891
83 240 231 12/01/98 11/01/18 184,676
84 300 286 07/01/98 06/01/08 335,366
- ---------------------------------------------------------------------------------------------------------
85 240 239 08/01/99 07/01/09 564,436
86 360 358 07/01/99 06/01/09 495,948
87 299 286 08/01/98 06/01/23 101,671
88 294 280 07/01/98 12/01/22 105,230
89 360 360 09/01/99 08/01/09 133,668
- ---------------------------------------------------------------------------------------------------------
90 360 355 04/01/99 03/01/09 162,607
91 360 353 02/01/99 01/01/09 1,053,324
92 360 357 06/01/99 05/01/09 696,201
93 360 360 09/01/99 08/01/09 92,417
94 360 360 09/10/99 08/10/09 429,024
- ---------------------------------------------------------------------------------------------------------
95 336 334 07/01/99 06/01/14 958,248
96 360 358 07/01/99 06/01/09 1,594,734
97 360 359 08/01/99 07/01/09 852,740
98 360 357 06/01/99 05/01/09 461,144
99 300 300 09/01/99 08/01/09 149,782
- ---------------------------------------------------------------------------------------------------------
100 324 324 09/10/99 08/10/09 1,736,664
100 a
100 b
100 c
101 300 299 08/01/99 07/01/09 1,288,002
- ---------------------------------------------------------------------------------------------------------
102 360 360 09/01/99 08/01/09 173,658
103 360 359 08/01/99 07/01/09 700,158
104 360 359 08/10/99 07/10/09 3,332,503
105 360 358 07/01/99 06/01/09 379,797
106 360 357 06/01/99 05/01/09 152,501
- ---------------------------------------------------------------------------------------------------------
107 270 256 12/01/98 06/01/16 439,188
108 270 256 12/01/98 06/01/16 207,545
109 270 256 12/01/98 06/01/16 171,686
110 270 256 12/01/98 06/01/16 202,881
111 270 256 12/01/98 06/01/16 298,492
- ---------------------------------------------------------------------------------------------------------
112 270 256 12/01/98 06/01/16 176,452
113 270 256 12/01/98 06/01/16 319,480
114 270 256 12/01/98 06/01/16 258,849
115 270 256 12/01/98 06/01/16 328,030
116 360 360 09/10/99 08/10/11 568,410
- ---------------------------------------------------------------------------------------------------------
117 360 359 08/01/99 07/01/09 68,621
118 360 359 08/01/99 07/01/09 630,984
119 360 358 07/01/99 06/01/09 1,609,654
120 360 360 23 08/01/99 07/01/09 358,081
121 360 360 09/01/99 08/01/09 226,530
- ---------------------------------------------------------------------------------------------------------
122 360 357 06/10/99 05/10/09 2,450,048
123 360 360 09/01/99 08/01/09 221,447
124 360 356 05/01/99 04/01/09 3,328,850
124 a
124 b
- ---------------------------------------------------------------------------------------------------------
124 c
124 d
124 e
124 f
124 g
- ---------------------------------------------------------------------------------------------------------
125 360 359 08/10/99 07/10/09 305,223
126 360 357 06/10/99 05/10/09 635,586
127 360 357 06/10/99 05/10/11 541,738
128 300 291 12/01/98 11/01/08 918,189
129 360 347 08/10/98 07/10/13 325,632
- ---------------------------------------------------------------------------------------------------------
130 360 358 07/01/99 06/01/06 440,505
131 180 180 09/01/99 08/01/09 151,342
132 252 236 05/01/98 04/01/19 670,346
133 360 359 08/01/99 07/01/09 854,948
134 300 285 06/01/98 05/01/13 157,644
- ---------------------------------------------------------------------------------------------------------
135 300 285 06/01/98 05/01/13 141,664
136 300 285 06/01/98 05/01/13 313,313
137 300 285 06/01/98 05/01/13 180,357
138 300 298 07/01/99 06/01/09 200,207
139 360 360 58 07/10/99 06/10/09 6,712,615
- ---------------------------------------------------------------------------------------------------------
140 360 357 06/10/99 05/10/11 766,051
141 315 301 07/01/98 06/01/20 407,119
142 315 301 07/01/98 06/01/20 407,119
143 315 301 07/01/98 06/01/20 191,753
144 326 312 07/01/98 06/01/20 211,277
- ---------------------------------------------------------------------------------------------------------
145 239 225 07/01/98 05/01/18 216,506
146 325 311 07/01/98 06/01/20 170,990
147 315 301 07/01/98 06/01/20 427,475
148 315 301 07/01/98 06/01/20 188,903
149 325 311 07/01/98 06/01/20 232,872
- ---------------------------------------------------------------------------------------------------------
150 315 301 07/01/98 06/01/20 207,631
151 315 301 07/01/98 06/01/20 166,104
152 360 358 07/01/99 06/01/09 165,316
153 360 360 09/01/99 08/01/09 157,766
154 360 359 08/01/99 07/01/09 261,025
- ---------------------------------------------------------------------------------------------------------
155 360 358 07/01/99 06/01/09 343,402
156 360 358 07/01/99 06/01/09 1,722,708
157 360 360 23 08/01/99 07/01/09 1,991,131
158 360 353 02/01/99 01/01/09 162,085
159 300 298 07/01/99 06/01/09 102,626
- ---------------------------------------------------------------------------------------------------------
160 360 360 09/10/99 08/10/09 371,224
161 360 360 09/10/99 08/10/09 1,263,733
162 360 358 07/10/99 06/10/09 948,290
163 360 359 08/01/99 07/01/09 82,604
164 360 358 07/10/99 06/10/09 521,816
- ---------------------------------------------------------------------------------------------------------
165 360 359 08/01/99 07/01/09 268,955
166 171 160 10/01/98 12/01/12 158,965
167 360 358 07/01/99 06/01/09 243,623
168 360 358 07/01/99 06/01/09 838,202
169 300 298 07/01/99 06/01/09 108,549
- ---------------------------------------------------------------------------------------------------------
170 360 360 09/10/99 08/10/09 610,024
171 360 357 06/01/99 05/01/09 264,195
172 240 232 01/01/99 12/01/18 167,520
173 360 359 08/01/99 07/01/09 218,823
174 360 357 06/01/99 05/01/09 805,930
- ---------------------------------------------------------------------------------------------------------
175 300 286 07/01/98 06/01/08 666,562
176 300 299 08/01/99 07/01/09 471,067
177 360 357 06/01/99 05/01/09 283,699
178 360 357 06/01/99 05/01/09 568,395
178 a
- ---------------------------------------------------------------------------------------------------------
178 b
178 c
178 d
178 e
179 360 359 08/01/99 07/01/09 361,621
- ---------------------------------------------------------------------------------------------------------
180 300 299 08/01/99 07/01/09 206,997
181 360 360 09/01/99 08/01/09 267,299
182 360 358 07/01/99 06/01/09 82,120
183 360 359 08/01/99 07/01/09 2,421,091
184 360 357 06/01/99 05/01/09 203,471
- ---------------------------------------------------------------------------------------------------------
185 300 299 08/01/99 07/01/09 182,819
186 360 358 07/01/99 06/01/09 316,986
187 360 357 06/01/99 05/01/09 223,779
188 300 299 08/01/99 08/01/09 286,804
189 360 359 08/01/99 07/01/09 606,980
- ---------------------------------------------------------------------------------------------------------
190 360 358 07/01/99 06/01/11 901,627
191 360 360 09/01/99 08/01/09 180,760
192 360 360 09/10/99 08/10/11 615,788
193 360 358 07/01/99 06/01/09 243,623
194 360 353 02/01/99 01/01/09 497,716
- ---------------------------------------------------------------------------------------------------------
195 360 357 06/01/99 05/01/09 811,368
196 360 359 08/01/99 07/01/09 617,615
197 360 357 06/01/99 05/01/09 814,330
198 360 357 06/10/99 05/10/09 1,436,886
199 360 357 06/01/99 05/01/09 134,930
- ---------------------------------------------------------------------------------------------------------
200 360 359 08/01/99 07/01/09 789,394
201 360 342 03/01/98 02/01/13 1,995,558
202 360 359 08/01/99 07/01/09 838,683
203 300 298 07/01/99 06/01/09 204,618
204 360 353 02/01/99 01/01/09 412,580
205 360 356 05/01/99 04/01/14 106,405
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1999 TTM,
ANNUALIZED, UNDERWRITTEN LOCKBOX
OR ACTUAL. NET CASH (HARD, SOFT APPRAISED APPRAISAL
ID 1998 NOI FLOW OR SPRINGING) DSCR VALUE DATE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 3,390,462 2,956,880 1.30 40,500,000 2/16/99
2 799,981 667,914 1.25 8,650,000 5/17/99
3 160,401 164,123 1.25 1,975,000 6/3/99
4 216,687 215,606 1.30 2,600,000 5/18/99
5 328,913 306,971 1.24 3,700,000 3/18/99
- ---------------------------------------------------------------------------------------------------------
6 146,325 124,523 1.34 1,500,000 5/18/99
7 124,778 103,918 1.62 1,550,000 5/14/99
8 754,362 700,064 1.24 8,800,000 6/7/99
9 120,486 107,480 1.20 1,200,000 4/26/99
10 1,293,171 1,100,392 1.25 12,700,000 11/1/98
- ---------------------------------------------------------------------------------------------------------
11 832,942 844,678 1.97 10,300,000 5/26/99
12 4,036,067 5,270,160 1.29 71,000,000 3/19/99
13 545,374 502,357 1.46 5,100,000 4/30/99
14 3,885,631 3,593,213 1.25 45,000,000 4/7/99
15 142,098 132,971 1.24 1,520,000 10/7/98
- ---------------------------------------------------------------------------------------------------------
16 281,996 214,425 Springing 1.30 3,120,000 4/23/99
17 2,669,425 2,302,076 1.26 27,740,000 6/18/99
18 279,958 167,662 1.33 2,225,000 6/6/98
19 916,859 767,928 Springing 1.25 9,700,000 2/11/99
20 1,155,546 904,483 1.35 10,550,000 3/31/99
- ---------------------------------------------------------------------------------------------------------
21 197,801 166,773 1.19 1,760,000 2/2/99
22 709,313 531,196 1.47 5,200,000 3/17/99
23 221,028 209,623 1.36 2,045,000 3/8/99
24 1,719,294 1.20 20,500,000 6/3/99
25 562,435 578,555 1.20 7,000,000 6/9/99
- ---------------------------------------------------------------------------------------------------------
26 301,057 284,724 1.21 3,415,000 3/3/99
27 337,671 301,256 1.27 3,550,000 3/3/99
28 647,950 586,111 1.26 6,800,000 1/14/99
29 376,907 582,502 1.24 7,400,000 7/1/99
30 508,622 444,783 1.22 5,510,000 3/11/99
- ---------------------------------------------------------------------------------------------------------
31 587,417 508,674 1.20 6,070,000 5/6/99
32 169,470 140,933 1.16 1,700,000 10/7/98
33 8,093,954 Hard 2.14 96,500,000 6/15/99
34 206,502 179,516 1.29 2,070,000 3/9/99
35 864,057 733,302 1.20 9,200,000 4/21/99
- ---------------------------------------------------------------------------------------------------------
36 2,654,047 2,463,579 1.40 24,500,000 3/3/99
37 355,222 302,298 1.26 3,600,000 5/10/99
38 2,095,779 1,616,445 1.21 19,900,000 4/15/99
39 181,593 155,652 1.29 1,630,000 3/5/99
40 644,565 568,484 1.28 6,400,000 3/30/99
- ---------------------------------------------------------------------------------------------------------
41 194,314 170,858 1.21 2,130,000 3/9/99
42 292,559 210,470 1.45 2,750,000 4/24/99
43 348,612 320,274 1.44 3,700,000 5/12/99
44 145,017 128,800 1.31 1,550,000 4/22/99
45 1,387,727 1,244,905 1.21 15,630,000 4/9/99
- ---------------------------------------------------------------------------------------------------------
46 231,639 Hard 1.00 2,740,000 10/19/98
47 211,469 Hard 1.05 2,480,000 10/20/98
48 153,849 Hard 1.03 1,810,000 8/5/98
49 146,316 Hard 1.05 1,600,000 7/14/98
50 176,211 171,159 1.51 1,875,000 1/7/99
- ---------------------------------------------------------------------------------------------------------
51 315,414 Hard 1.08 3,380,000 6/18/98
52 203,385 163,758 1.31 1,900,000 5/28/99
53 304,152 Hard 1.00 3,700,000 11/1/98
54 1,185,641 1.31 13,600,000 5/14/99
55 429,583 407,348 1.55 5,300,000 2/22/99
- ---------------------------------------------------------------------------------------------------------
56 219,437 181,416 1.33 2,100,000 1/29/99
57 576,437 498,265 1.21 6,900,000 4/15/99
58 272,199 347,482 1.22 4,229,000 8/2/99
59 243,550 240,347 1.25 3,000,000 4/27/99
60 249,254 234,657 1.22 2,650,000 4/26/99
- ---------------------------------------------------------------------------------------------------------
61 980,722 800,773 1.35 9,200,000 3/12/99
62 550,272 519,999 1.41 5,625,000 4/22/99
63 418,686 1.35 5,150,000 4/5/99
64 194,581 170,581 1.20 2,840,000 4/21/99
65 2,578,167 2,198,229 1.20 26,900,000 4/14/99
- ---------------------------------------------------------------------------------------------------------
66 325,016 304,747 1.25 3,690,000 3/12/99
67 279,556 238,497 1.43 2,600,000 3/29/99
68 368,320 331,126 1.31 3,625,000 5/27/99
69 130,161 132,220 1.31 1,300,000 2/8/99
70 878,346 747,217 1.30 8,900,000 4/16/99
- ---------------------------------------------------------------------------------------------------------
71 2,114,247 1,793,318 1.24 23,300,000 3/12/99
72 631,572 504,793 1.25 6,800,000 4/26/99
73 753,020 680,303 1.21 7,500,000 6/8/99
74 1,702,036 1,438,823 1.48 14,500,000 4/19/99
75 768,057 594,088 1.40 6,500,000 6/25/98
- ---------------------------------------------------------------------------------------------------------
76 725,532 533,005 1.57 4,900,000 5/8/98
77 1,917,919 1,461,385 1.42 20,500,000 7/8/98
78 1,172,435 1,103,343 Springing 1.22 13,000,000 6/2/99
79 964,834 935,831 1.37 10,100,000 7/2/99
80 366,320 331,184 Hard 1.25 3,850,000 5/11/99
81 182,914 155,380 1.28 1,820,000 4/2/99
82 228,626 176,773 1.50 2,025,000 5/9/98
83 324,418 262,072 1.42 2,650,000 6/29/98
84 557,846 474,361 1.41 5,780,000 4/16/98
- ---------------------------------------------------------------------------------------------------------
85 1,372,142 1,020,255 1.81 10,000,000 6/10/98
86 680,242 608,827 1.23 7,800,000 3/17/99
87 128,105 Hard 1.26 1,410,000 4/23/98
88 138,904 Hard 1.32 1,500,000 11/14/97
89 251,664 168,110 1.26 1,920,000 3/22/99
- ---------------------------------------------------------------------------------------------------------
90 252,227 204,769 1.26 2,380,000 10/21/98
91 1,065,101 1,295,998 Springing 1.23 15,500,000 7/2/99
92 1,038,507 891,475 1.28 10,500,000 2/10/99
93 123,927 114,182 1.24 1,350,000 6/15/99
94 688,543 531,114 1.24 6,400,000 6/7/99
- ---------------------------------------------------------------------------------------------------------
95 1,339,371 1.40 15,800,000 5/20/98
96 2,439,519 2,035,672 1.28 27,450,000 3/1/99
97 1,219,634 1,180,787 1.39 12,500,000 5/26/99
98 724,992 582,486 1.26 7,600,000 2/11/99
99 347,542 227,460 1.52 3,680,000 6/15/99
- ---------------------------------------------------------------------------------------------------------
100 2,380,293 2,084,810 1.20 41,800,000 7/7/99
100 a 10,100,000 7/7/99
100 b 14,200,000 7/7/99
100 c 17,500,000 7/7/99
101 1,770,122 1.37 19,600,000 4/26/99
- ---------------------------------------------------------------------------------------------------------
102 245,107 222,924 1.28 2,525,000 6/16/99
103 986,353 881,733 1.26 10,200,000 4/16/99
104 4,598,001 4,340,120 1.30 56,500,000 4/14/99
105 672,635 512,053 1.35 5,800,000 3/4/99
106 226,413 197,135 1.29 2,300,000 3/9/99
- ---------------------------------------------------------------------------------------------------------
107 439,188 Hard 1.00 5,650,000 3/23/98
108 207,545 Hard 1.00 2,670,000 3/20/98
109 171,686 Hard 1.00 2,220,000 3/23/98
110 202,881 Hard 1.00 2,610,000 3/21/98
111 298,492 Hard 1.00 3,840,000 3/16/98
- ---------------------------------------------------------------------------------------------------------
112 176,452 Hard 1.00 2,270,000 3/23/98
113 319,480 Hard 1.00 4,110,000 3/24/98
114 258,849 Hard 1.00 3,330,000 3/30/98
115 328,030 Hard 1.00 4,220,000 3/18/98
116 739,702 681,673 1.20 8,400,000 4/9/99
- ---------------------------------------------------------------------------------------------------------
117 105,551 85,828 1.25 1,450,000 7/9/98
118 982,022 821,041 1.30 8,700,000 4/6/99
119 1,570,485 2,009,079 1.25 24,400,000 3/30/99
120 502,304 452,646 1.26 5,750,000 4/6/99
121 302,832 271,948 1.20 3,350,000 6/23/99
- ---------------------------------------------------------------------------------------------------------
122 3,157,286 2,987,850 1.22 36,500,000 4/14/99
123 335,095 283,452 1.28 3,200,000 2/18/99
124 5,848,740 4,342,010 Springing 1.30 57,450,000
124 a 16,750,000 3/15/99
124 b 5,870,000 3/12/99
- ---------------------------------------------------------------------------------------------------------
124 c 9,600,000 3/12/99
124 d 6,230,000 3/12/99
124 e 6,500,000 3/10/99
124 f 6,350,000 3/10/99
124 g 6,150,000 3/11/99
- ---------------------------------------------------------------------------------------------------------
125 235,776 392,761 1.29 4,600,000 5/14/99
126 903,474 773,192 1.22 9,600,000 4/15/99
127 804,945 678,571 1.25 8,000,000 4/14/99
128 2,050,067 1,611,506 1.76 14,500,000 10/7/98
129 466,062 448,273 1.38 4,900,000 4/24/98
- ---------------------------------------------------------------------------------------------------------
130 687,828 640,460 1.45 7,100,000 5/4/99
131 191,677 199,292 1.32 2,220,000 4/17/99
132 670,346 Hard 1.00 6,400,000 1/1/98
133 1,162,462 1,026,187 1.20 13,400,000 4/5/99
134 332,504 229,742 1.46 3,600,000 3/16/98
- ---------------------------------------------------------------------------------------------------------
135 559,994 213,289 1.51 3,200,000 3/16/98
136 420,158 418,707 1.34 4,500,000 3/17/98
137 402,193 292,361 1.62 2,700,000 3/17/98
138 338,701 287,008 1.43 3,100,000 3/29/99
139 10,940,749 10,592,933 Hard 1.58 125,000,000 1/29/99
- ---------------------------------------------------------------------------------------------------------
140 1,013,021 919,511 1.20 11,840,000 4/9/99
141 407,119 Hard 1.00 5,300,000 4/11/98
142 407,119 Hard 1.00 5,300,000 4/11/98
143 191,753 Hard 1.00 2,500,000 6/1/98
144 211,277 Hard 1.00 2,620,000 4/23/98
- ---------------------------------------------------------------------------------------------------------
145 240,971 Hard 1.11 2,620,000 4/28/98
146 170,990 Hard 1.00 2,100,000 1/12/98
147 427,475 Hard 1.00 5,250,000 4/7/98
148 188,903 Hard 1.00 2,350,000 4/10/98
149 232,872 Hard 1.00 2,860,000 6/1/98
- ---------------------------------------------------------------------------------------------------------
150 207,631 Hard 1.00 2,550,000 6/1/98
151 166,104 Hard 1.00 2,040,000 6/1/98
152 181,729 204,404 1.24 2,400,000 4/14/99
153 190,506 1.21 2,200,000 4/14/99
154 403,871 314,205 1.20 3,800,000 4/15/99
- ---------------------------------------------------------------------------------------------------------
155 481,429 540,425 1.57 5,275,000 4/29/99
156 2,443,842 2,381,122 1.38 34,000,000 2/26/99
157 2,691,597 2,403,960 1.21 30,200,000 5/14/99
158 325,025 199,651 Springing 1.23 2,700,000 12/16/98
159 163,134 128,322 1.25 1,460,000 3/22/99
- ---------------------------------------------------------------------------------------------------------
160 545,795 477,389 1.29 6,000,000 9/29/98
161 1,538,152 1,516,163 1.20 18,000,000 5/11/99
162 1,207,493 1,186,264 1.25 14,300,000 4/1/99
163 101,009 100,154 1.21 1,230,000 3/11/99
164 785,959 654,789 1.26 8,850,000 3/12/99
- ---------------------------------------------------------------------------------------------------------
165 364,787 323,152 1.20 3,840,000 3/16/99
166 166,913 Hard 1.05 1,800,000 8/8/97
167 317,558 314,640 1.29 4,050,000 4/14/99
168 824,549 1,143,083 1.36 13,000,000 3/25/99
169 176,631 141,748 1.31 1,580,000 4/13/99
- ---------------------------------------------------------------------------------------------------------
170 850,463 764,388 Hard 1.25 9,600,000 7/1/99
171 340,369 1.29 4,000,000 1/20/99
172 182,429 Hard 1.09 2,000,000 7/14/98
173 301,935 273,613 1.25 3,300,000 4/30/99
174 1,044,348 1,034,361 1.28 15,000,000 4/13/99
- ---------------------------------------------------------------------------------------------------------
175 991,464 964,810 1.45 9,500,000 3/19/98
176 836,171 663,657 1.41 7,400,000 5/3/99
177 285,777 368,222 1.30 4,400,000 3/10/99
178 917,960 735,685 1.29 8,740,000 3/1/99
178 a 2,617,619 3/1/99
- ---------------------------------------------------------------------------------------------------------
178 b 1,969,645 3/1/99
178 c 1,631,992 3/1/99
178 d 1,837,398 3/1/99
178 e 683,346 3/1/99
179 475,492 469,256 1.30 5,500,000 4/27/99
- ---------------------------------------------------------------------------------------------------------
180 375,888 309,765 Hard 1.50 3,300,000 3/1/99
181 478,377 362,351 1.36 4,000,000 6/8/99
182 125,367 111,278 1.36 1,260,000 4/15/99
183 2,458,582 2,934,317 1.21 37,000,000 2/26/99
184 260,082 249,425 1.23 3,100,000 3/19/99
- ---------------------------------------------------------------------------------------------------------
185 238,268 228,565 1.25 2,750,000 5/4/99
186 501,388 459,021 1.45 4,727,000 5/5/99
187 302,205 293,976 1.31 3,500,000 3/3/99
188 465,731 373,849 Springing 1.30 4,540,000 4/22/99
189 807,603 1.33 9,200,000 4/19/99
- ---------------------------------------------------------------------------------------------------------
190 1,253,637 1,163,655 1.29 15,200,000 4/6/99
191 272,976 234,969 1.30 3,175,000 12/1/98
192 898,087 739,017 1.20 10,100,000 6/22/99
193 317,358 1.30 3,850,000 4/15/99
194 985,698 562,065 Springing 1.13 7,600,000 12/16/98
- ---------------------------------------------------------------------------------------------------------
195 1,068,521 1,014,574 1.25 11,700,000 3/19/99
196 830,815 739,562 1.20 10,200,000 4/5/99
197 1,509,247 1,358,687 1.67 15,925,000 2/11/99
198 1,952,440 1,741,868 1.21 25,000,000 4/16/99
199 188,537 161,251 1.20 2,050,000 3/9/99
- ---------------------------------------------------------------------------------------------------------
200 1,087,014 960,519 1.22 11,500,000 4/16/99
201 2,242,468 2,398,171 1.20 33,000,000 12/16/97
202 1,112,337 1,033,633 1.23 12,150,000 4/30/99
203 295,831 262,864 1.29 2,800,000 3/1/99
204 667,103 583,540 Springing 1.41 6,300,000 12/16/98
205 158,603 127,585 1.20 1,450,000 10/30/98
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CUT-OFF
DATE LTV RATIO SERVICING
LTV AT FEE
ID RATIO MATURITY PREPAYMENT PROVISIONS RATE ADDRESS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 68.1% 60.1% L(2.08),D(7.42),1%(.25),
O(.25) 0.060% 1845 Walnut Street
2 69.4% 62.3% L(2),D(7.50),O(0.5) 0.055% 19 Sentry Parkway
3 68.6% 53.4% L(3),D(6.75),O(.25) 0.060% 200 N. Maryland Avenue
4 69.2% 62.8% L(4),D(5.75),O(.25) 0.060% 302 West Fifth Street
5 79.9% 70.8% L(4),D(5.75),O(.25) 0.060% 39-41 North Fullerton Avenue
- -------------------------------------------------------------------------------------------------------------------------------
6 68.6% 61.9% L(2.08),D(7.67),O(0.25) 0.055% 4220 East Craig Road
7 41.9% 35.4% L(4),D(5.75),O(.25) 0.060% 4480 W. Spring Mountain Road
8 72.7% 65.2% L(2),D(7.75),O(0.25) 0.055% 5340 & 5400 Shawnee Road
9 79.4% 72.3% L(4),D(5.75),O(.25) 0.060% 520-560 McKinley
10 59.1% 0.7% L(2),D(12.75),O(0.25) 0.055% 745 64th Street
- -------------------------------------------------------------------------------------------------------------------------------
11 48.5% 43.2% L(2),D(7.75),O(0.25) 0.055% 8899 Beverly Boulevard
12 70.4% 62.5% L(4),D(5.58),O(.42) 0.060% 90-100 John Street
13 69.9% 58.7% L(4),D(5.75),O(.25) 0.060% 95 First Avenue
14 70.2% 63.4% L(2),D(7.5),O(.5) 0.060% 2601 Dawson Road
15 73.6% 58.4% L(10),O(5) 0.060% 1100 Anacuitas Street
- -------------------------------------------------------------------------------------------------------------------------------
16 56.0% 46.5% L(3),D(7.08) 0.060% 4142 Pacific Coast Hwy.
17 75.7% 67.6% L(2),D(7.75),O(0.25) 0.055% Seventh St & Heinz Ave.
18 60.6% 50.3% L(3),D(6.75),O(.25) 0.060% 14421-14439 Van Nuys Blvd.
19 72.9% 65.1% L(3),D(6.75),O(.25) 0.060% 1375-1467 N. Citrus Ave.
20 67.8% 56.3% L(2.08),D(7.67),O(0.25) 0.055% 153-6212 DE ROSA DRIVE
- -------------------------------------------------------------------------------------------------------------------------------
21 84.9% 0.0% L(10),YM1%(5),1%(15) 0.060% 2522 Callier Springs Road
22 79.9% 71.5% L(4),D(5.75),O(.25) 0.060% 1110-1138 Barclay St. & 1521-1535 Magnolia Ave.
23 76.2% 64.4% L(4),D(5.75),O(.25) 0.060% 509-521 SW 2nd Place
24 79.7% 72.5% L(4),D(5.75),O(.25) 0.060% 830 - 944 Roosevelt Road
25 79.2% 70.8% L(3),D(6.75),O(.25) 0.060% 2810 Nathaniel Way
- -------------------------------------------------------------------------------------------------------------------------------
26 74.6% 67.8% L(4),D(5.75),O(.25) 0.060% 4124 Pennwood Ave.
27 78.7% 70.0% L(4),D(5.75),O(.25) 0.060% 1111 Austin Highway
28 71.4% 3.7% L(10),YM1%(9.67),O(.25) 0.060% Blue Angel Pkwy. & Hwy. 98
29 74.3% 69.2% L(2),D(4.75),O(0.25) 0.055% 239 Orville Street
30 79.8% 70.6% L(4),D(5.75),O(.25) 0.060% 5655 N. Marty
- -------------------------------------------------------------------------------------------------------------------------------
31 77.2% 69.7% L(4),D(5.75),O(.25) 0.060% Fourth Street and Ocotillo Avenue
32 74.9% 59.4% L(10),O(5) 0.060% 2280 West Business 77
33 51.8% 51.8% L(2),D(4.75),O(0.25) 0.020% 450 N Street
34 80.0% 70.8% L(4),D(5.75),O(.25) 0.060% 5101 Belle Terrace
35 78.1% 66.7% L(2.25),D(9.50),O(0.25) 0.055% 2875 Central Park Way
- -------------------------------------------------------------------------------------------------------------------------------
36 82.0% 73.3% L(2),D(7.75),O(.25) 0.060% 160 Islander Court
37 74.6% 67.2% L(4),D(5.75),O(.25) 0.060% 20911 Johnson Street
38 79.9% 73.2% L(2.25),D(5.50),O(0.25) 0.055% 3200 Chestnut Ridge Road
39 79.8% 66.2% L(4),D(5.75),O(.25) 0.060% 6001 N. Church Street
40 79.6% 71.2% L(4),D(5.75),O(.25) 0.060% 1103, 1201, 1300 - 1302 Patrick Henry Drive
- -------------------------------------------------------------------------------------------------------------------------------
41 79.8% 70.6% L(4),D(5.75),O(.25) 0.060% 5801 Ming Ave.
42 59.1% 53.1% L(4),D(5.75),O(.25) 0.060% 855 West University
43 70.0% 62.3% L(4),D(5.75),O(.25) 0.060% 6915 - 6921 Lewiston Way
44 67.0% 55.9% L(4),D(5.75),O(.25) 0.060% 1701 - 1725 S. Cooper Street
45 77.6% 66.2% L(2.25),D(9.50),O(0.25) 0.055% 1130 Pine Valley Lane
- -------------------------------------------------------------------------------------------------------------------------------
46 83.1% 0.0% L(4),D(15.33) 0.060% 2009 Wards Road
47 87.9% 0.0% L(4),D(15.67) 0.060% 1539 Amherst Highway
48 96.7% 0.0% L(8),D(12.25) 0.060% 937 Ridge Road
49 98.7% 0.0% L(6),D(14.08) 0.060% 100 Worcester Street
50 63.8% 53.3% L(4),D(5.75),O(.25) 0.060% 575 California Avenue & 655 Redwood Ave.
- -------------------------------------------------------------------------------------------------------------------------------
51 93.9% 37.9% L(4),D(18) 0.060% 2614 West Jefferson Street
52 70.4% 64.0% L(4),D(5.75),O(.25) 0.060% 124 South 400 East
53 89.2% 0.0% L(8),D(11.75) 0.060% 2301 Park Ave
54 75.5% 66.4% L(2.08),D(7.67),O(.25) 0.060% 1912-1968 Jericho Turnpike
55 62.1% 54.4% L(4),D(5.75),O(.25) 0.060% 203 - 225 Main Street
- -------------------------------------------------------------------------------------------------------------------------------
56 70.3% 60.8% L(4),D(5.75),O(.25) 0.060% 12812 Old Glenn Highway
57 71.1% 65.2% L(2.25),D(5.50),O(0.25) 0.055% 15885 Memorial Drive
58 78.5% 69.8% L(2),D(7.75),O(0.25) 0.055% 1800 Murton Avenue
59 64.9% 54.9% L(4),D(5.75),O(.25) 0.060% 600 McCabe Road
60 75.0% 62.9% L(4),D(5.75),O(.25) 0.060% 509 Brand Lane
- -------------------------------------------------------------------------------------------------------------------------------
61 74.9% 66.8% L(3),D(6.75),O(.25) 0.060% 1304-1398 Artesia Boulevard
62 74.6% 66.9% L(4),D(5.75),O(.25) 0.060% 1750 Robinwood Road
63 69.8% 62.3% L(4),D(5.75),O(.25) 0.060% 6330 South Pecos Road
64 56.8% 50.9% L(4),D(5.75),O(.25) 0.060% 2520-2570 Winstel Blvd.
65 77.7% 71.8% L(2.08),D(5.67),O(0.25) 0.055% 2100 Georgetown Parkway
- -------------------------------------------------------------------------------------------------------------------------------
66 79.8% 70.6% L(4),D(5.75),O(.25) 0.060% 800 N. Lovers Lane
67 67.2% 56.2% L(4),D(5.75),O(.25) 0.060% 300 Devereaux
68 80.0% 71.5% L(4),D(5.75),O(.25) 0.060% 302 - 304 14th Street
69 82.2% 68.5% L(4),D(5.75),O(.25) 0.060% 53752 Appleton Rd.
70 75.5% 67.2% L(4),D(5.75),O(.25) 0.060% 10725 Abercorn Extension
- -------------------------------------------------------------------------------------------------------------------------------
71 72.0% 64.2% L(3),D(6.75),O(.25) 0.060% 300-900 NW Eastman Parkway
72 68.1% 60.9% L(4),D(5.75),O(.25) 0.060% 2321 - 2361 Whitney Ave
73 84.0% 75.5% L(4),D(6) 0.060% 1801 Dorchester Road
74 68.9% 57.9% L(4),D(5.75),O(.25) 0.060% 5434 Kearney Mesa Road
75 73.0% 60.2% L(4),D(5.75),O(.25) 0.060% 1455 East Blvd.
- -------------------------------------------------------------------------------------------------------------------------------
76 74.3% 62.0% L(3),D(6.75),O(.25) 0.060% 1490 Greenville Ave.
77 62.5% 48.3% L(3),D(11.5),O(.5) 0.060% 2401 PGA Blvd.
78 80.0% 72.7% L(4),D(5.75),O(.25) 0.060% 3335 and 3350 Hauck Street
79 79.2% 70.4% L(4),D(5.5),O(.5) 0.060% 7440 Riverside Parkway
80 74.9% 62.0% L(4),D(5.92) 0.060% 1520-1566 Sumner Street
81 71.3% 59.2% L(4),D(5.75),O(.25) 0.060% 2097 Hillview Street
82 67.9% 43.6% L(4),D(10.75),O(.25) 0.060% 6509 Dan Bell Lane
83 73.6% 3.0% L(3),D(16.75),O(.25) 0.060% 608 West Roosevelt Rd
84 63.1% 52.5% L(4),D(5.75),O(.25) 0.060% US Highway 1 @ Morganton Road
- -------------------------------------------------------------------------------------------------------------------------------
85 54.9% 39.4% L(2),D(7.75),O(.25) 0.060% 10925 Stonelake Blvd.
86 73.0% 65.3% L(4),D(5.75),O(.25) 0.060% 100 - 1300 Hunters Road
87 92.3% 0.0% L(4),D(20.92) 0.060% 21105 Devonshire Street
88 85.8% 0.0% L(8),YM1%(16.5) 0.060% Loop 1604 & US 281
89 72.9% 66.6% L(4),D(5.75),O(.25) 0.060% 315 South James St.
- -------------------------------------------------------------------------------------------------------------------------------
90 76.5% 69.0% L(3),D(6.75),O(.25) 0.060% 7001-7139 Sewells Point Road
91 82.7% 73.0% L(4),D(5.75),O(.25) 0.060% 3633 (East) & 3805 (West) Route 33
92 79.8% 70.6% L(4),D(5.75),O(.25) 0.060% 15221 SW 80th Street
93 79.6% 70.9% L(2),D(7.75),O(.25) 0.060% 4888 21st Ave. North
94 74.2% 66.9% L(2),D(7.75),O(0.25) 0.055% 2531 S. College Ave.
- -------------------------------------------------------------------------------------------------------------------------------
95 74.2% 51.9% L(2.16),D(12.59),O(.25) 0.060% 1 Memorial Drive
96 67.5% 60.2% L(3),D(6.75),O(.25) 0.060% 3333 Rosecrans Street
97 79.2% 70.6% L(4),D(5.75),O(.25) 0.060% 8645 Fredricksburg Road
98 69.6% 62.3% L(5),D(4.75),O(.25) 0.060% 235 Wooster Road North
99 43.5% 36.1% L(4),D(5.75),O(.25) 0.060% 10171-10191 Magnolia Ave.
- -------------------------------------------------------------------------------------------------------------------------------
100 45.4% 39.1% L(2),D(7.75),O(0.25) 0.055% Various
100 a 41-59 Washington Street
100 b 60-72 Washington Street
100 c 50 Washington Street
101 77.5% 61.2% L(2.08),D(7.67),O(.25) 0.060% Millersville Pike and Charles Road
- -------------------------------------------------------------------------------------------------------------------------------
102 80.0% 71.2% L(2),D(7.75),O(.25) 0.060% 3202 S. Orlando Drive
103 80.0% 71.2% L(4),D(5.75),O(.25) 0.060% 11400 White Bluff Road
104 65.5% 59.0% L(2.08),D(7.67),O(0.25) 0.055% 3945 & 3955 Freedom Circle
105 77.5% 68.8% L(3),D(7) 0.060% 3634 Colonial Oaks Lane
106 79.8% 70.6% L(4),D(5.75),O(.25) 0.060% 5601 Ming Avenue
- -------------------------------------------------------------------------------------------------------------------------------
107 91.7% 30.1% L(2),YM(16) 0.205% 10445 Rieger Road
108 91.7% 30.1% L(2),YM(16) 0.205% 2359 69TH Avenue
109 91.7% 30.1% L(2),YM(16) 0.205% 402 Lovell Road
110 91.7% 30.1% L(2),YM(16) 0.205% 10708 M Street
111 91.7% 30.1% L(2),YM(16) 0.205% 700 US 83 Expressway
- -------------------------------------------------------------------------------------------------------------------------------
112 91.7% 30.1% L(2),YM(16) 0.205% 114 Chaffin Place
113 91.7% 30.1% L(2),YM(16) 0.205% 776 Horizon Drive
114 91.7% 30.1% L(2),YM(16) 0.205% 406 E. Safari Road
115 91.7% 30.1% L(2),YM(16) 0.205% 1001 W. Nasa Road 1
116 78.3% 67.2% L(2),D(9.75),O(0.25) 0.055% 1259 Muirwood Drive
- -------------------------------------------------------------------------------------------------------------------------------
117 51.8% 46.9% L(4),D(5.75),O(.25) 0.060% 1115 12th Street, NW
118 80.0% 72.2% L(3),D(6.75),O(.25) 0.060% Interstate 83 and Robinhood Drive
119 75.7% 67.7% L(4),D(5.75),O(.25) 0.060% 1 Padanaram Road
120 71.1% 65.7% L(4),D(5.75),O(.25) 0.060% 5353 West Dartmouth Avenue
121 78.7% 70.0% L(2),D(7.75),O(.25) 0.060% 100 Nottingham Circle
- -------------------------------------------------------------------------------------------------------------------------------
122 79.9% 70.8% L(2.25),D(7.50),O(0.25) 0.055% 643 Dorchester
123 75.0% 68.0% L(2),D(7.75),O(.25) 0.060% 2550 North Dodge Blvd
124 68.1% 60.6% L(4),D(5.75),O(.25) 0.060% Various
124 a 30 Corporate Park
124 b 3100 Airway
- -------------------------------------------------------------------------------------------------------------------------------
124 c 2132 -2144 Michelson
124 d 2691 Richter Avenue
124 e 22900 - 22980 Millcreek
124 f 1000 - 1012 Brioso Drive
124 g 927, 929 & 931 Calle Negocio
- -------------------------------------------------------------------------------------------------------------------------------
125 75.0% 67.3% L(2.08),D(7.67),O(0.25) 0.060% 2700-2710 East Patrick Lane
126 78.8% 69.9% L(2.25),D(7.50),O(0.25) 0.060% 2727 Grand Haven Dr
127 79.9% 68.2% L(2.25),D(9.50),O(0.25) 0.060% 6146 Perimeter Lakes Drive
128 74.2% 60.1% L(4),D(5.75),O(.25) 0.060% 6700 Phillips Place Court
129 78.9% 62.3% L(3.08),D(11.67),O(0.25) 0.055% 2-8 Pilgrim Hill Road
- -------------------------------------------------------------------------------------------------------------------------------
130 73.8% 68.7% L(3),D(3.75),O(.25) 0.060% 946-A Marimich Court
131 58.6% 29.1% L(4),D(5.75),O(.25) 0.060% 120 South Peters Rd.
132 95.6% 0.0% L(8),YM1%(13) 0.060% 14111 Southwest Freeway
133 74.3% 66.2% L(4),D(5.75),O(.25) 0.060% 550 Harbor Cove Lane
134 48.0% 32.1% L(6),D(8.75),O(.25) 0.060% 1251 N. Harbor Blvd
- -------------------------------------------------------------------------------------------------------------------------------
135 48.5% 32.4% L(6),D(8.75),O(.25) 0.060% 1818 E. Holt Blvd.
136 76.3% 51.0% L(6),D(8.75),O(.25) 0.060% 204 N. village court
137 73.2% 49.0% L(6),D(8.75),O(.25) 0.060% 13409 Mariposa Rd.
138 67.6% 56.5% L(4),D(5.75),O(.25) 0.060% 2410 Songbird Circle
139 65.6% 62.4% L(2.17),D(7.58),O(0.25) 0.020% 96-05 Queens Boulevard
- -------------------------------------------------------------------------------------------------------------------------------
140 76.3% 65.1% L(2.25),D(9.50),O(0.25) 0.055% 1631 Hill Rd
141 91.2% 28.8% L(4),D(18) 0.060% 300 S. Highland Springs Road
142 91.2% 28.8% L(4),D(18) 0.060% 890 East Hobson Way
143 91.0% 28.7% L(4),D(18) 0.060% 9482 California City Boulevard
144 98.0% 35.5% L(4),D(18) 0.060% 501 Water Street
- -------------------------------------------------------------------------------------------------------------------------------
145 85.4% 0.0% L(2.33),D(17.59) 0.060% 3200 Riverside Drive
146 97.8% 35.5% L(4),D(18) 0.060% 924 W. Main St.
147 96.7% 30.5% L(4),D(18) 0.060% 2555 Main Street
148 95.4% 30.1% L(4),D(18) 0.060% 41 Carroll Street
149 97.8% 35.5% L(4),D(18) 0.060% 125 E. Baltimore Street
- -------------------------------------------------------------------------------------------------------------------------------
150 96.7% 30.5% L(4),D(18) 0.060% 380 Harmony Road
151 96.7% 30.5% L(4),D(18) 0.060% 5675 York Road
152 79.1% 70.7% L(4),D(5.50),O(.50) 0.060% 15240 Kittridge Street
153 79.5% 71.7% L(3),D(6.75),O(.25) 0.060% 3120 Saint Paul Street
154 78.9% 70.5% L(3),D(6.75),O(.25) 0.060% 1008-1010 Saint Paul Street
- -------------------------------------------------------------------------------------------------------------------------------
155 73.9% 66.2% L(4),D(5.75),O(.25) 0.060% 2201 Statesville Boulevard
156 58.8% 52.4% L(3),D(6.75),O(.25) 0.060% 150 - 250 Executive Park Boulevard
157 77.8% 71.4% L(4),D(5.75),O(.25) 0.060% 4650 West Oakey Boulevard
158 73.0% 64.5% L(4),D(5.75),O(.25) 0.060% 1049 Brentwood Drive
159 74.7% 62.2% L(4),D(5.75),O(.25) 0.060% 1218 Wahnish Way
- -------------------------------------------------------------------------------------------------------------------------------
160 70.0% 62.8% L(2),D(7.67),O(0.33) 0.055% 1900 Churn Creek Rd
161 78.6% 70.7% L(2),D(7.75),O(0.25) 0.055% 1802 Teall Avenue/Grant Blvd
162 73.1% 66.0% L(2.17),D(7.58),O(0.25) 0.055% 800 Kenilworth Drive
163 71.1% 64.9% L(4),D(5.75),O(.25) 0.060% 12101 Indiana Avenue
164 66.8% 59.9% L(2.17),D(7.58),O(0.25) 0.055% 10201 & 10235 South 51st Street
- -------------------------------------------------------------------------------------------------------------------------------
165 80.0% 71.6% L(4),D(5.75),O(.25) 0.060% 3940 Dawes Street
166 75.5% 0.0% L(6),YM5%(1),YM3%(1),
YM1%(6.25) 0.060% 2980 Colonial Blvd.
167 69.1% 61.8% L(4),D(5.50),O(.50) 0.060% 6628 Sepulveda Boulevard
168 74.9% 66.8% L(3),D(6.75),O(.25) 0.060% 6021-6451 Mack Road
169 73.6% 61.1% L(4),D(5.75),O(.25) 0.060% 3705-3745 Drennan Road
- -------------------------------------------------------------------------------------------------------------------------------
170 71.1% 63.9% L(2),D(7.75),O(0.25) 0.055% 200 Grossman Drive
171 77.4% 68.9% L(4),D(5.75),O(.25) 0.060% 3455 South Durango Drive
172 98.9% 0.0% L(6),D(14) 0.060% 100 Worcester Street
173 73.5% 66.3% L(4),D(5.75),O(.25) 0.060% 779 Story Road
174 64.5% 57.1% L(4),D(5.75),O(.25) 0.060% 2832-2860 West Ball Road
- -------------------------------------------------------------------------------------------------------------------------------
175 78.7% 64.9% L(2),D(7.75),O(.25) 0.060% 440 Old York Road
176 67.5% 56.2% L(4),D(5.75),O(.25) 0.060% 10010 West McNab Road
177 74.9% 66.8% L(4),D(5.75),O(.25) 0.060% 3409 N. Central Expressway
178 79.8% 70.3% L(4),D(5.75),O(.25) 0.060% Various
178 a 1-7 Keisha Drive
- -------------------------------------------------------------------------------------------------------------------------------
178 b 326-336 E. Vernon St.
178 c 503 S. Main Street
178 d 604 Dale Street
178 e 712 N. Adelaide
179 72.7% 65.6% L(4),D(5.75),O(.25) 0.060% 970 Momument St.
- -------------------------------------------------------------------------------------------------------------------------------
180 64.2% 54.1% L(4),D(5.75),O(.25) 0.060% Route 29 North
181 75.0% 67.4% L(4),D(5.75),O(.25) 0.060% 2701 North Charles Street
182 70.6% 64.0% L(4),D(5.75),O(.25) 0.060% 600 South Broadway
183 75.6% 67.5% L(4),D(5.75),O(.25) 0.060% 65 and 75-77 Prospect Street
184 78.1% 69.3% L(4),D(5.75),O(.25) 0.060% 6439 West Myrtle Avenue
- -------------------------------------------------------------------------------------------------------------------------------
185 68.7% 57.7% L(4),D(5.75),O(.25) 0.060% 4946 Lake Village
186 76.1% 68.2% L(4),D(5.75),O(.25) 0.060% 1316 Patterson Avenue
187 77.0% 68.1% L(4),D(5.75),O(.25) 0.060% 7678 Highway 90 West
188 67.5% 55.9% L(3),D(7.08) 0.060% 8905 Venice Blvd.
189 74.9% 65.9% L(3),D(6.75),O(.25) 0.060% 7870 Villa Park Drive
- -------------------------------------------------------------------------------------------------------------------------------
190 69.7% 59.5% L(3),D(8.75),O(.25) 0.060% 8670 Devonshire Court
191 62.7% 56.6% L(4),D(5.75),O(.25) 0.060% 11901 Santa Monica Blvd.
192 68.1% 59.1% L(2),D(9.75),O(0.25) 0.055% 2067 West Vista Way
193 72.6% 65.0% L(4),D(5.75),O(.25) 0.060% 861 Yamato Road
194 79.6% 70.3% L(4),D(5.75),O(.25) 0.060% 1225 South Beach Street
- -------------------------------------------------------------------------------------------------------------------------------
195 76.8% 69.3% L(4),D(5.75),O(.25) 0.060% 5901 Old Hickory Boulevard
196 70.5% 62.8% L(4),D(5.75),O(.25) 0.060% 9989 Dorchester Road
197 63.9% 56.0% L(4),D(5.75),O(.25) 0.060% 632 Schindler Drive
198 68.4% 60.6% L(2.25),D(7.50),O(0.25) 0.055% 6710 Hollow Run Circle
199 79.3% 70.1% L(4),D(5.75),O(.25) 0.060% 4201 California
- -------------------------------------------------------------------------------------------------------------------------------
200 80.0% 71.2% L(4),D(5.75),O(.25) 0.060% 450 Johnny Mercer Boulevard
201 75.3% 56.6% L(2),YM1%(10),1%(1),O(2) 0.060% 12545 Markaire Drive
202 81.1% 72.1% L(4),D(5.75),O(.25) 0.060% 7118 West Arbor Trace Drive
203 74.9% 63.0% L(4),D(5.67),O(.33) 0.060% 105 North Robertson Blvd.
204 79.6% 70.3% L(4),D(5.75),O(.25) 0.060% 2050 South Ridgewood Avenue
205 76.7% 60.9% L(10),O(5) 0.060% 2802 North 7th Street
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GENERAL DETAILED
PROPERTY PROPERTY
ID CITY STATE ZIP CODE TYPE TYPE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Philadelphia PA 19103 Office Office
2 Blue Bell PA 19422 Office Office
3 Glendale CA 91206 Office Office
4 San Pedro CA 90731 Office Office
5 Montclair NJ 7042 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------
6 Las Vegas NV 89030 Industrial Industrial
7 Las Vegas NV 89102 Office Office
8 Alexandria VA 22312 Office Office
9 Mundelein IL 60060 Multifamily Conventional
10 Brooklyn NY 11220 Office Office
- ------------------------------------------------------------------------------------------------------
11 West Hollywood CA 90048 Office Office
12 New York NY 10038 Multifamily Conventional
13 Pacheco CA 94553 Self Storage
14 Albany GA 31707 Retail Anchored
15 Mercedes TX 78570 Multifamily Sec. 42
- ------------------------------------------------------------------------------------------------------
16 Torrance CA 90722 Retail Unanchored
17 Berkeley CA 94710 Industrial Industrial
18 Arleta CA 91331 Retail Unanchored
19 Covina CA 91722 Retail Anchored
20 Las Vegas NV 89108 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------
21 Rome GA 30161 Multifamily Sec. 42
22 St. Paul MN 55106 Multifamily Conventional
23 Pompano Beach FL 33060 Healthcare Assisted Living
24 Glen Ellyn IL 60137 Retail Anchored
25 Edgemere MD 21219 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------
26 Las Vegas NV 89102 Multifamily Conventional
27 San Antonio TX 78209 Multifamily Conventional
28 Pensacola FL 32506 Retail Anchored
29 Fairborn OH 45324 Multifamily Conventional
30 Fresno CA 93711 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------
31 Benson AZ 85602 Retail Anchored
32 San Benito TX 78586 Multifamily Sec. 42
33 Sacramento CA 95814 Office Office
34 Bakersfield CA 93309 Multifamily Conventional
35 Grand Rapids MI 49505 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------
36 Longwood FL 32750 Healthcare Assisted Living
37 Pembroke Pines FL 33028 Industrial Flex
38 Pittsburgh PA 15205 Multifamily Conventional
39 Tampa FL 33614 Multifamily Conventional
40 Blacksburg VA 24060 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------
41 Bakersfield CA 93309 Multifamily Conventional
42 Mesa AZ 85201 Retail Unanchored
43 Sacramento CA 95828 Multifamily Conventional
44 Arlington TX 76010 Retail Unanchored
45 Toledo OH 43615 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------
46 Lynchburg VA 23405 Retail Drug Store
47 Madison Heights VA 22727 Retail Drug Store
48 Webster NY 14580 Retail Drug Store
49 Grafton MA 1519 Retail Drug Store
50 Sand City CA 93955 Self Storage
- ------------------------------------------------------------------------------------------------------
51 Joliet IL 60435 Retail Grocery Store
52 Salt Lake City UT 84111 Office Office
53 South Plainfield NJ 7080 Retail Drug Store
54 East Northport NY 11731 Retail Unanchored
55 South Bound Brook NJ 8880 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------
56 Eagle River AK 99577 Retail Unanchored
57 Houston TX 77079 Multifamily Conventional
58 Vancouver WA 98661 Multifamily Conventional
59 La Porte TX 77571 MHC
60 Stafford TX 77477 MHC
- ------------------------------------------------------------------------------------------------------
61 Gardena CA 90248 Retail Anchored
62 Gastonia NC 28054 Healthcare Assisted Living
63 Las Vegas NV 89120 Retail Unanchored
64 Tucson AZ 85716 Multifamily Conventional
65 Fenton MI 48430 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------
66 Visalia CA 93292 Multifamily Conventional
67 Decatur TX 76234 Healthcare Assisted Living
68 Charlottesville VA 22903 Multifamily Conventional
69 Milton-Freewater OR 97236 MHC
70 Savannah GA 31419 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------
71 Gresham OR 97030 Retail Anchored
72 Hamden CT 6518 Mixed Use Office/Retail
73 Brooklyn NY 11226 Multifamily Conventional
74 San Diego CA 92111 Hospitality Limited Service
75 Montgomery AL 36117 Hospitality Limited Service
- ------------------------------------------------------------------------------------------------------
76 Staunton VA 24401 Hospitality Limited Service
77 Palm Beach Gardens FL 33410 Office Office
78 Las Vegas NV 89102 Multifamily Conventional
79 Austell GA 30001 Multifamily Conventional
80 Hartford WI 53027 Retail Anchored
81 Sarasota FL 34239 Multifamily Conventional
82 Thornburg VA 22565 Hospitality Limited Service
83 Monroe NC 28110 Hospitality Limited Service
84 Southern Pines NC 28388 Hospitality Full Service
- ------------------------------------------------------------------------------------------------------
85 Austin TX 78759 Hospitality Limited Service
86 Radford VA 24141 Multifamily Conventional
87 Chatsworth CA 91311 Special Purpose Restaurant
88 San Antonio TX 78232 Special Purpose Restaurant
89 Jacksonville AR 72076 Retail Anchored
- ------------------------------------------------------------------------------------------------------
90 Norfolk VA 23513 Multifamily Conventional
91 Neptune NJ 7753 Multifamily Conventional
92 Miami FL 33193 Multifamily Conventional
93 St. Petersburg FL 33713 Multifamily Conventional
94 Ft. Collins CO 80525 Retail Anchored
- ------------------------------------------------------------------------------------------------------
95 Lodi NJ 7644 Retail Anchored
96 San Diego CA 92110 Retail Anchored
97 San Antonio TX 78240 Healthcare Congregate Care
98 Barberton OH 44203 Retail Anchored
99 Riverside CA 92503 Retail Unanchored
- ------------------------------------------------------------------------------------------------------
100 Brooklyn NY 11201 Industrial Industrial
100 a Brooklyn NY 11201 Industrial Industrial
100 b Brooklyn NY 11201 Industrial Industrial
100 c Brooklyn NY 11201 Industrial Industrial
101 Lancaster PA 17603 Retail Anchored
- ------------------------------------------------------------------------------------------------------
102 Sanford FL 32773 Multifamily Conventional
103 Savannah GA 31419 Multifamily Conventional
104 Santa Clara CA 95054 Office Office
105 Memphis TN 38116 Multifamily Conventional
106 Bakersfield CA 93309 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------
107 Baton Rouge LA 70809 Hospitality Limited Service
108 Moline IL 61265 Hospitality Limited Service
109 Knoxville TN 37922 Hospitality Limited Service
110 Omaha NE 68127 Hospitality Limited Service
111 McAllen TX 78501 Hospitality Limited Service
- ------------------------------------------------------------------------------------------------------
112 Murfreesboro TN 37130 Hospitality Limited Service
113 Grand Junction CO 81506 Hospitality Limited Service
114 Grand Prairie TX 75050 Hospitality Limited Service
115 Webster TX 77598 Hospitality Limited Service
116 Columbus OH 43701 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------
117 Washington DC 20005 Multifamily Conventional
118 Newberry Township PA 17319 Retail Anchored
119 Danbury CT 6811 Retail Anchored
120 Denver CO 80227 Office Office
121 Greenacres City FL 33463 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------
122 Rochester Hills MI 48307 Multifamily Conventional
123 Tucson AZ 85716 Healthcare Congregate Care
124 Various CA Office Office
124 a Irvine CA 92606 Office Office
124 b Costa Mesa CA 92626 Office Office
- ------------------------------------------------------------------------------------------------------
124 c Irvine CA 92612 Office Office
124 d Irvine CA 92606 Office Office
124 e Laguna Hills CA 92653 Office Office
124 f Costa Mesa CA 92627 Office Office
124 g San Clemente CA 92673 Office Office
- ------------------------------------------------------------------------------------------------------
125 Las Vegas NV 89120 Industrial Industrial
126 Reynoldsburg OH 43068 Multifamily Conventional
127 Dublin OH 43017 Multifamily Conventional
128 Charlotte NC 28210 Hospitality Limited Service
129 Plymouth MA 02360 Retail Unanchored
- ------------------------------------------------------------------------------------------------------
130 Eldersburg MD 21784 Multifamily Conventional
131 Knoxville TN 37919 Retail Unanchored
132 Houston TX 77478 Special Purpose Health & Fitness
133 Charleston SC 29412 Multifamily Conventional
134 Anaheim CA 92801 Hospitality Limited Service
- ------------------------------------------------------------------------------------------------------
135 Ontario CA 91761 Hospitality Limited Service
136 San Dimas CA 91773 Hospitality Limited Service
137 Victorville CA 92392 Hospitality Limited Service
138 Brownwood TX 76801 Healthcare Assisted Living
139 Rego Park NY 11475 Retail Anchored
- ------------------------------------------------------------------------------------------------------
140 Pickerington OH 43147 Multifamily Conventional
141 Banning CA 92220 Retail Drug Store
142 Blythe CA 92225 Retail Drug Store
143 California City CA 92626 Retail Drug Store
144 Chardon OH 44024 Retail Drug Store
- ------------------------------------------------------------------------------------------------------
145 Danville VA 24540 Retail Drug Store
146 Fremont MI 49412 Retail Drug Store
147 Oakley CA 94561 Retail Drug Store
148 Pittsfield NH 3263 Retail Drug Store
149 Baltimore MD 21202 Retail Drug Store
- ------------------------------------------------------------------------------------------------------
150 Gibbstown, Greenwich Township NJ 8027 Retail Drug Store
151 New Oxford Township PA 17350 Retail Drug Store
152 Van Nuys CA 91405 Multifamily Conventional
153 Baltimore MD 21218 Multifamily Conventional
154 Baltimore MD 21202 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------
155 Salisbury NC 28147 Healthcare Assisted Living
156 San Francisco CA 94134 Office Office
157 Las Vegas NV 89102 Multifamily Conventional
158 Daytona Beach FL 32117 Multifamily Conventional
159 Tallahassee FL 32304 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------
160 Redding CA 96002 Office Office
161 Syracuse NY 13206 Retail Anchored
162 Towson MD 21204 Retail Unanchored
163 Riverside CA 92503 MHC
164 Phoenix AZ 85044 Office Office
- ------------------------------------------------------------------------------------------------------
165 Riverside CA 92503 Multifamily Conventional
166 Ft Myers FL 33907 Retail Convenience Store
167 Van Nuys CA 91411 Multifamily Conventional
168 Sacramento CA 95823 Retail Anchored
169 Colorado Springs CO 80910 Retail Unanchored
- ------------------------------------------------------------------------------------------------------
170 Braintree MA 02184 Retail Anchored
171 Las Vegas NV 89117 Retail Unanchored
172 Grafton MA 1519 Retail Grocery Store
173 San Jose CA 95122 Retail Unanchored
174 Anaheim CA 92804 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------
175 Jenkintown PA 19046 Healthcare Assisted Living
176 Tamarac FL 33321 Retail Anchored
177 Plano TX 75086 Office Office
178 Various IL Multifamily Conventional
178 a Bloomington IL 61704 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------
178 b Normal IL 61761 Multifamily Conventional
178 c Normal IL 61761 Multifamily Conventional
178 d Normal IL 61761 Multifamily Conventional
178 e Normal IL 61761 Multifamily Conventional
179 Los Angeles CA 90272 Retail Unanchored
- ------------------------------------------------------------------------------------------------------
180 Charlottesville VA 22901 Retail Anchored
181 Baltimore MD 21218 Office Office
182 Sylacauga AL 35150 Multifamily Conventional
183 Stamford CT 6921 Multifamily Conventional
184 Glendale AZ 85301 MHC
- ------------------------------------------------------------------------------------------------------
185 San Antonio TX 78223 MHC
186 Monroe NC 28112 Healthcare Assisted Living
187 San Antonio TX 78227 Multifamily Conventional
188 Los Angeles CA 90019 Retail Unanchored
189 Richmond VA 23228 Industrial Flex
- ------------------------------------------------------------------------------------------------------
190 Manassas VA 20110 Multifamily Conventional
191 Los Angeles CA 90025 Mixed Use Retail/Office
192 Vista CA 92083 Office Office
193 Boca Raton FL 33487 Retail Unanchored
194 Daytona Beach FL 32114 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------
195 Hermitage TN 37076 Multifamily Conventional
196 Summerville SC 29485 Multifamily Conventional
197 Brick Township NJ 8723 Multifamily Conventional
198 Indianapolis IN 46214 Multifamily Conventional
199 Bakersfield CA 93309 Multifamily Conventional
- ------------------------------------------------------------------------------------------------------
200 Wilmington Island GA 31410 Multifamily Conventional
201 Creve Cour MO 63146 Multifamily Conventional
202 Knoxville TN 37909 Multifamily Conventional
203 Beverly Hills CA 90211 Mixed Use Retail/Office
204 South Daytona Beach FL 32119 Multifamily Conventional
205 Harlingen TX 78550 Multifamily Sec. 42
- ------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOAN PER
NET NET LOAN
CTL YEAR YEAR RENTABLE NUMBER RENTABLE PER
ID FLAG BUILT RENOVATED AREA OF UNITS AREA (SF) UNIT
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1968 1995 352,384 78.28
2 1989 56,776 105.68
3 1983 17,226 78.66
4 1978 1996 32,954 54.60
5 1935 69 42,820.42
- --------------------------------------------------------------------------------------------------------------------------
6 1998 23,850 43.17
7 1988 14,702 44.18
8 1985 85,055 75.25
9 1955 26 36,641.18
10 1953 1998 83,638 89.67
- --------------------------------------------------------------------------------------------------------------------------
11 1963 1996 75,584 66.15
12 1931 1999 221 226,244.34
13 1978 779 4,579.44
14 1976 1988 457,774 69.00
15 1998 72 15,538.05
- --------------------------------------------------------------------------------------------------------------------------
16 1955 1998 22,913 76.32
17 1988 134,093 156.61
18 1957 1996 27,285 49.44
19 1960 1998 40,709 173.61
20 1978 1998 262 27,287.19
- --------------------------------------------------------------------------------------------------------------------------
21 1998 88 16,989.96
22 1964 Various 216 19,236.87
23 1971 1996 47 33,137.60
24 1998 135,273 120.76
25 1972 1998 201 27,598.86
- --------------------------------------------------------------------------------------------------------------------------
26 1963 1998 128 19,914.63
27 1974 1998 121 23,099.79
28 1998 68,082 71.34
29 1968 1998 208 26,442.31
30 1987 150 29,331.28
- --------------------------------------------------------------------------------------------------------------------------
31 1986 91,403 51.29
32 1998 72 17,688.40
33 1992 501,060 99.79
34 1984 80 20,688.95
35 1988 216 33,274.12
- --------------------------------------------------------------------------------------------------------------------------
36 1985 1998 269 74,684.01
37 1998 55,136 48.73
38 1983 468 33,954.62
39 1973 78 16,672.33
40 1997 78 65,308.62
- --------------------------------------------------------------------------------------------------------------------------
41 1984 76 22,378.79
42 1986 37,171 43.70
43 1970 142 18,239.44
44 1971 1995 28,800 36.05
45 1987 316 38,381.07
- --------------------------------------------------------------------------------------------------------------------------
46 CTL 1998 12,608 180.59
47 CTL 1999 10,125 215.36
48 CTL 1998 10,125 172.85
49 CTL 1998 10,125 155.99
50 1979 194 6,169.56
- --------------------------------------------------------------------------------------------------------------------------
51 CTL 1974 1977 41,365 76.70
52 1985 1995 25,290 52.91
53 CTL 1998 10,908 302.66
54 1960 1997 85,929 119.50
55 1980 122 26,992.85
- --------------------------------------------------------------------------------------------------------------------------
56 1985 31,935 46.21
57 1993 104 47,192.02
58 1970 1997 123 26,991.87
59 1974 233 8,359.06
60 1973 135 14,715.13
- --------------------------------------------------------------------------------------------------------------------------
61 1990 65,987 104.44
62 1996 81 51,793.55
63 1999 45,157 79.63
64 1971 96 16,812.50
65 1987 480 43,563.34
- --------------------------------------------------------------------------------------------------------------------------
66 1991 64 46,038.06
67 1997 37 47,213.82
68 1986 26 111,538.46
69 1962 70 15,258.25
70 1984 194 34,616.91
- --------------------------------------------------------------------------------------------------------------------------
71 1987 1995 264,649 63.40
72 1940 1986 99,479 46.54
73 1950 101 62,376.24
74 1989 151 66,177.25
75 1986 105 45,217.27
- --------------------------------------------------------------------------------------------------------------------------
76 1994 76 47,917.19
77 1985 119,810 106.92
78 1988 1997 212 49,056.60
79 1972 1998 232 34,482.76
80 1983 1997 61,897 46.62
81 1969 46 28,208.55
82 1996 54 25,463.18
83 1987 1995 79 24,696.98
84 1969 1987 162 22,504.95
- --------------------------------------------------------------------------------------------------------------------------
85 1997 97 56,621.37
86 1988 156 36,495.99
87 CTL 1998 3,964 328.28
88 CTL 1997 4,706 273.48
89 1971 1996 99,765 14.03
- --------------------------------------------------------------------------------------------------------------------------
90 1971 155 11,743.23
91 1967 1998 308 41,602.04
92 1989 1997 254 33,008.53
93 1970 1998 39 27,564.10
94 1971 118,862 39.96
- --------------------------------------------------------------------------------------------------------------------------
95 1979 1998 83,941 139.71
96 1969 1990 210,704 87.93
97 1984 157 63,026.61
98 1952 1995 237,878 22.24
99 1980 26,094 61.32
- --------------------------------------------------------------------------------------------------------------------------
100 Various 1,228,357 15.44
100 a 1908 1998 365,452 12.54
100 b 1916 1998 382,097 16.86
100 c 1906 1998 480,808 16.51
101 1966 1999 242,931 62.49
- --------------------------------------------------------------------------------------------------------------------------
102 1974 1998 88 22,954.55
103 1983 188 43,382.82
104 1985 201,420 183.62
105 1974 270 16,645.64
106 1984 76 24,164.89
- --------------------------------------------------------------------------------------------------------------------------
107 CTL 1984 110 47,089.84
108 CTL 1974 98 24,977.94
109 CTL 1988 109 18,672.30
110 CTL 1974 103 23,231.37
111 CTL 1974 93 37,854.69
- --------------------------------------------------------------------------------------------------------------------------
112 CTL 1974 1994 85 24,483.77
113 CTL 1978 100 37,680.21
114 CTL 1983 1997 129 23,666.06
115 CTL 1972 1995 122 31,712.03
116 1991 196 33,571.43
- --------------------------------------------------------------------------------------------------------------------------
117 1905 1985 37 20,316.44
118 1987 1992 238,958 29.11
119 1959 1998 210,578 87.75
120 1979 68,536 59.68
121 1986 1998 70 37,642.86
- --------------------------------------------------------------------------------------------------------------------------
122 1986 544 53,578.71
123 1979 1996 72 33,333.33
124 550,702 71.09
124 a 1986 90,824 125.68
124 b 1979 68,271 58.60
- --------------------------------------------------------------------------------------------------------------------------
124 c 1979 115,205 56.79
124 d 1979 65,798 64.53
124 e 1981 58,010 76.36
124 f 1979 81,197 53.30
124 g 1990 71,397 58.70
- --------------------------------------------------------------------------------------------------------------------------
125 1998 61,984 55.64
126 1992 256 29,535.95
127 1992 189 33,802.28
128 1997 124 86,747.80
129 1998 19,619 197.03
- --------------------------------------------------------------------------------------------------------------------------
130 1988 136 38,553.50
131 1996 21,784 59.68
132 CTL 1994 46,658 131.15
133 1987 230 43,300.34
134 1985 1995 117 14,769.43
- --------------------------------------------------------------------------------------------------------------------------
135 1989 1995 107 14,512.71
136 1985 1994 134 25,629.83
137 1985 1995 94 21,031.84
138 1997 45 46,584.30
139 1952 1997 343,049 239.03
- --------------------------------------------------------------------------------------------------------------------------
140 1991 216 41,823.72
141 CTL 1990 27,463 175.97
142 CTL 1991 31,316 154.32
143 CTL 1998 16,078 141.57
144 CTL 1998 10,752 238.76
- --------------------------------------------------------------------------------------------------------------------------
145 CTL 1998 11,057 202.28
146 CTL 1997 10,752 191.08
147 CTL 1991 31,450 161.34
148 CTL 1998 11,180 200.57
149 CTL 1998 25,860 108.20
- --------------------------------------------------------------------------------------------------------------------------
150 CTL 1998 10,752 229.23
151 CTL 1998 10,752 183.38
152 1972 61 31,111.34
153 1924 78 22,435.90
154 1953 151 19,858.22
- --------------------------------------------------------------------------------------------------------------------------
155 1997 71 54,867.82
156 1982 204,063 97.89
157 1986 1999 488 48,155.74
158 1964 1997 120 16,414.91
159 1997 19 57,421.07
- --------------------------------------------------------------------------------------------------------------------------
160 1986 56,899 73.82
161 1952 1996 245,951 57.53
162 1978 1987 142,491 73.33
163 1960 46 19,015.42
164 1987 70,511 83.79
- --------------------------------------------------------------------------------------------------------------------------
165 1973 108 28,431.40
166 CTL 1997 2,940 462.36
167 1970 114 24,532.86
168 1982 189,063 51.51
169 1985 29,911 38.88
- --------------------------------------------------------------------------------------------------------------------------
170 1998 42,958 158.85
171 1998 21,518 143.81
172 CTL 1998 59,625 33.18
173 1998 13,430 180.49
174 1968 1998 183 52,906.24
- --------------------------------------------------------------------------------------------------------------------------
175 1989 64 116,888.63
176 1987 1996 105,541 47.34
177 1997 30,304 108.71
178 181 38,553.11
178 a 1997 66 31,665.69
- --------------------------------------------------------------------------------------------------------------------------
178 b 1997 60 26,209.77
178 c 1991 14 93,071.45
178 d 1991 16 91,687.42
178 e 1991 25 21,823.64
179 1992 27,124 147.41
- --------------------------------------------------------------------------------------------------------------------------
180 1989 41,922 50.53
181 1969 62,120 48.29
182 1948 1989 54 16,465.33
183 1956 1998 268 104,427.43
184 1962 177 13,675.61
- --------------------------------------------------------------------------------------------------------------------------
185 1974 221 8,554.81
186 1997 78 46,101.95
187 1975 1998 178 15,139.95
188 1951 1998 20,083 152.49
189 1998 88,960 77.51
- --------------------------------------------------------------------------------------------------------------------------
190 1980 285 37,147.02
191 1990 17,372 114.67
192 1981 45,717 150.53
193 1999 10,000 279.67
194 1974 1997 256 23,627.52
- --------------------------------------------------------------------------------------------------------------------------
195 1998 184 48,841.39
196 1985 200 35,972.22
197 1977 520 19,574.53
198 1997 344 49,691.31
199 1984 50 32,498.63
- --------------------------------------------------------------------------------------------------------------------------
200 1984 192 47,893.00
201 1968 330 75,305.71
202 1988 250 39,419.91
203 1926 1998 17,320 121.04
204 1974 1997 235 21,336.21
205 1998 80 13,899.06
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OCCUPANCY ANNUAL ANNUAL
OCCUPANCY RATE AS OF RESERVES RESERVES
ID RATE DATE PER SF PER UNIT LARGEST TENANT
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 97% 05/31/99 0.10 Marshall Dennehey
2 100% 05/01/99 0.20 Madison Bank
3 100% 05/12/99 0.18 Software Works
4 93% 05/10/99 0.19 City of Los Angeles (G.A.P.)
5 100% 04/01/99 318.00
- -------------------------------------------------------------------------------------------------------------------
6 100% 05/17/99 0.10 Pacific Inter Tel
7 100% 05/01/99 0.33 Telephone Billing Service
8 100% 06/24/99 0.20 David Volkert & Associates
9 100% 04/08/99 250.00
10 100% 10/25/98 0.20 Metropolitan Geriatrics
- -------------------------------------------------------------------------------------------------------------------
11 93% 05/29/99 0.20 Cossette Prod
12 99% 04/10/99 358.77
13 91% 06/04/99 15.00
14 94% 06/22/99 0.15 Gayfers of Georgia, Inc.
15 93% 04/30/99 250.00
- -------------------------------------------------------------------------------------------------------------------
16 100% 05/20/99 0.10 Suitmax (Value Priced Clothing II, Inc.)
17 99% 01/08/99 0.20 State of California
18 100% 05/21/99 0.10 Kragen Auto Parts Store
19 91% 05/21/99 0.10 1459 - Peter Piper Pizza
20 95% 02/23/99 250.00
- -------------------------------------------------------------------------------------------------------------------
21 94% 05/31/99 250.00
22 100% 04/02/99 307.00
23 85% 04/30/99 250.00
24 96% 05/01/99 0.10 Dominick's
25 95% 06/09/99 250.00
- -------------------------------------------------------------------------------------------------------------------
26 92% 05/11/99 480.00
27 94% 04/12/99 250.00
28 100% 06/12/99 0.18 Winn Dixie
29 86% 06/29/99 258.00
30 95% 04/26/99 262.00
- -------------------------------------------------------------------------------------------------------------------
31 97% 05/03/99 0.15 Safeway Store
32 93% 02/28/99 200.00
33 100% 06/18/99 0.20 State of CA-Board of Equalization
34 100% 03/01/99 262.00
35 98% 04/24/99 250.00
- -------------------------------------------------------------------------------------------------------------------
36 96% 06/14/99 309.98
37 100% 04/27/99 0.10 Korner Kick
38 91% 05/04/99 250.00
39 96% 02/10/99 324.00
40 100% 03/01/99 300.00
- -------------------------------------------------------------------------------------------------------------------
41 99% 03/03/99 302.00
42 96% 03/25/99 0.44 Checker Auto
43 97% 06/06/99 250.00
44 89% 03/01/99 0.10 Craft Mall
45 95% 04/23/99 250.00
- -------------------------------------------------------------------------------------------------------------------
46 100% 0.24 Revco Discount Drug Centers, Inc.
47 100% 0.20 Revco Discount Durg Centers, Inc.
48 100% 0.15 Webster CVS, Inc
49 100% 0.30 Grafton CVS, Inc.
50 99% 03/23/99 21.02
- -------------------------------------------------------------------------------------------------------------------
51 100% Eagle Food Centers, Inc.
52 100% 06/30/99 0.10 The Childrens Service Society of Utah
53 100% 0.30 Eckerd Corporation
54 100% 06/01/99 0.10 Annie Sez
55 95% 03/01/99 250.00
- -------------------------------------------------------------------------------------------------------------------
56 100% 02/01/99 0.37 Salvation Army
57 94% 04/21/99 250.00
58 98% 06/10/99 268.29
59 85% 03/29/99 50.00
60 100% 03/29/99 50.00
- -------------------------------------------------------------------------------------------------------------------
61 98% 06/17/99 0.14 Tawa Market
62 99% 05/01/99 250.00
63 100% 03/23/99 0.10 Design Image II
64 91% 03/30/99 250.00
65 81% 02/28/99 250.00
- -------------------------------------------------------------------------------------------------------------------
66 100% 04/26/99 280.00
67 97% 03/31/99 250.00
68 100% 05/02/99 312.00
69 100% 03/01/99 53.00
70 95% 04/23/99 250.00
- -------------------------------------------------------------------------------------------------------------------
71 93% 06/17/99 0.24 G. I. Joe's, Inc.
72 94% 06/01/99 0.10 Hilb, Rogal & Hamilton
73 100% 06/21/99 292.00
74 75% 962.80
75 84% 681.73
- -------------------------------------------------------------------------------------------------------------------
76 81% 694.95
77 94% 04/27/99 0.20 Carmines
78 96% 06/24/99 290.00
79 95% 05/01/99 250.00
80 100% 04/01/99 0.25 Supervalu Holdings, Inc. (County Market)
81 95% 05/04/99 300.00
82 51% 380.16
83 63% 515.14
84 61% 817.89
- -------------------------------------------------------------------------------------------------------------------
85 77% 1,144.48
86 76% 05/01/99 300.00
87 100% 0.15 IHOP Properties, Inc.
88 100% IHOP Properties, Inc.
89 100% 03/01/99 0.16 MegaMart
- -------------------------------------------------------------------------------------------------------------------
90 85% 05/31/99 288.00
91 94% 06/14/99 260.00
92 96% 04/22/99 278.00
93 97% 06/30/99 252.00
94 100% 04/29/99 0.15 Kmart
- -------------------------------------------------------------------------------------------------------------------
95 100% 05/11/99 0.10 A&P
96 96% 06/17/99 0.18 Circuit City
97 95% 05/21/99 256.00
98 99% 03/29/99 0.13 Big K (K-Mart)
99 76% 06/16/99 0.15 Lotion & Lace
- -------------------------------------------------------------------------------------------------------------------
100 88% 06/21/99 0.15
100 a 85% 06/21/99 NYC Board of Elections
100 b 79% 06/21/99 M&S II, Inc.
100 c 100% 06/21/99 Quality Cases
101 95% 05/01/99 0.15 Regal Cinemas
- -------------------------------------------------------------------------------------------------------------------
102 99% 06/30/99 258.00
103 98% 04/23/99 250.00
104 96% 06/10/99 0.20 Amkor Electronics
105 99% 05/21/99 422.00
106 99% 03/03/99 344.00
- -------------------------------------------------------------------------------------------------------------------
107 Motel 6
108 Motel 6
109 Motel 6
110 Motel 6
111 Motel 6
- -------------------------------------------------------------------------------------------------------------------
112 Motel 6
113 Motel 6
114 Motel 6
115 Motel 6
116 82% 02/28/99 250.00
- -------------------------------------------------------------------------------------------------------------------
117 100% 06/10/99 250.00
118 92% 06/25/99 0.10 Rite Aid (office)
119 92% 04/01/99 0.13 A&P
120 100% 04/01/99 0.11 Norwest Bank Colorado, N.A.
121 99% 06/30/99 289.00
- -------------------------------------------------------------------------------------------------------------------
122 95% 03/31/99 249.26
123 89% 06/08/99 292.00
124 96% 06/02/99 0.21 Spectrum Medsystems Corporation
124 a 97% 06/02/99 0.19 Harding Lawson Associates
124 b 94% 06/02/99 0.32 Chun-Nein King dba K.T.I.
- -------------------------------------------------------------------------------------------------------------------
124 c 100% 06/02/99 0.10 Spectrum Medsystems Corporation
124 d 100% 06/02/99 0.10 Cue Paging Corporation
124 e 98% 06/02/99 0.30 Ontek Corporation
124 f 94% 06/02/99 0.18 Calor Apparel
124 g 100% 06/02/99 0.35 Global Air Partners, LLC
- -------------------------------------------------------------------------------------------------------------------
125 94% 05/17/99 0.11 Callahan & Associates
126 79% 02/28/99 250.00
127 89% 02/28/99 250.00
128 80% 1,287.05
129 100% 05/11/98 0.15 CVS
- -------------------------------------------------------------------------------------------------------------------
130 100% 03/31/99 291.00
131 100% 04/14/99 0.10 Clancy Optical Company
132 100% Q Club, Inc
133 100% 04/22/99 250.00
134 68% 345.85
- -------------------------------------------------------------------------------------------------------------------
135 76% 384.39
136 50% 390.13
137 73% 412.18
138 100% 02/16/99 250.00
139 100% 05/04/99 0.30 Sears
- -------------------------------------------------------------------------------------------------------------------
140 89% 02/28/99 250.00
141 100% Rite Aid of Banning
142 100% Rite Aid of California
143 100% Rite Aid of California
144 100% Rite Aid of Ohio
- -------------------------------------------------------------------------------------------------------------------
145 100% 0.30 Rite Aid of Virginia
146 100% Rite Aid of Michigan
147 100% Rite Aid of California
148 100% Rite Aid of New Hampshire
149 100% Rite Aid of Maryland
- -------------------------------------------------------------------------------------------------------------------
150 100% Rite Aid of New Jersey
151 100% Rite Aid of Pennsylvania
152 95% 02/20/99 306.76
153 97% 04/01/99 250.00
154 99% 04/21/99 250.00
- -------------------------------------------------------------------------------------------------------------------
155 99% 05/01/99 250.00
156 99% 05/01/99 0.10 UCSF Stanford
157 95% 05/26/99 250.00
158 91% 06/14/99 238.00
159 96% 01/01/99 250.00
- -------------------------------------------------------------------------------------------------------------------
160 90% 03/31/99 0.25 GSA-Far Northern
161 86% 07/01/99 0.16 Ames Department Store
162 94% 05/07/99 0.15 Stebbins-Anderson
163 85% 03/01/99 61.78
164 98% 02/23/99 0.20 Pulte Home Corp
- -------------------------------------------------------------------------------------------------------------------
165 94% 05/01/99 300.00
166 100% 0.20 Southland
167 92% 04/05/99 250.00
168 99% 06/17/99 0.15 Target
169 100% 04/06/99 0.25 Specialty Sports & Supplies
- -------------------------------------------------------------------------------------------------------------------
170 100% 06/01/99 0.15 Sports Authority
171 100% 03/25/99 0.14 Dolphin Court Spa
172 100% Stop & Shop
173 100% 03/01/99 0.10 Hollywood Video
174 100% 04/07/99 250.00
- -------------------------------------------------------------------------------------------------------------------
175 100% 05/31/99 250.00
176 98% 06/01/99 0.18 Tamarac Cinema V
177 100% 04/01/99 0.15 Matrix Rehabilitation, Inc.
178 98% 250.00
178 a 100% 10/09/98 223.00
- -------------------------------------------------------------------------------------------------------------------
178 b 95% 04/30/99 231.00
178 c 100% 04/30/99 340.00
178 d 100% 04/30/99 325.00
178 e 95% 04/30/99 270.00
179 96% 05/13/99 0.10 Kinko's of Beverly Hills
- -------------------------------------------------------------------------------------------------------------------
180 100% 05/01/99 0.24 Carmike Cinemas, Inc
181 100% 06/07/99 0.16 Johns Hopkins University-IAAY
182 100% 04/01/99 251.00
183 97% 05/14/99 250.00
184 100% 04/14/99 45.00
- -------------------------------------------------------------------------------------------------------------------
185 94% 03/29/99 50.00
186 91% 05/01/99 250.00
187 95% 04/21/99 250.00
188 100% 05/20/99 0.10 Goodwill Industries
189 100% 06/04/99 0.10 Earth Tech, Inc. (100% owned by Tyco)
- -------------------------------------------------------------------------------------------------------------------
190 95% 03/01/99 317.00
191 96% 06/29/99 0.10 J.R. Seafood Restaurant, Inc.
192 100% 06/01/99 0.33
193 100% 05/26/99 0.10 Pembroke Crossing Restaurant (Sal's Ristorante #119)
194 89% 06/10/99 244.00
- -------------------------------------------------------------------------------------------------------------------
195 98% 04/01/99 250.00
196 99% 04/23/99 266.00
197 84% 03/31/99 319.00
198 89% 03/01/99 250.00
199 97% 03/05/99 333.00
- -------------------------------------------------------------------------------------------------------------------
200 94% 04/23/99 255.00
201 90% 05/25/99 250.00
202 92% 06/02/99 304.00
203 100% 01/19/99 0.20 Gonen, Shlomo (Pawn Shop)
204 96% 06/14/99 245.00
205 100% 01/21/99 250.00
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
% OF LEASE % OF LEASE
ID NRA EXPIRATION 2ND LARGEST TENANT NRA EXPIRATION
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 22% 08/31/08 Willig, Williams & Davidson 10% 05/01/06
2 24% 01/31/01 Variable Annuity Life 18% 07/31/02
3 16% 06/30/01 Evergreen Devco 14% 05/31/02
4 12% 01/01/99 City Attorney 11% 01/01/99
5
- ---------------------------------------------------------------------------------------------------------------------
6 28% 04/01/02 JR Furniture 25% 10/01/01
7 65% 11/30/00 Media Broadcast 25% 06/15/01
8 11% 12/01/99 Science Applications 9% 10/01/02
9
10 49% 12/01/05 Maimonides Medical 29% 05/01/10
- ---------------------------------------------------------------------------------------------------------------------
11 11% 04/30/00 Film Roos 10% 04/14/02
12
13
14 33% 01/31/02 Toys R Us 7% 01/31/18
15
- ---------------------------------------------------------------------------------------------------------------------
16 55% 07/31/03 Performance Bicycle Shop 24% 07/31/03
17 59% 06/30/07 Xoma 31% 04/30/08
18 50% 10/30/06 $1 Discount Store 33% 04/30/03
19 33% 05/31/08 1445 - Chief Auto Parts 15% 05/31/08
20
- ---------------------------------------------------------------------------------------------------------------------
21
22
23
24 54% 07/31/18 Hollywood Video 6% 10/24/08
25
- ---------------------------------------------------------------------------------------------------------------------
26
27
28 75% 12/09/18 Darenda's Hallmark 7% 02/28/04
29
30
- ---------------------------------------------------------------------------------------------------------------------
31 43% 03/01/09 Best Hardware 13% 04/01/01
32
33 100% 12/31/23
34
35
- ---------------------------------------------------------------------------------------------------------------------
36
37 16% 09/30/01 Physicians Medical Supply, Inc. 13% 01/31/02
38
39
40
- ---------------------------------------------------------------------------------------------------------------------
41
42 23% 09/30/07 Fashion Family 11% 07/01/03
43
44 33% 08/31/01 International Food Land 18% 12/31/03
45
- ---------------------------------------------------------------------------------------------------------------------
46 100% 09/30/18
47 100% 01/31/20
48 100% 01/31/19
49 100% 01/31/19
50
- ---------------------------------------------------------------------------------------------------------------------
51 100% 07/31/20
52 18% 05/31/02 NetCRS, Inc. 13% 05/31/03
53 100% 09/23/18
54 17% 01/31/10 Genovese Drugs 13% 10/31/12
55
- ---------------------------------------------------------------------------------------------------------------------
56 29% 12/31/99 Alaska USA Federal Credit Union 15% 10/31/00
57
58
59
60
- ---------------------------------------------------------------------------------------------------------------------
61 33% 09/30/00 Rite Aid 29% 05/31/15
62
63 30% 02/28/04 Laser Quest 20% 12/31/08
64
65
- ---------------------------------------------------------------------------------------------------------------------
66
67
68
69
70
- ---------------------------------------------------------------------------------------------------------------------
71 21% 03/31/37 Emporium, Inc. 16% 01/31/13
72 15% 12/31/08 HCIA Software Systems 15% 04/14/01
73
74
75
- ---------------------------------------------------------------------------------------------------------------------
76
77 13% 09/30/13 Bistro Zenith 8% 12/31/05
78
79
80 68% 03/19/10 RAS Enterprises, Inc. D/B/A Kay's HALLMARK 9% 03/31/02
81
82
83
84
- ---------------------------------------------------------------------------------------------------------------------
85
86
87 100% 06/30/23
88 100% 12/31/22
89 54% 01/31/06 Pathfinder 20% 08/30/99
- ---------------------------------------------------------------------------------------------------------------------
90
91
92
93
94 71% 11/30/01 Wade's Carpets 9% 09/30/02
- ---------------------------------------------------------------------------------------------------------------------
95 51% 04/30/19 Genovese Drugs 15% 01/31/13
96 17% 01/31/10 T. J. Maxx 15% 01/31/05
97
98 38% 08/30/05 Bowling Center 10% 08/31/03
99 13% 10/22/03 Banner Mattress 13% 05/31/02
- ---------------------------------------------------------------------------------------------------------------------
100
100 a 34% 05/01/09 Mercer Clothing 6% 07/01/03
100 b 8% 11/01/02 D. Robbins and Co. 8% 07/01/04
100 c 9% 04/01/08 One Main 7% 04/01/18
101 25% 05/31/14 Weis Market 19% 08/31/02
- ---------------------------------------------------------------------------------------------------------------------
102
103
104 20% 11/18/01 EDS/AT Kearney 7% 12/31/99
105
106
- ---------------------------------------------------------------------------------------------------------------------
107 05/31/16
108 05/31/16
109 05/31/16
110 05/31/16
111 05/31/16
- ---------------------------------------------------------------------------------------------------------------------
112 05/31/16
113 05/31/16
114 05/31/16
115 05/31/16
116
- ---------------------------------------------------------------------------------------------------------------------
117
118 37% 01/31/08 Superfresh 16% 09/30/03
119 31% 05/31/18 Burlington Coat 21% 01/31/09
120 52% 03/30/12 Quade, Fontana, & Bonn 7% 10/31/00
121
- ---------------------------------------------------------------------------------------------------------------------
122
123
124 4% 07/21/99 Diedrich Coffee 4% 10/16/00
124 a 22% 10/26/99 Guaranty National Insurance 17% 12/31/03
124 b 4% 05/31/02 Triflo Medical, Inc. 4% 09/13/99
- ---------------------------------------------------------------------------------------------------------------------
124 c 21% 07/21/99 Diedrich Coffee 20% 10/16/00
124 d 8% 05/05/02 Lightworks Optics, LLC 8% 06/14/00
124 e 14% 06/22/00 Douglas Bender & Associates 12% 03/26/01
124 f 16% 12/31/01 Digital Wave Corporation 13% 05/11/00
124 g 12% 07/01/00 True Grit School Uniforms 12% 05/04/00
- ---------------------------------------------------------------------------------------------------------------------
125 9% 02/01/02 Executive Marketing Services 9% 11/01/01
126
127
128
129 52% 01/31/19 Endless Video 22% 02/14/03
- ---------------------------------------------------------------------------------------------------------------------
130
131 12% 12/31/06 The Works, LLC 11% 07/31/01
132 100% 03/31/19
133
134
- ---------------------------------------------------------------------------------------------------------------------
135
136
137
138
139 57% 03/31/21 Circuit City 15% 03/31/21
- ---------------------------------------------------------------------------------------------------------------------
140
141 100% 05/31/20
142 100% 05/31/20
143 100% 05/31/20
144 100% 05/31/20
- ---------------------------------------------------------------------------------------------------------------------
145 100% 05/31/18
146 100% 05/31/20
147 100% 05/31/20
148 100% 05/31/20
149 100% 05/31/20
- ---------------------------------------------------------------------------------------------------------------------
150 100% 05/31/20
151 100% 05/31/20
152
153
154
- ---------------------------------------------------------------------------------------------------------------------
155
156 16% Multiple Spaces Pharmaceutical Research Associates 10% 10/15/07
157
158
159
- ---------------------------------------------------------------------------------------------------------------------
160 34% 06/01/01 NME Hospitals 15% 12/31/99
161 23% 01/31/07 Peters Groceries 21% 04/30/18
162 28% 04/30/03 Jos A. Banks 13% 01/31/05
163
164 48% 09/01/02 J.S. Redpath Corp. 6% 12/01/99
- ---------------------------------------------------------------------------------------------------------------------
165
166 100% 12/31/12
167
168 56% 01/31/02 Discovery Zone 8% 11/30/03
169 17% 06/30/00 Time Out Sports 13% 12/21/02
- ---------------------------------------------------------------------------------------------------------------------
170 100% N/A
171 38% 01/31/09 Taste of Bread Bakery & Cafe 14% 11/30/03
172 100% 01/31/19
173 48% 08/26/08 Radio Shack 15% 08/18/03
174
- ---------------------------------------------------------------------------------------------------------------------
175
176 28% 12/31/07 Calvery Chapel 16% Multiple Spaces
177 67% 02/28/03 Texas Central Bank 33% 02/28/08
178
178 a
- ---------------------------------------------------------------------------------------------------------------------
178 b
178 c
178 d
178 e
179 24% 07/31/04 Wells Fargo Bank / Subtenant - Blockbuster 13% 02/28/05
- ---------------------------------------------------------------------------------------------------------------------
180 49% 12/01/10 Pier 1 Imports 22% 07/31/01
181 50% 02/01/05 Johns Hopkins Univ-Telecommunications 17% 06/01/04
182
183
184
- ---------------------------------------------------------------------------------------------------------------------
185
186
187
188 64% 11/30/08 Payless Shoe Source, Inc. 15% 11/30/08
189 63% 05/31/09 Applied Materials 10% 01/31/03
- ---------------------------------------------------------------------------------------------------------------------
190
191 25% 12/31/09 Adecco Employment Services 15% 02/15/01
192
193 26% 10/13/08 J&J Enterprises (Friends Cafe) 25% 10/13/08
194
- ---------------------------------------------------------------------------------------------------------------------
195
196
197
198
199
- ---------------------------------------------------------------------------------------------------------------------
200
201
202
203 39% 04/30/05 Four Courners (owner occupied) 32% 03/01/09
204
205
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CROSS
COLLATERALIZED
% OF LEASE AND CROSS
ID LARGEST TENANT NRA EXPIRATION DEFAULTED GROUP
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 Jewish Employment & Vocational Services 7% 04/30/01
2 Hansen Properties 14% 11/30/01
3 Roth Group 9% 01/31/02
4 Think Concepts, Inc. (Restaurant) 10% 03/01/01
5
- -------------------------------------------------------------------------------------------------------------------------
6 Western Humidor 13% 04/01/01
7 Trenlink International, Inc. 10% 08/01/00
8 Platinum International 7% 10/01/99
9
10 New York City Police 22% 09/01/04
- -------------------------------------------------------------------------------------------------------------------------
11 Castaway Studios 8% 09/14/03
12
13
14 Mansours 4% 09/30/01
15
- -------------------------------------------------------------------------------------------------------------------------
16 South Bay Pool & Spa Supply 21% 03/31/03
17 Bayer 6% 09/01/01
18 Video Galaxy 12% 05/31/01
19 1455 - Yes 99 Cents Discount Store 9% 11/30/00
20
- -------------------------------------------------------------------------------------------------------------------------
21
22
23
24 Hallmark 5% 02/28/05
25
- -------------------------------------------------------------------------------------------------------------------------
26
27
28 Friendly Video 5% 12/31/01
29
30
- -------------------------------------------------------------------------------------------------------------------------
31 McCrory Stores 9% 02/01/04
32
33
34
35
- -------------------------------------------------------------------------------------------------------------------------
36
37 Danny Bar 6% 05/28/00
38
39
40 Hunter's Ridge
- -------------------------------------------------------------------------------------------------------------------------
41
42 Ace TV Rental 10% 07/31/03
43
44 Arlington Lock & Key 11% 06/14/03
45
- -------------------------------------------------------------------------------------------------------------------------
46
47
48
49
50
- -------------------------------------------------------------------------------------------------------------------------
51
52 Network Travel International, Inc. 10% 05/31/03
53
54 Pet Supplies Plus 12% 11/30/03
55
- -------------------------------------------------------------------------------------------------------------------------
56 School of Karate 7% 04/30/01
57
58
59
60
- -------------------------------------------------------------------------------------------------------------------------
61 Mador Wilsonorp 8% 09/30/10 Center Trust
62
63 Renal Dialysis 18% 03/31/05
64
65
- -------------------------------------------------------------------------------------------------------------------------
66
67
68
69
70
- -------------------------------------------------------------------------------------------------------------------------
71 Ross Stores, Inc. 10% 01/01/03 Center Trust
72 Psychological Resource Organization, P.C. 11% 03/31/02
73
74
75
- -------------------------------------------------------------------------------------------------------------------------
76
77 MD Networks 7% 05/31/05
78
79
80 Wisconsin Video, Inc. (Blockbuster Video) 9% 11/30/01
81
82
83
84
- -------------------------------------------------------------------------------------------------------------------------
85
86 Collegiate Suites Apartments
87
88
89 Dolgencorp Dollar General 8% 10/31/01
- -------------------------------------------------------------------------------------------------------------------------
90
91
92
93
94 Payless Shoe Source 3% 07/31/00
- -------------------------------------------------------------------------------------------------------------------------
95 U.S. Post Office 9% 06/30/02
96 Sav-On Drug 14% 04/30/03 Center Trust
97
98 Big Lots 9% 01/31/01
99 Payless Shoe Source 12% 01/31/01
- -------------------------------------------------------------------------------------------------------------------------
100
100 a NYS-AHRC 6% 09/01/02
100 b Berstone Knitting Mills 7% 05/01/06
100 c Simpson Thacher 5% 12/01/99
101 Tru Value Mart 9% 08/31/04
- -------------------------------------------------------------------------------------------------------------------------
102
103
104 Scitor 5% 04/30/04
105
106
- -------------------------------------------------------------------------------------------------------------------------
107
108
109
110
111
- -------------------------------------------------------------------------------------------------------------------------
112
113
114
115
116
- -------------------------------------------------------------------------------------------------------------------------
117
118 Red Land Senior Citizens Center 7% 06/30/11
119 Ragshop 8% 02/28/09
120 Clifton, Hook, & Bovarnick, P.C. 4% 04/30/00
121
- -------------------------------------------------------------------------------------------------------------------------
122
123
124 Harding Lawson Associates 4% 10/26/99 Olen Pool
124 a Nexgen SI, Inc. 9% 03/03/00
124 b Elias N. Francisco DBA Jetpower Support 4% 08/31/01
- -------------------------------------------------------------------------------------------------------------------------
124 c Rand Technology, Inc. 10% 10/22/00
124 d Cyvex Technologies, Inc. 7% Multiple Spaces
124 e Support Associates, Inc. 12% 12/14/00
124 f Recreational Athletic 9% 10/31/99
124 g Zippy USA 10% Multiple Spaces
- -------------------------------------------------------------------------------------------------------------------------
125 Hard Rock 9% 12/01/02
126
127
128
129 Compass Bank 18% 04/30/08
- -------------------------------------------------------------------------------------------------------------------------
130
131 Taekwondo Plus 11% 11/30/00
132
133
134 TOG
- -------------------------------------------------------------------------------------------------------------------------
135 TOG
136 TOG
137 TOG
138
139 Bed Bath & Beyond 13% 01/31/13
- -------------------------------------------------------------------------------------------------------------------------
140
141
142
143
144
- -------------------------------------------------------------------------------------------------------------------------
145
146
147
148
149
- -------------------------------------------------------------------------------------------------------------------------
150
151
152
153
154
- -------------------------------------------------------------------------------------------------------------------------
155
156 Ischemia Research 9% 09/30/00
157
158 Daytona
159
- -------------------------------------------------------------------------------------------------------------------------
160 Bureau of Indian Affairs 10% 10/31/00
161 Eckerd Drug 7% 11/30/04
162 Faces Enterprises 9% 10/31/01
163
164 Muscular Dystrophy Assoc.
- -------------------------------------------------------------------------------------------------------------------------
165
166
167
168 Big Five Sporting Goods 5% 01/31/02 Center Trust
169 Martec Corporation 12% 12/31/05
- -------------------------------------------------------------------------------------------------------------------------
170 N/A
171 Joey's Only 11% 03/31/06
172
173 Carl's Jr. 15% 03/01/19
174
- -------------------------------------------------------------------------------------------------------------------------
175
176 Story Time Early Learning Center 10% 10/31/06
177
178
178 a
- -------------------------------------------------------------------------------------------------------------------------
178 b
178 c
178 d
178 e
179 Dr. Roberta Smith 8% 11/14/06
- -------------------------------------------------------------------------------------------------------------------------
180 Little Gym Inc. 11% 05/31/01
181 State of Maryland - Dept. of Human Resources 8% 03/01/00
182
183
184
- -------------------------------------------------------------------------------------------------------------------------
185
186
187
188 Vena Market 10% 11/30/03
189 Sunscript Pharmacy Corporation 9% 03/31/04
- -------------------------------------------------------------------------------------------------------------------------
190
191 National Computer Training 10% 03/14/01
192
193 Big City Eats 14% 10/15/03
194 Daytona
- -------------------------------------------------------------------------------------------------------------------------
195
196
197
198
199
- -------------------------------------------------------------------------------------------------------------------------
200
201
202
203 Kim, Charley (karate instruction) 10% 08/31/00
204 Daytona
205
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MONTHLY REAL MONTHLY MONTHLY
ESTATE TAX INSURANCE REPLACEMENT
ID BORROWER AFFILIATION RESERVES RESERVES RESERVES
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 52,859.54 2,936.53
2 7,186.00 813.00 5,033.43
3 2,095.28 331.75 258.39
4 2,538.42 429.83 521.77
5 7,437.50 1,933.00 1,828.50
- -----------------------------------------------------------------------------------------
6 Gerald D. Butler 965.00 565.00
7 792.55 170.92 404.31
8 6,785.00 3,250.00
9 2,036.30 271.33 541.67
10 10,878.00 6,766.00
- -----------------------------------------------------------------------------------------
11 5,635.00 550.00
12 55,874.58 4,024.12 6,607.35
13 3,959.63 538.42 973.75
14 25,493.90 6,327.25 5,722.18
15 2,555.85 578.75 1,200.00
- -----------------------------------------------------------------------------------------
16 1,612.13 246.50 190.94
17 25,147.00 7,708.00
18 2,184.92 284.33 227.38
19 8,824.08 1,171.83 339.24
20 8,569.00 3,670.00
- -----------------------------------------------------------------------------------------
21 4,431.40 562.00 1,466.67
22 4,431.40 1,593.17 4,500.00
23 1,544.62 499.65 1,145.83
24 11,550.64 1,731.84
25 7,928.33 1,642.16 3,350.00
- -----------------------------------------------------------------------------------------
26 491.75 3,200.00
27 2,784.02 1,159.19 2,520.83
28 1,897.42 2,056.20
29 5,666.00 3,441.00
30 5,303.79 519.16 3,125.00
- -----------------------------------------------------------------------------------------
31 7,228.16 758.00 1,142.54
32 4,557.09 544.00 1,200.00
33
34 2,872.41 148.41 1,666.67
35 AERC 16,671.00 3,862.00
- -----------------------------------------------------------------------------------------
36 15,769.17 7,263.92 5,604.17
37 2,252.48 1,280.42 459.47
38 AERC 38,471.00 6,484.00
39 1,977.09 553.33 2,106.00
40 3,270.90 386.08 1,950.00
- -----------------------------------------------------------------------------------------
41 2,807.74 150.92 1,583.33
42 3,908.98 427.67 1,362.94
43 3,026.37 932.42 2,958.33
44 3,056.38 264.58 240.00
45 AERC 22,795.00 5,560.00
- -----------------------------------------------------------------------------------------
46 253.13
47 168.75
48 126.56
49 253.13
50 1,108.07 348.91 339.74
- -----------------------------------------------------------------------------------------
51
52 1,495.93 302.83 210.75
53 272.70
54 20,108.93 1,291.00 716.08
55 12,272.92
- -----------------------------------------------------------------------------------------
56 2,055.12 685.00 984.66
57 AERC 17,480.00 1,552.00
58 3,509.00 2,063.00
59 991.78 970.10 970.83
60 1,906.16 815.76 562.50
- -----------------------------------------------------------------------------------------
61 Center Trust 10,339.21 769.85
62 2,023.53 250.17 1,687.50
63 496.08 376.31
64 2,679.87 431.17 2,000.00
65 AERC 26,639.00 8,205.00
- -----------------------------------------------------------------------------------------
66 2,917.69 365.01 1,333.33
67 3,385.60 906.25 770.83
68 2,089.02 941.00 650.00
69 546.78 148.25 309.17
70 Merry Land Properties, Inc. 9,804.81 1,487.91 4,041.67
- -----------------------------------------------------------------------------------------
71 Center Trust 22,562.16 5,292.98
72 16,361.33 1,526.17 828.99
73 9,389.82 1,476.00 1,683.33
74 9,284.10 1,841.08 12,115.27
75 2,750.00 2,799.92 5,965.13
- -----------------------------------------------------------------------------------------
76 1,320.26 652.58 4,401.37
77 28,726.00 2,047.39 1,999.58
78 Olenicoff, Igor 8,164.72 652.77 4,416.67
79 4,535.21 1,831.75 4,833.33
80 6,106.40 698.75 1,289.21
81 1,037.81 1,150.00
82 1,235.24 626.83 1,710.74
83 1,544.86 440.00 3,310.89
84 4,603.43 2,964.67 11,041.47
- -----------------------------------------------------------------------------------------
85 15,103.02 928.91 9,251.25
86 4,964.35 1,392.18 3,900.00
87 49.55
88
89 1,913.69 371.58 1,330.20
- -----------------------------------------------------------------------------------------
90 2,591.60 1,140.41 3,720.00
91 Kushner, Charles 25,710.93 6,673.33
92 14,593.64 4,991.00 5,884.33
93 1,875.01 465.93 650.00
94 11,956.00 5,015.25
- -----------------------------------------------------------------------------------------
95 10,768.68 1,291.00 699.51
96 Center Trust 22,034.65 3,160.56
97 12,267.30 1,938.00 3,270.83
98 4,256.90 1,987.00 2,577.01
99 2,610.36 637.58 326.18
- -----------------------------------------------------------------------------------------
100 63,334.00 15,208.00
100 a
100 b
100 c
101 20,668.00 3,797.08 3,027.21
- -----------------------------------------------------------------------------------------
102 2,781.37 1,103.26 1,466.67
103 Merry Land Properties, Inc. 10,263.36 1,820.83 3,916.67
104 41,325.00 9,355.00
105 10,703.36 2,103.33
106 2,158.43 149.58 1,583.33
- -----------------------------------------------------------------------------------------
107 Herrick, Norton
108 Herrick, Norton
109 Herrick, Norton
110 Herrick, Norton
111 Herrick, Norton
- -----------------------------------------------------------------------------------------
112 Herrick, Norton
113 Herrick, Norton
114 Herrick, Norton
115 Herrick, Norton
116 AERC 4,861.00 2,634.92
- -----------------------------------------------------------------------------------------
117 551.42 428.58
118 7,863.68 1,395.92
119 11,067.19 8,016.67 2,281.26
120 6,460.14 790.08 628.25
121 5,027.31 1,005.70 1,166.67
- -----------------------------------------------------------------------------------------
122 AERC 45,911.00 11,300.00
123 1,368.83 397.42 1,752.00
124 Olenicoff, Igor 26,018.34 9,517.58
124 a 5,218.37 1,438.05
124 b 1,953.97 1,820.56
- -----------------------------------------------------------------------------------------
124 c 5,102.87 960.04
124 d 2,108.11 548.32
124 e 3,241.77 1,450.25
124 f 3,009.99 1,217.96
124 g 5,383.26 2,082.41
- -----------------------------------------------------------------------------------------
125 Gerald D. Butler 2,979.00 1,174.00
126 AERC 9,969.00 3,693.00
127 AERC 19,757.00 2,579.00
128 6,583.33 1,202.25
129 3,300.00 833.00 55.00
- -----------------------------------------------------------------------------------------
130 5,574.61 1,657.33 2,833.33
131 1,978.76 331.33 181.53
132
133 Merry Land Properties, Inc. 11,264.89 2,707.00 4,791.67
134 TOG 2,904.48 920.33
- -----------------------------------------------------------------------------------------
135 TOG 1,500.36 812.50
136 TOG 3,608.00 1,148.75
137 TOG 2,094.44 762.50
138 3,318.90 1,029.92 937.50
139 70,901.00
- -----------------------------------------------------------------------------------------
140 AERC 16,059.00 3,603.00
141
142
143
144
- -----------------------------------------------------------------------------------------
145 276.43
146
147
148
149
- -----------------------------------------------------------------------------------------
150
151
152 1,395.30 725.67 1,270.83
153 3,602.06 498.91 1,625.00
154 3,490.40 1,268.00 3,145.83
- -----------------------------------------------------------------------------------------
155 2,702.88 224.75 1,479.17
156 17,214.21 3,564.41 1,721.00
157 17,169.20 3,487.50 8,133.33
158 Kushner, Charles 3,795.56 2,500.00
159 1,054.75 487.17 395.83
- -----------------------------------------------------------------------------------------
160 4,782.00 377.00 1,185.00
161 16,385.00 2,371.00
162 13,033.00 2,917.00
163 899.10 166.93 236.83
164 6,906.00 1,175.00
- -----------------------------------------------------------------------------------------
165 3,138.65 801.50 2,700.00
166 49.00
167 2,597.50 1,063.00 2,375.00
168 Center Trust 13,547.10 812.00 2,347.92
169 1,257.98 144.00 623.15
- -----------------------------------------------------------------------------------------
170 11,722.00 396.00
171 2,510.25 332.25 251.04
172
173 1,505.50 676.25 111.92
174 8,108.88 1,645.17 3,770.83
- -----------------------------------------------------------------------------------------
175 7,601.72 1,333.33
176 5,786.37 2,112.38 1,583.12
177 5,596.81 229.75 378.80
178 9,909.36 1,305.52 3,770.83
178 a 436.36 354.91 1,226.50
- -----------------------------------------------------------------------------------------
178 b 4,357.71 209.88 1,155.00
178 c 2,089.15 302.05 396.67
178 d 2,023.23 325.13 433.33
178 e 1,002.91 113.55 562.50
179 4,926.82 515.33 226.03
- -----------------------------------------------------------------------------------------
180 1,920.96 721.67 838.44
181 3,803.64 452.50 828.27
182 580.63 394.42 1,129.50
183 16,928.81 5,233.33 4,467.00
184 1,821.16 298.33 633.81
- -----------------------------------------------------------------------------------------
185 1,258.16 823.26 920.83
186 1,615.99 231.34 1,625.00
187 2,593.94 1,346.22 3,708.33
188 2,422.27 257.58 167.36
189 2,372.95 741.33
- -----------------------------------------------------------------------------------------
190 8,757.19 1,672.42 4,750.00
191 1,760.25 252.00 144.77
192 6,427.00 1,250.00
193 1,536.77 290.53 83.33
194 Kushner, Charles 10,258.25 5,333.33
- -----------------------------------------------------------------------------------------
195 12,987.99 851.41
196 Merry Land Properties, Inc. 11,097.60 1,716.83 4,433.33
197 31,514.96
198 AERC 31,189.00 5,562.00
199 2,295.44 181.75 1,041.67
- -----------------------------------------------------------------------------------------
200 Merry Land Properties, Inc. 8,209.35 1,986.22 4,080.00
201 18,034.83 3,991.21 5,931.20
202 16,646.63 1,408.33 5,208.33
203 749.89 339.84 288.67
204 Kushner, Charles 8,521.99 4,875.00
205 3,757.67 221.83 1,333.00
- -----------------------------------------------------------------------------------------
</TABLE>
Footnote
- ------------------------------------------------------
(1) CMB - Chase Manhattan Bank; FUNB - First Union National Bank
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<TABLE>
<CAPTION>
CHASE MANHATTAN BANK - FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGE TRUST SERIES 1999-1
ANNEX B DEBT SERVICE PAYMENT SCHEDULES FOR CERTAIN CREDIT LEASE LOANS
Note: Except for each Motel 6 loan, Pay Period 1 is equal to the first pay date of the loan. For each of the Motel 6 loans,
given their semi-annual pay structure, Pay Period 1 is equal to 7/1/98 and the first payment of debt service is 12/1/98,
which is listed as Pay Period 6 for the Motel 6 loans.
CVS WORCESTER GRAFTON MOTEL 6 1124 BATON ROUGE MOTEL 6 1179 MOLINE MOTEL 6 1252 KNOXVILLE
300044 300012 300016 300018
MONTH # DEBT PAYMENT MONTH # DEBT PAYMENT MONTH # DEBT PAYMENT MONTH # DEBT PAYMENT
------- ------------ ------- ------------ ------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 11,630.04 1 0.00 1 0.00 1 0.00
62 11,781.41 6 436,947.73 6 206,486.80 6 171,685.65
122 12,809.21 7 0.00 7 0.00 7 0.00
182 13,916.69 12 350,797.67 12 165,775.18 12 137,835.54
13 0.00 13 0.00 13 0.00
18 273,184.34 18 129,097.73 18 107,339.69
CVS MADISON HEIGHTS 19 0.00 19 0.00 19 0.00
300108 24 252,094.62 24 119,131.44 24 99,053.11
25 0.00 25 0.00 25 0.00
MONTH # DEBT PAYMENT 30 276,606.43 30 130,714.90 30 108,684.30
------- ------------
1 16,783.21 31 0.00 31 0.00 31 0.00
61 18,053.87 36 249,428.24 36 117,871.40 36 98,005.43
121 19,510.98 37 0.00 37 0.00 37 0.00
181 21,084.76 42 275,494.28 42 130,189.33 42 108,247.31
43 0.00 43 0.00 43 0.00
48 248,938.09 48 117,639.77 48 97,812.84
CVS WEBSTER RIDGE 49 0.00 49 0.00 49 0.00
300043 54 283,995.96 54 134,206.94 54 111,587.79
55 0.00 55 0.00 55 0.00
MONTH # DEBT PAYMENT 60 242,451.75 60 114,574.54 60 95,264.23
------- ------------
1 12,447.37 61 0.00 61 0.00 61 0.00
56 13,452.98 66 280,405.54 66 132,510.23 66 110,177.04
116 14,539.70 67 0.00 67 0.00 67 0.00
176 15,715.62 72 248,703.03 72 117,528.69 72 97,720.48
73 0.00 73 0.00 73 0.00
78 260,849.98 78 123,268.93 78 102,493.27
IHOP CHATSWORTH DEVONSHIRE 79 0.00 79 0.00 79 0.00
300098 84 272,006.33 84 128,541.04 84 106,876.82
85 0.00 85 0.00 85 0.00
MONTH # DEBT PAYMENT 90 218,807.99 90 103,401.30 90 85,974.11
------- ------------
1 8,472.58 91 0.00 91 0.00 91 0.00
12 8,799.96 96 310,197.80 96 146,589.05 96 121,883.03
24 9,323.77 97 0.00 97 0.00 97 0.00
120 10,260.08 102 199,869.12 102 94,451.42 102 78,532.65
180 11,290.02 103 0.00 103 0.00 103 0.00
240 12,422.95 108 272,620.89 108 128,831.46 108 107,118.30
109 0.00 109 0.00 109 0.00
114 183,800.06 114 86,857.73 114 72,218.78
IHOP SAN ANTONIO LOOP 1604 115 0.00 115 0.00 115 0.00
300100 120 245,882.59 120 116,195.84 120 96,612.27
121 0.00 121 0.00 121 0.00
MONTH # DEBT PAYMENT 126 187,146.23 126 88,439.01 126 73,533.56
------- ------------
1 8,769.19 127 0.00 127 0.00 127 0.00
55 9,650.44 132 242,358.04 132 114,530.26 132 95,227.41
115 10,615.50 133 0.00 133 0.00 133 0.00
175 11,677.00 138 191,562.68 138 90,526.08 138 75,268.88
235 12,844.75 139 0.00 139 0.00 139 0.00
144 239,363.90 144 113,115.33 144 94,050.95
145 0.00 145 0.00 145 0.00
SOUTHLAND GUMPERT FT. MYERS 150 187,445.28 150 88,580.34 150 73,651.07
300038 151 0.00 151 0.00 151 0.00
156 244,368.20 156 115,480.20 156 96,017.24
MONTH # DEBT PAYMENT 157 0.00 157 0.00 157 0.00
------- ------------
1 13,247.08 162 178,006.43 162 84,119.85 162 69,942.35
52 14,865.71 163 0.00 163 0.00 163 0.00
53 14,866.13 168 253,485.76 168 119,788.85 168 99,599.72
112 16,680.00 169 0.00 169 0.00 169 0.00
113 16,680.41 174 170,495.36 174 80,570.37 174 66,991.10
160 16,929.52 175 0.00 175 0.00 175 0.00
180 245,008.69 180 115,782.87 180 96,268.90
181 0.00 181 0.00 181 0.00
STOP & SHOP GRAFTON WORCESTER 186 258,913.13 186 122,353.64 186 101,732.24
300095 187 0.00 187 0.00 187 0.00
192 148,986.01 192 70,405.78 192 58,539.64
MONTH # DEBT PAYMENT 193 0.00 193 0.00 193 0.00
------- ------------
1 13,963.49 198 392,960.38 198 185,699.86 198 154,402.13
61 15,084.98 199 0.00 199 0.00 199 0.00
121 16,296.19 204 66,920.00 204 31,624.14 204 26,294.23
181 17,604.32 205 0.00 205 0.00 205 0.00
210 215,120.17 210 101,658.56 210 84,525.09
211 0.00 211 0.00 211 0.00
216 1,763,255.02 216 833,255.03 216 692,818.79
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MOTEL 6 161 OMAHA MOTEL 6 212 MCALLEN MOTEL 6 234 MURFREESBORO
300019 300021 300023
MONTH # DEBT PAYMENT MONTH # DEBT PAYMENT MONTH # DEBT PAYMENT
------- ------------ ------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C>
1 0.00 1 0.00 1 0.00
6 201,846.65 6 296,969.78 6 175,552.45
7 0.00 7 0.00 7 0.00
12 162,049.90 12 238,418.24 12 140,939.95
13 0.00 13 0.00 13 0.00
18 126,196.66 18 185,668.65 18 109,757.25
19 0.00 19 0.00 19 0.00
24 116,454.33 24 171,335.11 24 101,284.03
25 0.00 25 0.00 25 0.00
30 127,777.48 30 187,994.46 30 111,132.14
31 0.00 31 0.00 31 0.00
36 115,222.60 36 169,522.91 36 100,212.76
37 0.00 37 0.00 37 0.00
42 127,263.73 42 187,238.59 42 110,685.31
43 0.00 43 0.00 43 0.00
48 114,996.18 48 169,189.78 48 100,015.83
49 0.00 49 0.00 49 0.00
54 131,191.06 54 193,016.73 54 114,101.03
55 0.00 55 0.00 55 0.00
60 111,999.84 60 164,781.37 60 97,409.82
61 0.00 61 0.00 61 0.00
66 129,532.47 66 190,576.51 66 112,658.51
67 0.00 67 0.00 67 0.00
72 114,887.60 72 169,030.03 72 99,921.40
73 0.00 73 0.00 73 0.00
78 120,498.84 78 177,285.65 78 104,801.67
79 0.00 79 0.00 79 0.00
84 125,652.48 84 184,868.02 84 109,283.96
85 0.00 85 0.00 85 0.00
90 101,077.67 90 148,711.98 90 87,910.47
91 0.00 91 0.00 91 0.00
96 143,294.91 96 210,824.70 96 124,628.14
97 0.00 97 0.00 97 0.00
102 92,328.92 102 135,840.25 102 80,301.40
103 0.00 103 0.00 103 0.00
108 125,936.38 108 185,285.70 108 109,530.87
109 0.00 109 0.00 109 0.00
114 84,905.87 114 124,918.98 114 73,845.33
115 0.00 115 0.00 115 0.00
120 113,584.70 120 167,113.12 120 98,788.23
121 0.00 121 0.00 121 0.00
126 86,451.62 126 127,193.19 126 75,189.72
127 0.00 127 0.00 127 0.00
132 111,956.55 132 164,717.68 132 97,372.17
133 0.00 133 0.00 133 0.00
138 88,491.79 138 130,194.81 138 76,964.12
139 0.00 139 0.00 139 0.00
144 110,573.41 144 162,682.72 144 96,169.21
145 0.00 145 0.00 145 0.00
150 86,589.77 150 127,396.44 150 75,309.87
151 0.00 151 0.00 151 0.00
156 112,885.14 156 166,083.88 156 98,179.79
157 0.00 157 0.00 157 0.00
162 82,229.52 162 120,981.36 162 71,517.63
163 0.00 163 0.00 163 0.00
168 117,096.96 168 172,280.59 168 101,842.95
169 0.00 169 0.00 169 0.00
174 78,759.80 174 115,876.49 174 68,499.91
175 0.00 175 0.00 175 0.00
180 113,181.01 180 166,519.18 180 98,437.12
181 0.00 181 0.00 181 0.00
186 119,604.12 186 175,969.28 186 104,023.50
187 0.00 187 0.00 187 0.00
192 68,823.63 192 101,257.75 192 59,858.10
193 0.00 193 0.00 193 0.00
198 181,526.83 198 267,073.96 198 157,879.66
199 0.00 199 0.00 199 0.00
204 30,913.49 204 45,481.91 204 26,886.44
205 0.00 205 0.00 205 0.00
210 99,374.10 210 146,205.57 210 86,428.81
211 0.00 211 0.00 211 0.00
216 814,530.20 216 1,198,389.25 216 708,422.81
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MOTEL 6 261 GRAND JUNCTION MOTEL 6 446 DALLAS GRAND PRARIE MOTEL 6 551 HOUSTON CLARK LAKE WEBSTER
300024 300030 300034
MONTH # DEBT PAYMENT MONTH # DEBT PAYMENT MONTH # DEBT PAYMENT
------- ------------ ------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C>
1 0.00 1 0.00 1 0.00
6 317,850.47 6 257,528.48 6 326,357.42
7 0.00 7 0.00 7 0.00
12 255,182.02 12 206,753.31 12 262,011.71
13 0.00 13 0.00 13 0.00
18 198,723.47 18 161,009.53 18 204,042.11
19 0.00 19 0.00 19 0.00
24 183,382.11 24 148,579.66 24 188,290.14
25 0.00 25 0.00 25 0.00
30 201,212.82 30 163,026.44 30 206,598.08
31 0.00 31 0.00 31 0.00
36 181,442.49 36 147,008.15 36 186,298.62
37 0.00 37 0.00 37 0.00
42 200,403.80 42 162,370.96 42 205,767.41
43 0.00 43 0.00 43 0.00
48 181,085.94 48 146,719.26 48 185,932.52
49 0.00 49 0.00 49 0.00
54 206,588.21 54 167,381.69 54 212,117.34
55 0.00 55 0.00 55 0.00
60 176,367.56 60 142,896.34 60 181,087.86
61 0.00 61 0.00 61 0.00
66 203,976.42 66 165,265.56 66 209,435.64
67 0.00 67 0.00 67 0.00
72 180,914.95 72 146,580.73 72 185,756.96
73 0.00 73 0.00 73 0.00
78 189,751.05 78 153,739.90 78 194,829.54
79 0.00 79 0.00 79 0.00
84 197,866.55 84 160,315.24 84 203,162.25
85 0.00 85 0.00 85 0.00
90 159,168.29 90 128,961.17 90 163,428.27
91 0.00 91 0.00 91 0.00
96 225,648.31 96 182,824.54 96 231,687.56
97 0.00 97 0.00 97 0.00
102 145,391.52 102 117,798.97 102 149,282.78
103 0.00 103 0.00 103 0.00
108 198,313.60 108 160,677.44 108 203,621.27
109 0.00 109 0.00 109 0.00
114 133,702.34 114 108,328.18 114 137,280.75
115 0.00 115 0.00 115 0.00
120 178,863.26 120 144,918.41 120 183,650.36
121 0.00 121 0.00 121 0.00
126 136,136.46 126 110,300.34 126 139,780.01
127 0.00 127 0.00 127 0.00
132 176,299.39 132 142,841.11 132 181,017.86
133 0.00 133 0.00 133 0.00
138 139,349.14 138 112,903.31 138 143,078.67
139 0.00 139 0.00 139 0.00
144 174,121.35 144 141,076.42 144 178,781.53
145 0.00 145 0.00 145 0.00
150 136,354.00 150 110,476.60 150 140,003.38
151 0.00 151 0.00 151 0.00
156 177,761.65 156 144,025.86 156 182,519.26
157 0.00 157 0.00 157 0.00
162 129,487.86 162 104,913.52 162 132,953.47
163 0.00 163 0.00 163 0.00
168 184,394.07 168 149,399.57 168 189,329.19
169 0.00 169 0.00 169 0.00
174 124,024.06 174 100,486.64 174 127,343.44
175 0.00 175 0.00 175 0.00
180 178,227.56 180 144,403.35 180 182,997.64
181 0.00 181 0.00 181 0.00
186 188,342.12 186 152,598.36 186 193,382.90
187 0.00 187 0.00 187 0.00
192 108,377.43 192 87,809.45 192 111,278.05
193 0.00 193 0.00 193 0.00
198 285,852.59 198 231,603.20 198 293,503.15
199 0.00 199 0.00 199 0.00
204 48,679.86 204 39,441.35 204 49,982.73
205 0.00 205 0.00 205 0.00
210 156,485.65 210 126,787.64 210 160,673.83
211 0.00 211 0.00 211 0.00
216 1,282,651.00 216 1,039,228.18 216 1,316,979.86
</TABLE>
<PAGE>
<TABLE>
CHASE MANHATTAN BANK-FIRST UNION NATIONAL BANK COMMERCIAL MORTGAGE TRUST SERIES 1999-1
ANNEX C CERTAIN INFORMATION REGARDING MULTIFAMILY MORTGAGED PROPERTIES
<CAPTION>
CONTROL
NUMBER LENDER PROPERTY NAME ADDRESS
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5 FUNB 39-41 North Fullerton Avenue 39-41 North Fullerton Avenue
9 FUNB 560 East McKinley Avenue 520-560 McKinley
12 FUNB 90 & 100 John Street 90-100 John Street
15 FUNB Anacuitas Manor Apartments 1100 Anacuitas Street
20 CMB Ashford Manor Apartments 153-6212 DE ROSA DRIVE
21 FUNB Ashton Ridge Apartments 2522 Callier Springs Road
22 FUNB Ashwood Court 1110-1138 Barclay Street & 1521-1535 Magnolia Avenue
25 FUNB Beacon Pointe 2810 Nathaniel Way
26 FUNB Bel Aire Apartments 4124 Pennwood Ave.
27 FUNB Bentwood Apartments 1111 Austin Highway
29 CMB Breckenridge Apartments 239 Orville Street
30 FUNB Bridgewood Apartments 5655 N. Marty
32 FUNB Canal Place Apartments 2280 West Business 77
34 FUNB Cedarwood Apartments 5101 Belle Terrace
35 CMB Central Park Place 2875 Central Park Way
38 CMB Chestnut Ridge 3200 Chestnut Ridge Road
39 FUNB Clover Apartments 6001 N. Church Street
40 FUNB Collegiate Suites Apartments, Phases 3 & 4 1103, 1201, 1300 - 1302 Patrick Henry Drive
41 FUNB Columbard Apartments 5801 Ming Ave.
43 FUNB Continental Terrace Apartments 6915 - 6921 Lewiston Way
46 CMB Country Club 1130 Pine Valley Lane
56 FUNB Finchley Gardens 203 - 225 Main Street
58 CMB Fleetwood 15885 Memorial Drive
59 CMB Forest Glen Apartments 1800 Murton Avenue
65 FUNB Georgetown Apartments 2520-2570 Winstel Blvd.
66 CMB Georgetown Park Apartments 2100 Georgetown Parkway
67 FUNB Golden Oaks Apartments 800 N. Lovers Lane
69 FUNB Graduate Court Apartments 302 - 304 14th Street
71 FUNB Greentree Apartments 10725 Abercorn Extension
74 FUNB Hampton House 1801 Dorchester Road
79 FUNB Hidden Cove Apartments 3335 and 3350 Hauck Street
80 FUNB Highland Park 7440 Riverside Parkway
82 FUNB Hillview Apartments 2097 Hillview Street
87 FUNB Hunter's Ridge Apartments 100 - 1300 Hunters Road
91 FUNB Johnston Square 7001-7139 Sewells Point Road
92 FUNB Jumping Brook 3633 (East) & 3805 (West) Route 33
93 FUNB Kendall Lake Towers 15221 SW 80th Street
94 FUNB Kings Courtyard Apartments 4888 21st Ave. North
103 FUNB Mariners Village Apartments 3202 S. Orlando Drive
104 FUNB Marsh Cove Apartments 11400 White Bluff Road
106 FUNB Meadow Oaks Apartments 3634 Colonial Oaks Lane
107 FUNB Ming Tree Apartments 5601 Ming Avenue
117 CMB Muirwood Village - Zanesville 1259 Muirwood Drive
118 FUNB New Plaza Apartments 1115 12th Street, NW
122 FUNB Nottingham Lakes Apartments 100 Nottingham Circle
123 CMB Oaks at Hampton 643 Dorchester
126 CMB Pendleton Lakes East 2727 Grand Haven Dr
127 CMB Perimeter Lakes 6146 Perimeter Lakes Drive
130 FUNB Piney Ridge Apartments 946-A Marimich Court
133 FUNB Quarterdeck Apartments 550 Harbor Cove Lane
140 CMB Residence at Turnberry 1631 Hill Rd
152 FUNB Royal Garden Apartments 15240 Kittridge Street
153 FUNB Saint Paul Court 3120 Saint Paul Street
154 FUNB Saint Paul Regency 1008-1010 Saint Paul Street
157 FUNB Sandpiper Apartments 4650 West Oakey Boulevard
158 FUNB Sandy Park 1049 Brentwood Drive
159 FUNB Shaker Heights 1218 Wahnish Way
165 FUNB Smoke Tree Apts 3940 Dawes Street
167 FUNB Southoaks Pointe Apartments 6628 Sepulveda Boulevard
174 FUNB Summercrest Apartments 2832-2860 West Ball Road
178 FUNB The Bloomington Apartment Portfolio Various
182 FUNB The Oaks Apartments 600 South Broadway
183 FUNB The Townhouse Apartments 65 and 75-77 Prospect Street
187 FUNB Vaquero Place 7678 Highway 90 West
190 FUNB Village Square Apartments 8670 Devonshire Court
194 FUNB Water Club 1225 South Beach Street
195 FUNB Waterford Landing @ Hermitage 5901 Old Hickory Boulevard
196 FUNB Waters Edge Apartments 9989 Dorchester Road
197 FUNB Waterside Gardens 632 Schindler Drive
198 CMB Waterstone 6710 Hollow Run Circle
199 FUNB West Park Royale Apartments 4201 California
200 FUNB West Wind Landing Apartments 450 Johnny Mercer Boulevard
201 FUNB Whispering Hills 12545 Markaire Drive
202 FUNB Willows of West Hills Apartments 7118 West Arbor Trace Drive
204 FUNB Windsor Gardens 2050 South Ridgewood Avenue
205 FUNB Windstar Apartments 2802 North 7th Street
178 a FUNB 1 - 7 Keisha Drive Apartments 1-7 Keisha Drive
178 b FUNB 326-336 E. Vernon Street Apartments 326-336 E. Vernon St.
178 c FUNB 503 S Main Street Apartments 503 S. Main Street
178 d FUNB 604 Dale Steet Apartments 604 Dale Street
178 e FUNB 712 Adelaide Street Apartments 712 N. Adelaide
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GENERAL SPECIFIC
CONTROL ZIP PROPERTY PROPERTY
NUMBER CITY STATE CODE COUNTY TYPE TYPE ELEVATOR(S)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
5 Montclair NJ 07042 Essex Multifamily Conventional Y
9 Mundelein IL 60060 Lake Multifamily Conventional N
12 New York NY 10038 New York Multifamily Conventional Y
15 Mercedes TX 78570 Hidalgo Multifamily Sec. 42 N
20 Las Vegas NV 89108 Clark Multifamily Conventional N
21 Rome GA 30161 Floyd Multifamily Sec. 42 N
22 St. Paul MN 55106 Ramsey Multifamily Conventional N
25 Edgemere MD 21219 Baltimore Multifamily Conventional N
26 Las Vegas NV 89102 Clark Multifamily Conventional N
27 San Antonio TX 78209 Bexar County Multifamily Conventional N
29 Fairborn OH 45324 Greene Multifamily Conventional N
30 Fresno CA 93711 Fresno Multifamily Conventional N
32 San Benito TX 78586 Cameron Multifamily Sec. 42 N
34 Bakersfield CA 93309 Kern Multifamily Conventional N
35 Grand Rapids MI 49505 Kent Multifamily Conventional N
38 Pittsburgh PA 15205 Allegheny Multifamily Conventional N
39 Tampa FL 33614 Hillsborough Multifamily Conventional N
40 Blacksburg VA 24060 Montgomery Multifamily Conventional N
41 Bakersfield CA 93309 Kern Multifamily Conventional N
43 Sacramento CA 95828 Sacramento Multifamily Conventional N
46 Toledo OH 43615 Lucas Multifamily Conventional N
56 South Bound Brook NJ 08880 Somerset Multifamily Conventional N
58 Houston TX 77079 Harris Multifamily Conventional N
59 Vancouver WA 98661 Clark Multifamily Conventional N
65 Tucson AZ 85716 Pima Multifamily Conventional N
66 Fenton MI 48430 Genesee Multifamily Conventional N
67 Visalia CA 93292 Tulare Multifamily Conventional N
69 Charlottesville VA 22903 Albemarle Multifamily Conventional N
71 Savannah GA 31419 Chatham Multifamily Conventional N
74 Brooklyn NY 11226 Kings Multifamily Conventional Y
79 Las Vegas NV 89102 Clark Multifamily Conventional N
80 Austell GA 30001 Cobb Multifamily Conventional N
82 Sarasota FL 34239 Sarasota Multifamily Conventional N
87 Radford VA 24141 Montgomery Multifamily Conventional N
91 Norfolk VA 23513 Norfolk Multifamily Conventional N
92 Neptune NJ 07753 Monmouth Multifamily Conventional N
93 Miami FL 33193 Dade Multifamily Conventional Y
94 St. Petersburg FL 33713 Pinellas Multifamily Conventional N
103 Sanford FL 32773 Seminole Multifamily Conventional N
104 Savannah GA 31419 Chatham Multifamily Conventional N
106 Memphis TN 38116 Shelby Multifamily Conventional N
107 Bakersfield CA 93309 Kern Multifamily Conventional N
117 Columbus OH 43701 Muskingum Multifamily Conventional N
118 Washington DC 20005 Washington Multifamily Conventional Y
122 Greenacres City FL 33463 Palm Beach Multifamily Conventional N
123 Rochester Hills MI 48307 Oakland Multifamily Conventional N
126 Reynoldsburg OH 43068 Fairfield Multifamily Conventional N
127 Dublin OH 43017 Franklin Multifamily Conventional N
130 Eldersburg MD 21784 Carrol Multifamily Conventional N
133 Charleston SC 29412 Charleston Multifamily Conventional N
140 Pickerington OH 43147 Fairfield Multifamily Conventional N
152 Van Nuys CA 91405 Los Angeles Multifamily Conventional N
153 Baltimore MD 21218 Baltimore Multifamily Conventional N
154 Baltimore MD 21202 Baltimore Multifamily Conventional Y
157 Las Vegas NV 89102 Clark Multifamily Conventional N
158 Daytona Beach FL 32117 Volusia Multifamily Conventional N
159 Tallahassee FL 32304 Leon Multifamily Conventional N
165 Riverside CA 92503 Riverside Multifamily Conventional N
167 Van Nuys CA 91411 Los Angeles Multifamily Conventional Y
174 Anaheim CA 92804 Orange Multifamily Conventional N
178 Various IL Various McLean Multifamily Conventional N
182 Sylacauga AL 35150 Talladega Multifamily Conventional N
183 Stamford CT 06921 Fairfield Multifamily Conventional Y
187 San Antonio TX 78227 Bexar County Multifamily Conventional N
190 Manassas VA 20110 Prince William Multifamily Conventional N
194 Daytona Beach FL 32114 Volusia Multifamily Conventional N
195 Hermitage TN 37076 Davidson Multifamily Conventional N
196 Summerville SC 29485 Dorchester Multifamily Conventional N
197 Brick Township NJ 08723 Ocean Multifamily Conventional N
198 Indianapolis IN 46214 Marion Multifamily Conventional N
199 Bakersfield CA 93309 Kern Multifamily Conventional N
200 Wilmington Island GA 31410 Chatham Multifamily Conventional N
201 Creve Cour MO 63146 St. Louis Multifamily Conventional N
202 Knoxville TN 37909 Knox Multifamily Conventional N
204 South Daytona Beach FL 32119 Volusia Multifamily Conventional N
205 Harlingen TX 78550 Cameron Multifamily Sec. 42 N
178 a Bloomington IL 61704 McLean Multifamily Conventional N
178 b Normal IL 61761 McLean Multifamily Conventional N
178 c Normal IL 61761 McLean Multifamily Conventional N
178 d Normal IL 61761 McLean Multifamily Conventional N
178 e Normal IL 61761 McLean Multifamily Conventional N
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UTILITIES NUMBER NUMBER NUMBER NUMBER NUMBER
CONTROL TENANT OF STUDIO OF 1 BR OF 2 BR OF 3 BR OF 4 BR
NUMBER PAYS UNITS UNITS UNITS UNITS UNITS
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
5 E,P,T,C,W,G 8 32 28 1
9 W,E,G,P,C 11 15
12 E, P, C 183 31 6 1
15 E, P, C 36 36
20 E,G 120 80 62
21 E,P,C 14 37 37
22 E, P, C 108 108
25 E,G,P,C 53 145 3
26 E,G,P,C 6 82 40
27 E,P 74 36 11
29 13 195
30 E,G,P,C 13 124 13
32 E,P,C 8 48 16
34 E,G,P,C 48 16 16
35 E,G 52 164
38 E,G 320 148
39 58 20
40 E, G, P 4 26 48
41 E,G,P,C 32 24 20
43 E,G,P,C 88 54
46 E 158 158
56 E,P,C 100 22
58 E 72 32
59 E,W,P,C 123
65 C,P 32 61 3
66 E,G 30 450
67 E,G,P,C 14 50
69 E,G,P,C 1 25
71 W,E,G,P,C 66 128
74 E,G,P,C 12 26 51 12
79 E,G,P,C 72 140
80 W, E, P, C 116 116
82 E,P,C 46
87 E, G, P, C 2 154
91 E,P,C 9 96 50
92 E;P;C;T 200 108
93 E,G,P,C 53 120 65 16
94 E,G,P,C 1 26 12
103 E,G,P,C 48 40
104 W,E,G,P,C 32 72 84
106 36 144 72 18
107 E,G,P,C 24 20 32
117 E 88 108
118 E, P,C 7 22 8
122 E,G,P,C 70
123 E,G 144 352 48
126 E 36 220
127 E,G 72 117
130 E,G,P,C 136
133 W,E,P,C 130 100
140 E,G 20 196
152 E, P, C 24 30 7
153 E, P, C 13 51 8
154 E, P, C 107 21 20
157 E, P, C 240 248
158 E;P;C 6 107 7
159 P 1 18
165 E, G, P, C 68 40
167 E, P, C 25 88 1
174 E,G,P,C 22 131 30
178 E,P,C 24 126 31
182 W,T,G,E,P,C 12 32 10
183 E, P 17 172 60 19
187 E,P 166 12
190 E,G,P,C 84 168 33
194 E;P;C 124 108 24
195 W,E,G,P,T,C 24 52 82 26
196 E,P,C 64 136
197 E,P,C 415 105
198 E 148 196
199 E,G,P,C 12 38
200 W,E,G,P,C 32 108 52
201 E,G,P,C 76 162 83 9
202 E,G,P,C 136 100 14
204 E;P;C 81 153 1
205 E, P 40 40
178 a E,P,C 66
178 b E,P,C 60
178 c E,P,C 14
178 d E,P,C 16
178 e E,P,C 24 1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
CONTROL RENT, RENT RENT, RENT RENT, RENT RENT, RENT RENT, RENT
NUMBER RANGES - STUDIO RANGES - 1 BR RANGES - 2 BR RANGES - 3 BR RANGES - 4+ BR
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5 646.25; 585 - 695 753; 685 - 850 874; 750 - 1095 975; 975 - 975
9 583; 560 - 600 686; 660 - 715
12 1869;1773-2128 2595;2477-2681 3379;3231-4200 15500; 15500 - 15500
15 388; 330-405 460; 460-465
20 488 562 676
21 135; 135 - 135 383; 330 - 420 437; 375 - 480
22 487; 435-495 600; 600
25 390; 380 - 400 500; 400 - 600 550; 458 - 665
26 370; 370 - 370 445; 300 - 700 500; 287 - 500
27 373;340-425 501;475-535 626;619-650
29 439 499
30 450; 440 - 465 503; 490 - 525 725; 700 - 750
32 385; 385 - 385 450; 450 - 450 500; 500 - 500
34 356; 320 - 420 416; 400 - 430 468; 450 - 500
35 570 665
38 662 881
39 375 475
40 400; 400 622; 615-700 1017; 1007-1047
41 351; 335 - 365 422; 395 - 445 467; 460 - 495
43 411; 365 - 435 505; 445 - 555
46 579 695
56 690; 690 780; 780
58 824 1,270
59 445
65 414; 389 - 429 488; 459 - 555 699; 699 - 700
66 725 716
67 650; 600 - 670 706; 685 - 770
69 600; 600 1680; 1680
71 565;565-565 624;610-637
74 635;546-723 622;572-846 975;643-1404 1146;940-1352
79 625; 610 - 665 760; 735 - 800
80 607;595-610 709;695-710
82 566; 475 - 650
87 615; 615 727; 600-825
91 400; 395 - 440 440; 420 - 490 520; 502 - 550
92 713; 615 - 785 840; 700 - 950
93 590 685 780 925
94 450; 450 455; 440 - 475 565; 495 - 625
103 414; 390 - 460 480; 460 - 520
104 570;570-570 680;660-700 753;745-780
106 319; 305 - 330 371; 325 - 415 466; 415 - 530 513; 470 - 555
107 436; 440 - 370 436; 425 - 450 482; 475 - 525
117 439 595
118 541;485-625 694;590-709 1119;920-1452
122 615; 365 - 640
123 700 844 1,095
126 490 564
127 595 747
130 687; 670 - 775
133 625;600-630 790;790-790
140 605 748
152 485; 416-520 585; 575-605 743; 700-750
153 425; 425-425 560; 475-630 738; 730-775
154 432; 380-450 560; 560-560 675; 675-675
157 625; 625 725; 725 - 750
158 363; 355 - 365 401; 365 - 435 474; 420 - 490
159 485; 485 - 485 572; 425 - 690
165 458; 436-485 574; 529-600
167 435; 425-450 550; 525 - 575 750; 750 - 750
174 596; 385 - 625 790; 500 - 925 934; 585 - 1100
178 395; 395 - 395 467; 460 - 475 1000; 1000 - 1000
182 300; 285 - 325 350; 335 - 375 405; 380 - 425
183 1135; 1100-1175 1332; 1200-1475 1760; 1300-2650 2055; 2000-2095
187 345; 250 - 375 482; 409 - 490
190 613; 641 - 648 680; 684 - 694 778; 813 - 821
194 495;435-555 598;515-680 718;690-745
195 560; 560 - 580 650; 650-700 785; 785-810 925; 925-950
196 575;575-575 695;690-700
197 590; 570 - 620 710; 670-720
198 641 872
199 453; 430 - 460 549; 505 - 600
200 600;600-600 716;655-785 835;835-835
201 728; 715 - 835 992; 830 - 1260 1270; 1240 - 1380 1303; 1265 - 1385
202 563; 509-583 711; 689-718 874, 874
204 406; 380 - 535 390; 268 - 490 350; 350
205 357;308-369 426;426
178 a 460; 460 - 460
178 b 475; 475 - 475
178 c 1000; 1000 - 1000
178 d 1000; 1000 - 1000
178 e 395; 395 - 395 1000; 1000 - 1000
</TABLE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX D
CHASE MANHATTAN BANK-FIRST UNION NATIONAL BANK
COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS THROUGH CERTIFICATES
SERIES 1999-1 PAYMENT DATE:
BXXX RECORD DATE:
SUMMARY OF AVAILABLE INFORMATION
DELIVERY
NAME OF REPORT OR FILE PREPARER FREQUENCY VEHICLES:
- ---------------------- -------- --------- ---------
Distribution Date Statement Trustee Monthly Web
Stratification Tables Trustee Monthly Web
Loan Schedule Trustee Monthly Web
Delinquent Loan Status Servicer Monthly Web
Historical Loss Estimate Report Servicer Monthly Web
Historical Loan Modification Report Servicer Monthly Web
REO Status Report Servicer Monthly Web
Specially Serviced Loan Detail Servicer Monthly Web
Watch List Report Servicer Monthly Web
Loan Payoff Notification Report Servicer Monthly Web
CSSA Loan Periodic Update File Servicer Monthly Web
Comparative Financial Status Report Servicer Monthly Web
Operating Statement Analysis Report Servicer Quarterly Upon Request
NOI Adjustment Worksheet Servicer Annually Upon Request
STATE STREET INFORMATION DELIVERY VEHICLES
- ------------------------------------------
Web Site: http://corporatetrust.statestreet.com
For other information delivery requests: [email protected]
DEAL-SPECIFIC CONTACTS
- ----------------------
Account Officer (trustee and paying agent questions):
Account Administrator (analytics and collateral questions):
Servicer
Special Servicer
Page 1 of 5
<PAGE>
CHASE MANHATTAN BANK-FIRST UNION NATIONAL BANK W.A.C.
COMMERCIAL MORTGAGE TRUST W.A.M.
COMMERCIAL MORTGAGE PASS THROUGH CERTIFICATES
SERIES 1999-1 PAYMENT DATE:
BXXX RECORD DATE:
TRUSTEE'S REPORT TO CERTIFICATEHOLDERS
PAYMENT SUMMARY
<TABLE>
PASS-THROUGH INTEREST ORIGINAL BEGINNING PRINCIPAL INTEREST TOTAL ENDING
CLASS CUSIP RATE TYPE BALANCE BALANCE PAID PAID PAID BALANCE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A-1
A-2
X
B
C
D
E
F
- ---------------------------------------------------------------------------------------------------------------------------
TOTALS:
--------------------------------------------------------------------------
</TABLE>
* Based on a Notional Balance
For complete information see Payment Detail
DISTRIBUTIONS PER CERTIFICATE
<TABLE>
BEGINNING PRINCIPAL INTEREST ENDING
CLASS CERTIFICATE FACTOR DISTRIBUTION DISTRIBUTION CERTIFICATE FACTOR
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A-1
A-2
X
B
C
D
E
F
- --------------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>
This report has been prepared by, or is based on information furnished to State
Street Bank and Trust Company ("State Street") by, one or more third parties
(e.g. Servicers, Master Servicer, etc.), and State Street has not independently
verified information received from or prepared by any such third party. State
Street shall not and does not undertake responsibility for the accuracy,
completeness, or sufficiency of this report or the information contained herein
for any purpose, and State Street makes no representations or warranties with
respect thereto. The information in this report is presented here with the
approval of the Issuer solely as a convenience for the user, and should not be
relied upon without further investigation by any user contemplating an inv
Page 2 of 5
<PAGE>
CHASE MANHATTAN BANK-FIRST UNION NATIONAL BANK W.A.C.
COMMERCIAL MORTGAGE TRUST W.A.M.
COMMERCIAL MORTGAGE PASS THROUGH CERTIFICATES
SERIES 1999-1 PAYMENT DATE:
BXXX RECORD DATE:
TRUSTEE'S REPORT TO CERTIFICATEHOLDERS
PAYMENT DETAILS
PRINCIPAL DETAIL
<TABLE>
BEGINNING SCHEDULED UNSCHEDULED OTHER PRINCIPAL/ TOTAL PRINCIPAL REALIZED LOSSES/
CLASS BALANCE PRINCIPAL PRINCIPAL CASH ADJUSTMENTS DISTRIBUTION AMOUNT BALANCE ADJ
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
A-1
A-2
X
B
C
D
E
F
- ---------------------------------------------------------------------------------------------------------------------------------
TOTALS:
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
APPRAISAL ENDING CUMULATIVE CUMULATIVE
REDUCTION AMOUNT BALANCE REALIZED LOSSES APPRAISAL REDUCTION
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
INTEREST DETAIL
<TABLE>
ACCRUED BEGINNING UNPAID PREPAYMENT CURRENT INTEREST ADDITIONAL TRUST
CLASS CERTIFICATE INTEREST INTEREST INT. SHORTFALLS SHORTFALLS FUND EXPENSES
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
A-1
A-2
X
B
C
D
E
F
- ------------------------------------------------------------------------------------------------------------------------
TOTALS:
-----------------------------------------------------------------------------------------------------------------
PREPAYMENT ADDITIONAL TOTAL INTEREST CUMULATIVE UNPAID
PREMIUMS ADJUSTMENTS DISTR. AMOUNT INTEREST SHORTFALL
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
Page 3 of 5
<PAGE>
[STATE Chase Manhattan Bank-First Union National Bank W.A.C.
STREET Commercial Mortgage Trust W.A.M.
LOGO] Commercial Mortgage Pass Through Certificates
Series 1999-1 Payment Date
BXXX Record Date
TRUSTEE'S REPORT TO CERTIFICATEHOLDERS
<TABLE>
<CAPTION>
Original/Current Ratings
Original DCR Current DCR Original Fitch Current Fitch Original S&P Current S&P
------------ ----------- -------------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
A-1
A-2
X
B
C
D
E
F
</TABLE>
DELINQUENCY, SPECIALLY SERVICED, AND LOAN GROUP STATISTICS
DELINQUENCIES One Month Two Months Three+Months Foreclosures Total
--------- ---------- ------------ ------------ -----
# of Loans
Ending APB
TWELVE MONTH SUMMARY OF PREPAYMENTS AND PREPAYMENT PENALTIES:
MONTH/YEAR PREPAYMENTS PENALTIES
- ---------- ----------- ---------
Orig. Class Mat. Original Current
Class @0% CPR Subordination Level Subord. Level
----- ---------------- ------------------- -------------
A-1
A-2
X
B
C
D
E
F
APPRAISAL REDUCTIONS: Current Total Cum. Total
Loan# ------------- ----------
Amount
Page 4 of 5
<PAGE>
[STATE Chase Manhattan Bank-First Union National Bank W.A.C.
STREET Commercial Mortgage Trust W.A.M.
LOGO] Commercial Mortgage Pass Through Certificates
Series 1999-1 Payment Date
BXXX Record Date
TRUSTEE'S REPORT TO CERTIFICATEHOLDERS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AVAILABLE DISTRIBUTION AMOUNT
COLLATERAL INFORMATION:
CLOSING BEG ENDING
COLL. BALANCE COLL. BALANCE COLL. BALANCE
------------- ------------- -------------
MORTGAGE LOANS:
RATED SECURITIES:
--------------------------------------------------
- - -
ORIGINAL BEGINNING ENDING
Loan Count
Aggregate amount of P&I Advances made during current period:
SERVICING FEES:
Aggregate Amount of servicing compensation paid to Master Servicer
Aggregate Amount of servicing compensation paid to Schroder
Aggregate Amount of servicing compensation paid to Trustee:
Additional Special Servicing Fee
AGGREGATE AMOUNT OF:
Additional Trust Fund Expenses
Mortgage Loans that have been paid in full:
Mortgage Loans that have been paid at their Maturity Date:
Prepayment Penalties paid on the Mortgage Loans:
</TABLE>
SPEED HISTORY*
CPR %
1 month 0.0000%
3 month 0.0000%
6 month 0.0000%
12 month 0.0000%
Life 0.0000%
* Principal received within 1 month of maturity is not
considered prepayment in the calculation of CPR.
Page 5 of 5
<PAGE>
CHASE MANHATTAN BANK-FIRST UNION NATIONAL BANK
COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS THROUGH CERTIFICATES
SERIES 1999-1
STATE STREET CORPORATE TRUST
corporatetrust.statestreet.com
PAYMENT DATE
REPORT BXXX-01
DISTRIBUTION OF CURRENT SCHEDULED PRINCIPAL BALANCES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Current Weighted Average
Scheduled # of Aggregate % Tot ------------------------------------
Principal Mtg Sched Prin Sched Mnths Mort
Balance Loans Balance Bal DSCR* to Mat Rate
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
less than $ 1,000,000.00
$ 1,000,000.01+
$ 2,000,000.01+
$ 3,000,000.01+
$ 4,000,000.01+
$ 5,000,000.01+
$ 6,000,000.01+
$ 7,000,000.01+
$ 8,000,000.01+
$10,000,000.00+
$12,000,000.00+
$14,000,000.00+
- --------------------------------------------------------------------------------------------------------------
Total
- --------------------------------------------------------------------------------------------------------------
</TABLE>
DISTRIBUTION OF CURRENT MORTGAGE INTEREST RATES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Current Weighted Average
Mortgage # of Aggregate % Tot ------------------------------------
Interest Mtg Sched Prin Sched Mnths Mort
Rate Loans Balance Bal DSCR* to Mat Rate
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
less than 7.500%
7.501%-8.000%
8.001%-8.500%
8.501%-9.000%
9.000%+
- ---------------------------------------------------------------------------------------------------------
Total
- ---------------------------------------------------------------------------------------------------------
</TABLE>
DISTRIBUTION OF REMAINING STATED TERM ALL LOANS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Remaining Weighted Average
Stated # of Aggregate % Tot -----------------------------------
Term Mtg Sched Prin Sched Mnths Mort
(Months) Loans Balance Bal DSCR* to Mat Rate
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0 - 36
37 - 48
49 - 60
61 - 84
85 - 96
97 - 108
109 - 120
121 - 180
181+
- -----------------------------------------------------------------------------------------------
Total
- -----------------------------------------------------------------------------------------------
</TABLE>
DISTRIBUTION OF PROPERTY TYPE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Weighted Average
# of Aggregate % Tot -----------------------------------
Property Mtg Sched Prin Sched Mnths Mort
Types Loans Balance Bal DSCR* to Mat Rate
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ind./Warehouse
Multi-Family
Office
Retail
- -----------------------------------------------------------------------------------------------------
Total
- -----------------------------------------------------------------------------------------------------
</TABLE>
*All DSCR calculations are non-zero weighted averages at Closing.
<PAGE>
CHASE MANHATTAN BANK-FIRST UNION NATIONAL BANK
COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS THROUGH CERTIFICATES
SERIES 1999-1
STATE STREET CORPORATE TRUST
corporatetrust.statestreet.com
PAYMENT DATE
REPORT BXXX-02
DISTRIBUTION BY STATE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Weighted Average
# of Aggregate % Tot ------------------------------------
Mtg Sched Prin Sched Mnths Mort
States Loans Balance Bal DSCR* to Mat Rate
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
New York
Massachussetts
California
District of Columbia
Georgia
Connecticut
Pennsylvania
Texas
Rhode Island
South Carolina
Other
- ---------------------------------------------------------------------------------------------------------
Total
- ---------------------------------------------------------------------------------------------------------
</TABLE>
DISTRIBUTION OF SEASONING
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Weighted Average
# of Aggregate % Tot -----------------------------------
Seasoning Mtg Sched Prin Sched Mnths Mort
(months) Loans Balance Bal DSCR* to Mat Rate
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0 - 12
13 - 24
25 - 36
37 - 48
49 - 60
61 - 84
85 - 120
121 - 180
181+
- ---------------------------------------------------------------------------------------------------------
Total
- ---------------------------------------------------------------------------------------------------------
</TABLE>
DISTRIBUTION OF AMORTIZATION TYPE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Weighted Average
# of Aggregate % Tot -----------------------------------
Amortization Mtg Sched Prin Sched Mnths Mort
Type Loans Balance Bal DSCR* to Mat Rate
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Amort Balloon
Fully Amortizing
IO/Balloon
- -----------------------------------------------------------------------------------------------
Total
- -----------------------------------------------------------------------------------------------
</TABLE>
DISTRIBUTION OF DEBT SERVICE COVERAGE RATIO AT CLOSING
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Weighted Average
# of Aggregate % Tot -----------------------------------
Mtg Sched Prin Sched Mnths Mort
DSCR Loans Balance Bal DSCR* to Mat Rate
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Not Populated
0.001 - 0.999
1.000 - 1.250
1.251 - 1.500
1.501 - 1.750
1.751 - 2.000
2.000+
- -----------------------------------------------------------------------------------------------------
Total
- -----------------------------------------------------------------------------------------------------
</TABLE>
*All DSCR calculations are non-zero weighted averages at Closing.
<PAGE>
CHASE MANHATTAN BANK-FIRST UNION NATIONAL BANK
COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS THROUGH CERTIFICATES
SERIES 1999-1
STATE STREET CORPORATE TRUST
corporatetrust.statestreet.com
PAYMENT DATE
REPORT BXXX-03
DISTRIBUTION OF LOAN TO VALUE RATIO AT CLOSING
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Weighted Average
Most # of Aggregate % Tot ------------------------------------
Recent Mtg Sched Prin Sched Mnths Mort
LTV Loans Balance Bal DSCR* to Mat Rate
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
less than 20.001
20.001+
30.001+
40.001+
50.001+
55.001+
60.001+
65.001+
70.000+
- -------------------------------------------------------------------------------------------------------
Total
- -------------------------------------------------------------------------------------------------------
</TABLE>
DISTRIBUTION OF ORIGINAL TERM TO STATED MATURITY
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Weighted Average
Original # of Aggregate % Tot ------------------------------------
Term to Mtg Sched Prin Sched Mnths Mort
Maturity Loans Balance Bal DSCR* to Mat Rate
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0 - 60
61 - 84
85 - 120
121 - 180
181 - 240
241+
0
- -------------------------------------------------------------------------------------------------
Total
- -------------------------------------------------------------------------------------------------
</TABLE>
DISTRIBUTION OF MATURITY DATE EXTENSIONS (SINCE DEAL ORIGINATION)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Current Cumulative
--------------------------------------- ------------------------------------
# of Aggregate WA # of Aggregate WA
Months Mtg Sched Prin Months Mtg Sched Prin Months
Extended Loans Balance Extended Loans Balance Extended
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0 - 12
13 - 24
25+
Extended & Paid Off
- --------------------------------------------------------------------------------------------------------
Total
- --------------------------------------------------------------------------------------------------------
</TABLE>
*All DSCR calculations are non-zero weighted averages at Closing.
NOTE: Scheduled Principal Balances do not include Rated Securities.
<PAGE>
ANNEX E
WEIGHTED AVERAGE LIFE, PRINCIPAL WINDOW
PRE-TAX YIELD TO MATURITY AND MODIFIED DURATION OF THE A-1 CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE OR PENALTY - OTHERWISE AT
INDICATED CPR
<TABLE>
<CAPTION>
PRICE (32NDS) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
------------- ------ ------- ------- ------- -------
CBE YIELD CBE YIELD CBE YIELD CBE YIELD CBE YIELD
<S> <C> <C> <C> <C> <C>
99-18 7.278 7.278 7.278 7.278 7.278
99-20 7.264 7.264 7.264 7.264 7.264
99-22 7.249 7.249 7.249 7.249 7.249
99-24 7.234 7.234 7.234 7.234 7.234
99-26 7.220 7.220 7.220 7.220 7.220
99-28 7.205 7.205 7.205 7.205 7.205
99-30 7.191 7.191 7.191 7.191 7.191
100-00 7.176 7.176 7.176 7.176 7.176
100-02 7.162 7.162 7.162 7.161 7.161
100-04 7.147 7.147 7.147 7.147 7.147
100-06 7.133 7.132 7.132 7.132 7.132
100-08 7.118 7.118 7.118 7.118 7.118
100-10 7.104 7.103 7.103 7.103 7.103
Weighted Average
Life (yrs.) 5.49 5.49 5.49 5.49 5.48
First Principal
Payment Date 9/15/99 9/15/99 9/15/99 9/15/99 9/15/99
Last Principal
Payment Date 7/15/07 7/15/07 7/15/07 7/15/07 7/15/07
Modified Duration
@ 99-30 4.28 4.27 4.27 4.27 4.27
</TABLE>
E-1
<PAGE>
WEIGHTED AVERAGE LIFE, PRINCIPAL WINDOW
PRE-TAX YIELD TO MATURITY AND MODIFIED DURATION OF THE A-2 CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE OR PENALTY - OTHERWISE AT
INDICATED CPR
<TABLE>
<CAPTION>
PRICE (32NDS) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
------------- ------ ------- ------- ------- -------
CBE YIELD CBE YIELD CBE YIELD CBE YIELD CBE YIELD
<S> <C> <C> <C> <C> <C>
99-19 7.573 7.573 7.573 7.573 7.573
99-21 7.563 7.563 7.563 7.563 7.563
99-23 7.554 7.554 7.554 7.554 7.554
99-25 7.545 7.545 7.545 7.545 7.545
99-27 7.535 7.535 7.535 7.535 7.535
99-29 7.526 7.526 7.526 7.526 7.526
99-31 7.517 7.517 7.517 7.517 7.517
100-01 7.507 7.507 7.507 7.507 7.507
100-03 7.498 7.498 7.498 7.498 7.498
100-05 7.489 7.489 7.489 7.489 7.489
100-07 7.479 7.479 7.479 7.479 7.479
100-09 7.470 7.470 7.470 7.470 7.470
100-11 7.461 7.461 7.461 7.461 7.461
Weighted Average
Life (yrs.) 9.69 9.68 9.68 9.67 9.66
First Principal
Payment Date 7/15/07 7/15/07 7/15/07 7/15/07 7/15/07
Last Principal
Payment Date 7/15/09 7/15/09 7/15/09 7/15/09 7/15/09
Modified Duration
@ 99-31 6.67 6.66 6.66 6.66 6.66
</TABLE>
E-2
<PAGE>
WEIGHTED AVERAGE LIFE, PRINCIPAL WINDOW
PRE-TAX YIELD TO MATURITY AND MODIFIED DURATION OF THE B CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE OR PENALTY - OTHERWISE AT
INDICATED CPR
<TABLE>
<CAPTION>
PRICE (32NDS) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
------------- ------ ------- ------- ------- -------
CBE YIELD CBE YIELD CBE YIELD CBE YIELD CBE YIELD
<S> <C> <C> <C> <C> <C>
99-19 7.757 7.757 7.757 7.757 7.757
99-21 7.748 7.748 7.748 7.748 7.748
99-23 7.739 7.739 7.739 7.739 7.739
99-25 7.729 7.729 7.729 7.729 7.729
99-27 7.720 7.720 7.720 7.720 7.720
99-29 7.711 7.711 7.711 7.711 7.711
99-31 7.702 7.702 7.702 7.702 7.702
100-01 7.692 7.692 7.692 7.692 7.692
100-03 7.683 7.683 7.683 7.683 7.683
100-05 7.674 7.674 7.674 7.674 7.674
100-07 7.665 7.665 7.665 7.665 7.664
100-09 7.655 7.655 7.655 7.655 7.655
100-11 7.646 7.646 7.646 7.646 7.646
Weighted Average
Life (yrs.) 9.92 9.91 9.91 9.90 9.89
First Principal
Payment date 7/15/09 7/15/09 7/15/09 7/15/09 7/15/09
Last Principal
Payment Date 8/15/09 8/15/09 8/15/09 8/15/09 8/15/09
Modified Duration
@ 99-31 6.72 6.72 6.71 6.71 6.71
</TABLE>
E-3
<PAGE>
WEIGHTED AVERAGE LIFE, PRINCIPAL WINDOW
PRE-TAX YIELD TO MATURITY AND MODIFIED DURATION OF THE C CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE OR PENALTY - OTHERWISE AT
INDICATED CPR
<TABLE>
<CAPTION>
PRICE (32NDS) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
------------- ------ ------- ------- ------- -------
CBE YIELD CBE YIELD CBE YIELD CBE YIELD CBE YIELD
<S> <C> <C> <C> <C> <C>
98-13 7.941 7.941 7.941 7.941 7.941
98-15 7.931 7.931 7.931 7.931 7.931
98-17 7.922 7.922 7.922 7.922 7.922
98-19 7.913 7.913 7.913 7.913 7.913
98-21 7.903 7.903 7.903 7.903 7.903
98-23 7.894 7.894 7.894 7.894 7.894
98-25 7.885 7.885 7.885 7.885 7.885
98-27 7.875 7.875 7.875 7.875 7.875
98-29 7.866 7.866 7.866 7.866 7.866
98-31 7.856 7.856 7.856 7.856 7.856
99-01 7.847 7.847 7.847 7.847 7.847
99-03 7.838 7.838 7.838 7.838 7.838
99-05 7.828 7.828 7.828 7.828 7.828
Weighted Average
Life (yrs.) 9.97 9.97 9.97 9.97 9.97
First Principal
Payment Date 8/15/09 8/15/09 8/15/09 8/15/09 8/15/09
Last Principal
Payment Date 8/15/09 8/15/09 8/15/09 8/15/09 8/15/09
Modified Duration
@ 98-25 6.72 6.72 6.72 6.72 6.72
</TABLE>
E-4
<PAGE>
WEIGHTED AVERAGE LIFE, PRINCIPAL WINDOW
PRE-TAX YIELD TO MATURITY AND MODIFIED DURATION OF THE D CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE OR PENALTY - OTHERWISE AT
INDICATED CPR
<TABLE>
<CAPTION>
PRICE (32NDS) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
------------- ------ ------- ------- ------- -------
CBE YIELD CBE YIELD CBE YIELD CBE YIELD CBE YIELD
<S> <C> <C> <C> <C> <C>
97-24 8.040 8.040 8.040 8.040 8.040
97-26 8.031 8.031 8.031 8.031 8.031
97-28 8.021 8.021 8.021 8.021 8.021
97-30 8.012 8.012 8.012 8.012 8.012
98-00 8.002 8.002 8.002 8.002 8.002
98-02 7.993 7.993 7.993 7.993 7.993
98-04 7.983 7.983 7.983 7.983 7.983
98-06 7.974 7.974 7.974 7.974 7.974
98-08 7.964 7.964 7.964 7.964 7.964
98-10 7.955 7.955 7.955 7.955 7.955
98-12 7.946 7.946 7.946 7.946 7.946
98-14 7.936 7.936 7.936 7.936 7.936
98-16 7.927 7.927 7.927 7.927 7.927
Weighted Average
Life (yrs.) 9.97 9.97 9.97 9.97 9.97
First Principal
Payment Date 8/15/09 8/15/09 8/15/09 8/15/09 8/15/09
Last Principal
Payment Date 8/15/09 8/15/09 8/15/09 8/15/09 8/15/09
Modified Duration
@ 98-04 6.70 6.70 6.70 6.70 6.70
</TABLE>
E-5
<PAGE>
WEIGHTED AVERAGE LIFE, PRINCIPAL WINDOW
PRE-TAX YIELD TO MATURITY AND MODIFIED DURATION OF THE E CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE OR PENALTY - OTHERWISE AT
INDICATED CPR
<TABLE>
<CAPTION>
PRICE (32NDS) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
------------- ------ ------- ------- ------- -------
CBE YIELD CBE YIELD CBE YIELD CBE YIELD CBE YIELD
<S> <C> <C> <C> <C> <C>
95-30 8.348 8.349 8.350 8.350 8.352
96-00 8.339 8.339 8.340 8.341 8.342
96-02 8.329 8.330 8.331 8.331 8.333
96-04 8.320 8.320 8.321 8.322 8.323
96-06 8.310 8.311 8.312 8.312 8.314
96-08 8.301 8.302 8.302 8.303 8.304
96-10 8.291 8.292 8.293 8.293 8.295
96-12 8.282 8.283 8.283 8.284 8.285
96-14 8.273 8.273 8.274 8.275 8.276
96-16 8.263 8.264 8.265 8.265 8.266
96-18 8.254 8.254 8.255 8.256 8.257
96-20 8.244 8.245 8.246 8.246 8.248
96-22 8.235 8.236 8.236 8.237 8.238
Weighted Average
Life (yrs.) 10.47 10.45 10.44 10.42 10.39
First Principal
Payment Date 8/15/09 8/15/09 8/15/09 8/15/09 8/15/09
Last Principal
Payment Date 5/15/11 5/15/11 5/15/11 5/15/11 4/15/11
Modified Duration
96-10 6.85 6.84 6.84 6.83 6.82
</TABLE>
E-6
<PAGE>
WEIGHTED AVERAGE LIFE, PRINCIPAL WINDOW
PRE-TAX YIELD TO MATURITY AND MODIFIED DURATION OF THE F CERTIFICATES
0% CPR DURING LOCKOUT, DEFEASANCE, YIELD MAINTENANCE OR PENALTY - OTHERWISE AT
INDICATED CPR
<TABLE>
<CAPTION>
PRICE (32NDS) 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
------------- ------ ------- ------- ------- -------
CBE YIELD CBE YIELD CBE YIELD CBE YIELD CBE YIELD
<S> <C> <C> <C> <C> <C>
89-31 9.163 9.163 9.162 9.162 9.162
90-01 9.153 9.153 9.153 9.153 9.153
90-03 9.144 9.144 9.143 9.143 9.143
90-05 9.134 9.134 9.134 9.133 9.133
90-07 9.125 9.124 9.124 9.124 9.124
90-09 9.115 9.115 9.114 9.114 9.114
90-11 9.105 9.105 9.105 9.105 9.105
90-13 9.096 9.096 9.095 9.095 9.095
90-15 9.086 9.086 9.086 9.085 9.086
90-17 9.077 9.077 9.076 9.076 9.076
90-19 9.067 9.067 9.067 9.066 9.066
90-21 9.058 9.057 9.057 9.057 9.057
90-23 9.048 9.048 9.048 9.047 9.047
Weighted Average
Life (yrs.) 11.72 11.72 11.72 11.72 11.71
First Principal
Payment Date 5/15/11 5/15/11 5/15/11 5/15/11 4/15/11
Last Principal
Payment Date 5/15/11 5/15/11 5/15/11 5/15/11 5/15/11
Modified Duration
@ 90-11 7.19 7.19 7.19 7.19 7.19
</TABLE>
E-7
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
PROSPECTUS
MORTGAGE PASS-THROUGH CERTIFICATES
(ISSUABLE IN SERIES)
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
(DEPOSITOR)
--------------
Chase Commercial Mortgage Securities Corp. from time to time will offer
commercial mortgage pass-through certificates in separate series. We will offer
the certificates through this prospectus and a separate prospectus supplement
for each series.
For each series we will establish a trust fund consisting primarily of a
segregated pool of various types of multifamily or commercial mortgage loans,
mortgage-backed securities that evidence interests in, or that are secured by
pledges of, one or more of various types of multifamily or commercial mortgage
loans, or a combination of mortgage loans and mortgage-backed securities.
If specified in the related prospectus supplement, the trust fund for a series
of certificates may include letters of credit, insurance policies, guarantees,
reserve funds or other types of credit support, interest rate exchange
agreements, interest rate cap or floor agreements or currency exchange
agreements as described in this prospectus.
The certificates of a series will evidence beneficial ownership interests in
the trust fund. We may divide the certificates of a series into two or more
classes which may have different interest rates and which may receive principal
payments in differing proportions and at different times. In addition, your
rights as holders of certain classes may be subordinate to the rights of
holders of other classes to receive principal and interest.
No series of certificates will represent an obligation of or interest in Chase
Commercial Mortgage Securities Corp. or any of its affiliates. Neither the
certificates of any series nor the assets in any trust fund will be guaranteed
or insured by any governmental agency or instrumentality or by any other
person, unless otherwise provided in the related prospectus supplement. The
assets in each trust fund will be held in trust for the benefit of the holders
of the related series of certificates, as more fully described in this
prospectus.
No secondary market will exist for a series of certificates prior to its
offering. We cannot assure you that a secondary market will develop for the
certificates of any series, or, if it does develop, that it will continue.
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 14 OF THIS
PROSPECTUS AND IN THE RELATED PROSPECTUS SUPPLEMENT.
--------------
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved of the offered certificates or notes or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
We may offer certain of the certificates of any series through one or more
different methods, including offerings through underwriters, which may include
our affiliate Chase Securities Inc., as more fully described in this prospectus
under "Method of Distribution" and in the related prospectus supplement. We may
retain or hold for sale one or more classes of a series of certificates.
Offerings of certain classes of the certificates, if so specified in the
related prospectus supplement, may be made in one or more transactions exempt
from the registration requirements of the Securities Act of 1933, as amended.
Those offerings are not being made pursuant to this prospectus or the related
registration statement.
This prospectus may not be used to consummate sales of the certificates of any
series unless accompanied by the prospectus supplement for that series.
The date of this Prospectus is August 19, 1999
<PAGE>
TABLE OF CONTENTS
Important Notice About Information Presented in this Prospectus and
Each Accompanying Prospectus Supplement .................................. 5
SUMMARY OF PROSPECTUS ..................................................... 6
RISK FACTORS .............................................................. 14
Limited Liquidity of Your Certificates ................................... 14
Limited Assets of Each Trust Fund ........................................ 14
Prepayment Considerations; Variability in Average Life of Offered
Certificates; Special Yield Considerations ............................. 15
Limited Nature of Ratings ................................................ 16
Risks Associated with Certain Mortgage Loans and Mortgaged Properties .... 17
Borrowers May Be Unable to Make Balloon Payments ......................... 19
Credit Support Limitations ............................................... 19
Leases and Rents ......................................................... 20
Environmental Risks ...................................................... 20
Special Hazard Losses .................................................... 20
Your Certificates May Not Be ERISA Eligible .............................. 21
Certain Federal Tax Considerations Regarding Residual Certificates ....... 21
Certain Federal Tax Considerations Regarding Original Issue Discount ..... 22
Bankruptcy Proceedings Entails Certain Risks ............................. 22
Book-Entry System for Certain Classes May Decrease Liquidity
and Delay Payment ...................................................... 22
Delinquent and Non-Performing Mortgage Loans ............................. 23
DESCRIPTION OF THE TRUST FUNDS ............................................ 24
General .................................................................. 24
Mortgage Loans ........................................................... 24
MBS ...................................................................... 28
Certificate Accounts ..................................................... 29
Credit Support ........................................................... 29
Cash Flow Agreements ..................................................... 29
YIELD AND MATURITY CONSIDERATIONS ......................................... 30
General .................................................................. 30
Pass-Through Rate ........................................................ 30
Payment Delays ........................................................... 30
Certain Shortfalls in Collections of Interest ............................ 30
Yield and Prepayment Considerations ...................................... 31
Weighted Average Life and Maturity ....................................... 32
Controlled Amortization Classes and Companion Classes .................... 33
Other Factors Affecting Yield, Weighted Average Life and Maturity ........ 34
THE DEPOSITOR ............................................................. 36
USE OF PROCEEDS ........................................................... 36
DESCRIPTION OF THE CERTIFICATES ........................................... 37
General .................................................................. 37
Distributions ............................................................ 37
Distributions of Interest on the Certificates ............................ 38
Distributions of Principal on the Certificates ........................... 39
Distributions on the Certificates in Respect of Prepayment Premiums
or in Respect of Equity Participations ................................. 39
Allocation of Losses and Shortfalls ...................................... 40
Advances in Respect of Delinquencies ..................................... 40
Reports to Certificateholders ............................................ 41
2
<PAGE>
Voting Rights ............................................................ 42
Termination .............................................................. 42
Book-Entry Registration and Definitive Certificates ...................... 43
DESCRIPTION OF THE POOLING AGREEMENTS ..................................... 44
General .................................................................. 44
Assignment of Mortgage Loans; Repurchases ................................ 45
Representations and Warranties; Repurchases .............................. 46
Collection and Other Servicing Procedures ................................ 47
Sub-Servicers ............................................................ 47
Special Servicers ........................................................ 47
Certificate Account ...................................................... 48
Modifications, Waivers and Amendments of Mortgage Loans .................. 51
Realization Upon Defaulted Mortgage Loans ................................ 51
Hazard Insurance Policies ................................................ 53
Due-on-Sale and Due-on-Encumbrance Provisions ............................ 54
Servicing Compensation and Payment of Expenses ........................... 54
Evidence as to Compliance ................................................ 54
Certain Matters Regarding the Master Servicer and the Depositor .......... 55
Events of Default ........................................................ 56
Rights Upon Event of Default ............................................. 56
Amendment ................................................................ 57
List of Certificateholders ............................................... 58
The Trustee .............................................................. 58
Duties of the Trustee .................................................... 58
Certain Matters Regarding the Trustee .................................... 58
Resignation and Removal of the Trustee ................................... 59
DESCRIPTION OF CREDIT SUPPORT ............................................. 60
General .................................................................. 60
Subordinate Certificates ................................................. 60
Cross-Support Provisions ................................................. 61
Insurance or Guarantees with Respect to Mortgage Loans ................... 61
Letter of Credit ......................................................... 61
Certificate Insurance and Surety Bonds ................................... 61
Reserve Funds ............................................................ 61
Credit Support with Respect to MBS ....................................... 62
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS ................................... 63
General .................................................................. 63
Types of Mortgage Instruments ............................................ 63
Leases and Rents ......................................................... 63
Personalty ............................................................... 64
Foreclosure .............................................................. 64
Bankruptcy Laws .......................................................... 67
Environmental Risks ...................................................... 70
Due-on-Sale and Due-on-Encumbrance ....................................... 71
Subordinate Financing .................................................... 72
Default Interest and Limitations on Prepayments .......................... 72
Applicability of Usury Laws .............................................. 72
Soldiers' and Sailors' Civil Relief Act of 1940 .......................... 73
Type of Mortgaged Property ............................................... 73
Americans with Disabilities Act .......................................... 74
Forfeitures In Drug And RICO Proceedings ................................. 74
3
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES ................................... 75
Federal Income Tax Consequences for REMIC Certificates ................... 75
Taxation of Regular Certificates ......................................... 78
Taxation of Residual Certificates ........................................ 85
Taxes That May Be Imposed on the REMIC Pool .............................. 92
Liquidation of the REMIC Pool ............................................ 93
Administrative Matters ................................................... 93
Limitations on Deduction of Certain Expenses ............................. 93
Taxation of Certain Foreign Investors .................................... 94
Backup Withholding ....................................................... 95
Reporting Requirements ................................................... 95
Federal Income Tax Consequences For Certificates as to Which No
REMIC Election Is Made ................................................. 96
Standard Certificates .................................................... 96
Stripped Certificates .................................................... 99
Reporting Requirements and Backup Withholding ............................ 102
Taxation of Certain Foreign Investors .................................... 102
STATE AND OTHER TAX CONSIDERATIONS ........................................ 102
CERTAIN ERISA CONSIDERATIONS .............................................. 103
General .................................................................. 103
Plan Asset Regulations ................................................... 103
Administrative Exemptions ................................................ 104
Insurance Company General Accounts ....................................... 104
Unrelated Business Taxable Income; Residual Certificates ................. 105
LEGAL INVESTMENT .......................................................... 105
METHOD OF DISTRIBUTION .................................................... 107
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE ......................... 109
LEGAL MATTERS ............................................................. 109
FINANCIAL INFORMATION ..................................................... 109
RATING .................................................................... 109
INDEX OF PRINCIPAL DEFINITIONS ............................................ 111
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IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND EACH ACCOMPANYING PROSPECTUS SUPPLEMENT
Information about the offered certificates is contained in two separate
documents that progressively provide more detail: (a) this prospectus, which
provides general information, some of which may not apply to the offered
certificates; and (b) the accompanying prospectus supplement for each series,
which describes the specific terms of the offered certificates. IF THE TERMS OF
THE OFFERED CERTIFICATES VARY BETWEEN THIS PROSPECTUS AND THE ACCOMPANYING
PROSPECTUS SUPPLEMENT, YOU SHOULD RELY ON THE INFORMATION IN THE PROSPECTUS
SUPPLEMENT.
You should rely only on the information contained in this prospectus and
the accompanying prospectus supplement. We have not authorized anyone to
provide you with information that is different from that contained in this
prospectus and the related prospectus supplement. The information in this
prospectus is accurate only as of the date of this prospectus.
Certain capitalized terms are defined and used in this prospectus to
assist you in understanding the terms of the offered certificates and this
offering. The capitalized terms used in this prospectus are defined on the
pages indicated under the caption "Index of Principal Definitions" beginning on
page 111 in this prospectus.
In this prospectus, the terms "Depositor," "we," "us" and "our" refer to
Chase Commercial Mortgage Securities Corp.
-------------------------------
If you require additional information, the mailing address of our
principal executive offices is Chase Commercial Mortgage Securities Corp., 270
Park Avenue, New York, New York 10017-2070, and telephone number is (212)
834-5723.
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SUMMARY OF PROSPECTUS
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT AND DOES
NOT CONTAIN ALL OF THE INFORMATION THAT YOU NEED TO CONSIDER IN MAKING AN
INVESTMENT DECISION. PLEASE READ THIS ENTIRE PROSPECTUS AND THE ACCOMPANYING
PROSPECTUS SUPPLEMENT AS WELL AS THE TERMS AND PROVISIONS OF THE RELATED
POOLING AND SERVICING AGREEMENT CAREFULLY TO UNDERSTAND ALL OF THE TERMS OF A
SERIES OF CERTIFICATES. AN INDEX OF PRINCIPAL DEFINITIONS IS INCLUDED AT THE
END OF THIS PROSPECTUS.
TITLE OF CERTIFICATES....... Mortgage pass-through certificates, issuable in
series.
DEPOSITOR................... Chase Commercial Mortgage Securities Corp., a
wholly-owned subsidiary of The Chase Manhattan
Bank, a New York banking corporation.
MASTER SERVICER............. The master servicer, if any, for a series of
certificates will be named in the related
prospectus supplement. The master servicer for
any series of certificates may be an affiliate of
the depositor or a special servicer.
SPECIAL SERVICER............ One or more special servicers, if any, for a
series of certificates will be named, or the
circumstances under which a special servicer will
be appointed will be described, in the related
prospectus supplement. A special servicer for any
series of certificates may be an affiliate of the
depositor or the master servicer.
TRUSTEE..................... The trustee for each series of certificates
will be named in the related prospectus
supplement.
THE TRUST ASSETS............ Each series of certificates will represent in
the aggregate the entire beneficial ownership
interest in a trust fund consisting primarily of:
A. MORTGAGE ASSETS......... The mortgage assets with respect to each series
of certificates will, in general, consist of a
pool of loans secured by liens on, or security
interests in:
o residential properties consisting of five or
more rental or cooperatively-owned dwelling
units or by shares allocable to a number of
those units and the related leases; or
o office buildings, shopping centers, retail
stores and establishments, hotels or motels,
nursing homes, hospitals or other health-care
related facilities, mobile home parks,
warehouse facilities, mini-warehouse
facilities, self-storage facilities,
industrial plants, parking lots, mixed use or
various other types of income-producing
properties described in this prospectus or
unimproved land.
If so specified in the related prospectus
supplement, a trust fund may include mortgage
loans secured by liens on real estate projects
under construction. No one will guarantee the
mortgage loans, unless otherwise provided in the
related prospectus supplement. If so specified
in the related
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prospectus supplement, some mortgage loans may
be delinquent. In no event will delinquent
mortgage loans comprise 20 percent or more of
the trust fund at the time the mortgage loans
are transferred to the trust fund.
As described in the related prospectus
supplement, a mortgage loan:
o may provide for no accrual of interest or for
accrual of interest at a mortgage interest
rate that is fixed over its term or that
adjusts from time to time, or that the
borrower may elect to convert from an
adjustable to a fixed mortgage interest rate,
or from a fixed to an adjustable mortgage
interest rate;
o may provide for level payments to maturity or
for payments that adjust from time to time to
accommodate changes in the mortgage interest
rate or to reflect the occurrence of certain
events, and may permit negative amortization;
o may be fully amortizing or partially
amortizing or non-amortizing, with a balloon
payment due on its stated maturity date;
o may prohibit prepayments over its term or for
a certain period and/or require payment of a
premium or a yield maintenance penalty in
connection with certain prepayments; and
o may provide for payments of principal,
interest or both, on due dates that occur
monthly, quarterly, semi-annually or at
another interval specified in the related
prospectus supplement.
Some or all of the mortgage loans in any trust
fund may have been originated by an affiliate of
the depositor. See "Description of the Trust
Funds--Mortgage Loans" in this prospectus.
If specified in the related prospectus
supplement, the mortgage assets with respect to
a series of certificates may also include, or
consist of,
o private mortgage participations, mortgage
pass-through certificates or other
mortgage-backed securities, or
o certificates insured or guaranteed by any of
the Federal Home Loan Mortgage Corporation,
the Federal National Mortgage Association, the
Governmental National Mortgage Association or
the Federal Agricultural Mortgage Corporation.
Each of the above mortgage assets will evidence
an interest in, or will be secured by a pledge
of, one or more mortgage loans that conform to
the descriptions of the mortgage loans contained
in this prospectus. See "Description of the
Trust Funds--MBS" in this prospectus.
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B. CERTIFICATE ACCOUNT..... Each trust fund will include one or more
certificate accounts established and maintained
on behalf of the certificateholders. The person
or persons designated in the related prospectus
supplement will be required to, to the extent
described in this prospectus and in that
prospectus supplement, deposit all payments and
other collections received or advanced with
respect to the mortgage assets and other assets
in the trust fund into the certificate accounts.
A certificate account may be maintained as an
interest bearing or a non-interest bearing
account, and its funds may be held as cash or
invested in certain obligations acceptable to the
rating agencies rating one or more classes of the
related series of offered certificates. See
"Description of the Trust Funds--Certificate
Accounts" and "Description of the Pooling
Agreements--Certificate Account" in this
prospectus.
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 that
series, which other classes may include one or
more classes of offered certificates, or by one
or more other types of credit support, such as a
letter of credit, insurance policy, guarantee,
reserve fund or another type of credit support
described in this prospectus, or a combination of
these features. The amount and types of any
credit support, the identification of any entity
providing it and related information will be set
forth in the prospectus supplement for a series
of offered certificates. See "Risk
Factors--Credit Support Limitations",
"Description of the Trust Funds--Credit Support"
and "Description of Credit Support" in this
prospectus.
D. CASH FLOW AGREEMENTS.... If so provided in the related prospectus
supplement, a trust fund may include guaranteed
investment contracts pursuant to which moneys
held in the funds and accounts established for
the related series will be invested at a
specified rate. The trust fund may also include
interest rate exchange agreements, interest rate
cap or floor agreements, or currency exchange
agreements, all of which are designed to reduce
the effects of interest rate or currency exchange
rate fluctuations on the mortgage assets or on
one or more classes of certificates. The
principal terms of that guaranteed investment
contract or other agreement, including, without
limitation, provisions relating to the timing,
manner and amount of any corresponding payments
and provisions relating to their termination,
will be described in the prospectus supplement
for the related series. In addition, the related
prospectus supplement will contain certain
information that pertains to the obligor under
any cash flow agreements of this type. See
"Description of the Trust Funds--Cash Flow
Agreements" in this prospectus.
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<PAGE>
DESCRIPTION OF
CERTIFICATES................ We will offer certificates in one or more classes
of a series of certificates issued pursuant to a
pooling and servicing agreement or other
agreement specified in the related prospectus
supplement. The certificates will represent in
the aggregate the entire beneficial ownership
interest in the trust fund created by that
agreement.
As described in the related prospectus
supplement, the certificates of each series, may
consist of one or more classes of certificates
that, among other things:
o are senior or subordinate to one or more other
classes of certificates in entitlement to
certain distributions on the certificates;
o are principal-only certificates entitled to
distributions of principal, with
disproportionately small, nominal or no
distributions of interest;
o are interest-only certificates entitled to
distributions of interest, with
disproportionately small, nominal or no
distributions of principal;
o provide for distributions of interest on, or
principal of, the certificates that begin only
after the occurrence of certain events, such
as the retirement of one or more other classes
of certificates of that series;
o provide for distributions of principal of the
certificates to be made, from time to time or
for designated periods, at a rate that is
faster, or slower than the rate at which
payments or other collections of principal are
received on the mortgage assets in the related
trust fund;
o provide for controlled distributions of
principal to be made based on a specified
schedule or other methodology, subject to
available funds; or
o provide for distributions based on collections
of prepayment premiums, yield maintenance
penalties or equity participations on the
mortgage assets in the related trust fund.
Each class of certificates, other than
interest-only certificates and residual
certificates which are only entitled to a
residual interest in the trust fund, will have a
stated principal balance. Each class of
certificates, other than principal-only
certificates and residual certificates, will
accrue interest on its stated principal balance
or, in the case of interest-only certificates,
on a notional amount. Each class of certificates
entitled to interest will accrue interest based
on a fixed, variable or adjustable pass-through
interest rate. The related prospectus supplement
will specify the principal balance, notional
amount and/or fixed pass-through interest rate,
or, in the case of a variable or adjustable
pass-through interest rate, the
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<PAGE>
method for determining that rate, as applicable,
for each class of offered certificates.
The certificates will not be guaranteed or
insured by anyone, unless otherwise provided in
the related prospectus supplement. See "Risk
Factors--Limited Assets of Each Trust Fund" and
"Description of the Certificates" in this
prospectus.
DISTRIBUTIONS OF INTEREST ON
THE CERTIFICATES........... Interest on each class of offered certificates,
other than certain classes of principal-only
certificates and certain classes of residual
certificates, of each series will accrue at the
applicable fixed, variable or adjustable
pass-through interest rate on the principal
balance or, in the case of certain classes of
interest-only certificates, on the notional
amount, outstanding from time to time. Interest
will be distributed to you as provided in the
related prospectus supplement on specified
distribution dates. Distributions of interest
with respect to one or more classes of accrual
certificates may not begin until the occurrence
of certain events, such as the retirement of one
or more other classes of certificates, and
interest accrued with respect to a class of
accrual certificates before the occurrence of
that event will either be added to its principal
balance or otherwise deferred. Distributions of
interest with respect to one or more classes of
certificates may be reduced to the extent of
certain delinquencies, losses and other
contingencies described in this prospectus and in
the related prospectus supplement. See "Risk
Factors--Prepayment Considerations; Variability
in Average Life of Offered Certificates; Special
Yield", "Yield and Maturity Considerations" and
"Description of the Certificates--Distributions
of Interest on the Certificates" in this
prospectus.
DISTRIBUTIONS OF PRINCIPAL
OF THE CERTIFICATES........ Each class of certificates of each series,
other than certain classes of interest-only
certificates and certain classes of residual
certificates, will have a principal balance. The
principal balance of a class of certificates will
represent the maximum amount that you are
entitled to receive as principal from future cash
flows on the assets in the related trust fund.
Distributions of principal with respect to one
or more classes of certificates may:
o be made at a rate that is faster, and, in some
cases, substantially faster, than the rate at
which payments or other collections of
principal are received on the mortgage assets
in the related trust fund;
o or may be made at a rate that is slower, and,
in some cases, substantially slower, than the
rate at which payments or other collections of
principal are received on the mortgage assets
in the related trust fund;
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<PAGE>
o not commence until the occurrence of certain
events, such as the retirement of one or more
other classes of certificates of the same
series;
o be made, subject to certain limitations, based
on a specified principal payment schedule
resulting in a controlled amortization class
of certificates; or
o be contingent on the specified principal
payment schedule for a controlled amortization
class of the same series and the rate at which
payments and other collections of principal on
the mortgage assets in the related trust fund
are received.
Unless otherwise specified in the related
prospectus supplement, distributions of principal
of any class of offered certificates will be made
on a pro rata basis among all of the certificates
of that class. See "Description of the
Certificates-- Distributions of Principal of the
Certificates" in this prospectus.
ADVANCES.................... If provided in the related prospectus
supplement, if a trust fund includes mortgage
loans, the master servicer, a special servicer,
the trustee, any provider of credit support
and/or any other specified person may be
obligated to make, or have the option of making,
certain advances with respect to delinquent
scheduled payments of principal and/or interest
on those mortgage loans. Any of the advances of
principal and interest made with respect to a
particular mortgage loan will be reimbursable
from subsequent recoveries from the related
mortgage loan and otherwise to the extent
described in this prospectus and in the related
prospectus supplement. If provided in the
prospectus supplement for a series of
certificates, any entity making these advances
may be entitled to receive interest on those
advances while they are outstanding, payable from
amounts in the related trust fund. If a trust
fund includes mortgage participations,
pass-through certificates or other
mortgage-backed securities, any comparable
advancing obligation will be described in the
related prospectus supplement. See "Description
of the Certificates--Advances in Respect of
Delinquencies" in this prospectus.
TERMINATION................. If so specified in the related prospectus
supplement, the mortgage assets in the related
trust fund may be sold, causing an early
termination of a series of certificates in the
manner set forth in the prospectus supplement. If
so provided in the related prospectus supplement,
upon the reduction of the principal balance of a
specified class or classes of certificates by a
specified percentage or amount, the party
specified in the prospectus supplement may be
authorized or required to bid for or solicit bids
for the purchase of all of the mortgage assets of
the related trust fund, or of a sufficient
portion of
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<PAGE>
the mortgage assets to retire the class or
classes, as described in the related prospectus
supplement. See "Description of the
Certificates--Termination" in this prospectus.
REGISTRATION OF BOOK-ENTRY
CERTIFICATES............... If so provided in the related prospectus
supplement, one or more classes of the offered
certificates of any series will be book-entry
certificates offered through the facilities of
The Depository Trust Company. Each class of
book-entry certificates will be initially
represented by one or more certificates
registered in the name of a nominee of The
Depository Trust Company. No person acquiring an
interest in a class of book-entry certificates
will be entitled to receive definitive
certificates of that class in fully registered
form, except under the limited circumstances
described in this prospectus. See "Risk
Factors--Book-Entry System for Certain Classes
May Decrease Liquidity and Delay Payment" and
"Description of the Certificates--Book-Entry
Registration and Definitive Certificates" in this
prospectus.
CERTAIN 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 of the trust fund as
one or more "real estate mortgage investment
conduits" (each, a "REMIC") under the provisions
of the Internal Revenue Code. The prospectus
supplement for each series of certificates will
specify whether one or more REMIC elections will
be made. See "Certain Federal Income Tax
Consequences" in this prospectus.
CERTAIN ERISA
CONSIDERATIONS.............. If you are a fiduciary of any employee benefit
plans or certain other retirement plans and
arrangements, including individual retirement
accounts, annuities, Keogh plans, and collective
investment funds and insurance company general
and separate accounts in which those plans,
accounts, annuities or arrangements are invested,
that are subject to ERISA or Section 4975 of the
Internal Revenue Code, you should carefully
review with your 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 the Internal Revenue Code. See "Certain ERISA
Considerations" in this prospectus and "ERISA
Considerations" in the related prospectus
supplement.
LEGAL INVESTMENT............ The applicable 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. If your
investment authority is subject to legal
restrictions you should consult
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<PAGE>
your own legal advisors to determine if the
offered certificates constitute legal
investments for you. See "Legal Investment" in
this prospectus and in the related prospectus
supplement.
RATING...................... At their dates of issuance, each class of
offered certificates will be rated at least
investment grade by one or more nationally
recognized statistical rating agencies. See
"Rating" in this prospectus and "Ratings" in the
related prospectus supplement.
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<PAGE>
RISK FACTORS
You should carefully consider the following risks and the risks described
under "RISK FACTORS" in the prospectus supplement for the applicable series of
certificates before making an investment decision. In particular, distributions
on your certificates will depend on payments received on and other recoveries
with respect to the mortgage loans. Thus, you should carefully consider the
risk factors relating to the mortgage loans and the mortgaged properties.
LIMITED LIQUIDITY OF YOUR CERTIFICATES
We cannot assure you that a secondary market for the certificates will
develop or, if it does develop, that it will provide you with liquidity of
investment or will continue for the life of your certificates. The prospectus
supplement for any series of offered certificates may indicate that an
underwriter intends to make a secondary market in those offered certificates;
however, no underwriter will be obligated to do so. Any resulting secondary
market may provide you with less liquidity than any comparable market for
certificates that evidence interests in single-family mortgage loans.
The primary source of ongoing information regarding the offered
certificates of any series, including information regarding the status of the
related mortgage assets and any credit support for your certificates, will be
the periodic reports delivered to you. See "Description of the Certificates--
Reports to Certificateholders" in this prospectus. We cannot assure you that
any additional ongoing information regarding your certificates will be
available through any other source. The limited nature of the available
information in respect of a series of offered certificates may adversely affect
its liquidity, even if a secondary market for those certificates does develop.
Even if a secondary market does develop with respect to any series or
class of certificates, the market value of those certificates will be affected
by several factors, including:
o The perceived liquidity of the certificates;
o The anticipated cash flow of the certificates, which may vary widely
depending upon the prepayment and default assumptions applied in
respect of the underlying mortgage loans and prevailing interest
rates;
o The price payable at any given time in respect of certain classes of
offered certificates may be extremely sensitive to small fluctuations
in prevailing interest rates, particularly, for a class with a
relatively long average life, a companion class to a controlled
amortization class, a class of interest-only certificates or
principal-only certificates; and
o The relative change in price for an offered certificate in response to
an upward or downward movement in prevailing interest rates may not
equal the relative change in price for that certificate in response to
an equal but opposite movement in those rates. Accordingly, the sale
of your certificates in any secondary market that may develop may be
at a discount from the price you paid.
We are not aware of any source through which price information about the
offered certificates will be generally available on an ongoing basis.
Except to the extent described in this prospectus and in the related
prospectus supplement, you will have no redemption rights, and the certificates
of each series will be subject to early retirement only under certain specified
circumstances described in this prospectus and in the related prospectus
supplement. See "Description of the Certificates--Termination" in this
prospectus.
LIMITED ASSETS OF EACH TRUST FUND
Unless otherwise specified in the related prospectus supplement
o The certificates of any series and the mortgage assets in the related
trust fund 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 or entity; and
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<PAGE>
o The certificate of any series will not represent a claim against or
security interest in the trust funds for any other series.
Accordingly, if the related trust fund has insufficient assets to make
payments on a series of offered certificates, no other assets will be available
to make those payments. Additionally, certain amounts on deposit from time to
time in certain funds or accounts constituting part of a trust fund may be
withdrawn under certain conditions, as described in the related prospectus
supplement, for purposes other than the payment of principal of or interest on
the related series of certificates. If so provided in the prospectus supplement
for a series of certificates consisting of one or more classes of subordinate
certificates, if losses or shortfalls in collections have occurred with respect
to any distribution date, all or a portion of the amount of these 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 prospectus
supplement.
PREPAYMENT CONSIDERATIONS; VARIABILITY IN AVERAGE LIFE OF OFFERED CERTIFICATES;
SPECIAL YIELD CONSIDERATIONS
As a result of, among other things, prepayments on the mortgage loans in
any trust fund, the amount and timing of distributions of principal and/or
interest on the offered certificates of the related series may be highly
unpredictable. Prepayments on the mortgage loans in any trust fund will result
in a faster rate of principal payments on one or more classes of the related
series of certificates than if payments on those mortgage loans were made as
scheduled. Thus, the prepayment experience on the mortgage loans in a trust
fund may affect the average life of one or more classes of offered certificates
of the related series.
The rate of principal payments on pools of mortgage loans varies among
pools and from time to time is influenced by a variety of economic,
demographic, geographic, social, tax, legal and other factors. For example, if
prevailing interest rates fall significantly below the mortgage interest rates
of the mortgage loans included in a trust fund, then, subject to, among other
things, the particular terms of the mortgage loans and the ability of borrowers
to get new financing, principal prepayments on those mortgage loans are likely
to be higher than if prevailing interest rates remain at or above the rates on
those mortgage loans. Conversely, if prevailing interest rates rise
significantly above the mortgage interest rates of the mortgage loans included
in a trust fund, then principal prepayments on those mortgage loans are likely
to be lower than if prevailing interest rates remain at or below the rates on
those mortgage loans. We cannot assure you as to the actual rate of prepayment
on the mortgage loans in any trust fund or that the rate of prepayment will
conform to any model described in this prospectus or in any prospectus
supplement. As a result, depending on the anticipated rate of prepayment for
the mortgage loans in any trust fund, the retirement of any class of
certificates of the related series could occur significantly earlier or later
than expected.
The extent to which prepayments on the mortgage loans in any trust fund
ultimately affect the average life of your certificates will depend on the
terms of your certificates.
o A class of certificates that entitles the holders of those
certificates to a disproportionately large share of the prepayments on
the mortgage loans in the related trust fund increases the "call risk"
or the likelihood of early retirement of that class if the rate of
prepayment is relatively fast; and
o A class of certificates that entitles the holders of the certificates
to a disproportionately small share of the prepayments on the mortgage
loans in the related trust fund increases the likelihood of "extension
risk" or an extended average life of that class if the rate of
prepayment is relatively slow.
As described in the related prospectus supplement, the respective
entitlements of the various classes of certificate of any series to receive
payments, especially prepayments, of principal of the mortgage loans in the
related trust fund may vary based on the occurrence of certain events such as
the retirement of one or more classes of certificates of that series, or
subject to certain contingencies such as the rate of prepayments and defaults
with respect to those mortgage loans.
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<PAGE>
A series of certificates may include one or more controlled amortization
classes, which will entitle you to receive principal distributions according to
a specified principal payment schedule. Although prepayment risk cannot be
eliminated entirely for any class of certificates, a controlled amortization
class will generally provide a relatively stable cash flow so long as the
actual rate of prepayment on the mortgage loans in the related trust fund
remains relatively constant at the rate, or within the range of rates, of
prepayment used to establish the specific principal payment schedule for those
certificates. Prepayment risk with respect to a given pool of mortgage assets
does not disappear, however, and the stability afforded to a controlled
amortization class comes at the expense of one or more companion classes of the
same series, any of which companion classes may also be a class of offered
certificates. In general, and as more specifically described in the related
prospectus supplement, a companion class may entitle you to a
disproportionately large share of prepayments on the mortgage loans in the
related trust fund when the rate of prepayment is relatively fast, or may
entitle you to a disproportionately small share of prepayments on the mortgage
loans in the related trust fund when the rate of prepayment is relatively slow.
As described in the related prospectus supplement, a companion class absorbs
some (but not all) of the "call risk" and/or "extension risk" that would
otherwise belong to the related controlled amortization class if all payments
of principal of the mortgage loans in the related trust fund were allocated on
a pro rata basis.
A series of certificates may include one or more classes of offered
certificates offered at a premium or discount. Yields on those classes of
certificates will be sensitive, and in some cases extremely sensitive, to
prepayments on the mortgage loans in the related trust fund. Where the amount
of interest payable with respect to a class is disproportionately large, as
compared to the amount of principal, as with certain classes of interest-only
certificates, you might fail to recover your original investment under some
prepayment scenarios. The extent to which the yield to maturity of any class of
offered certificates may vary from the anticipated yield will depend upon the
degree to which they are purchased at a discount or premium and the amount and
timing of distributions on those certificates. You should consider, in the case
of any offered certificate purchased at a discount, the risk that a slower than
anticipated rate of principal payments on the mortgage loans could result in an
actual yield that is lower than the anticipated yield and, in the case of any
offered certificate purchased at a premium, the risk that a faster than
anticipated rate of principal payments could result in an actual yield that is
lower than the anticipated yield. See "Yield and Maturity Considerations" in
this prospectus.
LIMITED NATURE OF RATINGS
Any rating assigned to a class of offered certificates by a rating agency
will only reflect its assessment of the probability that you will receive
payments to which you are entitled. This rating will not constitute an
assessment of the probability that:
o principal prepayments on the related mortgage loans will be made;
o the degree to which the rate of prepayments might differ from the rate
of prepayments that was originally anticipated; or
o the likelihood of early optional termination of the related trust
fund.
Furthermore, the rating will not address the possibility that prepayment of the
related mortgage loans at a higher or lower rate than you anticipated may cause
you to experience a lower than anticipated yield or that if you purchase a
certificate at a significant premium you might fail to recover your initial
investment under certain prepayment scenarios.
The amount, type and nature of credit support, if any, provided with
respect to a series of certificates will be determined on the basis of criteria
established by each rating agency rating classes of the certificates of that
series. These criteria are sometimes based upon analysis of the behavior of
mortgage loans in a larger group. However, we cannot assure you that the
historical data supporting that analysis will accurately reflect future
experience, or that the data derived from a large pool of mortgage loans will
accurately predict the delinquency, foreclosure or loss experience of any
particular pool of mortgage loans. In other cases, the criteria may be based
upon determinations of the values of
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the mortgaged properties that provide security for the mortgage loans in the
related trust fund. However, we cannot assure you that those values will not
decline in the future. See "Description of Credit Support" and "Rating" in this
prospectus.
RISKS ASSOCIATED WITH CERTAIN MORTGAGE LOANS AND MORTGAGED PROPERTIES
A description of risks associated with investments in mortgage loans is
included under "Certain Legal Aspects of Mortgage Loans" in this prospectus.
Commercial and multifamily lending generally exposes the lender to a greater
risk of loss than one- to four-family residential lending. Commercial and
multifamily lending typically involves larger loans to single borrowers or
groups of related borrowers than residential one- to four-family mortgage
loans. Further, the repayment of loans secured by income producing properties
is typically dependent upon the successful operation of the related real estate
project. If the cash flow from the project is reduced (for example, if leases
are not obtained or renewed), the borrower's ability to repay the loan may be
impaired. Commercial and multifamily real estate can be affected significantly
by the supply and demand in the market for the type of property securing the
loan and, therefore, may be subject to adverse economic conditions. Market
values may vary as a result of economic events or governmental regulations
outside the control of the borrower or lender that impact the cash flow of the
property. For example, some laws, such as the Americans with Disabilities Act,
may require modifications to properties, and rent control laws may limit rent
collections in the case of multifamily properties. A number of the mortgage
loans may be secured by liens on owner-occupied mortgaged properties or on
mortgaged properties leased to a single tenant or a small number of significant
tenants. Accordingly, a decline in the financial condition of the borrower or a
significant tenant, as applicable, may have a disproportionately greater effect
on the net operating income from those mortgaged properties than would be the
case with respect to mortgaged properties with multiple tenants.
Furthermore, the value of any mortgaged property may be adversely affected
by risks generally incident to interests in real property, including:
o Changes in general or local economic conditions and/or specific
industry segments;
o Declines in real estate values;
o Declines in rental or occupancy rates;
o Increases in interest rates, real estate tax rates and other operating
expenses;
o Changes in governmental rules, regulations and fiscal policies,
including environmental legislation;
o Acts of God; and
o Other factors beyond the control of a master servicer.
The type and use of a particular mortgaged property may present additional
risk. For instance:
o Mortgaged properties that operate as hospitals and nursing homes may
present special risks to lenders due to the significant governmental
regulation of the ownership, operation, maintenance and financing of
health care institutions.
o Hotel and motel properties are often operated pursuant to franchise,
management or operating agreements that may be terminable by the
franchisor or operator. Moreover, the transferability of a hotel's
operating, liquor and other licenses upon a transfer of the hotel,
whether through purchase or foreclosure, is subject to local law
requirements.
o The ability of a borrower to repay a mortgage loan secured by shares
allocable to one or more cooperative dwelling units may depend on the
ability of the dwelling units to generate sufficient rental income,
which may be subject to rent control or stabilization laws, to cover
both debt service on the loan as well as maintenance charges to the
cooperative. Further, a mortgage loan secured by cooperative shares is
subordinate to the mortgage, if any, on the cooperative apartment
building.
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The economic performance of mortgage loans that are secured by full
service hotels, limited service hotels, 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, are affected by various factors, including:
o Adverse economic and social conditions, either local, regional or
national (which may limit the amount that can be charged for a room
and reduce occupancy levels);
o Construction of competing hotels or resorts;
o Continuing expenditures for modernizing, refurbishing, and maintaining
existing facilities prior to the expiration of their anticipated
useful lives;
o Deterioration in the financial strength or managerial capabilities of
the owner and operator of a hotel; and
o Changes in travel patterns caused by changes in access, energy prices,
strikes, relocation of highways, the construction of additional
highways or other factors.
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.
The viability of any hotel property that is the franchisee of a national
or regional chain 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 that hotel property, the property would 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 servicer or special servicer) or
purchaser of that hotel property would be entitled to the rights under any
existing liquor license for that hotel property. It is more likely that those
persons would have to apply for new licenses. We cannot assure you that a new
license could be obtained or that it could be obtained promptly.
Other multifamily properties, hotels, retail properties, office buildings,
mobile home parks, nursing homes and self-storage facilities located in the
areas of the mortgaged properties compete with the mortgaged properties to
attract residents and customers. The leasing of real estate is highly
competitive. The principal means of competition are price, location and the
nature and condition of the facility to be leased. A borrower under a mortgage
loan competes with all lessors and developers of comparable types of real
estate in the area in which the mortgaged property is located. Those lessors or
developers could have lower rentals, lower operating costs, more favorable
locations or better facilities. While a borrower under a mortgage loan may
renovate, refurbish or expand the mortgaged property to maintain it and remain
competitive, that renovation, refurbishment or expansion may itself entail
significant risk. Increased competition could adversely affect income from and
market value of the mortgaged properties. In addition, the business conducted
at each mortgaged property may face competition from other industries and
industry segments.
It is anticipated that some or all of the mortgage loans included in any
trust fund will be nonrecourse loans or loans for which recourse may be
restricted or unenforceable. As to that mortgage loan, recourse in the event of
borrower default will be limited to the specific real property and other
assets, if any, that were pledged to secure the mortgage loan. However, even
with respect to those mortgage loans that provide for recourse against the
borrower and its assets generally, we cannot assure you that enforcement of
those recourse provisions will be practicable, or that the assets of the
borrower will be sufficient to permit a recovery in respect of a defaulted
mortgage loan in excess of the liquidation value of the related mortgaged
property. See "Certain Legal Aspects of Mortgage Loans--Foreclosure" in this
prospectus.
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Further, the concentration of default, foreclosure and loss risks in
individual mortgage loans in a particular trust fund will generally be greater
than for pools of single-family loans because mortgage loans in a trust fund
will generally consist of a smaller number of higher balance loans than would a
pool of single-family loans of comparable aggregate unpaid principal balance.
BORROWERS MAY BE UNABLE TO MAKE BALLOON PAYMENTS
Certain of the mortgage loans included in a trust fund may be
non-amortizing or only partially amortizing over their terms to maturity and,
thus, will require substantial principal payments (that is, balloon payments)
at their stated maturity. Mortgage loans of this type involve a greater degree
of risk than self-amortizing loans because the ability of a borrower to make a
balloon payment typically will depend upon its ability either to refinance the
loan or to sell the related mortgaged property. The ability of a borrower to
accomplish either of these goals will be affected by:
o The value of the related mortgaged property;
o The level of available mortgage interest rates at the time of sale or
refinancing;
o The borrower's equity in the related mortgaged property;
o The financial condition and operating history of the borrower and the
related mortgaged property;
o Tax laws, rent control laws, with respect to certain residential
properties;
o Medicaid and Medicare reimbursement rates, with respect to hospitals
and nursing homes;
o Prevailing general economic conditions; and
o The availability of credit for loans secured by multifamily or
commercial real properties generally.
Neither the depositor nor any of its affiliates will be required to
refinance any mortgage loan.
If described in this prospectus and in the related prospectus supplement,
to maximize recoveries on defaulted mortgage loans, the master servicer or a
special servicer may, within prescribed limits, extend and modify mortgage
loans that are in default or as to which a payment default is reasonably
foreseeable. While a master servicer or a special servicer generally will be
required to determine that any extension or modification is reasonably likely
to produce a greater recovery, taking into account the time value of money,
than liquidation, we cannot assure you that any extension or modification will
in fact increase the present value of receipts from or proceeds of the affected
mortgage loans.
CREDIT SUPPORT LIMITATIONS
The prospectus supplement for a series of certificates will describe any
credit support provided for those certificates. Any use of credit support will
be subject to the conditions and limitations described in this prospectus and
in the related prospectus supplement, and may not cover all potential losses or
risks. For example, it 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, if so provided in the related prospectus supplement. Although
subordination is intended to reduce the risk to holders of senior certificates
of delinquent distributions or ultimate losses, the amount of subordination
will be limited and may decline under certain circumstances described in the
related prospectus supplement. In addition, if principal payments on one or
more classes of certificates of a series are made in a specified order of
priority, any limits with respect to the aggregate amount of claims under any
related credit support may be exhausted before the principal of the later paid
classes of certificates of that series has been repaid in full. As a result,
the impact of losses and shortfalls experienced with respect to the mortgage
assets may fall primarily upon those subordinate classes of certificates.
Moreover, if a form of credit support covers more than one series of
certificates, holders of certificates of one series will be subject to the risk
that the credit support will be exhausted by the claims of the holders of
certificates of one or more other series.
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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 those classes of certificates. Such criteria will be based
on an assumed level of defaults, delinquencies and losses on the underlying
mortgage assets and certain other factors. However, we cannot assure you that
the default, delinquency or loss experience on the related mortgage assets will
not exceed the assumed levels. See "Risk Factors--Limited Nature of Ratings",
"Description of the Certificates" and "Description of Credit Support" in this
prospectus.
LEASES AND RENTS
Each mortgage loan included in any trust fund secured by mortgaged
property that is subject to leases typically will be secured by an assignment
of leases and rents pursuant to which the borrower assigns to the lender its
right, title and interest as landlord under the leases of the related mortgaged
property, and the income derived from those leases, as further security for the
related mortgage loan, while retaining a license to collect rents for so long
as there is no default. If the borrower defaults, the license terminates and
the lender is entitled to collect rents. Some state laws may require that the
lender take possession of the mortgaged property and obtain a judicial
appointment of a receiver before becoming entitled to collect the rents. In
addition, if bankruptcy or similar proceedings are commenced by or in respect
of the borrower, the lender's ability to collect the rents may be adversely
affected. See "Certain Legal Aspects of Mortgage Loans--Leases and Rents" in
this prospectus.
ENVIRONMENTAL RISKS
Under federal law and the laws of certain states, contamination of real
property may give rise to a lien on the property to assure or reimburse the
costs of cleanup. In several states, that lien has priority over an existing
mortgage lien on that property. In addition, under various federal, state and
local laws, ordinances and regulations, an owner or operator of real estate may
be liable for the costs of removal or remediation of hazardous substances or
toxic substances on, in or beneath the property. This liability may be imposed
without regard to whether the owner knew of, or was responsible for, the
presence of those hazardous or toxic substances. The costs of any required
remediation and the owner or operator's liability for them as to any property
are generally not limited under these laws, ordinances and regulations and
could exceed the value of the mortgaged property and the aggregate assets of
the owner or operator. In addition, as to the owners or operators of mortgaged
properties that generate hazardous substances that are disposed of at
"off-site" locations, the owners or operators may be held strictly, jointly and
severally liable if there are releases or threatened releases of hazardous
substances at the off-site locations where that person's hazardous substances
were disposed.
Under some environmental laws, such as the federal Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, as
well as some state laws, a secured lender (such as the trust) may be liable as
an "owner" or "operator" for the costs of dealing with hazardous substances
affecting a borrower's property, if agents or employees of the lender have
participated in the management of the borrower's property. This liability could
exist even if a previous owner caused the environmental damage. The trust's
potential exposure to liability for cleanup costs may increase if the trust
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.
See "Certain Legal Aspects of the Mortgage Loans--Environmental Risks" in this
prospectus.
SPECIAL HAZARD LOSSES
Unless otherwise specified in a prospectus supplement, the master servicer
for the related trust fund will be required to cause the borrower on each
mortgage loan in that trust fund to maintain the insurance coverage in respect
of the related mortgaged property required under the related mortgage,
including hazard insurance. The master servicer may satisfy its obligation to
cause hazard insurance to be maintained with respect to any mortgaged property
through acquisition of a blanket policy.
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In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of the property by:
o fire;
o lightning;
o explosion;
o smoke;
o windstorm and hail; and
o riot, strike and civil commotion.
Each subject to the conditions and exclusions specified in each policy.
The policies covering the mortgaged properties will be underwritten by
different insurers under different state laws, and therefore will not contain
identical terms and conditions. However, most policies do not typically cover
any physical damage resulting from war, revolution, governmental actions,
floods and other water-related causes, earth movement, including earthquakes,
landslides and mudflows, wet or dry rot, vermin, domestic animals and certain
other kinds of risks. Unless the related mortgage specifically requires the
mortgagor to insure against physical damage arising from those causes, those
losses may be borne, at least in part, by the holders of one or more classes of
offered certificates of the related series, to the extent they are not covered
by any available credit support. See "Description of the Pooling
Agreements--Hazard Insurance Policies" in this prospectus.
YOUR CERTIFICATES MAY NOT BE ERISA ELIGIBLE
Generally, ERISA applies to investments made by employee benefit plans and
transactions involving the assets of those plans. Due to the complexity of
regulations that govern those plans, if you are subject to ERISA you are urged
to consult your own counsel regarding consequences under ERISA of acquisition,
ownership and disposition of the offered certificates of any series. See
"Certain ERISA Considerations" in this prospectus.
CERTAIN FEDERAL TAX CONSIDERATIONS REGARDING RESIDUAL CERTIFICATES
If you hold certain classes of certificates that constitute a residual
interest in a "real estate mortgage investment conduit" for federal income tax
purposes, you will be required to report on your federal income tax returns as
ordinary income your pro rata share of the taxable income of the REMIC,
regardless of the amount or timing your receipt of cash payments, as described
in "Certain Federal Income Tax Consequences--Federal Income Tax Consequences
for REMIC Certificates" in this prospectus. Accordingly, under certain
circumstances, if you hold residual certificates you may have taxable income
and tax liabilities arising from your investment during a taxable year in
excess of the cash received during that period. The requirement to report your
pro rata share of the taxable income and net loss of the REMIC will continue
until the principal balances of all classes of certificates of the related
series have been reduced to zero, even though you have received full payment of
their stated interest and principal. A portion, or, in certain circumstances,
all, of your share of the REMIC taxable income may be treated as "excess
inclusion" income to you, which:
o generally, will not be subject to offset by losses from other
activities;
o if you are a tax-exempt holder, will be treated as unrelated business
taxable income; and
o if you are a foreign holder, will not qualify for exemption from
withholding tax.
If you are an individual and you hold a class of residual certificates,
you may be limited in your ability to deduct servicing fees and other expenses
of the REMIC. In addition, classes of residual certificates are subject to
certain restrictions on transfer. Because of the special tax treatment of
classes of residual certificates, the taxable income arising in a given year on
a class of residual certificates will not be equal to the taxable income
associated with investment in a corporate bond or
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stripped instrument having similar cash flow characteristics and pre-tax yield.
As a result, the after-tax yield on the classes of residual certificates 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
Certain 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 that income. See "Certain Federal Income Tax Consequences--
Federal Income Tax Consequences for REMIC Certificates--Taxation of Regular
Certificates" in this prospectus.
BANKRUPTCY PROCEEDINGS ENTAILS CERTAIN RISKS
Under the federal bankruptcy code, the filing of a petition in bankruptcy
by or against a borrower will stay the sale of the mortgaged property owned by
that borrower, as well as the commencement or continuation of a foreclosure
action. In addition, if a court determines that the value of the mortgaged
property is less than the principal balance of the mortgage loan it secures,
the court may prevent a lender from foreclosing on the mortgaged property,
subject to certain protections available to the lender. As part of a
restructuring plan, a court also may reduce the amount of secured indebtedness
to the then-current value of the mortgaged property. This action would make the
lender a general unsecured creditor for the difference between the then-current
value and the amount of its outstanding mortgage indebtedness.
A bankruptcy court also may:
o grant a debtor a reasonable time to cure a payment default on a
mortgage loan;
o reduce monthly payments due under a mortgage loan;
o change the rate of interest due on a mortgage loan; or
o otherwise alter the mortgage loan's repayment schedule.
Moreover, the filing of a petition in bankruptcy by, or on behalf of, a
junior lienholder may stay the senior lienholder from taking action to
foreclose on the junior lien. Additionally, the borrower's trustee or the
borrower, as debtor-in-possession, has certain special powers to avoid,
subordinate or disallow debts. In certain circumstances, the claims of the
trustee may be subordinated to financing obtained by a debtor-in-possession
subsequent to its bankruptcy.
Under the federal bankruptcy code, the lender will be stayed from
enforcing a borrower's assignment of rents and leases. The bankruptcy code also
may interfere with the trustee's ability to enforce lockbox requirements. The
legal proceedings necessary to resolve these issues can be time consuming and
costly and may significantly delay or diminish the receipt of rents. Rents also
may escape an assignment to the extent they are used by the borrower to
maintain the mortgaged property or for other court authorized expenses.
As a result of the foregoing, the trustee's recovery with respect to
borrowers in bankruptcy proceedings may be significantly delayed, and the
aggregate amount ultimately collected may be substantially less than the amount
owed.
BOOK-ENTRY SYSTEM FOR CERTAIN CLASSES MAY DECREASE LIQUIDITY AND DELAY PAYMENT
If so provided in the related prospectus supplement, one or more classes
of the offered certificates of any series will be issued as book-entry
certificates. Each class of book-entry certificates will be initially
represented by one or more certificates registered in the name of a nominee for
The Depository Trust Company, or DTC . Since transactions in the classes of
book-entry certificates of any series generally can be effected only through
The Depository Trust Company, and its participating organizations:
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o the liquidity of book-entry certificates in secondary trading market
that may develop may be limited because investors may be unwilling to
purchase certificates for which they cannot obtain physical
certificates;
o your ability to pledge a certificates to persons or entities that do
not participate in the DTC system, or otherwise to take action in
respect of the certificates, may be limited due to lack of a physical
security representing the certificates;
o your access to information regarding the certificates may be limited
since conveyance of notices and other communications by The Depository
Trust Company to its participating organizations, and directly and
indirectly through those participating organizations to you, will be
governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect at that time, and
o you may experience some delay in receiving distributions of interest
and principal on your certificates because distributions will be made
by the trustee to DTC and DTC will then be required to credit those
distributions to the accounts of its participating organizations and
only then will they be credited to your account either directly or
indirectly through DTC's participating organizations.
See "Description of the Certificates--Book-Entry Registration and
Definitive Certificates" in this prospectus.
DELINQUENT AND NON-PERFORMING MORTGAGE LOANS
If so provided in the related prospectus supplement, the trust fund for a
particular series of certificates may include mortgage loans that are past due.
In no event will the mortgage loans that are past due comprise 20 percent or
more of the trust fund at the time the mortgage loans are transferred to the
trust fund. None of the mortgage loans will be non-performing (i.e., more than
90 days delinquent or in foreclosure) at the time the mortgage loans are
transferred by the Depositor to a trust fund for a series. If so specified in
the related prospectus supplement, a special servicer may perform the servicing
of delinquent mortgage loans or mortgage loans that become non-performing after
the time they are transferred to a trust fund. Credit support provided with
respect to a particular series of certificates may not cover all losses related
to those delinquent or non-performing mortgage loans. You should consider the
risk that the inclusion of those mortgage loans in the trust fund may adversely
affect the rate of defaults and prepayments on the mortgage assets in the trust
fund and the yield on your certificates of that series. See "Description of the
Trust Funds--Mortgage Loans--General" in this prospectus.
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DESCRIPTION OF THE TRUST FUNDS
GENERAL
The primary assets of each trust fund will consist of (1) various types of
multifamily or commercial mortgage loans, (2) mortgage participations,
pass-through certificates or other mortgage-backed securities ("MBS") that
evidence interests in, or that are secured by pledges of, one or more of
various types of multifamily or commercial mortgage loans or (3) a combination
of mortgage loans and MBS. Chase Commercial Mortgage Securities Corp. (the
"Depositor") will establish each trust fund. 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 of the mortgage
asset (a "Mortgage Asset Seller"), which prior holder may or may not be the
originator of that mortgage loan or the issuer of that MBS and may be our
affiliate. The mortgage assets will not be guaranteed or insured by the
Depositor or any of its affiliates or, unless otherwise provided in the related
prospectus supplement, by any governmental agency or instrumentality or by any
other person. The discussion under the heading "--Mortgage Loans" below, unless
otherwise noted, applies equally to mortgage loans underlying any MBS included
in a particular trust fund.
MORTGAGE LOANS
General. The mortgage loans will be evidenced by promissory notes (the
"Mortgage Notes") secured by mortgages, deeds of trust or similar security
instruments (the "Mortgages") that create liens on fee or leasehold estates in
properties (the "Mortgaged Properties") consisting of
o Residential properties consisting of five or more rental or
cooperatively-owned dwelling units in high-rise, mid-rise or garden
apartment buildings or other residential structures or
o Office buildings, retail stores and establishments, hotels or motels,
nursing homes, assisted living facilities, continuum care facilities,
day care centers, schools, hospitals or other healthcare related
facilities, mobile home parks, warehouse facilities, mini-warehouse
facilities, self-storage facilities, distribution centers,
transportation centers, industrial plants, parking facilities,
entertainment and/or recreation facilities, mixed use properties
and/or unimproved land.
The multifamily properties may include mixed commercial and residential
structures, apartment buildings owned by private cooperative housing
corporations ("Cooperatives"), and shares of the Cooperative allocable to one
or more dwelling units occupied by non-owner tenants or to vacant units. Each
Mortgage will create a first priority or junior priority mortgage lien on a
borrower's fee estate in a Mortgaged Property. If a Mortgage creates a lien on
a borrower's leasehold estate in a property, then, unless otherwise specified
in the related prospectus supplement, the term of that leasehold will exceed
the term of the Mortgage Note by at least two years. Unless otherwise specified
in the related prospectus supplement, a person other than the Depositor will
have originated each mortgage loan, and the originator may be or may have been
an affiliate of the Depositor.
If so specified in the related prospectus supplement, mortgage assets for
a series of certificates may include mortgage loans made on the security of
real estate projects under construction. In that case, the related prospectus
supplement will describe the procedures and timing for making disbursements
from construction reserve funds as portions of the related real estate project
are completed. In addition, the mortgage assets for a particular series of
certificates may include mortgage loans that are delinquent or non-performing
as of the date those certificates are issued. In that case, the related
prospectus supplement will set forth, as to those mortgage loans, available
information as to the period of the delinquency or non-performance of those
loans, any forbearance arrangement then in effect, the condition of the related
Mortgaged Property and the ability of the Mortgaged Property to generate income
to service the mortgage debt.
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Default and Loss Considerations with Respect to the Mortgage
Loans. Mortgage loans secured by liens on income-producing properties are
substantially different from loans made on the security of owner-occupied
single-family homes. The repayment of a loan secured by a lien on an income-
producing property is typically dependent upon the successful operation of that
property (that is, its ability to generate income). Moreover, some or all of
the mortgage loans included in a particular trust fund may be non-recourse
loans, which means that, absent special facts, recourse in the case of default
will be limited to the Mortgaged Property and those other assets, if any, that
were pledged to secure repayment of the mortgage loan.
Lenders typically look to the Debt Service Coverage Ratio of a loan
secured by income-producing property as an important factor in evaluating the
risk of default on that loan. Unless otherwise defined in the related
prospectus supplement, the "Debt Service Coverage Ratio" of a mortgage loan at
any given time is the ratio of (1) the Net Operating Income derived from the
related Mortgaged Property for a twelve-month period to (2) the annualized
scheduled payments on the mortgage loan and any other loans senior thereto that
are secured by the related Mortgaged Property. Unless otherwise defined in the
related prospectus supplement, "Net Operating Income" means, for any given
period, the total operating revenues derived from a Mortgaged Property during
that period, minus the total operating expenses incurred in respect of that
Mortgaged Property during that period other than
o non-cash items such as depreciation and amortization,
o capital expenditures, and
o debt service on the related mortgage loan or on any other loans that
are secured by that Mortgaged Property.
The Net Operating Income of a Mortgaged Property will fluctuate over time
and may or may not be sufficient to cover debt service on the related mortgage
loan at any given time. As the primary source of the operating revenues of a
non-owner occupied, income-producing property, rental income (and, with respect
to a mortgage loan secured by a Cooperative apartment building, maintenance
payments from tenant-stockholders of a Cooperative) may be affected by the
condition of the applicable real estate market and/or area economy. In
addition, properties typically leased, occupied or used on a short-term basis,
such as certain healthcare-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 typically leased
for longer periods, such as warehouses, retail stores, office buildings and
industrial plants. Commercial properties may be owner-occupied or leased to a
small number of tenants. Thus, the Net Operating Income of a commercial
property may depend substantially on the financial condition of the borrower or
a tenant, and mortgage loans secured by liens on those properties may pose
greater risks than loans secured by liens on multifamily properties or on
multi-tenant commercial properties.
Increases in operating expenses due to the general economic climate or
economic conditions in a locality or industry segment, such as increases in
interest rates, real estate tax rates, energy costs, labor costs and other
operating expenses, and/or to changes in governmental rules, regulations and
fiscal policies, may also affect the risk of default on a mortgage loan. As may
be further described in the related prospectus supplement, in some cases leases
of Mortgaged Properties may provide that the lessee, rather than the
borrower/landlord, is responsible for payment of operating expenses ("Net
Leases"). However, the existence of these "net of expense" provisions will
result in stable Net Operating Income to the borrower/landlord only to the
extent that the lessee is able to absorb operating expense increases while
continuing to make rent payments.
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Lenders also look to the Loan-to-Value Ratio of a mortgage loan as a
factor in evaluating risk of loss if a property must be liquidated following a
default. Unless otherwise defined in the related prospectus supplement, the
"Loan-to-Value Ratio" of a mortgage loan at any given time is the ratio
(expressed as a percentage) of
o the then outstanding principal balance of the mortgage loan and any
other loans senior thereto that are secured by the related Mortgaged
Property to
o the Value of the related Mortgaged Property.
The "Value" of a Mortgaged Property is generally its fair market value
determined in an appraisal obtained by the originator at the origination of
that loan. The lower the Loan-to-Value Ratio, the greater the percentage of the
borrower's equity in a Mortgaged Property, and thus
(a) the greater the incentive of the borrower to perform under the
terms of the related mortgage loan (in order to protect its equity); and
(b) the greater the cushion provided to the lender against loss on
liquidation following a default.
Loan-to-Value Ratios will not necessarily constitute an accurate measure
of the risk of liquidation loss in a pool of mortgage loans. For example, the
value of a Mortgaged Property as of the date of initial issuance of the related
series of certificates may be less than the Value determined at loan
origination, and will likely continue to fluctuate from time to time based upon
changes in economic conditions, the real estate market and other factors
described in this prospectus. Moreover, even when current, an appraisal is not
necessarily a reliable estimate of value. Appraised values of income-producing
properties are generally based on
o the market comparison method (which compares recent resale value of
comparable properties at the date of the appraisal),
o the cost replacement method which calculates the cost of replacing the
property at that date,
o the income capitalization method which projects value based upon the
property's projected net cash flow, or
o upon a selection from or interpolation of the values derived from
those methods.
Each of these appraisal methods can present analytical difficulties. It is
often difficult to find truly comparable properties that have recently been
sold; the replacement cost of a property may have little to do with its current
market value; and income capitalization is inherently based on inexact
projections of income and expense and the selection of an appropriate
capitalization rate and discount rate. Where more than one of these appraisal
methods are used and provide significantly different results, an accurate
determination of value and, correspondingly, a reliable analysis of default and
loss risks, is even more difficult.
While we believe that the foregoing considerations are important factors
that generally distinguish loans secured by liens on income-producing real
estate from single-family mortgage loans, we cannot assure you that all of
these factors will in fact have been prudently considered by the originators of
the mortgage loans, or that, for a particular mortgage loan, they are complete
or relevant. See "Risk Factors--Risks Associated with Certain Mortgage Loans
and Mortgaged Properties" and "--Borrowers May Be Unable to Make Balloon
Payments" in this prospectus.
Payment Provisions of the Mortgage Loans. In general, each mortgage loan
o will provide for scheduled payments of principal, interest or both, to
be made on specified dates ("Due Dates") that occur monthly,
quarterly, semi-annually or annually.
o may provide for no accrual of interest or for accrual of interest at
an interest rate that is fixed over its term or that adjusts from time
to time, or that may be converted at the borrower's election from an
adjustable to a fixed interest rate, or from a fixed to an adjustable
interest rate,
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o may provide for level payments to maturity or for payments that adjust
from time to time to accommodate changes in the interest rate or to
reflect the occurrence of certain events, and may permit negative
amortization,
o may be fully amortizing or partially amortizing or non-amortizing,
with a balloon payment due on its stated maturity date, and
o may prohibit over its term or for a certain period prepayments (the
period of that prohibition, a "Lock-out Period" and its date of
expiration, a "Lock-out Date") and/or require payment of a premium or
a yield maintenance penalty (a "Prepayment Premium") in connection
with certain prepayments, in each case as described in the related
prospectus supplement.
A mortgage loan may also contain a provision that entitles the lender to a
share of appreciation of the related Mortgaged Property, or profits realized
from the operation or disposition of that Mortgaged Property or the benefit, if
any, resulting from the refinancing of the mortgage loan (this provision, an
"Equity Participation"), as described in the related prospectus supplement. If
holders of any class or classes of offered certificates of a series will be
entitled to all or a portion of an Equity Participation in addition to payments
of interest on and/or principal of those offered certificates, the related
prospectus supplement will describe the Equity Participation and the method or
methods by which distributions will be made to holders of those certificates.
Mortgage Loan Information in Prospectus Supplements. Each prospectus
supplement will contain certain information pertaining to the mortgage loans in
the related trust fund, which will generally be current as of a date specified
in the related prospectus supplement and which, to the extent then applicable
and specifically known to the Depositor, will include the following:
o the aggregate outstanding principal balance and the largest, smallest
and average outstanding principal balance of the mortgage loans,
o the type or types of property that provide security for repayment of
the mortgage loans,
o the earliest and latest origination date and maturity date of the
mortgage loans,
o the original and remaining terms to maturity of the mortgage loans, or
the respective ranges of remaining terms to maturity, and the weighted
average original and remaining terms to maturity of the mortgage
loans,
o the original Loan-to-Value Ratios of the mortgage loans, or the range
of the Loan-to-Value Ratios, and the weighted average original
Loan-to-Value Ratio of the mortgage loans,
o the interest rates borne by the mortgage loans, or range of the
interest rates, and the weighted average interest rate borne by the
mortgage loans,
o with respect to mortgage loans with adjustable mortgage interest rates
("ARM Loans"), the index or indices upon which those adjustments are
based, the adjustment dates, the range of gross margins and the
weighted average gross margin, and any limits on mortgage interest
rate adjustments at the time of any adjustment and over the life of
the ARM Loan,
o information regarding the payment characteristics of the mortgage
loans, including, without limitation, balloon payment and other
amortization provisions, Lock-out Periods and Prepayment Premiums,
o the Debt Service Coverage Ratios of the mortgage loans (either at
origination or as of a more recent date), or the range of the Debt
Service Coverage Ratios, and the weighted average of the Debt Service
Coverage Ratios, and
o the geographic distribution of the Mortgaged Properties on a
state-by-state basis.
In appropriate cases, the related prospectus supplement will also contain
certain information available to the Depositor that pertains to the provisions
of leases and the nature of tenants of the Mortgaged Properties. If we are
unable to tabulate the specific information described above at the
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time offered certificates of a series are initially offered, we will provide
more general information of the nature described above in the related
prospectus supplement, and specific information will be set forth in a report
which we will make available to purchasers of those certificates at or before
the initial issuance of the certificates and will be filed as part of a Current
Report on Form 8-K with the Securities and Exchange Commission within fifteen
days following that issuance.
MBS
MBS may include:
o private (that is, not guaranteed or insured by the United States or
any agency or instrumentality of the United States) mortgage
participations, mortgage pass-through certificates or other
mortgage-backed securities or
o certificates insured or guaranteed by the Federal Home Loan Mortgage
Corporation ("FHLMC"), the Federal National Mortgage Association
("FNMA"), the Governmental National Mortgage Association ("GNMA") or
the Federal Agricultural Mortgage Corporation ("FAMC") provided that,
unless otherwise specified in the related prospectus supplement, each
MBS will evidence an interest in, or will be secured by a pledge of,
mortgage loans that conform to the descriptions of the mortgage loans
contained in this prospectus.
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"). The issuer of the MBS (the "MBS Issuer") and/or the
servicer of the underlying mortgage loans (the "MBS Servicer") will have
entered into the MBS Agreement, generally with a trustee (the "MBS Trustee")
or, in the alternative, with the original purchaser or purchasers of the MBS.
The MBS may have been issued in one or more classes with characteristics
similar to the classes of certificates described in this prospectus. The MBS
Issuer, the MBS Servicer or the MBS Trustee will make distributions in respect
of the MBS on the dates specified in the related prospectus supplement. 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.
Reserve funds, subordination or other credit support similar to that
described for the certificates under "Description of Credit Support" may have
been provided with respect to the MBS. The type, characteristics and amount of
credit support, if any, will be a function of the characteristics of the
underlying mortgage loans and other factors and generally will have been
established on the basis of the requirements of any rating agency that may have
assigned a rating to the MBS, or by the initial purchasers of the MBS.
The prospectus supplement for a series of certificates that evidence
interests in MBS will specify, to the extent available:
o the aggregate approximate initial and outstanding principal amount and
type of the MBS to be included in the trust fund,
o the original and remaining term to stated maturity of the MBS, if
applicable,
o the pass-through or bond rate of the MBS or the formula for
determining the rates,
o the payment characteristics of the MBS,
o the MBS Issuer, MBS Servicer and MBS Trustee, as applicable,
o a description of the credit support, if any,
o the circumstances under which the related underlying mortgage loans,
or the MBS themselves, may be purchased prior to their maturity,
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o the terms on which mortgage loans may be substituted for those
originally underlying the MBS,
o the type of mortgage loans underlying the MBS and, to the extent
available to the Depositor and appropriate under the circumstances,
the other information in respect of the underlying mortgage loans
described under "--Mortgage Loans--Mortgage Loan Information in
Prospectus Supplements" above, and
o the characteristics of any cash flow agreements that relate to the
MBS.
CERTIFICATE ACCOUNTS
Each trust fund will include one or more certificate accounts established
and maintained on behalf of the certificateholders into which the person or
persons designated in the related prospectus supplement will, to the extent
described in this prospectus and in that prospectus supplement, deposit all
payments and collections received or advanced with respect to the mortgage
assets and other assets in the trust fund. A certificate account may be
maintained as an interest bearing or a non-interest bearing account, and funds
held in a certificate account may be held as cash or invested in certain
obligations acceptable to each rating agency rating one or more classes of the
related series of offered certificates.
CREDIT SUPPORT
If so provided in the prospectus supplement for a series of certificates,
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 that series in the form of subordination of one or more other
classes of certificates of that series or by one or more other types of credit
support, such as letters of credit, overcollateralization, insurance policies,
guarantees, surety bonds or reserve funds, or a combination of them. The amount
and types of credit support, the identification of the entity providing it (if
applicable) and related information with respect to each type of credit
support, if any, will be set forth in the prospectus supplement for a series of
certificates. See "Risk Factors--Credit Support Limitations" and "Description
of Credit Support" in this prospectus.
CASH FLOW AGREEMENTS
If so provided in the prospectus supplement for a series of certificates,
the related trust fund may include guaranteed investment contracts pursuant to
which moneys held in the funds and accounts established for those series will
be invested at a specified rate. The trust fund may also include interest rate
exchange agreements, interest rate cap or floor agreements, or currency
exchange agreements, which agreements are designed to reduce the effects of
interest rate or currency exchange rate fluctuations on the mortgage assets on
one or more classes of certificates. The principal terms of a guaranteed
investment contract or other agreement (any of these agreements, a "Cash Flow
Agreement"), and the identity of the Cash Flow Agreement obligor, will be
described in the prospectus supplement for a series of certificates.
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YIELD AND MATURITY CONSIDERATIONS
GENERAL
The yield on any offered certificate will depend on the price you paid,
the fixed, variable or adjustable pass-through interest rate of the certificate
and the amount and timing of distributions on the certificate. See "Risk
Factors--Prepayment Considerations; Variability in Average Life of Offered
Certificates; Special Yield Considerations" in this prospectus. The following
discussion contemplates a trust fund that consists solely of mortgage loans.
While the characteristics and behavior of mortgage loans underlying an MBS can
generally be expected to have the same effect on the yield to maturity and/or
weighted average life of a class of certificates as will the characteristics
and behavior of comparable mortgage loans, the effect may differ due to the
payment characteristics of the MBS. If a trust fund includes MBS, the related
prospectus supplement will discuss the effect that the MBS payment
characteristics may have on the yield to maturity and weighted average lives of
the offered certificates of the related series.
PASS-THROUGH RATE
The certificates of any class within a series may have a fixed, variable
or adjustable pass-through interest rate, which may or may not be based upon
the interest rates borne by the mortgage loans in the related trust fund. The
prospectus supplement with respect to any series of certificates will specify
the pass-through interest rate for each class of offered certificates of that
series or, in the case of a class of offered certificates with a variable or
adjustable pass-through interest rate, the method of determining the
pass-through interest rate; the effect, if any, of the prepayment of any
mortgage loan on the pass-through interest rate of one or more classes of
offered certificates; and whether the distributions of interest on the offered
certificates of any class will be dependent, in whole or in part, on the
performance of any obligor under a Cash Flow Agreement.
PAYMENT DELAYS
With respect to any series of certificates, a period of time will elapse
between the date upon which payments on the mortgage loans in the related trust
fund are due and the distribution date on which those payments are passed
through to certificateholders. That delay will effectively reduce the yield
that would otherwise be produced if payments on those mortgage loans were
distributed to certificateholders on or near the date they were due.
CERTAIN SHORTFALLS IN COLLECTIONS OF INTEREST
When a principal prepayment in full or in part is made on a mortgage loan,
the borrower is generally charged interest on the amount of that prepayment
only through the date of prepayment, instead of through the Due Date for the
next succeeding scheduled payment. However, interest accrued on any series of
certificates and distributable on them on any distribution date will generally
correspond to interest accrued on the mortgage loans to their respective Due
Dates during the related Due Period. Unless otherwise specified in the
prospectus supplement for a series of certificates, a "Due Period" is a
specified time period generally corresponding in length to the time period
between distribution dates, and all scheduled payments on the mortgage loans in
the related trust fund that are due during a given Due Period will, to the
extent received by a specified date (the "Determination Date") or otherwise
advanced by the related master servicer or other specified person, be
distributed to the holders of the certificates of that series on the next
succeeding distribution date. Consequently, if a prepayment on any mortgage
loan is distributable to certificateholders on a particular distribution date,
but that prepayment is not accompanied by interest on it to the Due Date for
that mortgage loan in the related Due Period, then the interest charged to the
borrower (net of servicing and administrative fees) may be less (that
shortfall, a "Prepayment Interest Shortfall") than the corresponding amount of
interest accrued and otherwise payable on the certificates of the related
series. If that shortfall is allocated to a class of offered certificates,
their yield will be adversely affected. The prospectus supplement for each
series of certificates will describe the manner in which
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those shortfalls will be allocated among the classes of those certificates. If
so specified in the prospectus supplement for a series of certificates, the
master servicer for that series will be required to apply some or all of its
servicing compensation for the corresponding period to offset the amount of
those shortfalls. The related prospectus supplement will also describe any
other amounts available to offset those shortfalls. See "Description of the
Pooling Agreements--Servicing Compensation and Payment of Expenses" in this
prospectus.
YIELD AND PREPAYMENT CONSIDERATIONS
A certificate's yield to maturity will be affected by the rate of
principal payments on the mortgage loans in the related trust fund and the
allocation of principal to reduce the principal balance (or notional amount, if
applicable) of that certificate. The rate of principal payments on the mortgage
loans in any trust fund will in turn be affected by the amortization schedules
of the mortgage loans (which, in the case of ARM Loans, may change periodically
to accommodate adjustments to their mortgage interest rates), the dates on
which any balloon payments are due, and the rate of principal prepayments on
them (including for this purpose, prepayments resulting from liquidations of
mortgage loans due to defaults, casualties or condemnations affecting the
Mortgaged Properties, or purchases of mortgage loans out of the related trust
fund). Because the rate of principal prepayments on the mortgage loans in any
trust fund will depend on future events and a variety of factors (as described
more fully below), we cannot assure you as to that rate.
The extent to which the yield to maturity of a class of offered
certificates of any series may vary from the anticipated yield will depend upon
the degree to which they are purchased at a discount or premium and when, and
to what degree, payments of principal on the mortgage loans in the related
trust fund are in turn distributed on those certificates, or, in the case of a
class of interest-only certificates, result in the reduction of its notional
amount. An investor should consider, in the case of any offered certificate
purchased at a discount, the risk that a slower than anticipated rate of
principal payments on the mortgage loans in the related trust fund could result
in an actual yield to that investor that is lower than the anticipated yield
and, in the case of any offered certificate purchased at a premium, the risk
that a faster than anticipated rate of principal payments on those mortgage
loans could result in an actual yield to that investor that is lower than the
anticipated yield. In addition, if an investor purchases an offered certificate
at a discount (or premium), and principal payments are made in reduction of the
principal balance or notional amount of that investor's offered certificates at
a rate slower (or faster) than the rate anticipated by the investor during any
particular period, the consequent adverse effects on that investor's yield
would not be fully offset by a subsequent like increase (or decrease) in the
rate of principal payments.
A class of certificates, including a class of offered certificates, may
provide that on any distribution date the holders of those certificates are
entitled to a pro rata share of the prepayments on the mortgage loans in the
related trust fund that are distributable on that date, to a disproportionately
large share (which, in some cases, may be all) of those prepayments, or to a
disproportionately small share (which, in some cases, may be none) of those
prepayments. As described in the related prospectus supplement, the respective
entitlements of the various classes of certificates of any series to receive
distributions in respect of payments (and, in particular, prepayments) of
principal of the mortgage loans in the related trust fund may vary based on the
occurrence of certain events, such as, the retirement of one or more classes of
certificates of that series, or subject to certain contingencies, such as,
prepayment and default rates with respect to those mortgage loans.
In general, the notional amount of a class of interest-only certificates
will either (1) be based on the principal balances of some or all of the
mortgage assets in the related trust fund or (2) equal the principal balances
of one or more of the other classes of certificates of the same series.
Accordingly, the yield on those interest-only certificates will be inversely
related to the rate at which payments and other collections of principal are
received on those mortgage assets or distributions are made in reduction of the
principal balances of those classes of certificates, as the case may be.
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Consistent with the foregoing, if a class of certificates of any series
consists of interest-only certificates or principal-only certificates, a lower
than anticipated rate of principal prepayments on the mortgage loans in the
related trust fund will negatively affect the yield to investors in
principal-only certificates, and a higher than anticipated rate of principal
prepayments on those mortgage loans will negatively affect the yield to
investors in interest-only certificates. If the offered certificates of a
series include those certificates, the related prospectus supplement will
include a table showing the effect of various assumed levels of prepayment on
yields on those certificates. Those tables will be intended to illustrate the
sensitivity of yields to various assumed prepayment rates and will not be
intended to predict, or to provide information that will enable investors to
predict, yields or prepayment rates.
We are not aware of any relevant publicly available or authoritative
statistics with respect to the historical prepayment experience of a group of
multifamily or commercial mortgage loans. However, the extent of prepayments of
principal of the mortgage loans in any trust fund may be affected by a factors
such as:
o the availability of mortgage credit,
o the relative economic vitality of the area in which the Mortgaged
Properties are located,
o the quality of management of the Mortgaged Properties,
o the servicing of the mortgage loans,
o possible changes in tax laws and other opportunities for investment,
o the existence of Lock-out Periods,
o requirements that principal prepayments be accompanied by Prepayment
Premiums, and
o by the extent to which these provisions may be practicably enforced.
The rate of prepayment on a pool of mortgage loans is also affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below a mortgage
loan's interest rate, a borrower may have an increased incentive to refinance
its mortgage loan. Even in the case of ARM Loans, as prevailing market interest
rates decline, and without regard to whether the mortgage interest rates on the
ARM Loans decline in a manner consistent therewith, the related borrowers may
have an increased incentive to refinance for purposes of either (1) converting
to a fixed rate loan and thereby "locking in" that rate or (2) taking advantage
of a different index, margin or rate cap or floor on another adjustable rate
mortgage loan.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
Mortgaged Properties in order to realize their equity in the Mortgaged
Properties, to meet cash flow needs or to make other investments. In addition,
some borrowers may be motivated by federal and state tax laws (which are
subject to change) to sell Mortgaged Properties prior to the exhaustion of tax
depreciation benefits. We will make no representation as to the particular
factors that will affect the prepayment of the mortgage loans in any trust
fund, as to the relative importance of those factors, as to the percentage of
the principal balance of the mortgage loans that will be paid as of any date or
as to the overall rate of prepayment on the mortgage loans.
WEIGHTED AVERAGE LIFE AND MATURITY
The rate at which principal payments are received on the mortgage loans in
any trust fund will affect the ultimate maturity and the weighted average life
of one or more classes of the certificates of that series. Weighted average
life refers to the average amount of time that will elapse from the date of
issuance of an instrument until each dollar allocable as principal of that
instrument is repaid to the investor.
The weighted average life and maturity of a class of certificates of any
series will be influenced by the rate at which principal on the related
mortgage loans, whether in the form of scheduled amortization or prepayments
(for this purpose, the term "prepayment" includes voluntary
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prepayments, liquidations due to default and purchases of mortgage loans out of
the related trust fund), is paid to that class. Prepayment rates on loans are
commonly measured relative to a prepayment standard or model, such as the
Constant Prepayment Rate ("CPR") prepayment model or the Standard Prepayment
Assumption ("SPA") prepayment model. CPR represents an assumed constant rate of
prepayment each month (expressed as an annual percentage) relative to the then
outstanding principal balance of a pool of loans for the life of those loans.
SPA represents an assumed variable rate of prepayment each month (expressed as
an annual percentage) relative to the then outstanding principal balance of a
pool of loans, with different prepayment assumptions often expressed as
percentages of SPA. For example, a prepayment assumption of 100% of SPA assumes
prepayment rates of 0.2% per annum of the then outstanding principal balance of
the 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 particular pool of loans. Moreover, the
CPR and SPA models were developed based upon historical prepayment experience
for single-family loans. Thus, it is unlikely that the prepayment experience of
the mortgage loans included in any trust fund will conform to any particular
level of CPR or SPA.
The prospectus supplement with respect to each series of certificates will
contain tables, if applicable, setting forth the projected weighted average
life of each class of offered certificates of those series and the percentage
of the initial principal balance of each class that would be outstanding on
specified distribution dates based on the assumptions stated in that prospectus
supplement, including assumptions that prepayments on the related mortgage
loans are made at rates corresponding to various percentages of CPR or SPA, or
at other rates specified in that prospectus supplement. Those tables and
assumptions will illustrate the sensitivity of the weighted average lives of
the certificates to various assumed prepayment rates and will not be intended
to predict, or to provide information that will enable investors to predict,
the actual weighted average lives of the certificates.
CONTROLLED AMORTIZATION CLASSES AND COMPANION CLASSES
A series of certificates may include one or more controlled amortization
classes, which will entitle the holders of those certificates to receive
principal distributions according to a specified principal payment schedule,
which schedule is supported by creating priorities, as described in the related
prospectus supplement, to receive principal payments from the mortgage loans in
the related trust fund. Unless otherwise specified in the related prospectus
supplement, each controlled amortization class will either be a planned
amortization class or a targeted amortization class. In general, a planned
amortization class has a "prepayment collar", that is, a range of prepayment
rates that can be sustained without disruption, that determines the principal
cash flow of those certificates. That prepayment collar is not static, and may
expand or contract after the issuance of the planned amortization class
depending on the actual prepayment experience for the underlying mortgage
loans. Distributions of principal on a planned amortization class would be made
in accordance with the specified schedule so long as prepayments on the
underlying mortgage loans remain at a relatively constant rate within the
prepayment collar and, as described below, companion classes exist to absorb
"excesses" or "shortfalls" in principal payments on the underlying mortgage
loans. If the rate of prepayment on the underlying mortgage loans from time to
time falls outside the prepayment collar, or fluctuates significantly within
the prepayment collar, especially for any extended period of time, that event
may have material consequences in respect of the anticipated weighted average
life and maturity for a planned amortization class. A targeted amortization
class is structured so that principal distributions generally will be payable
on it in accordance with its specified principal payments schedule so long as
the rate of prepayments on the related mortgage assets remains relatively
constant at the particular rate used in establishing that schedule. A targeted
amortization class will generally afford the holders of those certificates some
protection against early retirement or some protection against an extended
average life, but not both.
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Although prepayment risk cannot be eliminated entirely for any class of
certificates, a controlled amortization class will generally provide a
relatively stable cash flow so long as the actual rate of prepayment on the
mortgage loans in the related trust fund remains relatively constant at the
rate, or within the range of rates, of prepayment used to establish the
specific principal payment schedule for those certificates. Prepayment risk
with respect to a given pool of mortgage assets does not disappear, however,
and the stability afforded to a controlled amortization class comes at the
expense of one or more companion classes of the same series, any of which
companion classes may also be a class of offered certificates. In general, and
as more particularly described in the related prospectus supplement, a
companion class will entitle the holders of those certificates to a
disproportionately large share of prepayments on the mortgage loans in the
related trust fund when the rate of prepayment is relatively fast, and will
entitle the holders of those certificates to a disproportionately small share
of prepayments on the mortgage loans in the related trust fund when the rate of
prepayment is relatively slow. A class of certificates that entitles the
holders of those certificates to a disproportionately large share of the
prepayments on the mortgage loans in the related trust fund enhances the risk
of early retirement of that class, or call risk, if the rate of prepayment is
relatively fast; while a class of certificates that entitles the holders of
those certificates to a disproportionately small share of the prepayments on
the mortgage loans in the related trust fund enhances the risk of an extended
average life of that class, or extension risk, if the rate of prepayment is
relatively slow. Thus, as described in the related prospectus supplement, a
companion class absorbs some (but not all) of the "call risk" and/or "extension
risk" that would otherwise belong to the related controlled amortization class
if all payments of principal of the mortgage loans in the related trust fund
were allocated on a pro rata basis.
OTHER FACTORS AFFECTING YIELD, WEIGHTED AVERAGE LIFE AND MATURITY
Balloon Payments; Extensions of Maturity. Some or all of the mortgage
loans included in a particular trust fund may require that balloon payments be
made at maturity. Because the ability of a borrower to make a balloon payment
typically will depend upon its ability either to refinance the loan or to sell
the related Mortgaged Property, there is a risk that mortgage loans that
require balloon payments may default at maturity, or that the maturity of that
mortgage loan may be extended in connection with a workout. In the case of
defaults, recovery of proceeds may be delayed by, among other things,
bankruptcy of the borrower or adverse conditions in the market where the
property is located. In order to minimize losses on defaulted mortgage loans,
the master servicer or a special servicer, to the extent and under the
circumstances set forth in this prospectus and in the related prospectus
supplement, may be authorized to modify mortgage loans that are in default or
as to which a payment default is imminent. Any defaulted balloon payment or
modification that extends the maturity of a mortgage loan may delay
distributions of principal on a class of offered certificates and thereby
extend the weighted average life of your certificates and, if those
certificates were purchased at a discount, reduce your yield.
Negative Amortization. The weighted average life of a class of
certificates can be affected by mortgage loans that permit negative
amortization to occur. A mortgage loan that provides for the payment of
interest calculated at a rate lower than the rate at which interest accrues on
it would be expected during a period of increasing interest rates to amortize
at a slower rate (and perhaps not at all) than if interest rates were declining
or were remaining constant. This slower rate of mortgage loan amortization
would correspondingly be reflected in a slower rate of amortization for one or
more classes of certificates of the related series. In addition, negative
amortization on one or more mortgage loans in any trust fund may result in
negative amortization on the certificates of the related series. The related
prospectus supplement will describe, if applicable, the manner in which
negative amortization in respect of the mortgage loans in any trust fund is
allocated among the respective classes of certificates of the related series.
The portion of any mortgage loan negative amortization allocated to a class of
certificates may result in a deferral of some or all of the interest payable on
them, which deferred interest may be added to the principal balance of the
certificates. Accordingly, the weighted
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average lives of mortgage loans that permit negative amortization and that of
the classes of certificates to which the negative amortization would be
allocated or that would bear the effects of a slower rate of amortization on
those mortgage loans, may increase as a result of that feature.
Negative amortization also may occur in respect of an ARM Loan that limits
the amount by which its scheduled payment may adjust in response to a change in
its mortgage interest rate, provides that its scheduled payment will adjust
less frequently than its mortgage interest rate or provides for constant
scheduled payments notwithstanding adjustments to its mortgage interest rate.
Accordingly, during a period of declining interest rates, the scheduled payment
on that mortgage loan may exceed the amount necessary to amortize the loan
fully over its remaining amortization schedule and pay interest at the then
applicable mortgage interest rate, thereby resulting in the accelerated
amortization of that mortgage loan. This acceleration in amortization of its
principal balance will shorten the weighted average life of that mortgage loan
and, correspondingly, the weighted average lives of those classes of
certificates entitled to a portion of the principal payments on that mortgage
loan.
The extent to which the yield on any offered certificate will be affected
by the inclusion in the related trust fund of mortgage loans that permit
negative amortization, will depend upon (1) whether that offered certificate
was purchased at a premium or a discount and (2) the extent to which the
payment characteristics of those mortgage loans delay or accelerate the
distributions of principal on that certificate or, in the case of an
interest-only certificate, delay or accelerate the amortization of the notional
amount of that certificate. See "--Yield and Prepayment Considerations" above.
Foreclosures and Payment Plans. The number of foreclosures and the
principal amount of the mortgage loans that are foreclosed in relation to the
number and principal amount of mortgage loans that are repaid in accordance
with their terms will affect the weighted average lives of those mortgage loans
and, accordingly, the weighted average lives of and yields on the certificates
of the related series. Servicing decisions made with respect to the mortgage
loans, including the use of payment plans prior to a demand for acceleration
and the restructuring of mortgage loans in bankruptcy proceedings, may also
have an effect upon the payment patterns of particular mortgage loans and thus
the weighted average lives of and yields on the certificates of the related
series.
Losses and Shortfalls on the Mortgage Assets. The yield on your
certificates will directly depend on the extent to which you are required to
bear the effects of any losses or shortfalls in collections arising out of
defaults on the mortgage loans in the related trust fund and the timing of
those losses and shortfalls. In general, the earlier that any loss or shortfall
occurs, the greater will be the negative effect on yield for any class of
certificates that is required to bear the effects of the shortfall.
The amount of any losses or shortfalls in collections on the mortgage
assets in any trust fund, to the extent not covered or offset by draws on any
reserve fund or under any instrument of credit support, will be allocated among
the respective classes of certificates of the related series in the priority
and manner, and subject to the limitations, specified in the related prospectus
supplement. As described in the related prospectus supplement, those
allocations may be effected by a reduction in the entitlements to interest
and/or principal balances of one or more classes of certificates, or by
establishing a priority of payments among those classes of certificates.
The yield to maturity on a class of Subordinate Certificates may be
extremely sensitive to losses and shortfalls in collections on the mortgage
loans in the related trust fund.
Additional Certificate Amortization. In addition to entitling the holders
of one or more classes of a series of certificates to a specified portion,
which may during specified periods range from none to all, of the principal
payments received on the mortgage assets in the related trust fund, one or more
classes of certificates of any series, including one or more classes of offered
certificates of those series, may provide for distributions of principal of
those certificates from (1) amounts attributable to interest accrued but not
currently distributable on one or more classes of accrual certificates, (2)
Excess Funds or (3) any other amounts described in the related prospectus
supplement. Unless otherwise specified in the related prospectus supplement,
"Excess Funds" will, in general, represent that portion of the amounts
distributable in respect of the certificates of any series on any distribution
date that represent
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(1) interest received or advanced on the mortgage assets in the related trust
fund that is in excess of the interest currently accrued on the certificates of
that series, or (2) Prepayment Premiums, payments from Equity Participations or
any other amounts received on the mortgage assets in the related trust fund
that do not constitute interest on, or principal of, those certificates.
The amortization of any class of certificates out of the sources described
in the preceding paragraph would shorten the weighted average life of those
certificates and, if those certificates were purchased at a premium, reduce the
yield on those certificates. The related prospectus supplement will discuss the
relevant factors to be considered in determining whether distributions of
principal of any class of certificates out of those sources would have any
material effect on the rate at which those certificates are amortized.
Optional Early Termination. If so specified in the related prospectus
supplement, a series of certificates may be subject to optional early
termination through the repurchase of the mortgage assets in the related trust
fund by the party or parties specified in the related prospectus supplement,
under the circumstances and in the manner set forth in the prospectus
supplement. If so provided in the related prospectus supplement, upon the
reduction of the principal balance of a specified class or classes of
certificates by a specified percentage or amount, the specified party may be
authorized or required to solicit bids for the purchase of all of the mortgage
assets of the related trust fund, or of a sufficient portion of those mortgage
assets to retire that class or classes, as set forth in the related prospectus
supplement. In the absence of other factors, any early retirement of a class of
offered certificates would shorten the weighted average life of those
certificates and, if those certificates were purchased at premium, reduce the
yield on those certificates.
THE DEPOSITOR
Chase Commercial Mortgage Securities Corp., the Depositor, is a New York
corporation organized on August 2, 1993. The Depositor is a wholly-owned
subsidiary of The Chase Manhattan Bank. The Depositor maintains its principal
office at 270 Park Avenue, New York, New York 10017-2070. Its telephone number
is (212) 834-5723. The Depositor does not have, nor is it expected in the
future to have, any significant assets.
USE OF PROCEEDS
We will apply the net proceeds to be received from the sale of the
certificates of any series to the purchase of Trust Assets or use the net
proceeds for general corporate purposes. We expect 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 we have
acquired, prevailing interest rates, availability of funds and general market
conditions.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
Each series of certificates will represent the entire beneficial ownership
interest in a trust fund. As described in the related prospectus supplement,
the certificates of each series, including the offered certificates of that
series, may consist of one or more classes of certificates that, among other
things:
o provide for the accrual of interest on the certificates at a fixed,
variable or adjustable rate;
o are senior (collectively, "Senior Certificates") or subordinate
(collectively, "Subordinate Certificates") to one or more other
classes of certificates in entitlement to certain distributions on the
certificates;
o are principal-only certificates entitled to distributions of
principal, with disproportionately small, nominal or no distributions
of interest;
o are interest-only certificates entitled to distributions of interest,
with disproportionately small, nominal or no distributions of
principal;
o provide for distributions of interest on, or principal of, those
certificates that commence only after the occurrence of certain
events, such as the retirement of one or more other classes of
certificates of that series;
o provide for distributions of principal of those certificates to be
made, from time to time or for designated periods, at a rate that is
faster, and, in some cases, substantially faster, or slower, and, in
some cases, substantially slower, than the rate at which payments or
other collections of principal are received on the mortgage assets in
the related trust fund;
o provide for controlled distributions of principal of those
certificates to be made based on a specified payment schedule or other
methodology, subject to available funds; or
o provide for distributions based on collections of Prepayment Premiums
and Equity Participations on the mortgage assets in the related trust
fund.
Each class of offered certificates of a series will be issued in minimum
denominations corresponding to the principal balances or, in case of certain
classes of interest-only certificates or residual certificates, notional
amounts or percentage interests, specified in the related prospectus
supplement. As provided in the related prospectus supplement, one or more
classes of offered certificates of any series may be issued in fully
registered, definitive form (those certificates, "Definitive Certificates") or
may be offered in book-entry format (those certificates, "Book-Entry
Certificates") through the facilities of The Depository Trust Company ("DTC").
The offered certificates of each series (if issued as Definitive Certificates)
may be transferred or exchanged, subject to any restrictions on transfer
described in the related prospectus supplement, at the location specified in
the related prospectus supplement, without the payment of any service charges,
other than any tax or other governmental charge payable in connection
therewith. Interests in a class of Book-Entry Certificates will be transferred
on the book-entry records of DTC and its participating organizations. See "Risk
Factors--Limited Liquidity of Your Certificates" and "--Book-Entry System for
Certain Classes May Decrease Liquidity and Delay Payment" in this prospectus.
DISTRIBUTIONS
Distributions on the certificates of each series will be made on each
distribution date as specified in the related prospectus supplement from the
Available Distribution Amount for that series and that distribution date.
Unless otherwise provided in the related prospectus supplement, the "Available
Distribution Amount" for any series of certificates and any distribution date
will refer to the total of all payments or other collections on or in respect
of the mortgage assets and any other assets included in the related trust fund
that are available for distribution to the holders of certificates of that
series on that date. The particular components of the Available Distribution
Amount for any series on each distribution date will be more specifically
described in the related prospectus supplement.
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Except as otherwise specified in the related prospectus supplement,
distributions on the certificates of each series, other than the final
distribution in retirement of that certificate, will be made to the persons in
whose names those certificates are registered at the close of business on the
last business day of the month preceding the month in which the applicable
distribution date occurs (the "Record Date"), and the amount of each
distribution will be determined as of the close of business on the date (the
"Determination Date") specified in the related prospectus supplement. All
distributions with respect to each class of certificates on each distribution
date will be allocated pro rata among the outstanding certificates in that
class. Payments will be made either by wire transfer in immediately available
funds to your account at a bank or other entity having appropriate facilities
for the transfer, if you have provided the person required to make those
payments with wiring instructions no later than the date specified in the
related prospectus supplement (and, if so provided in the related prospectus
supplement, that you hold certificates in the amount or denomination specified
in the prospectus supplement), or by check mailed to the address of that
certificateholder as it appears on the certificate register; provided, however,
that the final distribution in retirement of any class of certificates (whether
Definitive Certificates or Book-Entry Certificates) will be made only upon
presentation and surrender of those certificates at the location specified in
the notice to certificateholders of the final distribution.
DISTRIBUTIONS OF INTEREST ON THE CERTIFICATES
Each class of certificates of each series, other than certain classes of
principal-only certificates and residual certificates ("Residual Certificates")
that have no pass-through interest rate, may have a different pass-through
interest rate, which in each case may be fixed, variable or adjustable. The
related prospectus supplement will specify the pass-through interest rate or,
in the case of a variable or adjustable pass-through interest rate, the method
for determining the pass-through interest rate, for each class. Unless
otherwise specified in the related prospectus supplement, interest on the
certificates of each series will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.
Distributions of interest in respect of any class of certificates (other
than certain classes of certificates that will be entitled to distributions of
accrued interest commencing only on the distribution date, or under the
circumstances, specified in the related prospectus supplement ("Accrual
Certificates"), and other than any class of principal-only certificates or
Residual Certificates which are not entitled to distributions of interest, will
be made on each distribution date based on the Accrued Certificate Interest for
that class and that distribution date, subject to the sufficiency of the
portion of the Available Distribution Amount allocable to that class on that
distribution date. Prior to the time interest is distributable on any class of
Accrual Certificates, the amount of Accrued Certificate Interest otherwise
distributable on that class will be added to the principal balance of those
certificates on each distribution date. With respect to each class of
certificates, other than certain classes of interest-only certificates and
certain classes of residual certificates, the "Accrued Certificate Interest"
for each distribution date will be equal to interest at the applicable
pass-through interest rate accrued for a specified time period generally
corresponding in length to the time period between distribution dates, on the
outstanding principal balance of that class of certificates immediately prior
to that distribution date.
Unless otherwise provided in the related prospectus supplement, the
Accrued Certificate Interest for each distribution date on a class of
interest-only certificates will be similarly calculated except that it will
accrue on a notional amount that is either (1) based on the principal balances
of some or all of the mortgage assets in the related trust fund, (2) equal to
the principal balances of one or more other classes of certificates of the same
series or (3) an amount or amounts specified in the applicable prospective
supplement. Reference to a notional amount with respect to a class of
interest-only certificates is solely for convenience in making certain
calculations and does not represent the right to receive any distributions of
principal. If so specified in the related prospectus supplement, the amount of
Accrued Certificate Interest that is otherwise distributable on, or, in the
case of Accrual Certificates, that may otherwise be added to the principal
balance of, one or more classes of the certificates of a series will be reduced
to the extent that any Prepayment Interest Shortfalls, as described under
"Yield and Maturity Considerations--Certain Shortfalls in Collections of
Interest" in
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this prospectus, exceed the amount of any sums that are applied to offset the
amount of those shortfalls. The particular manner in which those shortfalls
will be allocated among some or all of the classes of certificates of that
series will be specified in the related prospectus supplement. The related
prospectus supplement will also describe the extent to which the amount of
Accrued Certificate Interest that is otherwise distributable on (or, in the
case of Accrual Certificates, that may otherwise be added to the principal
balance of) a class of offered certificates may be reduced as a result of any
other contingencies, including delinquencies, losses and deferred interest on
or in respect of the mortgage assets in the related trust fund. Unless
otherwise provided in the related prospectus supplement, any reduction in the
amount of Accrued Certificate Interest otherwise distributable on a class of
certificates by reason of the allocation to that class of a portion of any
deferred interest on or in respect of the mortgage assets in the related trust
fund will result in a corresponding increase in the principal balance of that
class. See "Risk Factors--Prepayment Considerations; Variability in Average
Life of Offered Certificates; Special Yield Considerations" and "Yield and
Maturity Considerations" in this prospectus.
DISTRIBUTIONS OF PRINCIPAL ON THE CERTIFICATES
Each class of certificates of each series, other than certain classes of
interest-only certificates and Residual Certificates, will have a principal
balance which, at any time, will equal the then maximum amount that the holders
of certificates of that class will be entitled to receive in respect of
principal out of the future cash flow on the mortgage assets and other assets
included in the related trust fund. The outstanding principal balance of a
class of certificates will be reduced by distributions of principal made on the
certificates from time to time and, if so provided in the related prospectus
supplement, further by any losses incurred in respect of the related mortgage
assets allocated thereto from time to time. In turn, the outstanding principal
balance of a class of certificates may be increased as a result of any deferred
interest on or in respect of the related mortgage assets being allocated to
that class from time to time, and will be increased, in the case of a class of
Accrual Certificates prior to the distribution date on which distributions of
interest on the certificates are required to commence, by the amount of any
Accrued Certificate Interest in respect of those certificates (reduced as
described above). The initial principal balance of each class of a series of
certificates will be specified in the related prospectus supplement. As
described in the related prospectus supplement, distributions of principal with
respect to a series of certificates will be made on each distribution date to
the holders of the class or classes of certificates of that series entitled
thereto until the principal balances of those certificates have been reduced to
zero. Distributions of principal with respect to one or more classes of
certificates may be made at a rate that is faster, and, in some cases,
substantially faster, than the rate at which payments or other collections of
principal are received on the mortgage assets in the related trust fund.
Distributions of principal with respect to one or more classes of certificates
may not commence until the occurrence of certain events, including the
retirement of one or more other classes of certificates of the same series, or
may be made at a rate that is slower, and, in some cases, substantially slower,
than the rate at which payments or other collections of principal are received
on the mortgage assets in the related trust fund. Distributions of principal
with respect to one or more classes of certificates may be made, subject to
available funds, based on a specified principal payment schedule. Distributions
of principal with respect to one or more classes of certificates may be
contingent on the specified principal payment schedule for another class of the
same series and the rate at which payments and other collections of principal
on the mortgage assets in the related trust fund are received. Unless otherwise
specified in the related prospectus supplement, distributions of principal of
any class of offered certificates will be made on a pro rata basis among all of
the certificates of that class.
DISTRIBUTIONS ON THE CERTIFICATES IN RESPECT OF PREPAYMENT PREMIUMS OR IN
RESPECT OF EQUITY PARTICIPATIONS
If so provided in the related prospectus supplement, Prepayment Premiums
or payments in respect of Equity Participations received on or in connection
with the mortgage assets in any trust fund will be distributed on each
distribution date to the holders of the class of certificates of the related
series entitled thereto in accordance with the provisions described in that
prospectus supplement.
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ALLOCATION OF LOSSES AND SHORTFALLS
The amount of any losses or shortfalls in collections on the mortgage
assets in any trust fund, to the extent not covered or offset by draws on any
reserve fund or under any instrument of credit support, will be allocated among
the respective classes of certificates of the related series in the priority
and manner, and subject to the limitations, specified in the related prospectus
supplement. As described in the related prospectus supplement, those
allocations may be effected by a reduction in the entitlements to interest
and/or principal balances of one or more classes of certificates, or by
establishing a priority of payments among those classes of certificates.
ADVANCES IN RESPECT OF DELINQUENCIES
If provided in the related prospectus supplement, if a trust fund includes
mortgage loans, the master servicer, a special servicer, the trustee, any
provider of credit support and/or any other specified person may be obligated
to advance, or have the option of advancing, on or before each distribution
date, from its or their own funds or from excess funds held in the related
certificate account that are not part of the Available Distribution Amount for
the related series of certificates for that distribution date, an amount up to
the aggregate of any payments of principal, other than any balloon payments,
and interest that were due on or in respect of those mortgage loans during the
related Due Period and were delinquent on the related Determination Date.
Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the class or classes of certificates entitled
thereto, rather than to guarantee or insure against losses. Accordingly, all
advances made out of a specific entity's own funds will be reimbursable out of
related recoveries on the mortgage loans, including amounts received under any
instrument of credit support, respecting which those advances were made (as to
any mortgage loan, "Related Proceeds") and those other specific sources as may
be identified in the related prospectus supplement, including in the case of a
series that includes one or more classes of Subordinate Certificates,
collections on other mortgage loans in the related trust fund that would
otherwise be distributable to the holders of one or more classes of those
Subordinate Certificates. No advance will be required to be made by a master
servicer, special servicer or trustee if, in the good faith judgment of the
master servicer, special servicer or trustee, as the case may be, that advance
would not be recoverable from Related Proceeds or another specifically
identified source (each, a "Nonrecoverable Advance"); and, if previously made
by a master servicer, special servicer or trustee, a Nonrecoverable Advance
will be reimbursable to the advancing party from any amounts in the related
certificate account prior to any distributions being made to the related series
of certificateholders.
If advances have been made by a master servicer, special servicer, trustee
or other entity from excess funds in a certificate account, the advancing party
will be required to replace those funds in that certificate account on any
future distribution date to the extent that funds in that certificate account
on that distribution date are less than payments required to be made to the
related series of certificateholders on that date. If so specified in the
related prospectus supplement, the obligation of a master servicer, special
servicer, trustee or other entity to make advances may be secured by a cash
advance reserve fund or a surety bond. If applicable, information regarding the
characteristics of a surety bond, and the identity of any obligor on that
surety bond, will be set forth in the related prospectus supplement.
If so provided in the related prospectus supplement, any entity making
advances will be entitled to receive interest on those advances for the period
that those advances are outstanding at the rate specified in that prospectus
supplement, and that entity will be entitled to payment of that interest
periodically from general collections on the mortgage loans in the related
trust fund prior to any payment to the related series of certificateholders or
as otherwise described in the prospectus supplement.
The prospectus supplement for any series of certificates evidencing an
interest in a trust fund that includes MBS will describe any comparable
advancing obligation.
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REPORTS TO CERTIFICATEHOLDERS
On each distribution date, together with the distribution to the holders
of each class of the offered certificates of a series, a master servicer or
trustee, as provided in the related prospectus supplement, will forward to each
holder a statement (a "Distribution Date Statement") that, unless otherwise
provided in the related prospectus supplement, will set forth, among other
things, in each case to the extent applicable:
o the amount of that distribution to holders of that class of offered
certificates that was applied to reduce the principal balance of those
certificates, expressed as a dollar amount per minimum denomination of
the relevant class of offered certificates or per a specified portion
of that minimum denomination;
o the amount of that distribution to holders of that class of offered
certificates that is allocable to Accrued Certificate Interest,
expressed as a dollar amount per minimum denomination of the relevant
class of offered certificates or per a specified portion of that
minimum denomination;
o the amount, if any, of that distribution to holders of that class of
offered certificates that is allocable to (A) Prepayment Premiums and
(B) payments on account of Equity Participations, expressed as a
dollar amount per minimum denomination of the relevant class of
offered certificates or per a specified portion of that minimum
denomination;
o the amount, if any, by which that distribution is less than the
amounts to which holders of that class of offered certificates are
entitled;
o if the related trust fund includes mortgage loans, the aggregate
amount of advances included in that distribution;
o if the related trust fund includes mortgage loans, the amount of
servicing compensation received by the related master servicer (and,
if payable directly out of the related trust fund, by any special
servicer and any sub-servicer) and other customary information as the
reporting party deems necessary or desirable, or that a
certificateholder reasonably requests, to enable certificateholders to
prepare their tax returns;
o information regarding the aggregate principal balance of the related
mortgage assets on or about that distribution date;
o if the related trust fund includes mortgage loans, information
regarding the number and aggregate principal balance of those mortgage
loans that are delinquent in varying degrees;
o if the related trust fund includes mortgage loans, information
regarding the aggregate amount of losses incurred and principal
prepayments made with respect to those mortgage loans during the
specified period, generally equal in length to the time period between
distribution dates, during which prepayments and other unscheduled
collections on the mortgage loans in the related trust fund must be
received in order to be distributed on a particular distribution date;
o the principal 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 that distribution date, separately
identifying any reduction in that principal balance or notional amount
due to the allocation of any losses in respect of the related mortgage
assets, any increase in that principal balance or notional amount due
to the allocation of any negative amortization in respect of the
related mortgage assets and any increase in the principal balance of a
class of Accrual Certificates, if any, in the event that Accrued
Certificate Interest has been added to that balance;
o if the class of offered certificates has a variable pass-through
interest rate or an adjustable pass-through interest rate, the
pass-through interest rate applicable to that class for that
distribution date and, if determinable, for the next succeeding
distribution date;
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o the amount deposited in or withdrawn from any reserve fund on that
distribution date, and the amount remaining on deposit in that reserve
fund as of the close of business on that distribution date;
o if the related trust fund includes one or more instruments of credit
support, like a letter of credit, an insurance policy and/or a surety
bond, the amount of coverage under that instrument as of the close of
business on that distribution date; and
o to the extent not otherwise reflected through the information
furnished as described above, the amount of credit support being
afforded by any classes of Subordinate Certificates.
The prospectus supplement for each series of certificates may describe
additional information to be included in reports to the holders of the offered
certificates of that series.
Within a reasonable period of time after the end of each calendar year,
the master servicer or trustee for a series of certificates, as the case may
be, will be required to furnish to each person who at any time during the
calendar year was a holder of an offered certificate of that series a statement
containing the information set forth in the first three categories described
above, aggregated for that calendar year or the applicable portion of that year
during which that person was a certificateholder. This obligation will be
deemed to have been satisfied to the extent that substantially comparable
information is provided pursuant to any requirements of the Internal Revenue
Code of 1986, as amended (the "Code"), as are from time to time in force. See,
however, "Description of the Certificates--Book-Entry Registration and
Definitive Certificates" in this prospectus.
If the trust fund for a series of certificates includes MBS, the ability
of the related master servicer or trustee, as the case may be, to include in
any Distribution Date Statement information regarding the mortgage loans
underlying that MBS will depend on the reports received with respect to that
MBS. In those cases, the related prospectus supplement will describe the
loan-specific information to be included in the distribution date statements
that will be forwarded to the holders of the offered certificates of that
series in connection with distributions made to them.
VOTING RIGHTS
The voting rights evidenced by each series of certificates will be
allocated among the respective classes of that series in the manner described
in the related prospectus supplement.
Certificateholders will generally not have a right to vote, except with
respect to required consents to certain amendments to the agreement pursuant to
which the certificates are issued and as otherwise specified in the related
prospectus supplement. See "Description of the Pooling Agreements-- Amendment"
in this prospectus. The holders of specified amounts of certificates of a
particular series will have the right to act as a group to remove the related
trustee and also upon the occurrence of certain events which if continuing
would constitute an event of default on the part of the related master
servicer. See "Description of the Pooling Agreements--Events of Default--Rights
Upon Event of Default--Resignation and Removal of the Trustee" in this
prospectus.
TERMINATION
The obligations created by the pooling and servicing or other agreement
creating a series of certificates will terminate following:
o the final payment or other liquidation of the last mortgage asset
underlying the series or the disposition of all property acquired upon
foreclosure of any mortgage loan underlying the series, and
o the payment to the certificateholders of the series of all amounts
required to be paid to them.
Written notice of termination will be given to each certificateholder of
the related series, and the final distribution will be made only upon
presentation and surrender of the certificates of that series at the location
to be specified in the notice of termination.
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If so specified in the related prospectus supplement, a series of
certificates may be subject to optional early termination through the
repurchase of the mortgage assets in the related trust fund by the party or
parties specified in the prospectus supplement, in the manner set forth in the
prospectus supplement. If so provided in the related prospectus supplement,
upon the reduction of the principal balance of a specified class or classes of
certificates by a specified percentage or amount, a party designated in the
prospectus supplement may be authorized or required to bid for or solicit bids
for the purchase of all the mortgage assets of the related trust fund, or of a
sufficient portion of those mortgage assets to retire those class or classes,
in the manner set forth in the prospectus supplement.
BOOK-ENTRY REGISTRATION AND DEFINITIVE CERTIFICATES
If so provided in the prospectus supplement for a series of certificates,
one or more classes of the offered certificates of that series will be offered
in book-entry format through the facilities of The Depository Trust Company,
and that class will be represented by one or more global certificates
registered in the name of DTC or its nominee.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking corporation" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within
the meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
was created to hold securities for its participating organizations
("Participants") and facilitate the clearance and settlement of securities
transactions between Participants through electronic computerized book-entry
changes in their accounts, thereby eliminating the need for physical movement
of securities certificates. "Direct Participants", which maintain accounts with
DTC, include securities brokers and dealers, banks, trust companies and
clearing corporations and may include certain other organizations. DTC is owned
by a number of its Direct Participants and by the New York Stock Exchange,
Inc., the American Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc. Access to the DTC system also is available to others
like banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants").
Purchases of Book-Entry Certificates under the DTC system must be made by
or through Direct Participants, which will receive a credit for the Book-Entry
Certificates on DTC's records. The ownership interest of each actual purchaser
of a Book-Entry Certificate (a "Certificate Owner") is in turn to be recorded
on the Direct and Indirect Participants' records. Certificate Owners will not
receive written confirmation from DTC of their purchases, but Certificate
Owners are expected to receive written confirmations providing details of those
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participant through which each Certificate Owner entered into the
transaction. Transfers of ownership interest in the Book-Entry Certificates are
to be accomplished by entries made on the books of Participants acting on
behalf of Certificate Owners. Certificate Owners will not receive certificates
representing their ownership interests in the Book-Entry Certificates, except
in the event that use of the book-entry system for the Book-Entry Certificates
of any series is discontinued as described below.
DTC has no knowledge of the actual Certificate Owners of the Book-Entry
Certificates; DTC's records reflect only the identity of the Direct
Participants to whose accounts those certificates are credited, which may or
may not be the Certificate Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Certificate Owners will be governed
by arrangements among them, subject to any statutory or regulatory requirements
as may be in effect from time to time.
Distributions on the Book-Entry Certificates will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the related distribution
date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment
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on that date. Disbursement of those distributions by Participants to
Certificate Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in
bearer form or registered in "street name", and will be the responsibility of
that Participant (and not of DTC, the Depositor or any trustee or master
servicer), subject to any statutory or regulatory requirements as may be in
effect from time to time. Under a book-entry system, Certificate Owners may
receive payments after the related distribution date.
Unless otherwise provided in the related prospectus supplement, the only
certificateholder of record will be the nominee of DTC, and the Certificate
Owners will not be recognized as certificateholders under the agreement
pursuant to which the certificates are issued. Certificate Owners will be
permitted to exercise the rights of certificateholders under that agreement
only indirectly through the Participants who in turn will exercise their rights
through DTC. The Depositor is informed that DTC will take action permitted to
be taken by a certificateholder under that agreement only at the direction of
one or more Participants to whose account with DTC interests in the Book-Entry
Certificates are credited.
Because DTC can act only on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain Certificate Owners, the ability of
a Certificate Owner to pledge its interest in Book-Entry Certificates to
persons or entities that do not participate in the DTC system, or otherwise
take actions in respect of its interest in Book-Entry Certificates, may be
limited due to the lack of a physical certificate evidencing that interest.
Unless otherwise specified in the related prospectus supplement,
certificates initially issued in book-entry form will be issued as Definitive
Certificates to Certificate Owners or their nominees, rather than to DTC or its
nominee, only if
o the Depositor advises the trustee in writing that DTC is no longer
willing or able to discharge properly its responsibilities as
depository with respect to those certificates and the Depositor is
unable to locate a qualified successor or
o the Depositor, at its option, elects to terminate the book-entry
system through DTC with respect to those certificates.
Upon the occurrence of either of the events described above, DTC will be
required to notify all Participants of the availability through DTC of
Definitive Certificates. Upon surrender by DTC of the certificate or
certificates representing a class of Book-Entry Certificates, together with
instructions for registration, the trustee for the related series or other
designated party will be required to issue to the Certificate Owners identified
in those instructions the Definitive Certificates to which they are entitled,
and thereafter the holders of those Definitive Certificates will be recognized
as certificateholders of record under the related agreement pursuant to which
the certificates are issued.
DESCRIPTION OF THE POOLING AGREEMENTS
GENERAL
The certificates of each series will be issued pursuant to a pooling and
servicing agreement or other agreement specified in the related prospectus
supplement (in either case, a "Pooling Agreement"). In general, the parties to
a Pooling Agreement will include the Depositor, a trustee, a master servicer
and, in some cases, a special servicer appointed as of the date of the Pooling
Agreement. However, a Pooling Agreement may include a Mortgage Asset Seller as
a party, and a Pooling Agreement that relates to a trust fund that consists
solely of MBS may not include a master servicer or other servicer as a party.
All parties to each Pooling Agreement under which certificates of a series are
issued will be identified in the related prospectus supplement. If so specified
in the related prospectus supplement, an affiliate of the Depositor, or the
Mortgage Asset Seller or an affiliate of the Mortgage Asset Seller, may perform
the functions of master servicer or special servicer. Any party to a Pooling
Agreement may own certificates.
A form of a Pooling Agreement has been filed as an exhibit to the
Registration Statement of which this prospectus is a part. However, the
provisions of each Pooling Agreement will vary
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depending upon the nature of the certificates to be issued and the nature of
the related trust fund. The following summaries describe certain provisions
that may appear in a Pooling Agreement under which certificates that evidence
interests in mortgage loans will be issued. The prospectus supplement for a
series of certificates will describe any provision of the related Pooling
Agreement that materially differs from the description contained in this
prospectus and, if the related trust fund includes MBS, will summarize all of
the material provisions of the related Pooling Agreement. The summaries in this
prospectus do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all of the provisions of the Pooling
Agreement for each series of certificates and the description of those
provisions in the related prospectus supplement. We will provide a copy of the
Pooling Agreement (without exhibits) that relates to any series of certificates
without charge upon written request of a holder of a certificate of that series
addressed to Chase Commercial Mortgage Securities Corp., 270 Park Avenue, New
York, New York 10017-2070, Attention: President.
ASSIGNMENT OF MORTGAGE LOANS; REPURCHASES
At the time of issuance of any series of certificates, we will assign (or
cause to be assigned) to the designated trustee the mortgage loans to be
included in the related trust fund. The trustee will, concurrently with the
assignment, deliver the certificates to or at the direction of the Depositor in
exchange for the mortgage loans and the other assets to be included in the
trust fund for that series. Each mortgage loan will be identified in a
schedule. That schedule generally will include detailed information that
pertains to each mortgage loan included in the related trust fund, which
information will typically include the address of the related Mortgaged
Property and type of that property; the mortgage interest rate and, if
applicable, the applicable index, gross margin, adjustment date and any rate
cap information; the original and remaining term to maturity; the original
amortization term; and the original and outstanding principal balance.
With respect to each mortgage loan to be included in a trust fund, we will
deliver (or cause to be delivered) to the related trustee (or to a custodian
appointed by the trustee) certain loan documents which, unless otherwise
specified in the related prospectus supplement, will include the original
Mortgage Note endorsed, without recourse, to the order of the trustee, the
original Mortgage, or a certified copy, in each case with evidence of recording
indicated on it and an assignment of the Mortgage to the trustee in recordable
form. Unless otherwise provided in the prospectus supplement for a series of
certificates, the related Pooling Agreement will require us or another party to
the agreement to promptly cause each assignment of Mortgage to be recorded in
the appropriate public office for real property records.
The trustee (or a custodian appointed by the trustee) for a series of
certificates will be required to review the mortgage loan documents delivered
to it within a specified period of days after receipt of the mortgage loan
documents, and the trustee (or that custodian) will hold those documents in
trust for the benefit of the certificateholders of that series. Unless
otherwise specified in the related prospectus supplement, if that document is
found to be missing or defective, and that omission or defect, as the case may
be, materially and adversely affects the interests of the certificateholders of
the related series, the trustee (or that custodian) will be required to notify
the master servicer and the Depositor, and one of those persons will be
required to notify the relevant Mortgage Asset Seller. In that case, and if the
Mortgage Asset Seller cannot deliver the document or cure the defect within a
specified number of days after receipt of that notice, then, except as
otherwise specified below or in the related prospectus supplement, the Mortgage
Asset Seller will be obligated to repurchase the related mortgage loan from the
trustee at a price that will be specified in the related prospectus supplement.
If so provided in the prospectus supplement for a series of certificates, a
Mortgage Asset Seller, in lieu of repurchasing a mortgage loan as to which
there is missing or defective loan documentation, will have the option,
exercisable upon certain conditions and/or within a specified period after
initial issuance of that series of certificates, to replace those mortgage
loans with one or more other mortgage loans, in accordance with standards that
will be described in the prospectus supplement. Unless otherwise specified in
the related prospectus supplement, this repurchase or substitution obligation
will constitute the sole remedy to holders of the certificates of any series or
to the related trustee on their behalf for missing or defective loan
documentation and neither the
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Depositor nor, unless it is the Mortgage Asset Seller, the master servicer will
be obligated to purchase or replace a mortgage loan if a Mortgage Asset Seller
defaults on its obligation to do so. Notwithstanding the foregoing, if a
document has not been delivered to the related trustee (or to a custodian
appointed by the trustee) because that document has been submitted for
recording, and neither that document nor a certified copy, in either case with
evidence of recording on it, can be obtained because of delays on the part of
the applicable recording office, then, unless otherwise specified in the
related prospectus supplement, the Mortgage Asset Seller will not be required
to repurchase or replace the affected mortgage loan on the basis of that
missing document so long as it continues in good faith to attempt to obtain
that document or that certified copy.
REPRESENTATIONS AND WARRANTIES; REPURCHASES
Unless otherwise provided in the prospectus supplement for a series of
certificates, the Depositor will, with respect to each mortgage loan in the
related trust fund, make or assign, or cause to be made or assigned, certain
representations and warranties (the person making those representations and
warranties, the "Warranting Party") covering, by way of example:
o the accuracy of the information set forth for that mortgage loan on
the schedule of mortgage loans delivered upon initial issuance of the
certificates;
o the enforceability of the related Mortgage Note and Mortgage and the
existence of title insurance insuring the lien priority of the related
Mortgage;
o the Warranting Party's title to the mortgage loan and the authority of
the Warranting Party to sell the mortgage loan; and
o the payment status of the mortgage loan.
It is expected that in most cases the Warranting Party will be the
Mortgage Asset Seller; however, the Warranting Party may also be an affiliate
of the Mortgage Asset Seller, the Depositor or an affiliate of the Depositor,
the master servicer, a special servicer or another person acceptable to the
Depositor. The Warranting Party, if other than the Mortgage Asset Seller, will
be identified in the related prospectus supplement.
Unless otherwise provided in the related prospectus supplement, each
Pooling Agreement will provide that the master servicer and/or trustee will be
required to notify promptly any Warranting Party of any breach of any
representation or warranty made by it in respect of a mortgage loan that
materially and adversely affects the interests of the certificateholders of the
related series. If that Warranting Party cannot cure that breach within a
specified period following the date on which it was notified of the breach,
then, unless otherwise provided in the related prospectus supplement, it will
be obligated to repurchase that mortgage loan from the trustee at a price that
will be specified in the related prospectus supplement. If so provided in the
prospectus supplement for a series of certificates, a Warranting Party, in lieu
of repurchasing a mortgage loan as to which a breach has occurred, will have
the option, exercisable upon certain conditions and/or within a specified
period after initial issuance of that series of certificates, to replace that
mortgage loan with one or more other mortgage loans, in accordance with
standards that will be described in the prospectus supplement. Unless otherwise
specified in the related prospectus supplement, this repurchase or substitution
obligation will constitute the sole remedy available to holders of the
certificates of any series or to the related trustee on their behalf for a
breach of representation and warranty by a Warranting Party and neither the
Depositor nor the master servicer, in either case unless it is the Warranting
Party, will be obligated to purchase or replace a mortgage loan if a Warranting
Party defaults on its obligation to do so.
In some cases, representations and warranties will have been made in
respect of a mortgage loan as of a date prior to the date upon which the
related series of certificates is issued, and thus may not address events that
may occur following the date as of which they were made. However, we will not
include any mortgage loan in the trust fund for any series of certificates if
anything has come to our attention that would cause us to believe that the
representations and warranties made in respect of that mortgage loan will not
be accurate in all material respects as of the date of issuance. The date as
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of which the representations and warranties regarding the mortgage loans in any
trust fund were made will be specified in the related prospectus supplement.
COLLECTION AND OTHER SERVICING PROCEDURES
The master servicer for any trust fund, directly or through sub-servicers,
will be required to make reasonable efforts to collect all scheduled payments
under the mortgage loans in that trust fund, and will be required to follow the
same collection procedures as it would follow with respect to mortgage loans
that are comparable to the mortgage loans in that trust fund and held for its
own account, provided those procedures are consistent with (1) the terms of the
related Pooling Agreement and any related instrument of credit support included
in that trust fund, (2) applicable law and (3) the servicing standard specified
in the related Pooling Agreement and prospectus supplement (the "Servicing
Standard").
The master servicer for any trust fund, directly or through sub-servicers,
will also be required to perform as to the mortgage loans in that trust fund
various other customary functions of a servicer of comparable loans, including
maintaining escrow or impound accounts, if required under the related Pooling
Agreement, for payment of taxes, insurance premiums, ground rents and similar
items, or otherwise monitoring the timely payment of those items; attempting to
collect delinquent payments; supervising foreclosures; negotiating
modifications; conducting property inspections on a periodic or other basis;
managing (or overseeing the management of) Mortgaged Properties acquired on
behalf of that trust fund through foreclosure, deed-in-lieu of foreclosure or
otherwise (each, an "REO Property"); and maintaining servicing records relating
to those mortgage loans. Unless otherwise specified in the related prospectus
supplement, the master servicer will be responsible for filing and settling
claims in respect of particular mortgage loans under any applicable instrument
of credit support. See "Description of Credit Support" in this prospectus.
SUB-SERVICERS
A master servicer may delegate its servicing obligations in respect of the
mortgage loans serviced thereby to one or more third-party servicers; provided
that, unless otherwise specified in the related prospectus supplement, the
master servicer will remain obligated under the related Pooling Agreement. A
sub-servicer for any series of certificates may be an affiliate of the
Depositor or master servicer. Unless otherwise provided in the related
prospectus supplement, each sub-servicing agreement between a master servicer
and a sub-servicer (a "Sub-Servicing Agreement") will provide that, if for any
reason the master servicer is no longer acting in that capacity, the trustee or
any successor master servicer may assume the master servicer's rights and
obligations under that Sub-Servicing Agreement. A master servicer will be
required to monitor the performance of sub-servicers retained by it and will
have the right to remove a sub-servicer retained by it at any time it considers
removal to be in the best interests of certificateholders.
Unless otherwise provided in the related prospectus supplement, a master
servicer will be solely liable for all fees owed by it to any sub-servicer,
irrespective of whether the master servicer's compensation pursuant to the
related Pooling Agreement is sufficient to pay those fees. Each sub-servicer
will be reimbursed by the master servicer that retained it for certain
expenditures which it makes, generally to the same extent the master servicer
would be reimbursed under a Pooling Agreement. See "Description of the Pooling
Agreements--Certificate Account" and "--Servicing Compensation and Payment of
Expenses" in this prospectus.
SPECIAL SERVICERS
To the extent so specified in the related prospectus supplement, one or
more special servicers may be a party to the related Pooling Agreement or may
be appointed by the master servicer or another specified party. A special
servicer for any series of certificates may be an affiliate of the Depositor or
the master servicer. A special servicer may be entitled to any of the rights,
and subject to any of the obligations, described in this prospectus in respect
of a master servicer. The related
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prospectus supplement will describe the rights, obligations and compensation of
any special servicer for a particular series of certificates. The master
servicer will not be liable for the performance of a special servicer.
CERTIFICATE ACCOUNT
General. The master servicer, the trustee and/or a special servicer will,
as to each trust fund that includes mortgage loans, establish and maintain or
cause to be established and maintained one or more separate accounts for the
collection of payments on or in respect of those mortgage loans, which will be
established so as to comply with the standards of each rating agency that has
rated any one or more classes of certificates of the related series. A
certificate account may be maintained as an interest-bearing or a
non-interest-bearing account and the funds held in a certificate account may be
invested pending each succeeding distribution date in United States government
securities and other obligations that are acceptable to each rating agency that
has rated any one or more classes of certificates of the related series
("Permitted Investments"). Unless otherwise provided in the related prospectus
supplement, any interest or other income earned on funds in a certificate
account will be paid to the related master servicer, trustee or any special
servicer as additional compensation. A certificate account may be maintained
with the related master servicer, special servicer or Mortgage Asset Seller or
with a depository institution that is an affiliate of any of the foregoing or
of the Depositor, provided that it complies with applicable rating agency
standards. If permitted by the applicable rating agency or agencies and so
specified in the related prospectus supplement, a certificate account may
contain funds relating to more than one series of mortgage pass-through
certificates and may contain other funds representing payments on mortgage
loans owned by the related master servicer or any special servicer or serviced
by either on behalf of others.
Deposits. Unless otherwise provided in the related Pooling Agreement and
described in the related prospectus supplement, a master servicer, trustee or
special servicer will be required to deposit or cause to be deposited in the
certificate account for each trust fund that includes mortgage loans, within a
certain period following receipt (in the case of collections on or in respect
of the mortgage loans) or otherwise as provided in the related Pooling
Agreement, the following payments and collections received or made by the
master servicer, the trustee or any special servicer subsequent to the cut-off
date (other than payments due on or before the cut-off date):
1. all payments on account of principal, including principal prepayments,
on the mortgage loans;
2. all payments on account of interest on the mortgage loans, including
any default interest collected, in each case net of any portion
retained by the master servicer or any special servicer as its
servicing compensation or as compensation to the trustee;
3. all proceeds received under any hazard, title or other insurance
policy that provides coverage with respect to a Mortgaged Property or
the related mortgage loan or in connection with the full or partial
condemnation of a Mortgaged Property (other than proceeds applied to
the restoration of the property or released to the related borrower in
accordance with the customary servicing practices of the master
servicer (or, if applicable, a special servicer) and/or the terms and
conditions of the related Mortgage) (collectively, "Insurance and
Condemnation Proceeds") and all other amounts received and retained in
connection with the liquidation of defaulted mortgage loans or
property acquired by foreclosure or otherwise ("Liquidation
Proceeds"), together with the net operating income (less reasonable
reserves for future expenses) derived from the operation of any
Mortgaged Properties acquired by the trust fund through foreclosure or
otherwise;
4. 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" in this prospectus;
5. any advances made as described under "Description of the
Certificates--Advances in Respect of Delinquencies" in this
prospectus;
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6. any amounts paid under any Cash Flow Agreement, as described under
"Description of the Trust Funds--Cash Flow Agreements" in this
prospectus;
7. all proceeds of the purchase of any mortgage loan, or property
acquired in respect of a mortgage loan, by the Depositor, any Mortgage
Asset Seller or any other specified person as described under
"--Assignment of Mortgage Loans; Repurchases" and "--Representations
and Warranties; Repurchases" in this prospectus, all proceeds of the
purchase of any defaulted mortgage loan as described under
"--Realization Upon Defaulted Mortgage Loans" in this prospectus, and
all proceeds of any mortgage asset purchased as described under
"Description of the Certificates--Termination" in this prospectus (all
of the foregoing, also "Liquidation Proceeds");
8. any amounts paid by the master servicer to cover Prepayment Interest
Shortfalls arising out of the prepayment of mortgage loans as
described under "--Servicing Compensation and Payment of Expenses" in
this prospectus;
9. to the extent that this item does not constitute additional servicing
compensation to the master servicer or a special servicer, any
payments on account of modification or assumption fees, late payment
charges, Prepayment Premiums or Equity Participations with respect to
the mortgage loans;
10. all payments required to be deposited in the certificate account with
respect to any deductible clause in any blanket insurance policy
described under "--Hazard Insurance Policies" in this prospectus;
11. any amount required to be deposited by the master servicer or the
trustee in connection with losses realized on investments for the
benefit of the master servicer or the trustee, as the case may be, of
funds held in the certificate account; and
12. any other amounts required to be deposited in the certificate account
as provided in the related Pooling Agreement and described in the
related prospectus supplement.
Withdrawals. Unless otherwise provided in the related Pooling Agreement
and described in the related prospectus supplement, a master servicer, trustee
or special servicer may make withdrawals from the certificate account for each
trust fund that includes mortgage loans for any of the following purposes:
1. to make distributions to the certificateholders on each distribution
date;
2. to pay the master servicer, the trustee or a special servicer any
servicing fees not previously retained by them out of payments on the
particular mortgage loans as to which those fees were earned;
3. to reimburse the master servicer, a special servicer, the trustee or
any other specified person for any unreimbursed amounts advanced by it
as described under "Description of the Certificates--Advances in
Respect of Delinquencies" in this prospectus, the reimbursement to be
made out of amounts received that were identified and applied by the
master servicer or a special servicer, as applicable, as late
collections of interest on and principal of the particular mortgage
loans with respect to which the advances were made or out of amounts
drawn under any form of credit support with respect to those mortgage
loans;
4. to reimburse the master servicer, the trustee or a special servicer
for unpaid servicing fees earned by it and certain unreimbursed
servicing expenses incurred by it with respect to mortgage loans in
the trust fund and properties acquired in respect of the mortgage
loans, the reimbursement to be made out of amounts that represent
Liquidation Proceeds and Insurance and Condemnation Proceeds collected
on the particular mortgage loans and properties, and net income
collected on the particular properties, with respect to which those
fees were earned or those expenses were incurred or out of amounts
drawn under any form of credit support with respect to those mortgage
loans and properties;
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5. to reimburse the master servicer, a special servicer, the trustee or
other specified person for any advances described in clause (3) above
made by it and/or any servicing expenses referred to in clause (4)
above incurred by it that, in the good faith judgment of the master
servicer, special servicer, trustee or other specified person, as
applicable, will not be recoverable from the amounts described in
clauses (3) and (4), respectively, the reimbursement to be made from
amounts collected on other mortgage loans in the same trust fund or,
if so provided by the related Pooling Agreement and described in the
related prospectus supplement, only from that portion of amounts
collected on those other mortgage loans that is otherwise
distributable on one or more classes of Subordinate Certificates of
the related series;
6. if described in the related prospectus supplement, to pay the master
servicer, a special servicer, the trustee or any other specified
person interest accrued on the advances described in clause (3) above
made by it and the servicing expenses described in clause (4) above
incurred by it while they remain outstanding and unreimbursed;
7. to pay for costs and expenses incurred by the trust fund for
environmental site assessments performed with respect to Mortgaged
Properties that constitute security for defaulted mortgage loans, and
for any containment, clean-up or remediation of hazardous wastes and
materials present on those Mortgaged Properties, as described under
"--Realization Upon Defaulted Mortgage Loans" in this prospectus;
8. to reimburse the master servicer, the special servicer, the Depositor,
or any of their respective directors, officers, employees and agents,
as the case may be, for certain expenses, costs and liabilities
incurred thereby, as described under "--Certain Matters Regarding the
Master Servicer and the Depositor" in this prospectus;
9. if described in the related prospectus supplement, to pay the fees of
trustee;
10. to reimburse the trustee or any of its directors, officers, employees
and agents, as the case may be, for certain expenses, costs and
liabilities incurred thereby, as described under "--Certain Matters
Regarding the Trustee" in this prospectus;
11. if described in the related prospectus supplement, to pay the fees of
any provider of credit support;
12. if described in the related prospectus supplement, to reimburse prior
draws on any form of credit support;
13. to pay the master servicer, a special servicer or the trustee, as
appropriate, interest and investment income earned in respect of
amounts held in the certificate account as additional compensation;
14. to pay (generally from related income) for costs incurred in
connection with the operation, management and maintenance of any
Mortgaged Property acquired by the trust fund by foreclosure or
otherwise;
15. if one or more elections have been made to treat the trust fund or
designated portions of the trust fund as a REMIC, to pay any federal,
state or local taxes imposed on the trust fund or its assets or
transactions, as described under "Certain Federal Income Tax
Consequences-- Federal Income Tax Consequences for REMIC
Certificates--Taxes That May Be Imposed on the REMIC Pool" in this
prospectus;
16. to pay for the cost of an independent appraiser or other expert in
real estate matters retained to determine a fair sale price for a
defaulted mortgage loan or a property acquired in respect a defaulted
mortgage loan in connection with the liquidation of that mortgage loan
or property;
17. to pay for the cost of various opinions of counsel obtained pursuant
to the related Pooling Agreement for the benefit of
certificateholders;
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18. to make any other withdrawals permitted by the related Pooling
Agreement and described in the related prospectus supplement; and
19. to clear and terminate the certificate account upon the termination of
the trust fund.
MODIFICATIONS, WAIVERS AND AMENDMENTS OF MORTGAGE LOANS
A master servicer may agree to modify, waive or amend any term of any
mortgage loan serviced by it in a manner consistent with the applicable
Servicing Standard; provided that, unless otherwise set forth in the related
prospectus supplement, the modification, waiver or amendment (1) will not
affect the amount or timing of any scheduled payments of principal or interest
on the mortgage loan, (2) will not, in the judgment of the master servicer,
materially impair the security for the mortgage loan or reduce the likelihood
of timely payment of amounts due on them and (3) will not adversely affect the
coverage under any applicable instrument of credit support. Unless otherwise
provided in the related prospectus supplement, a master servicer also may agree
to any other modification, waiver or amendment if, in its judgment, (1) a
material default on the mortgage loan has occurred or a payment default is
reasonably foreseeable, (2) the modification, waiver or amendment is reasonably
likely to produce a greater recovery with respect to the mortgage loan, taking
into account the time value of money, than would liquidation and (3) the
modification, waiver or amendment will not adversely affect the coverage under
any applicable instrument of credit support.
REALIZATION UPON DEFAULTED MORTGAGE LOANS
A borrower's failure to make required mortgage loan payments may mean that
operating income is insufficient to service the mortgage debt, or may reflect
the diversion of that income from the servicing of the mortgage debt. In
addition, a borrower that is unable to make mortgage loan payments may also be
unable to make timely payment of taxes and insurance premiums and to otherwise
maintain the related Mortgaged Property. In general, the master servicer or the
special servicer, if any, for a series of certificates will be required to
monitor any mortgage loan in the related trust fund that is in default,
evaluate whether the causes of the default can be corrected over a reasonable
period without significant impairment of the value of the related Mortgaged
Property, initiate corrective action in cooperation with the borrower if cure
is likely, inspect the related Mortgaged Property and take any other actions as
are consistent with the Servicing Standard. A significant period of time may
elapse before the servicer is able to assess the success of the corrective
action or the need for additional initiatives.
The time within which the servicer can make the initial determination of
appropriate action, evaluate the success of corrective action, develop
additional initiatives, institute foreclosure proceedings and actually
foreclose (or accept a deed to a Mortgaged Property in lieu of foreclosure) on
behalf of the certificateholders may vary considerably depending on the
particular mortgage loan, the Mortgaged Property, the borrower, the presence of
an acceptable party to assume the mortgage loan and the laws of the
jurisdiction in which the Mortgaged Property is located. If a borrower files a
bankruptcy petition, the master servicer may not be permitted to accelerate the
maturity of the related mortgage loan or to foreclose on the related Mortgaged
Property for a considerable period of time, and that mortgage loan may be
restructured in the resulting bankruptcy proceedings. See "Certain Legal
Aspects of Mortgage Loans" in this prospectus.
A Pooling Agreement may grant to the master servicer, a special servicer,
a provider of credit support and/or the holder or holders of certain classes of
the related series of certificates a right of first refusal to purchase from
the trust fund, at a predetermined purchase price (which, if insufficient to
fully fund the entitlements of certificateholders to principal and interest on
the certificates, will be specified in the related prospectus supplement), any
mortgage loan as to which a specified number of scheduled payments are
delinquent. In addition, unless otherwise specified in the related prospectus
supplement, a servicer may offer to sell any defaulted mortgage loan if and
when the master servicer determines, consistent with the applicable Servicing
Standard, that a sale would produce a greater recovery, taking into account the
time value of money, than would liquidation of the related
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Mortgaged Property. Unless otherwise provided in the related prospectus
supplement, the related Pooling Agreement will require that the servicer accept
the highest cash bid received from any person (including itself, the Depositor
or any affiliate of either of them or any certificateholder) that constitutes a
fair price for that defaulted mortgage loan. In the absence of any bid
determined in accordance with the related Pooling Agreement to be fair, the
master servicer will generally be required to proceed against the related
Mortgaged Property, subject to the discussion below.
If a default on a mortgage loan has occurred or, in the servicer's
judgment, a payment default is imminent, the servicer, on behalf of the
trustee, may at any time institute foreclosure proceedings, exercise any power
of sale contained in the related Mortgage, obtain a deed in lieu of
foreclosure, or otherwise acquire title to the related Mortgaged Property, by
operation of law or otherwise, if that action is consistent with the Servicing
Standard. Unless otherwise specified in the related prospectus supplement, the
servicer may not, however, acquire title to any Mortgaged Property, have a
receiver of rents appointed with respect to any Mortgaged Property or take any
other action with respect to any Mortgaged Property that would cause the
trustee, for the benefit of the related series of certificateholders, or any
other specified person to be considered to hold title to, to be a
"mortgagee-in-possession" of, or to be an "owner" or an "operator" of that
Mortgaged Property within the meaning of certain federal environmental laws,
unless the master servicer has previously determined, based on a report
prepared by a person who regularly conducts environmental audits (which report
will be an expense of the trust fund), that either:
1. the Mortgaged Property is in compliance with applicable environmental
laws and regulations or, if not, that taking those actions as are
necessary to bring the Mortgaged Property into compliance therewith is
reasonably likely to produce a greater recovery, taking into account
the time value of money, than not taking those actions; and
2. there are no circumstances or conditions present at the Mortgaged
Property that have resulted in any contamination for which
investigation, testing, monitoring, containment, clean-up or
remediation could be required under any applicable environmental laws
and regulations or, if those circumstances or conditions are present
for which that action could be required, taking those actions with
respect to the Mortgaged Property is reasonably likely to produce a
greater recovery, taking into account the time value of money, than
not taking those actions. See "Certain Legal Aspects of Mortgage
Loans--Environmental Risks" in this prospectus.
Unless otherwise provided in the related prospectus supplement, if title
to any Mortgaged Property is acquired by a trust fund as to which one or more
REMIC elections have been made, the servicer, on behalf of the trust fund, will
be required to sell the Mortgaged Property prior to the close of the third
calendar year following the year of acquisition, unless (1) the Internal
Revenue Service grants an extension of time to sell that property or (2) the
trustee receives an opinion of independent counsel to the effect that the
holding of the property by the trust fund beyond that period will not result in
the imposition of a tax on the trust fund or cause the trust fund (or any
designated portion) to fail to qualify as a REMIC under the Code at any time
that any certificate is outstanding. Subject to the foregoing, the servicer
will generally be required to solicit bids for any Mortgaged Property so
acquired in that manner as will be reasonably likely to realize a fair price
for that property. If the trust fund acquires title to any Mortgaged Property,
the servicer, on behalf of the trust fund, generally must retain an independent
contractor to manage and operate that property. The retention of an independent
contractor, however, will not relieve the servicer of its obligation to manage
that Mortgaged Property in a manner consistent with the Servicing Standard.
If Liquidation Proceeds collected with respect to a defaulted mortgage
loan are less than the outstanding principal balance of the defaulted mortgage
loan plus interest accrued on the mortgage loan plus the aggregate amount of
reimbursable expenses incurred by the servicer in connection with that mortgage
loan, the trust fund will realize a loss in the amount of that shortfall. The
servicer will be entitled to reimbursement out of the Liquidation Proceeds
recovered on any defaulted mortgage
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loan, prior to the distribution of those Liquidation Proceeds to
certificateholders, amounts that represent unpaid servicing compensation in
respect of the mortgage loan, unreimbursed servicing expenses incurred with
respect to the mortgage loan and any unreimbursed advances of delinquent
payments made with respect to the mortgage loan.
If any Mortgaged Property suffers damage so that the proceeds, if any, of
the related hazard insurance policy are insufficient to restore fully the
damaged property, the servicer will not be required to expend its own funds to
effect that restoration unless (and to the extent not otherwise provided in the
related prospectus supplement) it determines (1) that the restoration will
increase the proceeds to certificateholders on liquidation of the mortgage loan
after reimbursement of the servicer for its expenses and (2) that the expenses
will be recoverable by it from related Insurance and Condemnation Proceeds or
Liquidation Proceeds.
HAZARD INSURANCE POLICIES
Unless otherwise specified in the related prospectus supplement, each
Pooling Agreement will require the master servicer to cause each mortgage loan
borrower to maintain a hazard insurance policy that provides for the coverage
required under the related Mortgage or, if the Mortgage permits the mortgagee
to dictate to the borrower the insurance coverage to be maintained on the
related Mortgaged Property, the coverage consistent with the requirements of
the Servicing Standard. Unless otherwise specified in the related prospectus
supplement, the coverage generally will be in an amount equal to the lesser of
the principal balance owing on that mortgage loan and the replacement cost of
the related Mortgaged Property. The ability of a master servicer to assure that
hazard insurance proceeds are appropriately applied may be dependent upon its
being named as an additional insured under any hazard insurance policy and
under any other insurance policy referred to below, or upon the extent to which
information concerning covered losses is furnished by borrowers. All amounts
collected by a master servicer under that policy (except for amounts to be
applied to the restoration or repair of the Mortgaged Property or released to
the borrower in accordance with the master servicer's normal servicing
procedures and/or to the terms and conditions of the related Mortgage and
Mortgage Note) will be deposited in the related certificate account. The
Pooling Agreement may provide that the master servicer may satisfy its
obligation to cause each borrower to maintain a hazard insurance policy by
maintaining a blanket policy insuring against hazard losses on all of the
mortgage loans in a trust fund. If the blanket policy contains a deductible
clause, the master servicer will be required, in the event of a casualty
covered by the blanket policy, to deposit in the related certificate account
all sums that would have been deposited in that certificate account but for
that deductible clause.
In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of the property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions specified in each policy.
Although the policies covering the Mortgaged Properties will be underwritten by
different insurers under different state laws in accordance with different
applicable state forms, and therefore will not contain identical terms and
conditions, most policies typically do not cover any physical damage resulting
from war, revolution, governmental actions, floods and other water-related
causes, earth movement (including earthquakes, landslides and mudflows), wet or
dry rot, vermin, domestic animals and certain other kinds of risks.
Accordingly, a Mortgaged Property may not be insured for losses arising from
that cause unless the related Mortgage specifically requires, or permits the
mortgagee to require, that coverage.
The hazard insurance policies covering the Mortgaged Properties will
typically contain co-insurance clauses that in effect require an insured at all
times to carry insurance of a specified percentage, generally 80% to 90%, of
the full replacement value of the improvements on the property in order to
recover the full amount of any partial loss. If the insured's coverage falls
below this specified percentage, those clauses generally provide that the
insurer's liability in the event of partial
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loss does not exceed the lesser of (1) the replacement cost of the improvements
less physical depreciation and (2) that proportion of the loss as the amount of
insurance carried bears to the specified percentage of the full replacement
cost of those improvements.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the mortgage loans may contain a due-on-sale clause that
entitles the lender to accelerate payment of the mortgage loan upon any sale or
other transfer of the related Mortgaged Property made without the lender's
consent. Certain of the mortgage loans may also contain a due-on-encumbrance
clause that entitles the lender to accelerate the maturity of the mortgage loan
upon the creation of any other lien or encumbrance upon the Mortgaged Property.
Unless otherwise provided in the related prospectus supplement, the master
servicer will determine whether to exercise any right the trustee may have
under that provision in a manner consistent with the Servicing Standard. Unless
otherwise specified in the related prospectus supplement, the master servicer
will be entitled to retain as additional servicing compensation any fee
collected in connection with the permitted transfer of a Mortgaged Property.
See "Certain Legal Aspects of Mortgage Loans-- Due-on-Sale and
Due-on-Encumbrance" in this prospectus.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the related prospectus supplement, a master
servicer's primary servicing compensation with respect to a series of
certificates will come from the periodic payment to it of a specified portion
of the interest payments on each mortgage loan in the related trust fund.
Because that compensation is generally based on a percentage of the principal
balance of each mortgage loan outstanding from time to time, it will decrease
in accordance with the amortization of the mortgage loans. The prospectus
supplement with respect to a series of certificates may provide that, as
additional compensation, the master servicer may retain all or a portion of
late payment charges, Prepayment Premiums, modification fees and other fees
collected from borrowers and any interest or other income that may be earned on
funds held in the certificate account. Any sub-servicer will receive a portion
of the master servicer's compensation as its sub-servicing compensation.
In addition to amounts payable to any sub-servicer, a master servicer may
be required, to the extent provided in the related prospectus supplement, to
pay from amounts that represent its servicing compensation certain expenses
incurred in connection with the administration of the related trust fund,
including, without limitation, payment of the fees and disbursements of
independent accountants and payment of expenses incurred in connection with
distributions and reports to certificateholders. Certain other expenses,
including certain expenses related to mortgage loan defaults and liquidations
and, to the extent so provided in the related prospectus supplement, interest
on those expenses at the rate specified in the prospectus supplement, and the
fees of any special servicer, may be required to be borne by the trust fund.
If provided in the related prospectus supplement, a master servicer may be
required to apply a portion of the servicing compensation otherwise payable to
it in respect of any period to Prepayment Interest Shortfalls. See "Yield and
Maturity Considerations--Certain Shortfalls in Collections of Interest" in this
prospectus.
EVIDENCE AS TO COMPLIANCE
Unless otherwise provided in the related prospectus supplement, each
Pooling Agreement will require, on or before a specified date in each year, the
master servicer to cause a firm of independent public accountants to furnish to
the trustee a statement to the effect that, on the basis of the examination by
that firm conducted substantially in compliance with either the Uniform Single
Audit Program for Mortgage Bankers or the Audit Program for Mortgages serviced
for FHLMC, the servicing by or on behalf of the master servicer of mortgage
loans under pooling and servicing agreements substantially similar to each
other (which may include that Pooling Agreement) was conducted through the
preceding calendar year or other specified twelve month period in compliance
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with the terms of those 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.
Each Pooling Agreement will also require, on or before a specified date in
each year, the master servicer to furnish to the trustee a statement signed by
one or more officers of the master servicer to the effect that the master
servicer has fulfilled its material obligations under that Pooling Agreement
throughout the preceding calendar year or other specified twelve month period.
CERTAIN MATTERS REGARDING THE MASTER SERVICER AND THE DEPOSITOR
The entity serving as master servicer under a Pooling Agreement may be an
affiliate of the Depositor and may have other normal business relationships
with the Depositor or the Depositor's affiliates. Unless otherwise specified in
the prospectus supplement for a series of certificates, the related Pooling
Agreement will permit the master servicer to resign from its obligations under
the Pooling Agreement only upon (a) the appointment of, and the acceptance of
that appointment by, a successor master servicer and receipt by the trustee of
written confirmation from each applicable rating agency that the resignation
and appointment will not have an adverse effect on the rating assigned by that
rating agency to any class of certificates of that series or (b) a
determination that those obligations are no longer permissible under applicable
law or are in material conflict by reason of applicable law with any other
activities carried on by it. This resignation will not become effective until
the trustee or a successor servicer has assumed the master servicer's
obligations and duties under the Pooling Agreement. Unless otherwise specified
in the related prospectus supplement, the master servicer for each trust fund
will be required to maintain a fidelity bond and errors and omissions policy or
their equivalent 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, subject to certain limitations as to amount of coverage, deductible
amounts, conditions, exclusions and exceptions permitted by the related Pooling
Agreement.
Unless otherwise specified in the related prospectus supplement, each
Pooling Agreement will further provide that none of the master servicer, the
Depositor or any director, officer, employee or agent of either of them will be
under any liability to the related trust fund or certificateholders for any
action taken, or not taken, in good faith pursuant to the Pooling Agreement or
for errors in judgment. However, neither the master servicer nor the Depositor
will be protected against any breach of a representation, warranty or covenant
made in the Pooling Agreement, or against any expense or liability that they
are specifically required to bear pursuant to the terms of the Pooling
Agreement, or against any liability that would otherwise be imposed by reason
of willful misfeasance, bad faith or gross negligence in the performance of
their obligations or duties or by reason of reckless disregard of those
obligations and duties. Unless otherwise specified in the related prospectus
supplement, each Pooling Agreement will further provide that the master
servicer, the Depositor and any director, officer, employee or agent of either
of them will be entitled to indemnification by the related trust fund against
any loss, liability or expense incurred in connection with any legal action
that relates to the Pooling Agreement or the related series of certificates.
However, the indemnification will not extend to any loss, liability or expense
o that one or both of them are specifically required to bear pursuant to
the terms of the Pooling Agreement, or is incidental to the
performance of their obligations and duties and is not otherwise
reimbursable pursuant to the Pooling Agreement;
o incurred in connection with any breach of a representation, warranty
or covenant made in the Pooling Agreement;
o incurred by reason of misfeasance, bad faith or negligence in the
performance of their obligations or duties under that the Pooling
Agreement, or by reason of negligent disregard of those obligations or
duties; or
o incurred in connection with any violation of any state or federal
securities law.
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In addition, each Pooling Agreement will provide that neither the master
servicer nor the Depositor will be under any obligation to appear in, prosecute
or defend any legal action that is not incidental to its respective
responsibilities under the Pooling Agreement and that in its opinion may
involve it in any expense or liability. However, each of the master servicer
and the Depositor will be permitted, in the exercise of its discretion, to
undertake any action that it may deem necessary or desirable with respect to
the enforcement and/or protection of the rights and duties of the parties to
the Pooling Agreement and the interests of the related series of
certificateholders. In that event, the legal expenses and costs of that action,
and any liability resulting from that action, will be expenses, costs and
liabilities of the related series of certificateholders, and the master
servicer or the Depositor, as the case may be, will be entitled to charge the
related certificate account for those legal costs and expenses.
Any person into which the master servicer or the Depositor may be merged
or consolidated, or any person resulting from any merger or consolidation to
which the master servicer or the Depositor is a party, or any person succeeding
to the business of the master servicer or the Depositor, will be the successor
of the master servicer or the Depositor, as the case may be, under the related
Pooling Agreement.
EVENTS OF DEFAULT
Unless otherwise provided in the prospectus supplement for a series of
certificates, "Events of Default" under the related Pooling Agreement will
include
o any failure by the master servicer to distribute or cause to be
distributed to the certificateholders of that series, or to remit to
the trustee for distribution to those certificateholders, any amount
required to be so distributed or remitted, which failure continues
unremedied for five days after written notice of the failure has been
given to the master servicer by the trustee or the Depositor, or to
the master servicer, the Depositor and the trustee by
certificateholders entitled to not less than 25% (or other percentage
specified in the related prospectus supplement) of the voting rights
for that series;
o any failure by the master servicer duly to observe or perform in any
material respect any of its other covenants or obligations under the
related Pooling Agreement, which failure continues unremedied for
sixty days after written notice has been given to the master servicer
by the trustee or the Depositor, or to the master servicer, the
Depositor and the trustee by certificateholders entitled to not less
than 25% (or other percentage specified in the related prospectus
supplement) of the voting rights for that series; and
o certain events of insolvency, readjustment of debt, marshalling of
assets and liabilities, or similar proceedings in respect of or
relating to the master servicer and certain actions by or on behalf of
the master servicer indicating its insolvency or inability to pay its
obligations.
Material variations to the foregoing Events of Default (other than to add
to them or shorten cure periods or eliminate notice requirements) will be
specified in the related prospectus supplement.
RIGHTS UPON EVENT OF DEFAULT
If an Event of Default occurs with respect to the master servicer under a
Pooling Agreement, then, in each and every case, so long as the Event of
Default remains unremedied, the Depositor or the trustee will be authorized,
and at the direction of certificateholders of the related series entitled to
not less than 51% (or other percentage specified in the related prospectus
supplement) of the voting rights for that series, the trustee will be required,
to terminate all of the rights and obligations of the master servicer as master
servicer under the Pooling Agreement. Upon termination, the trustee will
succeed to all of the responsibilities, duties and liabilities of the master
servicer under the Pooling Agreement (except that if the master servicer is
required to make advances regarding delinquent mortgage loans, but the trustee
is prohibited by law from obligating itself to do so, or if the related
prospectus supplement so specifies, the trustee will not be obligated to make
those advances) and will
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be entitled to similar compensation arrangements. Unless otherwise specified in
the related prospectus supplement, if the trustee is unwilling or unable so to
act, it may (or, at the written request of certificateholders of the related
series entitled to not less than 51% (or other percentage specified in the
related prospectus supplement) of the voting rights for that series, it will be
required to) appoint, or petition a court of competent jurisdiction to appoint,
a loan servicing institution that (unless otherwise provided in the related
prospectus supplement) is acceptable to each applicable rating agency to act as
successor to the master servicer under the Pooling Agreement. Pending that
appointment, the trustee will be obligated to act in that capacity.
No certificateholder will have the right under any Pooling Agreement to
institute any proceeding with respect to the Pooling Agreement unless that
holder previously has given to the trustee written notice of default and unless
certificateholders of the same series entitled to not less than 25% (or other
percentage specified in the related prospectus supplement) of the voting rights
for that series shall have made written request upon the trustee to institute
that proceeding in its own name as trustee and shall have offered to the
trustee reasonable indemnity, and the trustee for sixty days (or other period
specified in the related prospectus supplement) shall have neglected or refused
to institute that proceeding. The trustee, however, will be under no obligation
to exercise any of the trusts or powers vested in it by any Pooling Agreement
or to make any investigation of matters arising under the Pooling Agreement or
to institute, conduct or defend any litigation under the Pooling Agreement or
in relation to it at the request, order or direction of any of the holders of
certificates of the related series, unless those certificateholders have
offered to the trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred by that action.
AMENDMENT
Each Pooling Agreement may be amended, without the consent of any of the
holders of the related series of certificates
1. to cure any ambiguity,
2. to correct a defective provision in the Pooling Agreement or to
correct, modify or supplement any of its provisions that may be
inconsistent with any other of its provisions,
3. to add any other provisions with respect to matters or questions
arising under the Pooling Agreement that are not inconsistent with its
provisions,
4. to comply with any requirements imposed by the Code, or
5. for any other purpose;
provided that the amendment (other than an amendment for the specific purpose
referred to in clause (4) above) may not (as evidenced by an opinion of counsel
to an effect satisfactory to the trustee) adversely affect in any material
respect the interests of any holder; and provided further that the amendment
(other than an amendment for one of the specific purposes referred to in
clauses (1) through (4) above) must be acceptable to each applicable rating
agency.
Unless otherwise specified in the related prospectus supplement, each
Pooling Agreement may also be amended, with the consent of the holders of the
related series of certificates entitled to not less than 51% (or other
percentage specified in the related prospectus supplement) of the voting rights
for that series allocated to the affected classes, for any purpose. However,
unless otherwise specified in the related prospectus supplement, that amendment
may not (1) reduce in any manner the amount of, or delay the timing of,
payments received or advanced on mortgage loans that are required to be
distributed in respect of any certificate without the consent of the holder of
that certificate, (2) adversely affect in any material respect the interests of
the holders of any class of certificates, in a manner other than as described
in clause (1), without the consent of the holders of all certificates of that
class or (3) modify the amendment provisions of the Pooling Agreement described
in this paragraph without the consent of the holders of all certificates of the
related series. Unless otherwise specified in the related prospectus
supplement, the trustee will be prohibited from consenting to any amendment of
a Pooling Agreement pursuant to which one or more REMIC elections are to be or
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have been made unless the trustee shall first have received an opinion of
counsel to the effect that the amendment will not result in the imposition of a
tax on the related trust fund or cause the related trust fund, or the
designated portion, to fail to qualify as a REMIC at any time that the related
certificates are outstanding.
LIST OF CERTIFICATEHOLDERS
Unless otherwise specified in the related prospectus supplement, upon
written request of three or more certificateholders of record made for purposes
of communicating with other holders of certificates of the same series with
respect to their rights under the related Pooling Agreement, the trustee or
other specified person will afford those certificateholders access during
normal business hours to the most recent list of certificateholders of that
series held by that person. If that list is of a date more than 90 days prior
to the date of receipt of that certificateholder's request, then that person,
if not the registrar for that series of certificates, will be required to
request from that registrar a current list and to afford those requesting
certificateholders access thereto promptly upon receipt.
THE TRUSTEE
The trustee under each Pooling Agreement will be named in the related
prospectus supplement. The commercial bank, national banking association,
banking corporation or trust company that serves as trustee may have typical
banking relationships with the Depositor and its affiliates and with any master
servicer or special servicer and its affiliates.
DUTIES OF THE TRUSTEE
The trustee for each series of certificates will make no representation as
to the validity or sufficiency of the related Pooling Agreement, the
certificates or any underlying mortgage loan or related document and will not
be accountable for the use or application by or on behalf of the master
servicer for that series of any funds paid to the master servicer or any
special servicer in respect of the certificates or the underlying mortgage
loans, or any funds deposited into or withdrawn from the certificate account or
any other account for that series by or on behalf of the master servicer or any
special servicer. If no Event of Default has occurred and is continuing, the
trustee for each series of certificates will be required to perform only those
duties specifically required under the related Pooling Agreement. However, upon
receipt of any of the various certificates, reports or other instruments
required to be furnished to it pursuant to the related Pooling Agreement, a
trustee will be required to examine those documents and to determine whether
they conform to the requirements of that agreement.
CERTAIN MATTERS REGARDING THE TRUSTEE
As described in the related prospectus supplement, the fees and normal
disbursements of any trustee may be the expense of the related master servicer
or other specified person or may be required to be borne by the related trust
fund.
Unless otherwise specified in the related prospectus supplement, the
trustee for each series of certificates will be entitled to indemnification,
from amounts held in the certificate account for that series, for any loss,
liability or expense incurred by the trustee in connection with the trustee's
acceptance or administration of its trusts under the related Pooling Agreement.
However, the indemnification will not extend to any loss, liability or expense
that constitutes a specific liability imposed on the trustee pursuant to the
related Pooling Agreement, or to any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or gross negligence on the part of the
trustee in the performance of its obligations and duties under the Pooling
Agreement, or by reason of its reckless disregard of those obligations or
duties, or as may arise from a breach of any representation, warranty or
covenant of the trustee made in the Pooling Agreement.
Unless otherwise specified in the related prospectus supplement, the
trustee for each series of certificates will be entitled to execute any of its
trusts or powers under the related Pooling Agreement
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or perform any of its duties under that Pooling Agreement either directly or by
or through agents or attorneys, and the trustee will not be relieved of any of
its duties or obligations by virtue of the appointment of any agents or
attorneys.
RESIGNATION AND REMOVAL OF THE TRUSTEE
A trustee will be permitted at any time to resign from its obligations and
duties under the related Pooling Agreement by giving written notice to the
Depositor, the servicer, the special servicer and to all certificateholders.
Upon receiving this notice of resignation, the Depositor, or other person as
may be specified in the related prospectus supplement, will be required to use
its best efforts to promptly appoint a successor trustee. If no successor
trustee shall have accepted an appointment within a specified period after the
giving of notice of resignation, the resigning trustee may petition any court
of competent jurisdiction to appoint a successor trustee.
If at any time a trustee ceases to be eligible to continue as trustee
under the related Pooling Agreement, or if at any time the trustee becomes
incapable of acting, or if certain events of, or proceedings in respect of,
bankruptcy or insolvency occur with respect to the trustee, the Depositor will
be authorized to remove the trustee and appoint a successor trustee. In
addition, holders of the certificates of any series entitled to at least 51%
(or other percentage specified in the related prospectus supplement) of the
voting rights for that series may at any time, with or without cause, remove
the trustee under the related Pooling Agreement and appoint a successor
trustee.
Any resignation or removal of a trustee and appointment of a successor
trustee will not become effective until acceptance of appointment by the
successor trustee.
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DESCRIPTION OF CREDIT SUPPORT
GENERAL
Credit support may be provided with respect to one or more classes of the
certificates of any series, or with respect to the related mortgage assets.
Credit support may be in the form of letters of credit, overcollateralization,
the subordination of one or more classes of certificates, insurance policies,
surety bonds, guarantees or reserve funds, or any combination of the foregoing.
If so provided in the related prospectus supplement, any form of credit support
may provide credit enhancement for more than one series of certificates to the
extent described in that prospectus supplement.
Unless otherwise provided in the related prospectus supplement for a
series of certificates, the credit support will not provide protection against
all risks of loss and will not guarantee payment to certificateholders of all
amounts to which they are entitled under the related Pooling Agreement. If
losses or shortfalls occur that exceed the amount covered by the related credit
support or that are not covered by that credit support, certificateholders will
bear their allocable share of deficiencies. Moreover, if a form of credit
support covers more than one series of certificates, holders of certificates of
one series will be subject to the risk that the credit support will be
exhausted by the claims of the holders of certificates of one or more other
series before the former receive their intended share of that coverage.
If credit support is provided with respect to one or more classes of
certificates of a series, or with respect to the related mortgage assets, the
related prospectus supplement will include a description of
o the nature and amount of coverage under the credit support,
o any conditions to payment under the credit support not otherwise
described in this prospectus,
o any conditions under which the amount of coverage under the credit
support may be reduced and under which that credit support may be
terminated or replaced and
o the material provisions relating to the credit support.
Additionally, the related prospectus supplement will set forth certain
information with respect to the obligor under any instrument of credit support,
including
o a brief description of its principal business activities,
o its principal place of business, place of incorporation and the
jurisdiction under which it is chartered or licensed to do business,
o if applicable, the identity of regulatory agencies that exercise
primary jurisdiction over the conduct of its business and
o its total assets, and its stockholders' equity or policyholders'
surplus, if applicable, as of a date that will be specified in the
prospectus supplement. See "Risk Factors--Credit Support Limitations"
in this prospectus.
SUBORDINATE CERTIFICATES
If so specified in the related prospectus supplement, one or more classes
of certificates of a series may be Subordinate Certificates. To the extent
specified in the related prospectus supplement, the rights of the holders of
Subordinate Certificates to receive distributions from the certificate account
on any distribution date will be subordinated to the corresponding rights of
the holders of Senior Certificates. If so provided in the related prospectus
supplement, the subordination of a class may apply only in the event of (or may
be limited to) certain types of losses or shortfalls. The related prospectus
supplement will set forth information concerning the method and amount of
subordination provided by a class or classes of Subordinate Certificates in a
series and the circumstances under which that subordination will be available.
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CROSS-SUPPORT PROVISIONS
If the mortgage assets in any trust fund are divided into separate groups,
each supporting a separate class or classes of certificates of the related
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 those
provisions.
INSURANCE OR GUARANTEES WITH RESPECT TO MORTGAGE LOANS
If so provided in the prospectus supplement for a series of certificates,
mortgage loans included in the related trust fund will be covered for certain
default risks by insurance policies or guarantees. To the extent deemed by the
Depositor to be material, a copy of that instrument will accompany the Current
Report on Form 8-K to be filed with the SEC within 15 days of issuance of the
certificates of the related series.
LETTER OF CREDIT
If so provided in the prospectus supplement for a series of certificates,
deficiencies in amounts otherwise payable on those certificates or certain
classes of those certificates will be covered by one or more letters of credit,
issued by a bank or financial institution specified in the prospectus
supplement (the "L/C Bank"). Under a letter of credit, the L/C Bank will be
obligated to honor draws under a letter of credit in an aggregate fixed dollar
amount, net of unreimbursed payments, generally equal to a percentage specified
in the related prospectus supplement of the aggregate principal balance of the
mortgage assets on the related cut-off date or of the initial aggregate
principal balance of one or more classes of certificates. If so specified in
the related prospectus supplement, the letter of credit may permit draws only
in the event of certain types of losses and shortfalls. The amount available
under the letter of credit will, in all cases, be reduced to the extent of the
unreimbursed payments under the letter of credit and may otherwise be reduced
as described in the related prospectus supplement. The obligations of the L/C
Bank under the letter of credit for each series of certificates will expire at
the earlier of the date specified in the related prospectus supplement or the
termination of the trust fund. A copy of that letter of credit will accompany
the Current Report on Form 8-K to be filed with the SEC within 15 days of
issuance of the certificates of the related series.
CERTIFICATE INSURANCE AND SURETY BONDS
If so provided in the prospectus supplement for a series of certificates,
insurance policies and/or surety bonds provided by one or more insurance
companies or sureties of the insurance companies will cover deficiencies in
amounts otherwise payable on those certificates or certain classes. Those
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. The
related prospectus supplement will describe any limitations on the draws that
may be made under that instrument. A copy of that instrument will accompany the
Current Report on Form 8-K to be filed with the SEC within 15 days of issuance
of the certificates of the related series.
RESERVE FUNDS
If so provided in the prospectus supplement for a series of certificates,
deficiencies in amounts otherwise payable on those certificates or certain
classes of those certificates will be covered, to the extent of available
funds, by one or more reserve funds in which cash, a letter of credit,
short-term debt obligations, a demand note or a combination of those features
will be deposited, in the amounts specified in the prospectus supplement. If so
specified in the related prospectus supplement, the reserve fund for a series
may also be funded over time by a specified amount of the collections received
on the related mortgage assets.
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Amounts on deposit in any reserve fund for a series, together with the
reinvestment income on those amounts, if any, will be applied for the purposes,
in the manner, specified in the related prospectus supplement. If so specified
in the related prospectus supplement, reserve funds may be established to
provide protection only against certain types of losses and shortfalls.
Following each distribution date, amounts in a reserve fund in excess of any
amount required to be maintained in that reserve fund may be released from it
under the conditions specified in the related prospectus supplement.
If so specified in the related prospectus supplement, amounts deposited in
any reserve fund will be invested in short-term debt obligations. Unless
otherwise specified in the related prospectus supplement, any reinvestment
income or other gain from those investments will be credited to the related
reserve fund for that series, and any loss resulting from those investments
will be charged to that reserve fund. However, that income may be payable to
any related master servicer or another service provider as additional
compensation for its services. The reserve fund, if any, for a series will not
be a part of the trust fund unless otherwise specified in the related
prospectus supplement.
CREDIT SUPPORT WITH RESPECT TO MBS
If so provided in the prospectus supplement for a series of certificates,
any MBS included in the related trust fund and/or the related underlying
mortgage loans may be covered by one or more of the types of credit support
described in this prospectus. The related prospectus supplement will specify,
as to each form of credit support, the information indicated above with respect
to the credit support for each series, to the extent that information is
material and available.
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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.
Because those legal aspects are governed by applicable state law, which laws
may differ substantially, the summaries do not purport to be complete, to
reflect the laws of any particular state, or to encompass the laws of all
states in which the security for the mortgage loans, or mortgage loans
underlying any MBS, is situated. Accordingly, the summaries are qualified in
their entirety by reference to the applicable laws of those states. See
"Description of the Trust Funds--Mortgage Loans" in this prospectus.
GENERAL
Each mortgage loan will be evidenced by a note or bond and secured by an
instrument granting a security interest in real property, which may be a
mortgage, deed of trust or a deed to secure debt, depending upon the prevailing
practice and law in the state in which the related Mortgaged Property is
located. Mortgages, deeds of trust and deeds to secure debt are in this
prospectus collectively referred to as "mortgages". A mortgage creates a lien
upon, or grants a title interest in, the real property covered thereby, and
represents the security for the repayment of the indebtedness customarily
evidenced by a promissory note. The priority of the lien created or interest
granted will depend on the terms of the mortgage and, in some cases, on the
terms of separate subordination agreements or intercreditor agreements with
others that hold interests in the real property, the knowledge of the parties
to the mortgage and, generally, the order of recordation of the mortgage in the
appropriate public recording office. However, the lien of a recorded mortgage
will generally be subordinate to later-arising liens for real estate taxes and
assessments and other charges imposed under governmental police powers.
TYPES OF MORTGAGE INSTRUMENTS
There are two parties to a mortgage: a mortgagor who is the borrower and
usually the owner of the subject property, and a mortgagee, who is the lender.
In contrast, a deed of trust is a three-party instrument, among a trustor who
is the equivalent of a borrower, a trustee to whom the real property is
conveyed, and a beneficiary, who is the lender, for whose benefit the
conveyance is made. Under a deed of trust, the trustor grants the property,
irrevocably until the debt is paid, in trust and generally with a power of
sale, to the trustee to secure repayment of the indebtedness evidenced by the
related note. A deed to secure debt typically has two parties. The grantor (the
borrower) conveys title to the real property to the grantee (the lender)
generally with a power of sale, until the time the debt is repaid. In a case
where the borrower is a land trust, there would be an additional party because
a land trustee holds legal title to the property under a land trust agreement
for the benefit of the borrower. At origination of a mortgage loan involving a
land trust, the borrower executes a separate undertaking to make payments on
the mortgage note. The mortgagee's authority under a mortgage, the trustee's
authority under a deed of trust and the grantee's authority under a deed to
secure debt are governed by the express provisions of the related instrument,
the law of the state in which the real property is located, certain federal
laws (including, without limitation, the Soldiers' and Sailors' Civil Relief
Act of 1940) and, in some 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 borrower assigns to the
lender the borrower's right, title and interest as landlord under each lease
and the income derived therefrom, while, unless rents are to be paid directly
to the lender, retaining a revocable license to collect the rents for so long
as there is no default. If the borrower defaults, the license terminates and
the lender is entitled to collect the rents. Local law may require that the
lender take possession of the property and/or obtain a court-appointed receiver
before becoming entitled to collect the rents.
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In most states, hotel and motel room rates are considered accounts
receivable under the Uniform Commercial Code, also known as the UCC, in cases
where hotels or motels constitute loan security, the borrower as additional
security for the loan generally pledges the rates. 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 that security interest. Even if the lender's security
interest in room rates is perfected under the UCC, it may be required to
commence a foreclosure action or otherwise take possession of the property in
order to collect the room rates following a default. See "Certain Legal Aspects
of Mortgage Loans--Bankruptcy Laws" in this prospectus.
PERSONALTY
In the case of certain types of mortgaged properties, for instance hotels,
motels and nursing homes, personal property (to the extent owned by the
borrower and not previously pledged) may constitute a significant portion of
the property's value as security. The creation and enforcement of liens on
personal property are governed by the UCC. Accordingly, if a borrower pledges
personal property as security for a mortgage loan, the lender generally must
file UCC financing statements in order to perfect its security interest in that
personal property, and must file continuation statements, generally every five
years, to maintain that perfection.
FORECLOSURE
General. Foreclosure is a legal procedure that allows the lender to
recover its mortgage debt by enforcing its rights and available legal remedies
under the mortgage. If the borrower defaults in payment or performance of its
obligations under the note or mortgage, the lender has the right to institute
foreclosure proceedings to sell the real property at public auction to satisfy
the indebtedness.
Foreclosure procedures vary from state to state. Two primary methods of
foreclosing a mortgage are judicial foreclosure, involving court proceedings,
and non-judicial foreclosure pursuant to a power of sale granted in the
mortgage instrument. Other foreclosure procedures are available in some states,
but they are either infrequently used or available only in limited
circumstances.
A foreclosure action is subject to most of the delays and expenses of
other lawsuits if defenses are raised or counterclaims are interposed, and
sometimes requires several years to complete. Moreover, as discussed below,
even a non-collusive, regularly conducted foreclosure sale may be challenged as
a fraudulent conveyance, regardless of the parties' intent, if a court
determines that the sale was for less than fair consideration and that sale
occurred while the borrower was insolvent and within a specified period prior
to the borrower's filing for bankruptcy protection.
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 foreclose is contested, the legal proceedings can be 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. Those sales are made in accordance with
procedures that vary from state to state.
Equitable Limitations on Enforceability of Certain Provisions. United
States courts have traditionally imposed general equitable principles to limit
the remedies available to lenders in foreclosure actions. These principles are
generally designed to relieve borrowers from the effects of mortgage defaults
perceived as harsh or unfair. Relying on those principles, a court may alter
the specific terms of a loan to the extent it considers necessary to prevent or
remedy an injustice, undue oppression or overreaching, or may require the
lender to undertake affirmative actions to determine the cause of the
borrower's default and the likelihood that the borrower will be able to
reinstate the
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loan. In some cases, courts have substituted their judgment for the lenders and
have required that lenders reinstate loans or recast payment schedules in order
to accommodate borrowers who are suffering from a temporary financial
disability. In other cases, courts have limited the right of the lender to
foreclose in the case of a non-monetary default, such as a failure to
adequately maintain the mortgaged property or an impermissible further
encumbrance of the mortgaged property. Finally, some courts have addressed the
issue of whether federal or state constitutional provisions reflecting due
process concerns for adequate notice require that a borrower receive notice in
addition to statutorily-prescribed minimum notice. For the most part, these
cases have upheld the reasonableness of the notice provisions or have found
that a public sale under a mortgage providing for a power of sale does not
involve sufficient state action to trigger constitutional protections.
Non-Judicial Foreclosure/Power of Sale. Foreclosure of a deed of trust is
generally accomplished by a non-judicial trustee's sale pursuant to a power of
sale typically granted in the deed of trust. A power of sale may also be
contained in any other type of mortgage instrument if applicable law so
permits. A power of sale under a deed of trust allows a non-judicial public
sale to be conducted generally following a request from the beneficiary/lender
to the trustee to sell the property upon default by the borrower and after
notice of sale is given in accordance with the terms of the mortgage and
applicable state law. In some states, prior to that sale, the trustee under the
deed of trust must record a notice of default and notice of sale and send a
copy to the borrower and to any other party who has recorded a request for a
copy of a notice of default and notice of sale. In addition, in some states the
trustee must provide notice to any other party having an interest of record in
the real property, including junior lienholders. A notice of sale must be
posted in a public place and, in most states, published for a specified period
of time in one or more newspapers. The borrower or junior lienholder may then
have the right, during a reinstatement period required in some states, to cure
the default by paying the entire actual amount in arrears (without regard to
the acceleration of the indebtedness), plus the lender's expenses incurred in
enforcing the obligation. In other states, the borrower or the junior
lienholder is not provided a period to reinstate the loan, but has only the
right to pay off the entire debt to prevent the foreclosure sale. Generally,
state law governs the procedure for public sale, the parties entitled to
notice, the method of giving notice and the applicable time periods.
Public Sale. A third party may be unwilling to purchase a mortgaged
property at a public sale because of the difficulty in determining the value of
that 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.)(the "Bankruptcy
Code") and, thus, could be rescinded in favor of the bankrupt's estate, if (1)
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 (2) the price paid
for the foreclosed property did not represent "fair consideration", which is
"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 those repairs at its own expense as are necessary to
render the property suitable for sale. Frequently, the lender employs a third
party
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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 those 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 those 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
amount of the mortgage against 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
Risks" below. Generally state law controls the amount of foreclosure expenses
and costs, including attorneys' fees, that may be recovered by a lender.
The holder of a junior mortgage that forecloses on a mortgaged property
does so subject to senior mortgages and any other prior liens, and may be
obliged to keep senior mortgage loans current in order to avoid foreclosure of
its interest in the property. In addition, if the foreclosure of a junior
mortgage triggers the enforcement of a "due-on-sale" clause contained in a
senior mortgage, the junior mortgagee could be required to pay the full amount
of the senior mortgage indebtedness or face foreclosure.
Rights of Redemption. The purposes of a foreclosure action are to enable
the lender to realize upon its security and to bar the borrower, and all
persons who have interests in the property that are subordinate to that of the
foreclosing lender, from exercise of their "equity of redemption". The doctrine
of equity of redemption provides that, until the property encumbered by a
mortgage has been sold in accordance with a properly conducted foreclosure and
foreclosure sale, those having interests that are subordinate to that of the
foreclosing lender have an equity of redemption and may redeem the property by
paying the entire debt with interest. Those having an equity of redemption must
generally be made parties and joined in the foreclosure proceeding in order for
their equity of redemption to be terminated.
The equity of redemption is a common-law (non-statutory) right which
should be distinguished from post-sale statutory rights of redemption. In some
states, after sale pursuant to a deed of trust or foreclosure of a mortgage,
the borrower and foreclosed junior lienors are given a statutory period in
which to redeem the property. In some states, statutory redemption may occur
only upon payment of the foreclosure sale price. In other states, redemption
may be permitted if the former borrower pays only a portion of the sums due.
The effect of a statutory right of redemption is to diminish the ability of the
lender to sell the foreclosed property because the exercise of a right of
redemption would defeat the title of any purchaser through a foreclosure.
Consequently, the practical effect of the redemption right is to force the
lender to maintain the property and pay the expenses of ownership until the
redemption period has expired. In some states, a post-sale statutory right of
redemption may exist following a judicial foreclosure, but not following a
trustee's sale under a deed of trust.
Anti-Deficiency Legislation. Some or all of the mortgage loans may be
nonrecourse loans, as to which recourse in the case of default will be limited
to the Mortgaged Property and those other assets, if any, that were pledged to
secure the mortgage loan. However, even if a mortgage loan by its terms
provides for recourse to the borrower's other assets, a lender's ability to
realize upon those assets may be limited by state law. For example, in some
states a lender cannot obtain a deficiency judgment against the borrower
following foreclosure or sale under a deed of trust. A deficiency judgment is a
personal judgment against the former borrower equal to the difference between
the net amount realized upon the public sale of the real property and the
amount due to the lender. Other statutes
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may require the lender to exhaust the security afforded under a mortgage before
bringing a personal action against the borrower. In certain other states, the
lender has the option of bringing a personal action against the borrower on the
debt without first exhausting that security; however, in some of those states,
the lender, following judgment on that personal action, may be deemed to have
elected a remedy and thus may be precluded from foreclosing upon the security.
Consequently, lenders in those states where an election of remedy provision
exists will usually proceed first against the security. Finally, other
statutory provisions, designed to protect borrowers from exposure to large
deficiency judgments that might result from bidding at below-market values at
the foreclosure sale, limit any deficiency judgment to the excess of the
outstanding debt over the fair market value of the property at the time of the
sale.
Leasehold Risks. Mortgage loans may be secured by a mortgage on the
borrower's leasehold interest in a ground lease. Leasehold mortgage loans are
subject to certain risks not associated with mortgage loans secured by a lien
on the fee estate of the borrower. The most significant of these risks is that
if the borrower's leasehold were to be terminated upon a lease default, the
leasehold mortgagee would lose its security. This risk may be lessened if the
ground lease requires the lessor to give the leasehold mortgagee notices of
lessee defaults and an opportunity to cure them, permits the leasehold estate
to be assigned to and by the leasehold mortgagee or the purchaser at a
foreclosure sale, and contains certain other protective provisions typically
included in a "mortgageable" ground lease.
Cooperative Shares. Mortgage loans may be secured by a security interest
on the borrower's ownership interest in shares, and the proprietary leases
appurtenant thereto, allocable to cooperative dwelling units that may be vacant
or occupied by non-owner tenants. Those loans are subject to certain risks not
associated with mortgage loans secured by a lien on the fee estate of a
borrower in real property. This kind of loan typically is subordinate to the
mortgage, if any, on the Cooperative's building which, if foreclosed, could
extinguish the equity in the building and the proprietary leases of the
dwelling units derived from ownership of the shares of the Cooperative.
Further, transfer of shares in a Cooperative are subject to various regulations
as well as to restrictions under the governing documents of the Cooperative,
and the shares may be cancelled in the event that associated maintenance
charges due under the related proprietary leases are not paid. Typically, a
recognition agreement between the lender and the Cooperative provides, among
other things, the lender with an opportunity to cure a default under a
proprietary lease.
Under the laws applicable in many states, "foreclosure" on Cooperative
shares is accomplished by a sale in accordance with the provisions of Article 9
of the UCC and the security agreement relating to the shares. Article 9 of the
UCC requires that a sale be conducted in a "commercially reasonable" manner,
which may be dependent upon, among other things, the notice given the debtor
and the method, manner, time, place and terms of the sale. Article 9 of the UCC
provides that the proceeds of the sale will be applied first to pay the costs
and expenses of the sale and then to satisfy the indebtedness secured by the
lender's security interest. A recognition agreement, however, generally
provides that the lender's right to reimbursement is subject to the right of
the Cooperative to receive sums due under the proprietary leases.
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 of a delay caused by an 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 a 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. In many
jurisdictions, the outstanding amount of the loan
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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
the value and the outstanding balance of the loan. Other modifications may
include 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 and the cash collateral is "adequately protected" as
the 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.
Federal bankruptcy law provides generally that rights and obligation under
an unexpired lease of the debtor/lessee may not be terminated or modified at
any time after the commencement of a case under the Bankruptcy Code solely
because of a provision in the lease to that effect or because of certain other
similar events. This prohibition on so-called "ipso facto clauses" could limit
the ability of the trustee to exercise certain contractual remedies with
respect to the leases on any mortgaged property. In addition, Section 362 of
the Bankruptcy Code operates as an automatic stay of, among other things, any
act to obtain possession of property from a debtor's estate, which may delay a
trustee's exercise of those remedies in the event that a lessee becomes the
subject of a proceeding under the Bankruptcy Code. For example, a mortgagee
would be stayed from enforcing an assignment of the lease by a borrower related
to a mortgaged property if the related borrower was in a bankruptcy proceeding.
The legal proceedings necessary to resolve the issues could be time-consuming
and might result in significant delays in the receipt of the assigned rents.
Similarly, the filing of a petition in bankruptcy by or on behalf of a lessee
of a mortgaged property would result in a stay 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 related lease that occurred prior to the filing of the lessee's
petition. Rents and other proceeds of a mortgage loan may also escape an
assignment if the assignment is not fully perfected under state law prior to
commencement of the bankruptcy proceeding.
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 in bankruptcy on behalf of the lessee, or the
lessee as debtor-in-possession, or the 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. These 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,
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the rejection generally constitutes a breach of the executory contract or
unexpired lease immediately before the date of filing the petition. As a
consequence, the other party or parties to the lease, such as the borrower, as
lessor under a lease, would have only an unsecured claim against the debtor for
damages resulting from the breach, which could adversely affect the security
for the related mortgage loan. 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 percent, not to exceed three
years, of the remaining term of the lease.
If a trustee in bankruptcy on behalf of a lessor, or a lessor as
debtor-in-possession, rejects an unexpired lease of real property, the lessee
may treat the lease as terminated by the rejection or, in the alternative, the
lessee may remain in possession of the leasehold for the balance of the term
and for any renewal or extension of the term that is enforceable by the lessee
under applicable nonbankruptcy law. The Bankruptcy Code provides that if a
lessee elects to remain in possession after a rejection of a lease, the lessee
may offset against rents reserved under the lease for the balance of the term
after the date of rejection of the lease, and the related renewal or extension
of the lease, any damages occurring after that date caused by the
nonperformance of any obligation of the lessor under the lease after that date.
In a bankruptcy or similar proceeding of a borrower, action may be taken
seeking the recovery, as a preferential transfer or on other grounds, of any
payments made by the borrower, or made directly by the related lessee, 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 borrower
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.
Certain of the borrowers may be partnerships. The laws governing limited
partnerships in certain states provide that the commencement of a case under
the Bankruptcy Code with respect to a general partner will cause a person to
cease to be a general partner of the limited partnership, unless otherwise
provided in writing in the limited partnership agreement. This provision may be
construed as an "ipso facto" clause and, in the event of the general partner's
bankruptcy, may not be enforceable. Certain limited partnership agreements of
the borrowers may provide that the commencement of a case under the Bankruptcy
Code with respect to the related general partner constitutes an event of
withdrawal (assuming the enforceability of the clause is not challenged in
bankruptcy proceedings or, if challenged, is upheld) that might trigger the
dissolution of the limited partnership, the winding up of its affairs and the
payment of its assets, unless (i) at the time there was at least one other
general partner and the written provisions of the limited partnership permit
the business of the limited partnership to be carried on by the remaining
general partner and that general partner does so or (ii) the written provisions
of the limited partnership agreement permit the limited partners to agree
within a specified time frame (often 60 days) after the withdrawal to continue
the business of the limited partnership and to the appointment of one or more
general partners and the limited partners do so. In addition, the laws
governing general partnerships in certain states provide that the commencement
of a case under the Bankruptcy Code or state bankruptcy laws with respect to a
general partner of the partnerships triggers the dissolution of the
partnership, the winding up of its affairs and the distribution of its assets.
Those state laws, however, may not be enforceable or
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effective in a bankruptcy case. The dissolution of a borrower, the winding up
of its affairs and the distribution of its assets could result in an
acceleration of its payment obligation under a related debt asset, which may
reduce the yield on the notes in the same manner as a principal prepayment.
In addition, the bankruptcy of the general or limited partner of a
borrower that is a partnership, or the bankruptcy of a member of a borrower
that is a limited liability company or the bankruptcy of a shareholder of a
borrower that is a corporation may provide the opportunity in the bankruptcy
case of the partner, member or shareholder to obtain an order from a court
consolidating the assets and liabilities of the partner, member or shareholder
with those of the mortgagor pursuant to the doctrines of substantive
consolidation or piercing the corporate veil. In such a case, the respective
mortgaged property, for example, would become property of the estate of the
bankrupt partner, member or shareholder. Not only would the mortgaged property
be available to satisfy the claims of creditors of the partner, member or
shareholder, but an automatic stay would apply to any attempt by the trustee to
exercise remedies with respect to the mortgaged property. However, such an
occurrence should not affect the trustee's status as a secured creditor with
respect to the mortgagor or its security interest in the mortgaged property.
ENVIRONMENTAL RISKS
Real property pledged as security for a mortgage loan may be subject to
certain environmental risks. Under federal law, including the Comprehensive
Environmental Response and Liability Act of 1980, as amended (also known as
CERCLA) and the laws of certain states, failure to perform the remediation
required or demanded by the state or federal government of any condition or
circumstance that
o may pose an imminent or substantial endangerment to the public health
or welfare or the environment,
o may result in a release or threatened release of any hazardous
material, or
o may give rise to any environmental claim or demand,
may give rise to a lien on the property to ensure the reimbursement of remedial
costs incurred by the federal or state government. In several states, the lien
has priority over the lien of an existing mortgage against the property. Of
particular concern may be those mortgaged properties which are, or have been,
the site of manufacturing, industrial or disposal activity. Those environmental
risks may give rise to (a) a diminution in value of property securing a
mortgage note or the inability to foreclose against the property or (b) in
certain circumstances as more fully described below, liability for clean-up
costs or other remedial actions, which liability could exceed the value of the
property, the aggregate assets of the owner or operator, or the principal
balance of the related indebtedness.
The state of the law is currently unclear as to whether and under what
circumstances cleanup costs, or the obligation to take remedial actions, could
be imposed on a secured lender. Under the laws of some states and under CERCLA,
a lender may become liable as an "owner" or an "operator" of a contaminated
mortgaged property for the costs of remediation of releases or threatened
releases of hazardous substances at the mortgaged property. The liability may
attach if the lender or its agents or employees have participated in the
management of the operations of the borrower, even though the environmental
damage or threat was caused by a prior owner, operator, or other third party.
Excluded from CERCLA's definition of "owner or operator" is any person
"who, without participating in the management of a facility, holds indicia of
ownership primarily to protect his security interest" (the "secured-creditor
exemption"). This exemption for holders of a security interest such as a
secured lender applies only in circumstances when the lender seeks to protect
its security interest in the contaminated facility or property. Thus, if a
lender's activities encroach on the actual management of that facility or
property, the lender faces potential liability as an "owner or operator" under
CERCLA. Similarly, when a lender forecloses and takes title to a contaminated
facility or property (whether it holds the facility or property as an
investment or leases it to a third party), under some circumstances the lender
may incur potential CERCLA liability.
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Recent amendments to CERCLA list permissible actions that may be
undertaken by a lender holding security in a contaminated facility without
exceeding the bounds of the secured-creditor exemption, subject to certain
conditions and limitations. Additionally, the amendments provide certain
protections from CERCLA liability as an "owner or operator" to a lender who
forecloses on contaminated property, as long as it seeks to divest itself of
the facility at the earliest practicable commercially reasonable time on
commercially reasonable terms. The amendments also limit the liability of
lenders under the federal Solid Waste Disposal Act for costs of responding to
leaking underground storage tanks. However, the protections afforded lenders
under the amendments are subject to terms and conditions that have not been
clarified by the courts. Moreover, the CERCLA secured-creditor exemption does
not necessarily affect the potential for liability in actions under other
federal or state laws which may impose liability on "owners or operators" but
do not incorporate the secured-creditor exemption. Furthermore, the
secured-creditor exemption does not protect lenders from other bases of CERCLA
liability, such as that imposed on "generators" or "transporters" of hazardous
substances.
Environment clean-up costs may be substantial. It is possible that those
costs could become a liability of the Trust and occasion a loss to
certificateholders if those remedial costs were incurred.
In a few states, transfers of some types of properties are conditioned
upon clean-up of contamination prior to transfer. It is possible that a
property securing a mortgage loan could be subject to these transfer
restrictions. If this occurs, and if the lender becomes the owner upon
foreclosure, the lender may be required to clean up the contamination before
selling the property.
The cost of remediating hazardous substance contamination at a property
can be substantial. If a lender is or becomes liable, it can bring an action
for contribution against the owner or operator that created the environmental
hazard, but that person or entity may be without substantial assets.
Accordingly, it is possible that these costs could become a liability of a
trust fund and occasion a loss to certificateholders of the related series.
To reduce the likelihood of this kind of loss, and unless otherwise
provided in the related prospectus supplement, the related Pooling Agreement
will provide that the master servicer may not, on behalf of the trust fund,
acquire title to a Mortgaged Property or take over its operation unless the
master servicer, based on a report prepared by a person who regularly conducts
environmental site assessments, has made the determination that it is
appropriate to do so, as described under "Description of the Pooling
Agreements--Realization Upon Defaulted Mortgage Loans" in this prospectus.
Even when a lender is not directly liable for cleanup costs on property
securing loans, if a property securing a loan is contaminated, the value of the
security is likely to be affected. In addition, a lender bears the risk that
unanticipated cleanup costs may jeopardize the borrower's repayment. Neither of
these two issues is likely to pose risks exceeding the amount of unpaid
principal and interest of a particular loan secured by a contaminated property,
particularly if the lender declines to foreclose on a mortgage secured by the
property.
If a lender forecloses on a mortgage secured by a property the operations
of which are subject to environmental laws and regulations, the lender will be
required to operate the property in accordance with those laws and regulations.
Compliance may entail some expense.
In addition, a lender may be obligated to disclose environmental
conditions on a property to government entities and/or to prospective buyers,
including prospective buyers at a foreclosure sale or following foreclosure.
That disclosure may decrease the amount that prospective buyers are willing to
pay for the affected property and thereby lessen the ability of the lender to
recover its investment in a loan upon foreclosure.
DUE-ON-SALE AND DUE-ON-ENCUMBRANCE
Certain of the mortgage loans may contain "due-on-sale" and
"due-on-encumbrance" clauses that purport to permit the lender to accelerate
the maturity of the loan if the borrower transfers or
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encumbers the related Mortgaged Property. In recent years, court decisions and
legislative actions placed substantial restrictions on the right of lenders to
enforce those clauses in many states. By virtue, however, of the Garn-St
Germain Depository Institutions Act of 1982 (the "Garn Act"), effective October
15, 1982, which purports to preempt state laws that prohibit the enforcement of
due-on-sale clauses by providing among other matters, that "due-on-sale"
clauses in certain loans made after the effective date of the Garn Act are
enforceable, within certain limitations as set forth in the Garn Act, a master
servicer may nevertheless have the right to accelerate the maturity of a
mortgage loan that contains a "due-on-sale" provision upon transfer of an
interest in the property, regardless of the master servicer's ability to
demonstrate that a sale threatens its legitimate security interest.
SUBORDINATE FINANCING
Certain of the mortgage loans may not restrict the ability of the borrower
to use the Mortgaged Property as security for one or more additional loans.
Where a borrower encumbers a mortgaged property with one or more junior liens,
the senior lender is subjected to additional risk. First, the borrower may have
difficulty servicing and repaying multiple loans. Moreover, if the subordinate
financing permits recourse to the borrower, as is frequently the case, and the
senior loan does not, a borrower may have more incentive to repay sums due on
the subordinate loan. Second, acts of the senior lender that prejudice the
junior lender or impair the junior lender's security may create a superior
equity in favor of the junior lender. For example, if the borrower and the
senior lender agree to an increase in the principal amount of or the interest
rate payable on the senior loan, the senior lender may lose its priority to the
extent any existing junior lender is harmed or the borrower is additionally
burdened. Third, if the borrower defaults on the senior loan and/or any junior
loan or loans, the existence of junior loans and actions taken by junior
lenders can impair the security available to the senior lender and can
interfere with or delay the taking of action by the senior lender. Moreover,
the bankruptcy of a junior lender may operate to stay foreclosure or similar
proceedings by the senior lender.
DEFAULT INTEREST AND LIMITATIONS ON PREPAYMENTS
Notes and mortgages may contain provisions that obligate the borrower to
pay a late charge or additional interest if payments are not timely made, and
in some circumstances, may prohibit prepayments for a specified period and/or
condition prepayments upon the borrower's payment of prepayment fees or yield
maintenance penalties. In certain states, there are or may be specific
limitations upon the late charges which a lender may collect from a borrower
for delinquent payments. Certain states also limit the amounts that a lender
may collect from a borrower as an additional charge if the loan is prepaid. In
addition, the enforceability of provisions that provide for prepayment fees or
penalties upon an involuntary prepayment is unclear under the laws of many
states.
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980 ("Title V") provides that state usury limitations shall not apply
to certain types of residential, including multifamily but not 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.
In any state in which application of Title V has been expressly rejected
or a provision limiting discount points or other charges has been adopted, no
mortgage loan originated after the date of that
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state action will (if originated after that rejection or adoption) be eligible
for inclusion in a trust fund unless (1) the mortgage loan provides for an
interest rate, discount points and charges as are permitted in that state or
(2) the mortgage loan provides that the terms are to be construed in accordance
with the laws of another state under which the interest rate, discount points
and charges would not be usurious and the borrower's counsel has rendered an
opinion that the choice of law provision would be given effect.
Statutes differ in their provisions as to the consequences of a usurious
loan. One group of statutes requires the lender to forfeit the interest due
above the applicable limit or impose a specified penalty. Under this statutory
scheme, the borrower may cancel the recorded mortgage or deed of trust upon
paying its debt with lawful interest, and the lender may foreclose, but only
for the debt plus lawful interest. A second group of statutes is more severe. A
violation of this type of usury law results in the invalidation of the
transaction, thereby permitting the borrower to cancel the recorded mortgage or
deed of trust without any payment or prohibiting the lender from foreclosing.
SOLDIERS' AND SAILORS' CIVIL RELIEF ACT OF 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), a borrower who enters military service after the
origination of that borrower's mortgage loan, including a borrower who was in
reserve status and is called to active duty after origination of the mortgage
loan, may not be charged interest, including fees and charges, above an annual
rate of 6% during the period of that borrower's active duty status, unless a
court orders otherwise upon application of the lender. The Relief Act applies
to individuals who are members of the Army, Navy, Air Force, Marines, National
Guard, Reserves, Coast Guard and officers of the U.S. Public Health Service
assigned to duty with the military. Because the Relief Act applies to
individuals who enter military service, including reservists who are called to
active duty, after origination of the related mortgage loan, no information can
be provided as to the number of loans with individuals as borrowers that may be
affected by the Relief Act. Application of the Relief Act would adversely
affect, for an indeterminate period of time, the ability of any servicer to
collect full amounts of interest on certain of the mortgage loans. Any
shortfalls in interest collections resulting from the application of the Relief
Act would result in a reduction of the amounts distributable to the holders of
the related series of certificates, and would not be covered by advances or,
unless otherwise specified in the related prospectus supplement, any form of
credit support provided in connection with those certificates. In addition, the
Relief Act imposes limitations that would impair the ability of the servicer to
foreclose on an affected mortgage loan during the borrower's period of active
duty status, and, under certain circumstances, during an additional three-month
period thereafter.
TYPE OF MORTGAGED PROPERTY
The lender may be subject to additional risk depending upon the type and
use of the Mortgaged Property in question. For instance, Mortgaged Properties
which are hospitals, nursing homes or convalescent homes may present special
risks to lenders in large part due to significant governmental regulation of
the operation, maintenance, control and financing of health care institutions.
Mortgages on Mortgaged Properties which are owned by the borrower under a
condominium form of ownership are subject to the declaration, by-laws and other
rules and regulations of the condominium association. Mortgaged Properties
which are hotels or motels may present additional risk to the lender in that:
1. hotels and motels are typically operated pursuant to franchise,
management and operating agreements which may be terminable by the
operator; and
2. 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 properties or
cooperatively owned multifamily properties may be subject to rent control laws,
which could impact the future cash flows of those properties.
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AMERICANS WITH DISABILITIES ACT
Under Title III of the Americans with Disabilities Act of 1990 (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, the 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 these 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.
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 statute, also known as RICO, can be seized by the
government if the property was used in, or purchased with the proceeds of,
those crimes. Under procedures contained in the Comprehensive Crime Control Act
of 1984, the government may seize the property even before conviction. The
government must publish notice of the forfeiture proceeding and may give notice
to all parties "known to have an alleged interest in the property", including
the holders of mortgage loans.
A lender may avoid forfeiture of its interest in the property if it
established that: (1) its mortgage was executed and recorded before commission
of the crime upon which the forfeiture is based, or (2) 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.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of
certificates. The discussion below does not purport to address all federal
income tax consequences that may be applicable to particular categories of
investors, some of which may be subject to special rules. The authorities on
which this discussion is based are subject to change or differing
interpretations, and any change or interpretation could apply retroactively.
This discussion reflects the applicable provisions of 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, (1) references to the mortgage loans
include references to the mortgage loans underlying MBS included in the
mortgage assets and (2) where the applicable prospectus supplement provides for
a fixed retained yield with respect to the mortgage loans underlying a series
of certificates, references to the mortgage loans will be deemed to refer to
that portion of the mortgage loans held by the trust fund which does not
include the Retained Interest. References to a "holder" or "certificateholder"
in this discussion generally mean the beneficial owner of a certificate.
FEDERAL INCOME TAX CONSEQUENCES FOR REMIC CERTIFICATES
General
With respect to a particular series of certificates, an election may be
made to treat the trust fund or one or more segregated pools of assets in the
trust fund as one or more REMICs within the meaning of Code Section 860D. A
trust fund or a portion of a trust fund as to which a REMIC election will be
made will be referred to as a "REMIC Pool". For purposes of this discussion,
certificates of a series as to which one or more REMIC elections are made are
referred to as "REMIC Certificates" and will consist of one or more classes of
"Regular Certificates" and one class of Residual Certificates in the case of
each REMIC Pool. Qualification as a REMIC requires ongoing compliance with
certain conditions. With respect to each series of REMIC Certificates,
Cadwalader, Wickersham & Taft, counsel to the Depositor, has advised the
Depositor that in the firm's opinion, assuming (1) the making of an election,
(2) compliance with the Pooling Agreement and (3) compliance with any changes
in the law, including any amendments to the Code or applicable Treasury
regulations under the Code, each REMIC Pool will qualify as a REMIC. In that
case, the Regular Certificates will be considered to be "regular interests" in
the REMIC Pool and generally will be treated for federal income tax purposes as
if they were newly originated debt instruments, and the Residual Certificates
will be considered to be "residual interests" in the REMIC Pool. The prospectus
supplement for each series of certificates will indicate whether one or more
REMIC elections with respect to the related trust fund will be made, in which
event references to "REMIC" or "REMIC Pool" below shall be deemed to refer to
that REMIC Pool. If so specified in the applicable prospectus supplement, the
portion of a trust fund as to which a REMIC election is not made may be treated
as a grantor trust for federal income tax purposes. See "--Federal Income Tax
Consequences for Certificates as to Which No REMIC Election Is Made" below.
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 that treatment. REMIC
Certificates held by a real estate investment trust will constitute "real estate
assets" within the meaning of Code Section 856(c)(4)(A), and interest on the
Regular Certificates and
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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 that 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%. Regular Certificates
will be "qualified mortgages" for another REMIC for purposes of Code Section
860(G)(a)(3) and "permitted assets" for a financial asset securitization
investment trust for purposes of Section 860(L)(c) REMIC Certificates held by a
regulated investment company will not constitute "Government Securities" within
the meaning of Code Section 851(b)(3)(A)(i). REMIC Certificates held 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 those 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 those loans were made to acquire, construct or
improve the related real property and not for the purpose of refinancing.
However, no effort will be made to identify the portion of the mortgage loans
of any Series meeting this requirement, and no representation is made in this
regard.
Qualification as a REMIC
In order for the REMIC Pool to qualify as a REMIC, there must be ongoing
compliance on the part of the REMIC Pool with the requirements set forth in the
Code. The REMIC Pool must fulfill an asset test, which requires that no more
than a de minimis portion of the assets of the REMIC Pool, as of the close of
the third calendar month beginning after the "Startup Day" (which for purposes
of this discussion is the date of issuance of the REMIC Certificates) and at
all times thereafter, may consist of assets other than "qualified mortgages"
and "permitted investments". The REMIC Regulations provide a safe harbor
pursuant to which the de minimis requirement is met if at all times the
aggregate adjusted basis of the nonqualified assets is less than 1% of the
aggregate adjusted basis of all the REMIC Pool's assets. An entity that fails
to meet the safe harbor may nevertheless demonstrate that it holds no more than
a de minimis amount of nonqualified assets. A REMIC also must provide
"reasonable arrangements" to prevent its residual interest from being held by
"disqualified organizations" and must furnish applicable tax information to
transferors or agents that violate this requirement. The Pooling Agreement for
each series will contain a provision designed to meet this requirement. See
"--Taxation of Residual Certificates--Tax-Related Restrictions on Transfer of
Residual Certificates--Disqualified Organizations" below.
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, including certain of the MBS, regular interests in another REMIC, such
as MBS in a trust as to which a REMIC election has been made, loans secured by
timeshare interests and loans secured by shares held by a tenant stockholder in
a cooperative housing corporation, provided, in general, (1) the fair market
value of the real property security (including buildings and structural
components) 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 (2) substantially all the
proceeds of the mortgage loan or the underlying
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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 (1) of the preceding sentence
as of the date of the last modification or at closing. A qualified mortgage
includes a qualified replacement mortgage, which is any property that would
have been treated as a qualified mortgage if it were transferred to the REMIC
Pool on the Startup Day and that is received either (1) in exchange for any
qualified mortgage within a three-month period thereafter or (2) in exchange
for a "defective obligation" within a two-year period thereafter. A "defective
obligation" includes
o a mortgage in default or as to which default is reasonably
foreseeable,
o a mortgage as to which a customary representation or warranty made at
the time of transfer to the REMIC Pool has been breached,
o a mortgage that was fraudulently procured by the mortgagor, and
o a mortgage that was not in fact principally secured by real property
(but only if the mortgage is disposed of within 90 days of discovery).
A mortgage loan that is "defective" as described in clause
o 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 the 90-day period.
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 the fund for the year is derived from the sale or other disposition
of property held for less than three months, unless required to prevent a
default on the regular interests caused by a default on one or more qualified
mortgages. A reserve fund must be reduced "promptly and appropriately" as
payments on the mortgage loans are received. Foreclosure property is real
property acquired by the REMIC Pool in connection with the default or imminent
default of a qualified mortgage and generally not held beyond the close of the
third calendar year following the acquisition of the property by the REMIC
Pool, with an extension that may be granted by the IRS.
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: (1) one or more classes of regular
interests or (2) 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. The
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 that interest are subordinated to
payments on other regular
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interests or the residual interest in the REMIC Pool, and are dependent on the
absence of defaults or delinquencies on qualified mortgages or permitted
investments, lower than reasonably expected returns on permitted investments,
unanticipated expenses incurred by the REMIC Pool or prepayment interest
shortfalls. Accordingly, the Regular Certificates of a series will constitute
one or more classes of regular interests, and the Residual Certificates for
each REMIC Pool of that series will constitute a single class of residual
interests on which distributions are made pro rata.
If an entity, such as the REMIC Pool, fails to comply with one or more of
the ongoing requirements of the Code for REMIC status during any taxable year,
the Code provides that the entity will not be treated as a REMIC for that year
and thereafter. In this event, an entity with multiple classes of ownership
interests may be treated as a separate association taxable as a corporation
under Treasury regulations, and the Regular Certificates may be treated as
equity interests in the REMIC Pool. 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 "Reform Act") indicates
that the relief may be accompanied by sanctions, such as the imposition of a
corporate tax on all or a portion of the REMIC Pool's income for the period of
time in which the requirements for REMIC status are not satisfied.
TAXATION OF REGULAR CERTIFICATES
General
In general, interest, original issue discount and market discount on a
Regular Certificate will be treated as ordinary income to a holder of the
Regular Certificate (the "Regular Certificateholder") as they accrue, and
principal payments on a Regular Certificate will be treated as a return of
capital to the extent of the Regular Certificateholder's basis in the Regular
Certificate allocable thereto. Regular Certificateholders must use the accrual
method of accounting with regard to Regular Certificates, regardless of the
method of accounting otherwise used by those Regular Certificateholders.
Original Issue Discount
Accrual Certificates and principal-only certificates will be, and other
classes of Regular Certificates may be, issued with "original issue discount"
within the meaning of Code Section 1273(a). Holders of any class of Regular
Certificates having original issue discount generally must include original
issue discount in ordinary income for federal income tax purposes as it
accrues, in accordance with the constant yield method that takes into account
the compounding of interest, in advance of receipt of the cash attributable to
that income. The following discussion is based in part on temporary and final
Treasury regulations issued on February 2, 1994, as amended on June 14, 1996
(the "OID Regulations") under Code Sections 1271 through 1273 and 1275 and in
part on the provisions of the Reform Act. Regular Certificateholders should be
aware, however, that the OID Regulations do not adequately address certain
issues relevant to prepayable securities, such as the Regular Certificates. To
the extent those issues are not addressed in those regulations, the Depositor
intends to apply the methodology described in the Conference Committee Report
to the Reform Act. We cannot assure you that the IRS 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 IRS 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 in this prospectus and the appropriate method for reporting interest
and original issue discount with respect to the Regular Certificates.
Each Regular Certificate, except to the extent described below with
respect to a Regular Certificate on which principal is distributed by random
lot ("Random Lot Certificates"), will be
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treated as a single installment obligation for purposes of determining the
original issue discount includible in a Regular Certificateholder's income. The
total amount of original issue discount on a Regular Certificate is the excess
of the "stated redemption price at maturity" of the Regular Certificate over
its "issue price". The issue price of a class of Regular Certificates offered
pursuant to this prospectus generally is the first price at which a substantial
amount of Regular Certificates of that class is sold to the public (excluding
bond houses, brokers and underwriters). Although unclear under the OID
Regulations, the Depositor intends to treat the issue price of a class as to
which there is no substantial sale as of the issue date or that is retained by
the Depositor as the fair market value of that class as of the issue date. The
issue price of a Regular Certificate also includes the amount paid by an
initial Regular Certificateholder for accrued interest that relates to a period
prior to the issue date of the Regular Certificate, unless the Regular
Certificateholder elects on its federal income tax return to exclude that
amount from the issue price and to recover it on the first distribution date.
The stated redemption price at maturity of a Regular Certificate always
includes the original principal amount of the Regular Certificate, but
generally will not include distributions of stated interest if those 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 those interest payments are unconditionally payable at intervals of one
year or less during the entire term of the Regular Certificate. Because there
is no penalty or default remedy in the case of nonpayment of interest with
respect to a Regular Certificate, it is possible that no interest on any class
of Regular Certificates will be treated as qualified stated interest. However,
except as provided in the following three sentences or in the applicable
prospectus supplement, because the underlying mortgage loans provide for
remedies in the event of default, we intend to treat interest with respect to
the Regular Certificates as qualified stated interest. Distributions of
interest on an Accrual Certificate, or on other Regular Certificates with
respect to which deferred interest will accrue, will not constitute qualified
stated interest, in which case the stated redemption price at maturity of the
Regular Certificates includes all distributions of interest as well as
principal on those Regular Certificates. Likewise, we intend to treat an
"interest only" class, or a class on which interest is substantially
disproportionate to its principal amount, a so-called "super-premium" class, as
having no qualified stated interest. Where the interval between the issue date
and the first distribution date on a Regular Certificate is shorter than the
interval between subsequent distribution dates, the interest attributable to
the additional days will be included in the stated redemption price at
maturity.
Under a de minimis rule, original issue discount on a Regular Certificate
will be considered to be zero if the original issue discount is less than 0.25%
of the stated redemption price at maturity of the Regular Certificate
multiplied by the weighted average maturity of the Regular Certificate. For
this purpose, the weighted average maturity of the Regular Certificate is
computed as the sum of the amounts determined by multiplying the number of full
years (i.e., rounding down partial years) from the issue date until each
distribution is scheduled to be made by a fraction, the numerator of which is
the amount of each distribution included in the stated redemption price at
maturity of the Regular Certificate and the denominator of which is the stated
redemption price at maturity of the Regular Certificate. The Conference
Committee Report to the Reform Act provides that the schedule of distributions
should be determined in accordance with the assumed rate of prepayment of the
mortgage loans (the "Prepayment Assumption") and the anticipated reinvestment
rate, if any, relating to the Regular Certificates. The Prepayment Assumption
with respect to a Series of Regular Certificates will be set forth in the
related prospectus supplement. Holders generally must report de minimis
original issue discount pro rata as principal payments are received, and that
income will be capital gain if the Regular Certificate is held as a capital
asset. However, under the OID Regulations, Regular Certificateholders may elect
to accrue all de minimis original issue discount as well as market discount and
market premium under the constant yield method. See "--Election to Treat All
Interest Under the Constant Yield Method" below.
A Regular Certificateholder generally must include in gross income for any
taxable year the sum of the "daily portions," as defined below, of the original
issue discount on the Regular Certificate accrued during an accrual period for
each day on which it holds the Regular Certificate, including the date of
purchase but excluding the date of disposition. The Depositor will treat the
monthly period
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ending on the day before each distribution date as the accrual period. With
respect to each Regular Certificate, a calculation will be made of the original
issue discount that accrues during each successive full accrual period, or
shorter period from the date of original issue, that ends on the day before the
related distribution date on the Regular Certificate. The Conference Committee
Report to the Reform 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
1. the sum of (a) the present value of all of the remaining distributions
to be made on the Regular Certificate as of the end of that accrual
period that are included in the Regular Certificate's stated
redemption price at maturity and (b) the distributions made on the
Regular Certificate during the accrual period that are included in the
Regular Certificate's stated redemption price at maturity, over
2. the adjusted issue price of the Regular Certificate at the beginning
of the accrual period.
The present value of the remaining distributions referred to in the
preceding sentence is calculated based on (1) the yield to maturity of the
Regular Certificate at the issue date, (2) events (including actual
prepayments) that have occurred prior to the end of the accrual period and (3)
the Prepayment Assumption. For these purposes, the adjusted issue price of a
Regular Certificate at the beginning of any accrual period equals the issue
price of the Regular Certificate, increased by the aggregate amount of original
issue discount with respect to the Regular Certificate that accrued in all
prior accrual periods and reduced by the amount of distributions included in
the Regular Certificate's stated redemption price at maturity that were made on
the Regular Certificate in those prior periods. The original issue discount
accruing during any accrual period (as determined in this paragraph) will then
be divided by the number of days in the period to determine the daily portion
of original issue discount for each day in the period. With respect to an
initial accrual period shorter than a full accrual period, the daily portions
of original issue discount must be determined according to an appropriate
allocation under any reasonable method.
Under the method described above, the daily portions of original issue
discount required to be included in income by a Regular Certificateholder
generally will increase to take into account prepayments on the Regular
Certificates as a result of prepayments on the mortgage loans that exceed the
Prepayment Assumption, and generally will decrease, but not below zero for any
period, if the prepayments are slower than the Prepayment Assumption. An
increase in prepayments on the mortgage loans with respect to a Series of
Regular Certificates can result in both a change in the priority of principal
payments with respect to certain classes of Regular Certificates and either an
increase or decrease in the daily portions of original issue discount with
respect to those Regular Certificates.
In the case of a Random Lot Certificate, we intend to determine the yield
to maturity of that 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 that unpaid principal balance, (a) the remaining unaccrued original issue
discount allocable to that certificate (or to that portion) will accrue at the
time of that distribution, and (b) the accrual of original issue discount
allocable to each remaining certificate of the 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 that class and the adjusted issue
price of that class to the extent attributable to the portion of the unpaid
principal balance of the class that was distributed. We believe 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. You are
advised to consult your tax advisors as to this treatment.
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Acquisition Premium
A purchaser of a Regular Certificate at a price greater than its adjusted
issue price but less than its stated redemption price at maturity will be
required to include in gross income the daily portions of the original issue
discount on the Regular Certificate reduced pro rata by a fraction, the
numerator of which is the excess of its purchase price over the 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, a
subsequent purchaser may elect to treat all of the acquisition premium under
the constant yield method, as described below under the heading "--Election to
Treat All Interest Under the Constant Yield Method" below.
Variable Rate Regular Certificates
Regular Certificates may provide for interest based on a variable rate.
Under the OID Regulations, interest is treated as payable at a variable rate
if, generally, (1) the issue price does not exceed the original principal
balance by more than a specified amount and (2) 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 the rate is subject to a fixed multiple that is greater than 0.65, but
not more than 1.35. The 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 (other than a qualified floating rate) is a
rate that is determined using a single fixed formula and that is based on
objective financial or economic information, provided that the information is
not (1) within the control of the issuer or a related party or (2) 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 floating rate
may nevertheless be an objective rate. A class of Regular Certificates may be
issued under this prospectus that does not have a variable rate under the OID
Regulations, for example, a class that bears different rates at different times
during the period it is outstanding so that it is considered significantly
"front-loaded" or "back-loaded" within the meaning of the OID Regulations. It
is possible that a class of this type may be considered to bear "contingent
interest" within the meaning of the OID Regulations. The OID Regulations, as
they relate to the treatment of contingent interest, are by their terms not
applicable to Regular Certificates. However, if final regulations dealing with
contingent interest with respect to Regular Certificates apply the same
principles as the OID Regulations, those regulations may lead to different
timing of income inclusion than would be the case under the OID Regulations.
Furthermore, application of those principles could lead to the characterization
of gain on the sale of contingent interest Regular Certificates as ordinary
income. Investors should consult their tax advisors regarding the appropriate
treatment of any Regular Certificate that does not pay interest at a fixed rate
or variable rate as described in this paragraph.
Under the REMIC Regulations, a Regular Certificate (1) 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 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 a rate that is
subject to one or more caps or floors, or (2) bearing one or more of these
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, we intend to treat Regular
Certificates that qualify as regular interests under this rule in the same
manner as obligations bearing a variable rate for original issue discount
reporting purposes.
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The amount of original issue discount with respect to a Regular
Certificate bearing a variable rate of interest will accrue in the manner
described above under "--Original Issue Discount" with the yield to maturity
and future payments on that Regular Certificate generally to be determined by
assuming that interest will be payable for the life of the Regular Certificate
based on the initial rate (or, if different, the value of the applicable
variable rate as of the pricing date) for the relevant class. Unless otherwise
specified in the applicable prospectus supplement, we intend to treat variable
interest as qualified stated interest, other than variable interest on an
interest-only or super-premium class, which will be treated as non-qualified
stated interest includible in the stated redemption price at maturity. Ordinary
income reportable for any period will be adjusted based on subsequent changes
in the applicable interest rate index.
Although unclear under the OID Regulations, unless required otherwise by
applicable final regulations, we intend to treat Regular Certificates bearing
an interest rate that is a weighted average of the net interest rates on
mortgage loans or Mortgage Certificates having fixed or adjustable rates, as
having qualified stated interest, except to the extent that initial "teaser"
rates cause sufficiently "back-loaded" interest to create more than de minimis
original issue discount. The yield on those Regular Certificates for purposes
of accruing original issue discount will be a hypothetical fixed rate based on
the fixed rates, in the case of fixed rate mortgage loans, and initial "teaser
rates" followed by fully indexed rates, in the case of adjustable rate mortgage
loans. In the case of adjustable rate mortgage loans, the applicable index used
to compute interest on the mortgage loans in effect on the pricing date (or
possibly the issue date) will be deemed to be in effect beginning with the
period in which the first weighted average adjustment date occurring after the
issue date occurs. Adjustments will be made in each accrual period either
increasing or decreasing the amount of ordinary income reportable to reflect
the actual pass-through interest rate on the Regular Certificates.
Market Discount
A purchaser of a Regular Certificate also may be subject to the market
discount rules of Code Section 1276 through 1278. Under these Code sections and
the principles applied by the OID Regulations in the context of original issue
discount, "market discount" is the amount by which the purchaser's original
basis in the Regular Certificate (1) is exceeded by the then-current principal
amount of the Regular Certificate or (2) in the case of a Regular Certificate
having original issue discount, is exceeded by the adjusted issue price of that
Regular Certificate at the time of purchase. The purchaser generally will be
required to recognize ordinary income to the extent of accrued market discount
on the Regular Certificate as distributions includible in the stated redemption
price at maturity of the Regular Certificate are received, in an amount not
exceeding that distribution. The 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 Reform Act provides that
until regulations are issued, the market discount would accrue either (1) on
the basis of a constant interest rate or (2) in the ratio of stated interest
allocable to the relevant period to the sum of the interest for that period
plus the remaining interest as of the end of that period, or in the case of a
Regular Certificate issued with original issue discount, in the ratio of
original issue discount accrued for the relevant period to the sum of the
original issue discount accrued for that period plus the remaining original
issue discount as of the end of that period. You also generally will be
required to treat a portion of any gain on a sale or exchange of the Regular
Certificate as ordinary income to the extent of the market discount accrued to
the date of disposition under one of the foregoing methods, less any accrued
market discount previously reported as ordinary income as partial distributions
in reduction of the stated redemption price at maturity were received. You will
be required to defer deduction of a portion of the excess of the interest paid
or accrued on indebtedness incurred to purchase or carry a Regular Certificate
over the interest distributable on those Regular Certificates. The deferred
portion of an interest expense in any taxable year generally will not exceed
the accrued market discount on the Regular Certificate for that year. The
deferred interest expense is, in general, allowed as a deduction not later than
the year in which the related market discount income is recognized or the
Regular Certificate is disposed of. As an alternative to the inclusion of
market discount in income on the foregoing basis, you may elect to include
market discount in income
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currently as it accrues on all market discount instruments you acquired 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 that election may be deemed to
be made.
Market discount with respect to a Regular Certificate will be considered
to be zero if the market discount is less than 0.25% of the remaining stated
redemption price at maturity of the Regular Certificate multiplied by the
weighted average maturity of the Regular Certificate (determined as described
above in the third paragraph under "Original Issue Discount") remaining after
the date of purchase. It appears that de minimis market discount would be
reported in a manner similar to de minimis original issue discount. See
"--Original Issue Discount" above. Treasury regulations implementing the market
discount rules have not yet been issued, and therefore investors should consult
their own tax advisors regarding the application of these rules. You should
also consult Revenue Procedure 92-67 concerning the elections to include market
discount in income currently and to accrue market discount on the basis of the
constant yield method.
Premium
A Regular Certificate purchased at a cost greater than its remaining
stated redemption price at maturity generally is considered to be purchased at
a premium. If you hold a Regular Certificate as a "capital asset" within the
meaning of Code Section 1221, you may elect under Code Section 171 to amortize
that premium under the constant yield method. Final regulations with respect to
amortization of bond premium do not by their terms apply to prepayable
obligations such as the Regular Certificates. However, the Conference Committee
Report to the Reform Act indicates a Congressional intent that the same rules
that will apply to the accrual of market discount on installment obligations
will also apply to amortizing bond premium under Code Section 171 on
installment obligations such as the Regular Certificates, although it is
unclear whether the alternatives to the constant yield method described above
under "Market Discount" are available. Amortizable bond premium will be treated
as an offset to interest income on a Regular Certificate rather than as a
separate deduction item. See "--Election to Treat All Interest Under the
Constant Yield Method" below regarding an alternative manner in which the Code
Section 171 election may be deemed to be made.
Election to Treat All Interest Under the Constant Yield Method
A holder of a debt instrument such as a Regular Certificate may elect to
treat all interest that accrues on the instrument using the constant yield
method, with none of the interest being treated as qualified stated interest.
For purposes of applying the constant yield method to a debt instrument subject
to an election, (1) "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 (2) 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 an election on an instrument by instrument basis or for a
class or group of debt instruments. However, if the holder makes 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 IRS. You should consult
their own tax advisors regarding the advisability of making an election.
Sale or Exchange of Regular Certificates
If you sell or exchange a Regular Certificate, you will recognize gain or
loss equal to the difference, if any, between the amount received and its
adjusted basis in the Regular Certificate. The
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adjusted basis of a Regular Certificate generally will equal the cost of the
Regular Certificate to the seller, increased by any original issue discount or
market discount previously included in the seller's gross income with respect
to the Regular Certificate and reduced by amounts included in the stated
redemption price at maturity of the Regular Certificate that were previously
received by the seller, by any amortized premium and by previously recognized
losses.
Except as described above with respect to market discount, and except as
provided in this paragraph, any gain or loss on the sale or exchange of a
Regular Certificate realized by an investor who holds the Regular Certificate
as a capital asset will be capital gain or loss and will be long-term or
short-term depending on whether the Regular Certificate has been held for the
applicable holding period (described below). That gain will be treated as
ordinary income
1. if a Regular Certificate is held as part of a "conversion transaction"
as defined in Code Section 1258(c), up to the amount of interest that
would have accrued on the Regular Certificateholder's net investment
in the conversion transaction at 120% of the appropriate applicable
Federal rate under Code Section 1274(d) in effect at the time the
taxpayer entered into the transaction minus any amount previously
treated as ordinary income with respect to any prior distribution of
property that was held as a part of that transaction,
2. in the case of a non-corporate taxpayer, to the extent the taxpayer
has made an election under Code Section 163(d)(4) to have net capital
gains taxed as investment income at ordinary rates, or
3. to the extent that the 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 the 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 that
holder with respect to the Regular Certificate.
In addition, gain or loss recognized from the sale of a Regular
Certificate by certain banks or thrift institutions will be treated as ordinary
income or loss pursuant to Code Section 582(c). Long-term capital gains of
certain non-corporate taxpayers generally are subject to a lower maximum tax
rate (20%) than ordinary income or short-term capital gains of those taxpayers
(39.6%) for property held for more than one year. The maximum tax rate for
corporations is the same with respect to both ordinary income and capital
gains.
Treatment of Losses
Holders of Regular Certificates will be required to report income with
respect to Regular Certificates on the accrual method of accounting, without
giving effect to delays or reductions in distributions attributable to defaults
or delinquencies on the mortgage loans allocable to a particular class of
Regular Certificates, except to the extent it can be established that those
losses are uncollectible. Accordingly, the holder of a Regular Certificate may
have income, or may incur a diminution in cash flow as a result of a default or
delinquency, but may not be able to take a deduction (subject to the discussion
below) for the corresponding loss until a subsequent taxable year. In this
regard, investors are cautioned that while they may generally cease to accrue
interest income if it reasonably appears that the interest will be
uncollectible, the IRS may take the position that original issue discount must
continue to be accrued in spite of its uncollectibility until the debt
instrument is disposed of in a taxable transaction or becomes worthless in
accordance with the rules of Code Section 166.
Under Code Section 166, it appears that holders of Regular Certificates
that are corporations or that otherwise hold the Regular Certificates in
connection with a trade or business should in general be allowed to deduct, as
an ordinary loss, a loss sustained during the taxable year on account of those
Regular Certificates becoming wholly or partially worthless, and that, in
general, holders of Regular Certificates that are not corporations and do not
hold the Regular Certificates in connection with a trade or business will be
allowed to deduct as a short-term capital loss any loss with respect to
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principal sustained during the taxable year on account of a portion of any
class or subclass of those Regular Certificates becoming wholly worthless.
Although the matter is not free from doubt, non-corporate holders of Regular
Certificates should be allowed a bad debt deduction at that time as the
principal balance of any class or subclass of those Regular Certificates is
reduced to reflect losses resulting from any liquidated mortgage loans. The
IRS, however, could take the position that non-corporate holders will be
allowed a bad debt deduction to reflect those losses only after all mortgage
loans remaining in the trust fund have been liquidated or that class of Regular
Certificates has been otherwise retired. The IRS could also assert that losses
on the Regular Certificates are deductible based on some other method that may
defer those 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. You are urged to consult your own tax advisors regarding the
appropriate timing, amount and character of any loss sustained with respect to
the 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 IRS may take the position that losses
attributable to accrued original issue discount may only be deducted as
short-term capital losses by non-corporate holders not engaged in a trade or
business. Special loss rules are applicable to banks and thrift institutions,
including rules regarding reserves for bad debts. Banks and thrift institutions
are advised to consult their tax advisors regarding the treatment of losses on
Regular Certificates.
TAXATION OF RESIDUAL CERTIFICATES
Taxation of REMIC Income
Generally, the "daily portions" of REMIC taxable income or net loss will
be includible as ordinary income or loss in determining the federal taxable
income of holders of certain classes 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 that quarter and
by allocating that daily portion among the Residual Certificateholders in
proportion to their respective holdings of certain classes of Residual
Certificates in the REMIC Pool on that 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 (1) the limitations on deductibility
of investment interest expense and expenses for the production of income do not
apply, (2) all bad loans will be deductible as business bad debts and (3) the
limitation on the deductibility of interest and expenses related to tax-exempt
income will apply. The REMIC Pool's gross income includes interest, original
issue discount income and market discount income, if any, on the mortgage
loans, reduced by amortization of any premium on the mortgage loans, plus
income from amortization of issue premium, if any, on the Regular Certificates,
plus income on reinvestment of cash flows and reserve assets, plus any
cancellation of indebtedness income upon allocation of realized losses to the
Regular Certificates. The REMIC Pool's deductions include interest and original
issue discount expense on the Regular Certificates, servicing fees on the
mortgage loans, other administrative expenses of the REMIC Pool and realized
losses on the mortgage loans. The requirement that Residual Certificateholders
report their pro rata share of taxable income or net loss of the REMIC Pool
will continue until there are no certificates of any class of the related
series outstanding.
The taxable income recognized by a Residual Certificateholder in any
taxable year will be affected by, among other factors, the relationship between
the timing of recognition of interest and original issue discount or market
discount income or amortization of premium with respect to the mortgage loans,
on the one hand, and the timing of deductions for interest (including original
issue discount) on the Regular Certificates or income from amortization of
issue premium on the Regular Certificates, on the other hand. In the event that
an interest in the mortgage loans is acquired by the REMIC Pool at a discount,
and one or more of those mortgage loans is prepaid, the Residual
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Certificateholder may recognize taxable income without being entitled to
receive a corresponding amount of cash because (1) the prepayment may be used
in whole or in part to make distributions in reduction of principal on the
Regular Certificates and (2) the discount on the mortgage loans which is
includible in income may exceed the deduction allowed upon those distributions
on those Regular Certificates on account of any unaccrued original issue
discount relating to those Regular Certificates. When there is more than one
class of Regular Certificates that distribute principal sequentially, this
mismatching of income and deductions is particularly likely to occur in the
early years following issuance of the Regular Certificates when distributions
in reduction of principal are being made in respect of earlier classes of
Regular Certificates to the extent that those classes are not issued with
substantial discount. If taxable income attributable to that kind of
mismatching is realized, in general, losses would be allowed in later years as
distributions on the later classes of Regular Certificates are made. Taxable
income may also be greater in earlier years than in later years as a result of
the fact that interest expense deductions, expressed as a percentage of the
outstanding principal amount of that series of Regular Certificates, may
increase over time as distributions in reduction of principal are made on the
lower yielding classes of Regular Certificates, whereas to the extent that the
REMIC Pool includes fixed rate mortgage loans, interest income with respect to
any given mortgage loan will remain constant over time as a percentage of the
outstanding principal amount of that loan. Consequently, Residual
Certificateholders must have sufficient other sources of cash to pay any
federal, state or local income taxes due as a result of that mismatching or
unrelated deductions against which to offset that income, subject to the
discussion of "excess inclusions" below under "--Limitations on Offset or
Exemption of REMIC Income". The timing of that 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 that Residual Certificateholder for those periods in accordance
with generally accepted accounting principles. You should consult their own
accountants concerning the accounting treatment of your investment in Residual
Certificates.
Basis and Losses
The amount of any net loss of the REMIC Pool that you may take into
account 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 that Residual Certificate. The 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 that loss was disallowed
and may be used by that Residual Certificateholder only to offset any income
generated by the same REMIC Pool.
You will not be permitted to amortize directly the cost of your 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.
That 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 under "--Taxation of REMIC Income" above, the period of time over
which the 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 a residual
interest as zero rather than a negative amount for purposes of determining the
REMIC Pool's basis in its assets. The preamble to the REMIC Regulations states
that the IRS may provide future guidance on the proper tax treatment of
payments made by a transferor
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of 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
that basis until termination of the REMIC Pool unless future Treasury
regulations provide for periodic adjustments to the REMIC income otherwise
reportable by that 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 we intend 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. We make no representation as to the specific method that it
will use for reporting income with respect to the mortgage loans and expenses
with respect to the Regular Certificates, and different methods could result in
different timing of reporting of taxable income or net loss to Residual
Certificateholders or differences in capital gain versus ordinary income.
Original Issue Discount and Premium. Generally, the REMIC Pool's
deductions for original issue discount and income from amortization of issue
premium will be determined in the same manner as original issue discount income
on Regular Certificates as described under "--Taxation of Regular
Certificates--Original Issue Discount" and "--Variable Rate Regular
Certificates", without regard to the de minimis rule described in that section,
and "--Premium" above.
Deferred Interest. Any deferred interest that accrues with respect to any
adjustable rate mortgage loans held by the REMIC Pool will constitute income to
the REMIC Pool and will be treated in a manner similar to the Deferred Interest
that accrues with respect to Regular Certificates as described under
"--Taxation of Regular Certificates--Deferred Interest" above.
Market Discount. The REMIC Pool will have market discount income in
respect of mortgage loans if, in general, their unpaid principal balances
exceed the basis of the REMIC Pool allocable to those mortgage loans. The REMIC
Pool's basis in those mortgage loans is generally the fair market value of the
mortgage loans immediately after the transfer of the mortgage loans to the
REMIC Pool. The REMIC Regulations provide that the 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 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 the 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 under "--Taxation of Regular Certificates--Market
Discount" above.
Premium. Generally, if the basis of the REMIC Pool in the mortgage loans
exceeds the unpaid principal balances of the mortgage loans, the REMIC Pool
will be considered to have acquired those mortgage loans at a premium equal to
the amount of that 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 of the
mortgage loans to the REMIC Pool. In a manner analogous to the discussion above
under "--Taxation of Regular Certificates--Premium", a REMIC Pool that holds a
mortgage loan as a capital asset under Code Section 1221 may elect under Code
Section 171 to amortize premium on whole mortgage loans or mortgage loans
underlying MBS that were originated after September 27, 1985 or MBS that are
REMIC regular interests under the constant yield method. Amortizable bond
premium will be treated as an offset to interest income on the mortgage loans,
rather than as a separate deduction item. To the extent that the mortgagors
with
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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 those
mortgage loans may be deductible in accordance with a reasonable method
regularly employed by the related holder. The allocation of the premium pro
rata among principal payments should be considered a reasonable method;
however, the IRS may argue that the premium should be allocated in a different
manner, such as allocating the 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 that quarterly period of
(1) 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 (2) the adjusted issue price of such
Residual Certificate at the beginning of that 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
those daily accruals of REMIC income described in this paragraph for all prior
quarters, decreased by any distributions made with respect to that Residual
Certificate prior to the beginning of that 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 that 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 that 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 that
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" below,
and that portion attributable to excess inclusions is not eligible for any
reduction in the rate of withholding tax, by treaty or otherwise. See
"--Taxation of Certain Foreign Investors--Residual Certificates" below.
Finally, if a real estate investment trust or a regulated investment company
owns a Residual Certificate, a portion (allocated under Treasury regulations
yet to be issued) of dividends paid by the real estate investment trust or a
regulated investment company could not be offset by net operating losses of its
shareholders, would constitute unrelated business taxable income for tax-exempt
shareholders, and would be ineligible for reduction of withholding to certain
persons who are not U.S. Persons. The SBJPA of 1996 has eliminated the special
rule permitting Section 593 institutions ("thrift institutions") to use net
operating losses and other allowable deductions to offset their excess
inclusion income from Residual Certificates that have "significant value"
within the meaning of the REMIC Regulations, effective for taxable years
beginning after December 31, 1995, except with respect to Residual Certificates
continuously held by thrift institutions since November 1, 1995.
In addition, the SBJPA of 1996 provides three rules for determining the
effect of excess inclusions on the alternative minimum taxable income of a
Residual Certificateholder. First, alternative minimum taxable income for a
Residual Certificateholder is determined without regard to the special rule,
discussed above, that taxable income cannot be less than excess inclusions.
Second, a Residual Certificateholder's alternative minimum taxable income for a
taxable year cannot be less than the excess inclusions for the year. Third, the
amount of any alternative minimum tax net operating loss deduction must be
computed without regard to any excess inclusions. These rules are effective for
taxable years beginning after December 31, 1996, unless a Residual
Certificateholder elects to have those rules apply only to taxable years
beginning after August 20, 1996.
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Tax-Related Restrictions on Transfer of Residual Certificates
Disqualified Organizations. If any legal or beneficial interest in a
Residual Certificate is transferred to a Disqualified Organization (as defined
below), a tax would be imposed in an amount equal to the product of (1) the
present value of the total anticipated excess inclusions with respect to that
Residual Certificate for periods after the transfer and (2) 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. The tax generally would be imposed on the transferor of the
Residual Certificate, except that where the transfer is through an agent,
including a broker, nominee or other middleman, for a Disqualified
Organization, the tax would instead be imposed on that agent. However, a
transferor of a Residual Certificate would in no event be liable for the 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 the
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
that entity, then a tax is imposed on the entity equal to the product of (1)
the amount of excess inclusions on the Residual Certificate that are allocable
to the interest in the Pass-Through Entity during the period the interest is
held by the Disqualified Organization, and (2) the highest marginal federal
corporate income tax rate. This 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 the tax if it has received an affidavit from the record
holder that it is not a Disqualified Organization or stating the holder's
taxpayer identification number and, during the period that person is the record
holder of the Residual Certificate, the Pass-Through Entity does not have
actual knowledge that the affidavit is false.
For taxable years beginning on or after January 1, 1998, if an "electing
large partnership" holds a Residual Certificate, all interests in the electing
large partnership are treated as held by Disqualified Organizations for
purposes of the tax imposed upon a Pass-Through Entity by section 860E(c) of
the Code. An exception to this tax, otherwise available to a Pass-Through
Entity that is furnished certain affidavits by record holders of interests in
the entity and that does not know the affidavits are false, is not available to
an electing partnership.
For these purposes, (1) "Disqualified Organization" means the United
States, any state or one of their political subdivisions, any foreign
government, any international organization, any agency or instrumentality of
any of the foregoing (provided, that the 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 one of those governmental entities),
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 that
organization is subject to the tax on unrelated business income imposed by Code
Section 511, (2) "Pass-Through Entity" means any regulated investment company,
real estate investment trust, common trust fund, partnership, trust or estate
and certain corporations operating on a cooperative basis. Except as may be
provided in Treasury regulations, any person holding an interest in a
Pass-Through Entity as a nominee for another will, with respect to that
interest, be treated as a Pass-Through Entity, and (3) 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.
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The Pooling Agreement with respect to a series of certificates will
provide that no legal or beneficial interest in a Residual Certificate may be
transferred unless (1) the proposed transferee provides to the transferor and
the trustee an affidavit providing its taxpayer identification number and
stating that the transferee is the beneficial owner of the Residual
Certificate, is not a Disqualified Organization and is not purchasing the
Residual Certificates on behalf of a Disqualified Organization (i.e., as a
broker, nominee or other middleman), and (2) the transferor provides a
statement in writing to the Depositor and the trustee that it has no actual
knowledge that the affidavit is false. Moreover, the Pooling 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 the restrictions on transfer, and each Residual
Certificateholder will be deemed to have agreed, as a condition of ownership of
the Residual Certificates, to any amendments to the related Pooling Agreement
required under the Code or applicable Treasury regulations to effectuate the
foregoing restrictions. Information necessary to compute an applicable excise
tax must be furnished to the IRS 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 that 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 under
"--Foreign Investors" below) 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, (1) 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 (2) 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 under "--Disqualified Organizations"
above. 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 (1) 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 (2) the
transferee represents to the transferor that it understands that, as the holder
of the noneconomic residual interest, the transferee may incur tax liabilities
in excess of cash flows generated by the interest and that the transferee
intends to pay taxes associated with holding the residual interest as they
become due. The Pooling Agreement with respect to each series of certificates
will require the transferee of a Residual Certificate to certify to the matters
in the preceding sentence as part of the affidavit described under the heading
"--Disqualified Organizations" above. The transferor must have no actual
knowledge or reason to know that those statements are false.
Foreign Investors. The REMIC Regulations provide that the transfer of a
Residual Certificate that has "tax avoidance potential" to a "foreign person"
will be disregarded for all federal tax purposes. This rule appears intended to
apply to a transferee who is not a "U.S. Person" (as defined below), unless the
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, (1) the future value
of expected distributions equals at least 30% of the anticipated excess
inclusions after the transfer, and (2) the transferor reasonably expects that
the transferee will receive sufficient distributions from the REMIC Pool at or
after the time at which the
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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 Certificates 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 a transfer may be made. The term "U.S. Person"
means a citizen or resident of the United States, a corporation, partnership,
except to the extent provided in applicable Treasury regulations, or other
entity created or organized in or under the laws of the United States or any of
their political subdivisions, an estate that is subject to United States
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 that trust, and one or more United States fiduciaries have
the authority to control all substantial decisions of that 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 under "--Taxation of
Residual Certificates--Basis and Losses" above, of the Residual
Certificateholder in the 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 the adjusted basis on that
distribution date. That income will be treated as gain from the sale or
exchange of the Residual Certificates. It is possible that the termination of
the REMIC Pool may be treated as a sale or exchange of a Residual
Certificateholder's Residual Certificates, in which case, if the Residual
Certificateholder has an adjusted basis in the Residual Certificates remaining
when its interest in the REMIC Pool terminates, and if the Residual
Certificateholder holds the Residual Certificate as a capital asset under Code
Section 1221, then that Residual Certificateholder will recognize a capital
loss at that time in the amount of the remaining adjusted basis.
Any gain on the sale of Residual Certificates will be treated as ordinary
income (1) if the Residual Certificates are 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 that transaction or (2) in
the case of a non-corporate taxpayer, to the extent that 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 Reform 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 those certificates, during the period beginning six months before the
sale or disposition of the Residual Certificate and ending six months after the
sale or disposition, acquires (or enters into any other transaction that
results in the application of Section 1091) any residual interest in any REMIC
or any interest in a "taxable mortgage pool" (such as a non-REMIC owner trust)
that is economically comparable to a Residual Certificate.
Mark to Market Regulations
The IRS has issued regulations, the "Mark to Market Regulations", under
Code Section 475 relating to the requirement that a securities dealer mark to
market securities held for sale to
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customers. This mark-to-market requirement applies to all securities of a
dealer, except to the extent that the dealer has specifically identified a
security as held for investment. The Mark to Market Regulations provide that,
for purposes of this mark-to-market requirement, a Residual Certificate is not
treated as a security and thus may not be marked to market. The Mark to Market
Regulations apply to all Residual Certificates acquired on or after January 4,
1995.
TAXES THAT MAY BE IMPOSED ON THE REMIC POOL
Prohibited Transactions
Income from certain transactions by the REMIC Pool, called prohibited
transactions, will not be part of the calculation of income or loss includible
in the federal income tax returns of Residual Certificateholders, but rather
will be taxed directly to the REMIC Pool at a 100% rate. Prohibited
transactions generally include
1. 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,
2. the receipt of income from assets that are not the type of mortgages
or investments that the REMIC Pool is permitted to hold,
3. the receipt of compensation for services or
4. the receipt of gain from disposition of cash flow investments other
than pursuant to a qualified liquidation.
Notwithstanding (1) and (4) it is not a prohibited transaction to sell
REMIC Pool property to prevent a default on Regular Certificates as a result of
a default on qualified mortgages or to facilitate a clean-up call, generally,
an optional termination to save administrative costs when no more than a small
percentage of the certificates is outstanding. The REMIC Regulations indicate
that the modification of a mortgage loan generally will not be treated as a
disposition if it is occasioned by a default or reasonably foreseeable default,
an assumption of the mortgage loan, the waiver of a due-on-sale or
due-on-encumbrance clause or the conversion of an interest rate by a mortgagor
pursuant to the terms of a convertible adjustable rate mortgage loan.
Contributions to the REMIC Pool After the Startup Day
In general, the REMIC Pool will be subject to a tax at a 100% rate on the
value of any property contributed to the REMIC Pool after the Startup Day.
Exceptions are provided for cash contributions to the REMIC Pool (1) during the
three months following the Startup Day, (2) made to a qualified reserve fund by
a Residual Certificateholder, (3) in the nature of a guarantee, (4) made to
facilitate a qualified liquidation or clean-up call and (5) 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 ending with the third calendar year
following the year of acquisition of that 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.
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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 that adoption is deemed to
occur, and sells all of its assets (other than cash) within a 90-day period
beginning on the date of the adoption of the plan of liquidation, the REMIC
Pool will not be subject to the prohibited transaction rules on the sale of its
assets, provided that the REMIC Pool credits or distributes in liquidation all
of the sale proceeds plus its cash (other than amounts retained to meet claims)
to holders of Regular Certificates and Residual Certificateholders within the
90-day period.
ADMINISTRATIVE MATTERS
The REMIC Pool will be required to maintain its books on a calendar year
basis and to file federal income tax returns for federal income tax purposes in
a manner similar to a partnership. The form for that income tax return is Form
1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return. The
trustee will be required to sign the REMIC Pool's returns. Treasury regulations
provide that, except where there is a single Residual Certificateholder for an
entire taxable year, the REMIC Pool will be subject to the procedural and
administrative rules of the Code applicable to partnerships, including the
determination by the IRS 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
the Residual Certificates, to have agreed (1) to the appointment of the tax
matters person as provided in the preceding sentence and (2) 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 those 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 (1) 3% of the
excess, if any, of adjusted gross income over $126,600 for 1999 ($63,300 in the
case of a married individual filing a separate return) (subject to annual
adjustments for inflation) or (2) 80% of the amount of itemized deductions
otherwise allowable for that year. In the case of a REMIC Pool, those
deductions may include deductions under Code Section 212 for the servicing fee
and all administrative and other expenses relating to the REMIC Pool, or any
similar expenses allocated to the REMIC Pool with respect to a regular interest
it holds in another REMIC. Those investors who hold REMIC Certificates either
directly or indirectly through certain pass-through entities may have their pro
rata share of those expenses allocated to them as additional gross income, but
may be subject to those limitation on deductions. In addition, those expenses
are not deductible at all for purposes of computing the alternative minimum
tax, and may cause those 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, that additional gross income and limitation on deductions
will apply to the allocable portion of those expenses to holders of Regular
Certificates, as well as holders of Residual Certificates, where those Regular
Certificates are issued in a manner that is similar to pass-through
certificates in a fixed investment trust. In general, that allocable portion
will be determined based on the ratio that a REMIC Certificateholder's income,
determined on a daily basis, bears to the income
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of all holders of Regular Certificates and Residual Certificates with respect
to a REMIC Pool. As a result, individuals, estates or trusts holding REMIC
Certificates (either directly or indirectly through a grantor trust,
partnership, S corporation, REMIC, or certain other pass-through entities
described in the foregoing temporary Treasury regulations) may have taxable
income in excess of the interest income at the pass-through rate on Regular
Certificates that are issued in a single class or otherwise consistently with
fixed investment trust status or in excess of cash distributions for the
related period on Residual Certificates. Unless otherwise indicated in the
applicable prospectus supplement, all those expenses will be allocable to the
Residual Certificates.
TAXATION OF CERTAIN FOREIGN INVESTORS
Regular Certificates
Interest, including original issue discount, distributable to Regular
Certificateholders who are non-resident aliens, foreign corporations, or other
Non-U.S. Persons (as defined below), will be considered "portfolio interest"
and, therefore, generally will not be subject to 30% United States withholding
tax, provided that the Non-U.S. Person (1) 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 (2) provides the
trustee, or the person who would otherwise be required to withhold tax from
those distributions under Code Section 1441 or 1442, with an appropriate
statement, signed under penalties of perjury, identifying the beneficial owner
and stating, among other things, that the beneficial owner of the Regular
Certificate is a Non-U.S. Person. If that statement, or any other required
statement, is not provided, 30% withholding will apply unless reduced or
eliminated pursuant to an applicable tax treaty or unless the interest on the
Regular Certificate is effectively connected with the conduct of a trade or
business within the United States by the Non-U.S. Person. In the latter case,
the Non-U.S. Person will be subject to United States federal income tax at
regular rates. Prepayment Premiums distributable to Regular Certificateholders
who are Non-U.S. Persons may be subject to 30% United States withholding tax.
Investors who are Non-U.S. Persons should consult their own tax advisors
regarding the specific tax consequences to them of owning a Regular
Certificate. The term "Non-U.S. Person" means any person who is not a U.S.
Person.
The IRS recently issued final regulations (the "New Regulations") which
would provide alternative methods of satisfying the beneficial ownership
certification requirement described above. The New Regulations will be
effective January 1, 2001. Current withholding certificates will remain valid
until the earlier of December 31, 2000 or the due date of expiration of the
certificate under the rules as currently in effect. The New Regulations would
require, in the case of Regular Certificates held by a foreign partnership,
that (1) the certification described above be provided by the partners rather
than by the foreign partnership and (2) 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 Reform Act indicates that amounts
paid to Residual Certificateholders who are Non-U.S. Persons are treated as
interest for purposes of the 30% (or lower treaty rate) United States
withholding tax. Treasury regulations provide that amounts distributed to
Residual Certificateholders may qualify as "portfolio interest", subject to the
conditions described in "Regular Certificates" above, but only to the extent
that (1) the mortgage loans (including mortgage loans underlying MBS) were
issued after July 18, 1984 and (2) the trust fund or segregated pool of assets
in the trust fund (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
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inclusion". See "--Taxation of Residual Certificates--Limitations on Offset or
Exemption of REMIC Income" above. 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 Non-U.S. Persons,
30% (or lower treaty rate) withholding will not apply. Instead, the amounts
paid to 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, those
amounts generally will be taken into account for purposes of withholding only
when paid or otherwise distributed (or when the Residual Certificate is
disposed of) under rules similar to withholding upon disposition of debt
instruments that have original issue discount. See "--Tax-Related Restrictions
on Transfer of Residual Certificates--Foreign Investors" above concerning the
disregard of certain transfers having "tax avoidance potential". Investors who
are Non-U.S. Persons should consult their own tax advisors regarding the
specific tax consequences to them of owning Residual Certificates.
BACKUP WITHHOLDING
Distributions made on the Regular Certificates, and proceeds from the sale
of the Regular Certificates to or through certain brokers, may be subject to a
"backup" withholding tax under Code Section 3406 of 31% on "reportable
payments" (including interest distributions, original issue discount, and,
under certain circumstances, principal distributions) unless the Regular
Certificateholder complies with certain reporting and/or certification
procedures, including the provision of its taxpayer identification number to
the trustee, its agent or the broker who effected the sale of the Regular
Certificate, or that certificateholder is otherwise an exempt recipient under
applicable provisions of the Code. Any amounts to be withheld from distribution
on the Regular Certificates would be refunded by the IRS or allowed as a credit
against the Regular Certificateholder's federal income tax liability. The New
Regulations will 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 and withholding and information reporting.
REPORTING REQUIREMENTS
Reports of accrued interest, original issue discount and information
necessary to compute the accrual of any market discount on the Regular
Certificates will be made annually to the IRS and to individuals, estates,
non-exempt and non-charitable trusts, and partnerships who are either holders
of record of Regular Certificates or beneficial owners who own Regular
Certificates through a broker or middleman as nominee. All brokers, nominees
and all other non-exempt holders of record of Regular Certificates (including
corporations, non-calendar year taxpayers, securities or commodities dealers,
real estate investment trusts, investment companies, common trust funds, thrift
institutions and charitable trusts) may request that information for any
calendar quarter by telephone or in writing by contacting the person designated
in IRS Publication 938 with respect to a particular series of Regular
Certificates. Holders through nominees must request that information from the
nominee.
The IRS' Form 1066 has an accompanying Schedule Q, Quarterly Notice to
Residual Interest Holders of REMIC Taxable Income or Net Loss Allocation.
Treasury regulations require that Schedule Q be furnished by the REMIC Pool to
each Residual Certificateholder by the end of the month following the close of
each calendar quarter (41 days after the end of a quarter under proposed
Treasury regulations) in which the REMIC Pool is in existence.
Treasury regulations require that, in addition to the foregoing
requirements, information must be furnished quarterly to Residual
Certificateholders, furnished annually, if applicable, to holders of Regular
Certificates, and filed annually with the IRS concerning Code Section 67
expenses, see "--Limitations on Deduction of Certain Expenses" above, allocable
to those holders. Furthermore, under those regulations, information must be
furnished quarterly to Residual Certificateholders, furnished annually to
holders of Regular Certificates, and filed annually with the IRS concerning the
percentage of the REMIC Pool's assets meeting the qualified asset tests
described under "--Status of REMIC Certificates" above.
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FEDERAL INCOME TAX CONSEQUENCES FOR CERTIFICATES AS
TO WHICH NO REMIC ELECTION IS MADE
STANDARD CERTIFICATES
General
In the event that no election is made to treat a trust fund (or a
segregated pool of assets in the trust fund) with respect to a series of
certificates that are not designated as "Stripped Certificates", as described
below, as a REMIC (certificates of that kind of series are referred to as
"Standard Certificates"), in the opinion of Cadwalader, Wickersham & Taft 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 a Standard Certificate (a "Standard
Certificateholder") in that 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 under "--Recharacterization of Servicing Fees" below.
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 those mortgage loans,
original issue discount (if any), prepayment fees, assumption fees, and late
payment charges received by the master servicer, in accordance with that
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 those 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 the administrative and other expenses of the trust fund, to the extent
that those 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 (1) 3% of the excess, if any, of
adjusted gross income over $126,600 for 1999 ($63,300 in the case of a married
individual filing a separate return) (subject to annual adjustments for
inflation), or (2) 80% of the amount of itemized deductions otherwise allowable
for that year. As a result, those 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 those
Standard Certificates with respect to interest at the pass-through rate on
those Standard Certificates. In addition, those expenses are not deductible at
all for purposes of computing the alternative minimum tax, and may cause the
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 under "--Stripped Certificates" and "--Recharacterization of
Servicing Fees", below.
Tax Status
In the opinion of Cadwalader, Wickersham & Taft, Standard Certificates
will have the following status for federal income tax purposes:
1. Standard Certificate owned by a "domestic building and loan
association" within the meaning of Code Section 7701(a)(19) will be
considered to represent "loans... secured by an interest in real
property which is... residential real property" within the meaning of
Code Section 7701(a)(19)(C)(v), provided that the real property
securing the mortgage loans represented by that Standard Certificate
is of the type described in that section of the Code.
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2. 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 those
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. 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).
4. Standard Certificate owned by a financial asset securitization
investment trust will be considered to represent "permitted assets"
within the meaning of Code Section 860(L)(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 under "--Certain Federal
Income Tax Consequences for REMIC Certificates--Taxation of Residual
Certificates--Treatment of Certain Items of REMIC Income and Expense--Premium"
above.
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, the 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 that
income. Unless indicated otherwise in the applicable prospectus supplement, no
prepayment assumption will be assumed for purposes of that 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 the mortgage loans acquired
by a Standard Certificateholder are purchased at a price equal to the then
unpaid principal amount of the mortgage loans, no original issue discount
attributable to the difference between the issue price and the original
principal amount of the mortgage loans (i.e., points) will be includible by
that 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 under "--Certain Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Market Discount" above, except
that the ratable accrual methods described there will not apply and it is
unclear whether a Prepayment Assumption would apply. Rather, the holder will
accrue market discount pro rata over the life of the mortgage loans, unless the
constant yield method is elected. Unless indicated otherwise in the applicable
prospectus supplement, no prepayment assumption will be assumed for purposes of
that accrual.
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Recharacterization of Servicing Fees
If the servicing fee paid to the master servicer were deemed to exceed
reasonable servicing compensation, the amount of that 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 the amount would exceed reasonable
servicing compensation as to some of the mortgage loans would be increased. IRS
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. That guidance provides safe harbors for servicing deemed
to be reasonable and requires taxpayers to demonstrate that the value of
servicing fees in excess of those amounts is not greater than the value of the
services provided.
Accordingly, if the IRS' approach is upheld, a servicer who receives a
servicing fee in excess of those 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 those mortgage loans as "stripped coupons" and "stripped
bonds". Subject to the de minimis rule discussed under "--Stripped
Certificates" below, each stripped bond or stripped coupon could be considered
for this purpose as a non-interest bearing obligation issued on the date of
issue of the Standard Certificates, and the original issue discount rules of
the Code would apply to that holder. While Standard Certificateholders would
still be treated as owners of beneficial interests in a grantor trust for
federal income tax purposes, the corpus of the 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 that portion as a second
class of equitable interest. Applicable Treasury regulations treat that
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, 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 on those
Standard Certificates. 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), that 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 (1) 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 that transaction or (2) in the case of a
non-corporate taxpayer, to the extent the taxpayer has made an election under
Code Section 163(d)(4) to have net capital gains taxed as investment income at
ordinary income rates. Long-term capital gains of certain non-corporate
taxpayers generally are subject to a lower maximum tax rate (20%) than ordinary
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income or short-term capital gains of those taxpayers (39.6%) for property held
for more than one year. The maximum tax rate for corporations is the same with
respect to both ordinary income and capital gains.
STRIPPED CERTIFICATES
General
Pursuant to Code Section 1286, the separation of ownership of the right to
receive some or all of the principal payments on an obligation from ownership
of the right to receive some or all of the interest payments results in the
creation of "stripped bonds" with respect to principal payments and "stripped
coupons" with respect to interest payments. For purposes of this discussion,
certificates that are subject to those rules will be referred to as "Stripped
Certificates". Stripped Certificates include interest-only certificates
entitled to distributions of interest, with disproportionately small, nominal
or no distributions of principal and principal-only certificates entitled to
distributions of principal, with disproportionately small, nominal or no
distributions of interest as to which no REMIC election is made.
The certificates will be subject to those rules if (1) we or any of our
affiliates retain, for our 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, (2) 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 (3) 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 those fees
represent reasonable compensation for services rendered. See discussion under
"--Standard Certificates--Recharacterization of Servicing Fees" above. 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 under "--Standard
Certificates--General" above, subject to the limitation described there.
Code Section 1286 treats a stripped bond or a stripped coupon as an
obligation issued at an original issue discount on the date that the 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 the Stripped Certificates are issued with respect to a
Mortgage Pool containing variable-rate mortgage loans, in the opinion of
Cadwalader, Wickersham & Taft (1) 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 (2) 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
under "--Taxation of Stripped Certificates--Possible Alternative
Characterizations" below, the OID Regulations state, in general, that two or
more debt instruments issued by a single issuer to a single investor in a
single transaction should be treated as a single debt instrument for original
issue discount purposes. The Pooling Agreement requires that the trustee make
and report all computations described below using this aggregate approach,
unless substantial legal authority requires otherwise.
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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 that Stripped Certificate would be
treated as qualified stated interest under the OID Regulations. Further, these
final regulations provide that the purchaser of a Stripped Certificate will be
required to account for any discount as market discount rather than original
issue discount if either (1) the initial discount with respect to the Stripped
Certificate was treated as zero under the de minimis rule, or (2) no more than
100 basis points in excess of reasonable servicing is stripped off the related
mortgage loans. This market discount would be reportable as described under
"--Certain Federal Income Tax Consequences for REMIC Certificates--Taxation of
Regular Certificates--Market Discount" above, without regard to the de minimis
rule there, assuming that a prepayment assumption is employed in that
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 Stripped Certificates owned by
applicable holders should be considered to represent "real estate assets"
within the meaning of Code Section 856(c)(4)(A), "obligation[s] principally
secured by an interest in real property" within the meaning of Code Section
860G(a)(3)(A), and "loans... secured by an interest in real property which
is... residential real property" within the meaning of Code Section
7701(a)(19)(C)(v), and interest (including original issue discount) income
attributable to Stripped Certificates should be considered to represent
"interest on obligations secured by mortgages on real property" within the
meaning of Code Section 856(c)(3)(B), provided that in each case the mortgage
loans and interest on those mortgage loans qualify for that treatment.
Taxation of Stripped Certificates
Original Issue Discount. Except as described under "--General" above, 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 that income. Based in part on the OID Regulations and the
amendments to the original issue discount sections of the Code made by the
Reform 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 under "--Federal Income Tax Consequences for
REMIC Certificates--Taxation of Regular Certificates--Original Issue Discount"
and "--Variable Rate Regular Certificates" above. However, with the apparent
exception of a Stripped Certificate qualifying as a market discount obligation,
as described under "--General" above, the issue price of a Stripped Certificate
will be the purchase price paid by each holder of the Stripped Certificate, and
the stated redemption price at maturity will include the aggregate amount of
the payments, other than qualified stated interest to be made on the Stripped
Certificate to that 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 the original issue discount will be either increased or decreased
depending on the relative interests in principal and interest on each mortgage
loan represented by that 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 that Stripped Certificate to recognize an ordinary loss equal to that
portion of unrecoverable basis.
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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
the 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, those regulations may lead to different
timing of income inclusion that would be the case under the OID Regulations.
Furthermore, application of those 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 that Stripped Certificate, as described
under "--Certain Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Sale or Exchange of Regular
Certificates" above. To the extent that a subsequent purchaser's purchase price
is exceeded by the remaining payments on the Stripped Certificates, that
subsequent purchaser will be required for federal income tax purposes to accrue
and report that 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 those 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
1. one installment obligation consisting of that Stripped Certificate's
pro rata share of the payments attributable to principal on each
mortgage loan and a second installment obligation consisting of that
Stripped Certificate's pro rata share of the payments attributable to
interest on each mortgage loan,
2. as many stripped bonds or stripped coupons as there are scheduled
payments of principal and/or interest on each mortgage loan or
3. 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 the Stripped Certificate, or classes of
Stripped Certificates in the aggregate, represent the same pro rata portion of
principal and interest on that mortgage loan, and a stripped bond or stripped
coupon (as the case may be), treated as an installment obligation or contingent
payment obligation, as to the remainder. Final regulations issued on December
28, 1992 regarding original issue discount on stripped obligations make the
foregoing interpretations less likely to be applicable. The preamble to those
regulations states that they are premised on the assumption that an aggregation
approach is appropriate for determining whether original issue discount on a
stripped bond or stripped coupon is de minimis, and solicits comments on
appropriate rules for aggregating stripped bonds and stripped coupons under
Code Section 1286.
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Because of these possible varying characterizations of Stripped
Certificates and the resultant differing treatment of income recognition,
Stripped Certificateholders are urged to consult their own tax advisors
regarding the proper treatment of Stripped Certificates for federal income tax
purposes.
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 that year, the information, prepared on the basis described
above, as the trustee deems to be necessary or desirable to enable those
certificateholders to prepare their federal income tax returns. The information
will include the amount of original issue discount accrued on certificates held
by persons other than certificateholders exempted from the reporting
requirements. The amounts required to be reported by the trustee may not be
equal to the proper amount of original issue discount required to be reported
as taxable income by a certificateholder, other than an original
certificateholder that purchased at the issue price. In particular, in the case
of Stripped Certificates, unless provided otherwise in the applicable
prospectus supplement, the reporting will be based upon a representative
initial offering price of each class of Stripped Certificates. The trustee will
also file the original issue discount information with the IRS. 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 under "--Certain Federal Income Tax
Consequences for REMIC Certificates--Backup Withholding" above.
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 a 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
that 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 those persons will
be subject to the same certification requirements, described under "--Certain
Federal Income Tax Consequences for REMIC Certificates--Taxation of Certain
Foreign Investors--Regular Certificates" above.
STATE AND OTHER TAX CONSIDERATIONS
In addition to the federal income tax consequences described in "Certain
Federal Income Tax Consequences" above, you should consider the state and local
tax consequences of the acquisition, ownership, and disposition of the offered
certificates. State tax law may differ substantially from the corresponding
federal law, and the discussion above does not purport to describe any aspect
of the tax laws of any state or other jurisdiction. Thus, you should consult
your own tax advisors with respect to the various tax consequences of
investments in the offered certificates.
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CERTAIN ERISA CONSIDERATIONS
GENERAL
The Employee Retirement Income Security Act of 1974, as amended, or ERISA,
and the Code impose certain requirements on retirement plans, and on certain
other employee benefit plans and arrangements, including individual retirement
accounts and annuities, Keogh plans, collective investment funds, insurance
company separate accounts and some insurance company general accounts in which
those plans, accounts or arrangements are invested that are subject to the
fiduciary responsibility provisions of ERISA and Section 4975 of the Code (all
of which are referred to as "Plans"), and on persons who are fiduciaries with
respect to Plans, in connection with the investment of Plan assets. Certain
employee benefit plans, such as governmental plans (as defined in ERISA Section
3(32)), and, if no election has been made under Section 410(d) of the Code,
church plans (as defined in Section 3(33) of ERISA) are not subject to ERISA
requirements. Accordingly, assets of those plans may be invested in offered
certificates without regard to the ERISA considerations described below,
subject to the provisions of other applicable federal and state law. Any of
these plans which are qualified and exempt from taxation under Sections 401(a)
and 501(a) of the Code, however, are subject to the prohibited transaction
rules set forth in Section 503 of the Code.
ERISA generally imposes on Plan fiduciaries certain general fiduciary
requirements, including those of investment prudence and diversification and
the requirement that a Plan's investments be made in accordance with the
documents governing the Plan. In addition, ERISA and the Code prohibit a broad
range of transactions involving assets of a Plan and persons ("Parties in
Interest") who have certain specified relationships to the Plan, unless a
statutory or administrative exemption is available. Certain Parties in Interest
that participate in a prohibited transaction may be subject to an excise tax
imposed pursuant to Section 4975 of the Code, unless a statutory or
administrative exemption is available. These prohibited transactions generally
are set forth in Section 406 of ERISA and Section 4975 of the Code. Special
caution should be exercised before the assets of a Plan are used to purchase a
certificate if, with respect to those assets, the Depositor, the master
servicer or the trustee or one of their affiliates, either: (a) has investment
discretion with respect to the investment of those assets of that Plan; or (b)
has authority or responsibility to give, or regularly gives, investment advice
with respect to those assets for a fee and pursuant to an agreement or
understanding that the advice will serve as a primary basis for investment
decisions with respect to those assets and that the advice will be based on the
particular investment needs of the Plan.
Before purchasing any offered certificates, a Plan fiduciary should
consult with its counsel and determine whether there exists any prohibition to
that 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 there would be met, or whether any statutory
prohibited transaction exemption is applicable, and further should consult the
applicable prospectus supplement relating to that series of certificates.
PLAN ASSET REGULATIONS
A Plan's investment in certificates may cause the Trust Assets to be
deemed Plan assets. Section 2510.3-101 of the regulations of the United States
Department of Labor ("DOL") provides that when a Plan acquires an equity
interest in an entity, the Plan's assets include both the equity interest and
an undivided interest in each of the underlying assets of the entity, unless
certain exceptions not applicable to this discussion apply, or unless the
equity participation in the entity by "benefit plan investors" (that is, Plans
and certain employee benefit plans not subject to ERISA) is not "significant".
For this purpose, in general, equity participation in a trust fund will be
"significant" on any date if, immediately after the most recent acquisition of
any certificate, 25% or more of any class of certificates is held by benefit
plan investors.
Any person who has discretionary authority or control respecting the
management or disposition of Plan assets, and any person who provides
investment advice with respect to those assets for a fee, is
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a fiduciary of the investing Plan. If the Trust Assets constitute Plan assets,
then any party exercising management or discretionary control regarding those
assets, such as a master servicer, a special servicer or any sub-servicer, may
be deemed to be a Plan "fiduciary" with respect to the investing Plan, and thus
subject to the fiduciary responsibility provisions and prohibited transaction
provisions of ERISA and the Code. In addition, if the Trust Assets constitute
Plan assets, the purchase of certificates by a Plan, as well as the operation
of the trust fund, may constitute or involve a prohibited transaction under
ERISA and the Code.
ADMINISTRATIVE EXEMPTIONS
Several underwriters of mortgage-backed securities have applied for and
obtained individual administrative ERISA prohibited transaction exemptions (the
"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 that underwriter serves as the sole or a
managing underwriter, or as a selling or placement agent. If that exemption
might be applicable to a series of certificates, the related prospectus
supplement will refer to the possibility, as well as provide a summary of the
conditions to the applicability.
In considering an investment in the offered certificates, a Plan fiduciary
also should consider the availability of prohibited transaction class
exemptions promulgated by the DOL including, among others, Prohibited
Transaction Class Exemption ("PTCE") 75-1, which exempts certain transactions
between Plans and broker/dealers, reporting dealers and banks; PTCE 90-1, which
exempts certain transactions between insurance company separate accounts and
Parties in Interest; PTCE 91-38, which exempts certain transactions between
bank collective investment funds and Parties in Interest; PTCE 84-14, which
exempts certain transactions effected on behalf of a Plan by a "qualified
professional asset manager"; PTCE 95-60, which exempts certain transactions
between insurance company general accounts and Parties in Interest; and PTCE
96-23, which exempts certain transactions effected on behalf of a Plan by an
"in-house asset manager." We cannot assure you that any of these class
exemptions will apply with respect to any particular Plan investment in the
certificates or, even if it were deemed to apply, that any exemption would
apply to all prohibited transactions that may occur in connection with that
investment. The prospectus supplement with respect to a series of certificates
may contain additional information regarding the availability of other
exemptions with respect to the certificates offered thereby.
INSURANCE COMPANY GENERAL ACCOUNTS
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
transaction in connection with the servicing, management and operation of a
trust (such as the trust fund) in which an insurance company general account
has an interest as a result of its acquisition of certificates issued by the
trust, provided that certain conditions are satisfied. If these conditions are
met, insurance company general accounts would be allowed to purchase certain
classes of certificates which do not meet the requirements of the Exemptions
solely because they (1) are subordinated to other classes of certificates in
the trust fund and/or (2) have not received a rating at the time of the
acquisition in one of the three highest rating categories from Standard &
Poor's Ratings Services, a division of The McGraw Hill Companies, Inc., Moody's
Investors Service, Inc., Duff & Phelps Credit Rating Co. or Fitch IBCA, Inc.
All other conditions of the Exemptions would have to be satisfied in order for
PTCE 95-60 to be available. Before purchasing that class of 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.
The Small Business Job Protection Act of 1996 added a new Section 401(c)
to ERISA, which provides certain exemptive relief from the provisions of Part 4
of Title I of ERISA and Section 4975 of the Code, including the prohibited
transaction restrictions imposed by ERISA and the related excise taxes imposed
by the Code, for transactions involving an insurance company general account.
Pursuant to Section 401(c) of ERISA, the DOL was required to issue final
regulations ("401(c)
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Regulations") no later than December 31, 1997 which were to provide guidance
for the purpose of determining, in cases where insurance policies supported by
an insured's general account are issued to or for the benefit of a Plan on or
before December 31, 1998, which general account assets constitute Plan assets.
On December 22, 1997, the DOL proposed those regulations. Section 401(c) of
ERISA generally provides that, until the date which is 18 months after the
401(c) Regulations become final, no person shall be subject to liability under
Part 4 of Tile I of ERISA and Section 4975 of the Code on the basis of a claim
that the assets of an insurance company general account constitute Plan assets,
unless (1) as otherwise provided by the Secretary of Labor in the 401(c)
Regulations to prevent avoidance of the regulations or (2) an action is brought
by the Secretary of Labor for certain breaches of fiduciary duty which would
also constitute a violation of federal or state criminal law. Any assets of an
insurance company general account which support insurance policies issued to a
Plan after December 31, 1998 or issued to Plans on or before December 31, 1998
for which the insurance company does not comply with the 401(c) Regulations may
be treated as Plan assets. In addition, because Section 401(c) does not relate
to insurance company separate accounts, separate account assets are still
treated as Plan assets of any Plan invested in that separate account. Insurance
companies contemplating the investment of general account assets in the offered
certificates should consult with their legal counsel with respect to the
applicability of Section 401(c) of ERISA, including the general account's
ability to continue to hold the offered certificates after the date which is 18
months after the date the 401(c) Regulations become final.
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 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 "Certain Federal Income Tax Consequences--Federal Income Tax
Consequences for REMIC Certificates--Taxation of Residual
Certificates--Tax-Related Restrictions on Transfer of Residual
Certificates--Disqualified Organizations."
Due to the complexity of these rules and the penalties imposed upon
persons involved in prohibited transactions, it is particularly important that
potential investors who are Plan fiduciaries consult with their counsel
regarding the consequences under ERISA of their acquisition and ownership of
certificates.
The sale of certificates to an employee benefit plan is in no respect a
representation by the Depositor or the Underwriter that this investment meets
all relevant legal requirements with respect to investments by plans generally
or by any particular plan, or that this investment is appropriate for plans
generally or for any particular plan.
LEGAL INVESTMENT
The offered certificates will constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984, as amended
("SMMEA"), only if so specified in the related prospectus supplement. The
appropriate characterization of those certificates not qualifying as "mortgage
related securities" ("Non-SMMEA Certificates") under various legal investment
restrictions, and thus the ability of investors subject to these restrictions
to purchase those certificates, may be subject to significant interpretive
uncertainties.
Generally, only classes of offered certificates that (1) are rated in one
of the two highest rating categories by one or more rating agencies and (2) are
part of a series evidencing interests in a trust
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fund consisting of loans secured by first liens and originated by certain types
of originators as specified in SMMEA, will be "mortgage related securities" for
purposes of SMMEA. As "mortgage related securities," those classes will
constitute legal investments for persons, trusts, corporations, partnerships,
associations, business trusts and business entities, including depository
institutions, insurance companies, trustees and pension funds, created pursuant
to or existing under the laws of the United States or of any state, including
the District of Columbia and Puerto Rico, whose authorized investments are
subject to state regulation to the same extent that, under applicable law,
obligations issued by or guaranteed as to principal and interest by the United
States or any of its agencies or instrumentalities constitute legal investments
for those entities.
Under SMMEA, a number of states enacted legislation, on or prior to the
October 3, 1991 cut-off for those enactments, limiting to various extents the
ability of certain entities (in particular, insurance companies) to invest in
"mortgage related securities" secured by liens on residential, or mixed
residential and commercial properties, in most cases by requiring the affected
investors to rely solely upon existing state law, and not SMMEA. Pursuant to
Section 347 of the Riegle Community Development and Regulatory Improvement Act
of 1994, which amended the definition of "mortgage related security" to
include, in relevant part, offered certificates satisfying the rating 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 those types of offered certificates. Section 347
also provides that the enactment by a state of any of those 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 that state legislation. Accordingly, the investors affected by any
of that kind of state legislation, when and if enacted, will be authorized to
invest in offered certificates qualifying as "mortgage related securities" only
to the extent provided in that 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 those securities, and
national banks may purchase those 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 those
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(1) to include certain "commercial mortgage-related securities" and
"residential mortgage-related securities." As so defined, "commercial
mortgage-related security" and "residential mortgage-related security" mean, in
relevant part, "mortgage related security" within the meaning of SMMEA,
provided that, in the case of a "commercial mortgage-related security," it
"represents ownership of a promissory note or certificate of interest or
participation that is directly secured by a first lien on one or more parcels
of real estate upon which one or more commercial structures are located and
that is fully secured by interests in a pool of loans to numerous obligors." In
the absence of any rule or administrative interpretation by the OCC defining
the term "numerous obligors," no representation is made as to whether any class
of offered certificates will qualify as "commercial mortgage-related
securities," and thus as "Type IV securities," for investment by national
banks. The National Credit Union Administration (the "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
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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 Derivative
Activities," which thrift institutions subject to the jurisdiction of the OTS
should consider before investing in any of the offered certificates.
All depository institutions considering an investment in the offered
certificates should review the "Supervisory Policy Statement 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 OCC, the
Federal Deposit Insurance Corporation 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 those authorities before purchasing any offered
certificates, as certain classes may be deemed unsuitable investments, or may
otherwise be restricted, under those rules, policies or guidelines (in certain
instances irrespective of SMMEA).
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits, provisions
which may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying," and, with regard to any offered certificates
issued in book-entry form, provisions which may restrict or prohibit
investments in securities which are issued in book-entry form.
Except as to the status of certain classes of offered certificates as
"mortgage related securities," no representations are made as to the proper
characterization of offered certificates for legal investment purposes,
financial institution regulatory purposes, or other purposes, or as to the
ability of particular investors to purchase offered certificates under
applicable legal investment restrictions. The uncertainties described above
(and any unfavorable future determinations concerning legal investment or
financial institution regulatory characteristics of the offered certificates)
may adversely affect the liquidity of the offered certificates.
Accordingly, all investors whose investment activities are subject to
legal investment laws and regulations, regulatory capital requirements or
review by regulatory authorities should consult with their own legal advisors
in determining whether and to what extent the offered certificates of any class
constitute legal investments or are subject to investment, capital or other
restrictions, and, if applicable, whether SMMEA has been overridden in any
jurisdiction relevant to that investor.
METHOD OF DISTRIBUTION
The offered certificates offered by this prospectus and by the related
prospectus supplements will be offered in series through one or more of the
methods described below. The prospectus supplement prepared for each series
will describe the method of offering being utilized for that series and will
state our net proceeds from that sale.
We intend that offered 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 a combination of two or more of these methods.
Those methods are as follows:
1. by negotiated firm commitment underwriting and public offering by one
or more underwriters specified in the related prospectus supplement;
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2. by placements through one or more placement agents specified in the
related prospectus supplement primarily with institutional investors
and dealers; and
3. through direct offerings by the Depositor.
If underwriters are used in a sale of any offered certificates (other than
in connection with an underwriting on a best efforts basis), those certificates
will be acquired by the underwriters for their own account and may be resold
from time to time in one or more transactions, including negotiated
transactions, at fixed public offering prices or at varying prices to be
determined at the time of sale or at the time of commitment. The underwriters
may be broker-dealers affiliated with us. Their identities and material
relationships to us will be set forth in the related prospectus supplement. The
managing underwriter or underwriters with respect to the offer and sale of a
particular series of certificates will be set forth in the cover of the
prospectus supplement relating to that series and the members of the
underwriting syndicate, if any, will be named in that prospectus supplement.
In connection with the sale of the offered certificates, underwriters may
receive compensation from us or from purchasers of the offered certificates in
the form of discounts, concessions or commissions. Underwriters and dealers
participating in the distribution of the offered certificates may be deemed to
be underwriters in connection with those offered certificates, and any
discounts or commissions received by them from us and any profit on the resale
of offered certificates by them may be deemed to be underwriting discounts and
commissions under the Securities Act of 1933, as amended (the "Securities
Act").
It is anticipated that the underwriting agreement pertaining to the sale
of any series of certificates will provide that the obligations of the
underwriters will be subject to certain conditions precedent, that the
underwriters will be obligated to purchase all offered certificates if any are
purchased (other than in connection with an underwriting on a best efforts
basis) and that we will indemnify the several underwriters, and each person, if
any, who controls that underwriter within the meaning of Section 15 of the
Securities Act, against certain civil liabilities, including liabilities under
the Securities Act, or will contribute to payments required to be made in
respect of these liabilities.
The prospectus supplement with respect to any series offered by placements
through dealers will contain information regarding the nature of that offering
and any agreements to be entered into between us and purchasers of offered
certificates of that series.
We anticipate that the offered certificates offered by this prospectus and
the related prospectus supplement will be sold primarily to institutional
investors. Purchasers of offered certificates, including dealers, may,
depending on the facts and circumstances of those purchases, be deemed to be
"underwriters" within the meaning of the Securities Act in connection with
reoffers and sales by them of offered certificates. You should consult with
your legal advisors in this regard prior to any similar reoffer or sale.
As to each series of certificates, only those classes rated in an
investment grade rating category by any rating agency will be offered by this
prospectus. We may initially retain any unrated class and we may sell it at any
time to one or more institutional investors.
If required by applicable law or regulation, this prospectus will be used
by Chase Securities Inc., our affiliate, in connection with offers and sales
related to market-making transactions in the offered certificates previously
offered by this prospectus in transactions in which Chase Securities Inc. acts
as principal. Chase Securities Inc. may also act as agent in those
transactions. Sales may be made at negotiated prices determined at the time of
sale.
108
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
With respect to each series of certificates offered by this prospectus,
there are incorporated in this prospectus and in the related prospectus
supplement 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 Securities Exchange Act of 1934, prior to the termination of
an offering of offered certificates that relate specifically to the related
series of certificates. 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,
upon written or oral request of that person, a copy of any or all documents or
reports incorporated in this prospectus by reference, in each case to the
extent the documents or reports relate to one or more of the classes of offered
certificates, other than the exhibits to those documents (unless the exhibits
are specifically incorporated by reference in those documents). Requests to the
Depositor should be directed in writing to its principal executive offices at
270 Park Avenue, New York, New York 10017-2070, Attention: President, or by
telephone at (212) 834-5588. The Depositor has determined that its financial
statements will not be material to the offering of any Offered Certificates.
The Depositor filed a registration statement (the "Registration
Statement") relating to the certificates with the Securities and Exchange
Commission. This prospectus is part of the Registration Statement, but the
Registration Statement includes additional information.
Copies of the Registration Statement may be obtained from the Public
Reference Section of the Securities and Exchange Commission, Washington, D.C.
20549, upon payment of the prescribed charges, or may be examined free of
charge at the Securities and Exchange Commission's offices, 450 Fifth Street
N.W., Washington, D.C. 20549 or at the regional offices of the Securities and
Exchange Commission located at Suite 1300, 7 World Trade Center, New York, New
York 10048 and Suite 1400, Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661-2511. The Securities and Exchange Commission also maintains a
site on the World Wide Web at "http://www.sec.gov" at which you 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. The Depositor has filed the
Registration Statement, including all exhibits thereto, through the EDGAR
system, so the materials should be available by logging onto the Securities and
Exchange Commission's Web site. The Securities and Exchange Commission
maintains computer terminals providing access to the EDGAR system at each of
the offices referred to above.
LEGAL MATTERS
The validity of the certificates of each series and certain federal income
tax matters will be passed upon for us 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 rating categories, by at least one rating agency.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by the holders of those certificates of all collections on the
underlying mortgage assets to which those holders are entitled. These ratings
address the structural, legal and issuer-related aspects associated with those
certificates, the nature of the underlying mortgage assets and the credit
quality of the guarantor, if any.
109
<PAGE>
Ratings on mortgage pass-through certificates do not represent any assessment
of the likelihood of principal prepayments by borrowers or of the degree by
which those prepayments might differ from those originally anticipated. As a
result, you 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.
110
<PAGE>
INDEX OF PRINCIPAL DEFINITIONS
PAGE
1998 Policy Statement ................................................. 107
401(c) Regulations .................................................... 104
Accrual Certificates .................................................. 38
Accrued Certificate Interest .......................................... 38
ADA ................................................................... 74
ARM Loans ............................................................. 27
Available Distribution Amount ......................................... 37
balloon payments ...................................................... 19
Bankruptcy Code ....................................................... 65
Book-Entry Certificates ............................................... 37
capital asset ......................................................... 83
Cash Flow Agreement ................................................... 29
CERCLA ................................................................ 70
Certificate Owner ..................................................... 43
Code .................................................................. 42
Constant Prepayment Rate .............................................. 33
Cooperatives .......................................................... 24
CPR ................................................................... 33
Debt Service Coverage Ratio ........................................... 25
Definitive Certificates ............................................... 37
Depositor ............................................................. 24
Determination Date .................................................... 30, 38
Direct Participants ................................................... 43
Disqualified Organization ............................................. 89
Distribution Date Statement ........................................... 41
DOL ................................................................... 103
DTC ................................................................... 37
Due Dates ............................................................. 26
Due Period ............................................................ 30
EDGAR ................................................................. 109
Equity Participation .................................................. 27
Events of Default ..................................................... 56
Excess Funds .......................................................... 35
excess servicing ...................................................... 98
Exemptions ............................................................ 104
FAMC .................................................................. 28
FHLMC ................................................................. 28
FNMA .................................................................. 28
Garn Act .............................................................. 72
GNMA .................................................................. 28
Indirect Participants ................................................. 43
Insurance and Condemnation Proceeds ................................... 48
L/C Bank .............................................................. 61
Liquidation Proceeds .................................................. 48, 49
Loan-to-Value Ratio ................................................... 26
Lock-out Date ......................................................... 27
Lock-out Period ....................................................... 27
Mark to Market Regulations ............................................ 91
market discount ....................................................... 82
master servicer ....................................................... 6
MBS ................................................................... 24
MBS Agreement ......................................................... 28
MBS Issuer ............................................................ 28
MBS Servicer .......................................................... 28
MBS Trustee ........................................................... 28
Mortgage Asset Seller ................................................. 24
Mortgage Notes ........................................................ 24
Mortgaged Properties .................................................. 24
Mortgages ............................................................. 24
NCUA .................................................................. 106
Net Leases ............................................................ 25
Net Operating Income .................................................. 25
New Regulations ....................................................... 94
Nonrecoverable Advance ................................................ 40
Non-SMMEA Certificates ................................................ 105
Non-U.S. Person ....................................................... 94
OCC ................................................................... 106
offered certificates .................................................. 8
OID Regulations ....................................................... 78
OTS ................................................................... 107
Participants .......................................................... 43
Parties in Interest ................................................... 103
Pass-Through Entity ................................................... 89
Permitted Investments ................................................. 48
Plans ................................................................. 103
Pooling Agreement ..................................................... 44
Prepayment Assumption ................................................. 79
Prepayment Interest Shortfall ......................................... 30
Prepayment Premium .................................................... 27
PTCE .................................................................. 104
PTCE 95-60 ............................................................ 104
Random Lot Certificates ............................................... 78
Record Date ........................................................... 38
Reform Act ............................................................ 78
Registration Statement ................................................ 109
Regular Certificateholder ............................................. 78
Regular Certificates .................................................. 75, 94
Related Proceeds ...................................................... 40
Relief Act ............................................................ 73
REMIC ................................................................. 12
REMIC Certificates .................................................... 75
REMIC Pool ............................................................ 75
REMIC Regulations ..................................................... 75
REO Property .......................................................... 47
Residual Certificateholders ........................................... 85
Residual Certificates ................................................. 38
RICO .................................................................. 74
SBJPA of 1996 ......................................................... 76
secured-creditor exemption ............................................ 70
Securities Act ........................................................ 108
Senior Certificates ................................................... 37
Servicing Standard .................................................... 47
SMMEA ................................................................. 105
SPA ................................................................... 33
special servicers ..................................................... 6
Standard Certificateholder ............................................ 96
Standard Certificates ................................................. 96
Standard Prepayment Assumption ........................................ 33
Startup Day ........................................................... 76
Stripped Certificates ................................................. 96
Subordinate Certificates .............................................. 37
Sub-Servicing Agreement ............................................... 47
The Trust Assets ...................................................... 6
thrift institutions ................................................... 88
Title V ............................................................... 72
Treasury .............................................................. 75
trustee ............................................................... 6
U.S. Person ........................................................... 91
Value ................................................................. 26
Warranting Party ...................................................... 46
111
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================================================================================
YOU SHOULD RELY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED PROSPECTUS. WE HAVE NOT AUTHORIZED
ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION.
WE ARE NOT OFFERING THESE CERTIFICATES IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED.
--------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT PAGE
----
Summary of Terms ........................................................ S-7
Risk Factors ............................................................ S-29
Description of the Mortgage Pool ........................................ S-48
Description of the Certificates ......................................... S-79
Servicing of the Mortgage Loans ......................................... S-103
Yield and Maturity Considerations ....................................... S-117
Certain Federal Income Tax Consequences ................................. S-127
Method of Distribution .................................................. S-129
Legal Matters ........................................................... S-130
Ratings ................................................................. S-130
Legal Investment ........................................................ S-131
ERISA Considerations .................................................... S-131
Index of Principal Definitions .......................................... S-134
PROSPECTUS PAGE
----
Summary of Prospectus ................................................... 6
Risk Factors ............................................................ 14
Description of the Trust Funds .......................................... 24
Yield and Maturity Considerations ....................................... 30
The Depositor ........................................................... 36
Use of Proceeds ......................................................... 36
Description of the Certificates ......................................... 37
Description of the Pooling Agreements ................................... 44
Description of Credit Support ........................................... 60
Certain Legal Aspects of Mortgage Loans ................................. 63
Certain Federal Income Tax Consequences ................................. 75
State and Other Tax Considerations ...................................... 102
Certain ERISA Considerations ............................................ 103
Legal Investment ........................................................ 105
Method of Distribution .................................................. 107
Incorporation of Certain Information By Reference ....................... 109
Legal Matters ........................................................... 109
Financial Information ................................................... 109
Rating .................................................................. 109
Index of Principal Definitions .......................................... 111
DEALERS WILL BE REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN
ACTING AS UNDERWRITERS OF THESE CERTIFICATES AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS. IN ADDITION, ALL DEALERS SELLING THESE
CERTIFICATES WILL DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS UNTIL
NOVEMBER 24, 1999.
================================================================================
================================================================================
$1,254,382,118
(APPROXIMATE)
CHASE COMMERCIAL
MORTGAGE SECURITIES
CORP.
(DEPOSITOR)
CHASE MANHATTAN BANK-
FIRST UNION NATIONAL BANK
COMMERCIAL MORTGAGE TRUST
COMMERCIAL MORTGAGE PASS-THROUGH
CERTIFICATES, SERIES 1999-1
- --------------------------------------------------------------------------------
CLASS A-1 CERTIFICATES $ 210,400,000
CLASS A-2 CERTIFICATES $ 816,865,579
CLASS X CERTIFICATES $1,397,640,241
CLASS B CERTIFICATES $ 76,870,213
CLASS C CERTIFICATES $ 62,893,811
CLASS D CERTIFICATES $ 20,964,604
CLASS E CERTIFICATES $ 48,917,408
CLASS F CERTIFICATES $ 17,470,503
PROSPECTUS SUPPLEMENT
- --------------------------------------------------------------------------------
FIRST UNION
CAPITAL MARKETS CORP.
CHASE SECURITIES INC.
AUGUST 19, 1999
================================================================================
