FILED PURSUANT TO RULE 424(b)(5) | ||
REGISTRATION FILE NO.: 333-180779-17 | ||
PROSPECTUS SUPPLEMENT
(TO ACCOMPANYING PROSPECTUS DATED OCTOBER 1, 2013)
$774,748,000 (Approximate)
Morgan Stanley Capital I Trust 2015-MS1
as Issuing Entity
Morgan Stanley Capital I Inc.
as Depositor
Morgan Stanley Mortgage Capital Holdings LLC
as Sponsor and Mortgage Loan Seller
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2015-MS1
Morgan Stanley Capital I Inc. is offering selected classes of its Commercial Mortgage Pass-Through Certificates, Series 2015-MS1, which represent beneficial ownership interests in the issuing entity. The issuing entity’s primary assets will be fifty-four (54) fixed rate mortgage loans secured by first liens on fifty-nine (59) multifamily and commercial properties. Distributions on the certificates will be made on the 4th business day following the 11th calendar day or, if that 11th calendar day is not a business day, the next succeeding business day, of each month, commencing in August 2015 in accordance with the priorities described in this prospectus supplement under “Description of the Offered Certificates—Distributions.” Certain classes of subordinate certificates will provide credit support to certain classes of senior certificates as described in this prospectus supplement under “Description of the Offered Certificates—Distributions—Subordination; Allocation of Collateral Support Deficit.” The offered certificates represent interests in the issuing entity only and are not interests in or obligations of the depositor, the sponsor, the mortgage loan seller or any of their respective affiliates, and neither the offered certificates nor the underlying mortgage loans are insured or guaranteed by any governmental agency or private insurer. The depositor will not list the offered certificates on any securities exchange or any automated quotation system of any national securities association or the Nasdaq Stock Market.
Investing in the certificates offered to you involves risks. See “RiskFactors” beginning on page S-41 of this prospectus supplement and page 9 of the accompanying prospectus.
Characteristics of the certificates offered to you include:
Class | Approximate Initial Certificate Principal Balance or Notional Amount | Approximate Initial Pass- Through Rate | Pass-Through Rate Description | Expected Final Distribution Date | |||||
Class A-1 | $ | 31,800,000 | 1.638% | Fixed | July 2020 | ||||
Class A-2 | $ | 17,000,000 | 3.261% | Fixed | June 2022 | ||||
Class A-SB | $ | 45,200,000 | 3.458% | Fixed | March 2025 | ||||
Class A-3 | $ | 215,000,000 | 3.510% | Fixed | April 2025 | ||||
Class A-4 | $ | 310,798,000 | 3.779% | Fixed/WAC Cap | May 2025 | ||||
Class X-A | $ | 619,798,000 | 0.625% | Variable | May 2025 | ||||
Class A-S | $ | 52,019,000 | 4.163% | WAC | June 2025 | ||||
Class B | $ | 70,834,000 | 4.163% | WAC | June 2025 | ||||
Class PST | $ | 154,950,000 | N/A | N/A | June 2025 | ||||
Class C | $ | 32,097,000 | 4.163% | WAC | June 2025 |
(Explanatory notes to this table begin on page S-7)
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
Morgan Stanley & Co. LLC, the underwriter, will purchase the certificates offered to you from Morgan Stanley Capital I Inc. and will offer them to the public in one or more negotiated transactions, or otherwise, at varying prices determined at the time of sale. The offered certificates are offered by the underwriter when, as and if issued by the issuing entity and delivered to and accepted by the underwriter and subject to its right to reject orders in whole or in part. The underwriter expects to deliver the certificates to purchasers on or about July 8, 2015. The depositor expects to receive from this offering approximately $809,033,012 plus accrued interest from July 1, 2015, before deducting expenses payable by the depositor.
MORGAN STANLEY
June 25, 2015
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
Information about the certificates offered to you is contained in two (2) separate documents that progressively provide more detail: (a) the accompanying prospectus, which provides general information, some of which may not apply to the certificates offered to you; and (b) this prospectus supplement, which describes the specific terms of the certificates offered to you. You should read both this prospectus supplement and the accompanying prospectus in full to obtain material information concerning the offered certificates.
You should rely only on the information contained in this prospectus supplement and the accompanying prospectus. Morgan Stanley Capital I Inc. has not authorized anyone to provide you with information that is different from that contained in this prospectus supplement and the accompanying prospectus.
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 accompanying prospectus identify the pages where these sections are located. You should read both this prospectus supplement and the accompanying prospectus in full to obtain material information concerning the offered certificates.
The appendices attached to this prospectus supplement are hereby incorporated into and made a part of this prospectus supplement.
This prospectus supplement and the accompanying prospectus do not constitute an offer to sell or a solicitation of an offer to buy any security other than the offered certificates, nor do they constitute an offer to sell or a solicitation of an offer to buy any of the offered certificates to any person in any jurisdiction in which it is unlawful to make such an offer or solicitation to such person.
In this prospectus supplement, the terms “depositor,” “we,” “our” and “us” refer to Morgan Stanley Capital I Inc.
Until ninety (90) days after the date of this prospectus supplement, all dealers that buy, sell or trade the certificates offered by this prospectus supplement, whether or not participating in this offering, may be required to deliver a prospectus supplement and the accompanying prospectus. This is in addition to the dealer’s obligation to deliver a prospectus supplement and the accompanying prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
The issuing entity will not be registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”). The issuing entity will be relying on an exclusion or exemption from the definition of “investment company” under the Investment Company Act contained in Section 3(c)(5) of the Investment Company Act or Rule 3a-7 under the Investment Company Act, although there may be additional exclusions or exemptions available to the issuing entity. The issuing entity will not be relying upon Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act as a basis for not registering under the Investment Company Act. The issuing entity is being structured so as not to constitute a “covered fund” for purposes of the Volcker Rule (as defined in this prospectus supplement) under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).
NOTICE TO RESIDENTS WITHIN THE EUROPEAN ECONOMIC AREA
This prospectus supplement is not a prospectus for the purposes of the European Union’s Directive 2003/71/EC (as amended, including by Directive 2010/73/EU) (the “EU Prospectus Directive”) as implemented in any Member State of the European Economic Area (each, a “Relevant Member State”). This prospectus supplement has been prepared on the basis that all offers of the offered certificates will be made pursuant to an exemption under the EU Prospectus Directive from the requirement to produce a prospectus in connection with offers of the offered certificates. Accordingly, any person making or intending to make any offer in that Relevant Member State of offered certificates which are the subject of the offering contemplated in this prospectus supplement may only do so in circumstances in which no obligation arises for the depositor, the issuing entity or the underwriter to produce a prospectus for such offer. None of the depositor, the issuing entity or the underwriter have authorized, and none of such entities authorizes, the making of any offer of the offered certificates in circumstances in which an obligation arises for the depositor, the issuing entity or the underwriter to publish a prospectus for such offer.
NOTICE TO UNITED KINGDOM INVESTORS
In the United Kingdom, this prospectus supplement is only being distributed to, and is directed only at, persons who (i) have professional experience in matters relating to investments and who qualify as investment professionals in accordance
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with Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), or (ii) are high net worth companies, unincorporated associations, partnerships or trustees in accordance with Article 49(2) of the Order (all such persons together being referred to as “relevant persons”). This prospectus supplement must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this prospectus supplement relates is available only to relevant persons and will be engaged in only with relevant persons.
HONG KONG
THE OFFERED CERTIFICATES MAY NOT BE OFFERED OR SOLD BY MEANS OF ANY DOCUMENT OTHER THAN (I) IN CIRCUMSTANCES WHICH DO NOT CONSTITUTE AN OFFER TO THE PUBLIC WITHIN THE MEANING OF THE COMPANIES ORDINANCE (CAP. 32, LAWS OF HONG KONG), OR (II) TO “PROFESSIONAL INVESTORS” WITHIN THE MEANING OF THE SECURITIES AND FUTURES ORDINANCE (CAP. 571, LAWS OF HONG KONG) AND ANY RULES MADE THEREUNDER, OR (III) IN OTHER CIRCUMSTANCES WHICH DO NOT RESULT IN THE DOCUMENT BEING A “PROSPECTUS” WITHIN THE MEANING OF THE COMPANIES ORDINANCE (CAP. 32, LAWS OF HONG KONG), AND NO ADVERTISEMENT, INVITATION OR DOCUMENT RELATING TO THE OFFERED CERTIFICATES MAY BE ISSUED OR MAY BE IN THE POSSESSION OF ANY PERSON FOR THE PURPOSE OF ISSUE (IN EACH CASE WHETHER IN HONG KONG OR ELSEWHERE), WHICH IS DIRECTED AT, OR THE CONTENTS OF WHICH ARE LIKELY TO BE ACCESSED OR READ BY, THE PUBLIC OF HONG KONG (EXCEPT IF PERMITTED TO DO SO UNDER THE SECURITIES LAWS OF HONG KONG) OTHER THAN WITH RESPECT TO OFFERED CERTIFICATES WHICH ARE OR ARE INTENDED TO BE DISPOSED OF ONLY TO PERSONS OUTSIDE HONG KONG OR ONLY TO “PROFESSIONAL INVESTORS” WITHIN THE MEANING OF THE SECURITIES AND FUTURES ORDINANCE (CAP. 571, LAWS OF HONG KONG) AND ANY RULES MADE THEREUNDER.
SINGAPORE
THIS PROSPECTUS SUPPLEMENT HAS NOT BEEN REGISTERED AS A PROSPECTUS WITH THE MONETARY AUTHORITY OF SINGAPORE. ACCORDINGLY, THIS PROSPECTUS SUPPLEMENT AND ANY OTHER DOCUMENT OR MATERIAL IN CONNECTION WITH THE OFFER OR SALE, OR INVITATION FOR SUBSCRIPTION OR PURCHASE, OF THE OFFERED CERTIFICATES MAY NOT BE CIRCULATED OR DISTRIBUTED, NOR MAY THE OFFERED CERTIFICATES BE OFFERED OR SOLD, OR BE MADE THE SUBJECT OF AN INVITATION FOR SUBSCRIPTION OR PURCHASE, WHETHER DIRECTLY OR INDIRECTLY, TO PERSONS IN SINGAPORE OTHER THAN (I) TO AN INSTITUTIONAL INVESTOR UNDER SECTION 274 OF THE SECURITIES AND FUTURES ACT, CHAPTER 289 OF SINGAPORE (THE “SFA”), (II) TO A RELEVANT PERSON, OR ANY PERSON PURSUANT TO SECTION 275(1A), IN ACCORDANCE WITH THE CONDITIONS SPECIFIED IN SECTION 275 OF THE SFA OR (III) OTHERWISE PURSUANT TO, AND IN ACCORDANCE WITH THE CONDITIONS OF, ANY OTHER APPLICABLE PROVISION OF THE SFA.
WHERE THE OFFERED CERTIFICATES ARE SUBSCRIBED OR PURCHASED UNDER SECTION 275 OF THE SFA BY A RELEVANT PERSON WHICH IS: (A) A CORPORATION (WHICH IS NOT AN ACCREDITED INVESTOR) THE SOLE BUSINESS OF WHICH IS TO HOLD INVESTMENTS AND THE ENTIRE SHARE CAPITAL OF WHICH IS OWNED BY ONE OR MORE INDIVIDUALS, EACH OF WHOM IS AN ACCREDITED INVESTOR; OR (B) A TRUST (WHERE THE TRUSTEE IS NOT AN ACCREDITED INVESTOR) WHOSE SOLE PURPOSE IS TO HOLD INVESTMENTS AND EACH BENEFICIARY IS AN ACCREDITED INVESTOR, SHARES, DEBENTURES AND UNITS OF SHARES AND DEBENTURES OF THAT CORPORATION OR THE BENEFICIARIES’ RIGHTS AND INTEREST IN THAT TRUST SHALL NOT BE TRANSFERABLE FOR 6 MONTHS AFTER THAT CORPORATION OR THAT TRUST HAS ACQUIRED THE OFFERED CERTIFICATES UNDER SECTION 275 EXCEPT: (1) TO AN INSTITUTIONAL INVESTOR UNDER SECTION 274 OF THE SFA OR TO A RELEVANT PERSON, OR ANY PERSON PURSUANT TO SECTION 275(1A) OF THE SFA, AND IN ACCORDANCE WITH THE CONDITIONS SPECIFIED IN SECTION 275 OF THE SFA; (2) WHERE NO CONSIDERATION IS GIVEN FOR THE TRANSFER; OR (3) BY OPERATION OF LAW.
JAPAN
THE OFFERED CERTIFICATES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE FINANCIAL INSTRUMENTS EXCHANGE ACT OF JAPAN (LAW NO. 25 OF 1948, AS AMENDED (THE “FIEL”)), AND THE UNDERWRITER HAS AGREED THAT IT WILL NOT OFFER OR SELL ANY OFFERED CERTIFICATES, DIRECTLY OR INDIRECTLY, IN JAPAN OR TO, OR FOR THE BENEFIT OF, ANY JAPANESE PERSON, OR TO OTHERS FOR RE-OFFERING OR RESALE, DIRECTLY OR INDIRECTLY, IN JAPAN OR TO ANY JAPANESE PERSON, EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF, AND OTHERWISE IN COMPLIANCE WITH, THE FIEL AND ANY OTHER APPLICABLE LAWS AND REGULATIONS. FOR THE PURPOSES OF THIS PARAGRAPH, “JAPANESE PERSON” SHALL MEAN ANY PERSON RESIDENT IN JAPAN, INCLUDING ANY CORPORATION OR OTHER ENTITY ORGANIZED UNDER THE LAWS AND REGULATIONS OF JAPAN.
NOTICE TO RESIDENTS OF THE PEOPLE’S REPUBLIC OF CHINA
THE OFFERED CERTIFICATES WILL NOT BE OFFERED OR SOLD IN THE PEOPLE’S REPUBLIC OF CHINA (EXCLUDING HONG KONG, MACAU AND TAIWAN, THE “PRC”) AS PART OF THE INITIAL DISTRIBUTION OF THE
S-4 |
OFFERED CERTIFICATES BUT MAY BE AVAILABLE FOR PURCHASE BY INVESTORS RESIDENT IN THE PRC FROM OUTSIDE THE PRC.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN THE PRC TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE THE OFFER OR SOLICITATION IN THE PRC.
THE PRC DOES NOT REPRESENT THAT THIS PROSPECTUS SUPPLEMENT MAY BE LAWFULLY DISTRIBUTED, OR THAT ANY OFFERED CERTIFICATES MAY BE LAWFULLY OFFERED, IN COMPLIANCE WITH ANY APPLICABLE REGISTRATION OR OTHER REQUIREMENTS IN THE PRC, OR PURSUANT TO AN EXEMPTION AVAILABLE THEREUNDER, OR ASSUME ANY RESPONSIBILITY FOR FACILITATING ANY SUCH DISTRIBUTION OR OFFERING. IN PARTICULAR, NO ACTION HAS BEEN TAKEN BY THE PRC WHICH WOULD PERMIT AN OFFERING OF ANY OFFERED CERTIFICATES OR THE DISTRIBUTION OF THIS PROSPECTUS SUPPLEMENT IN THE PRC. ACCORDINGLY, THE OFFERED CERTIFICATES ARE NOT BEING OFFERED OR SOLD WITHIN THE PRC BY MEANS OF THIS PROSPECTUS SUPPLEMENT OR ANY OTHER DOCUMENT. NEITHER THIS PROSPECTUS SUPPLEMENT NOR ANY ADVERTISEMENT OR OTHER OFFERING MATERIAL MAY BE DISTRIBUTED OR PUBLISHED IN THE PRC, EXCEPT UNDER CIRCUMSTANCES THAT WILL RESULT IN COMPLIANCE WITH ANY APPLICABLE LAWS AND REGULATIONS.
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TABLE OF CONTENTS
EXECUTIVE SUMMARY | S-7 | Certain Matters Regarding the Parties to the Pooling | |||
SUMMARY OFprospectus supplement | S-9 | and Servicing Agreement | S-210 | ||
RISK FACTORS | S-41 | Asset Status Reports | S-211 | ||
CAPITALIZED TERMS USED IN THIS PROSPECTUS | Mortgage Loan Modifications | S-212 | |||
supplement | S-83 | Sale of Defaulted Mortgage Loans and REO | |||
FORWARD LOOKING STATEMENTS | S-83 | Properties | S-213 | ||
TRANSACTION PARTIES | S-83 | Foreclosures | S-215 | ||
The Sponsor, Mortgage Loan Seller and Originator | S-83 | Additional Matters Relating to the Servicing of the | |||
The Depositor | S-93 | Non-Serviced Mortgage Loans | S-216 | ||
The Issuing Entity | S-94 | MATERIAL FEDERAL INCOME TAX CONSEQUENCES | S-219 | ||
The Trustee, Certificate Administrator and Custodian | S-95 | Tax Classification of the Issuing Entity | S-219 | ||
The Trust Advisor | S-96 | Taxation of the Exchangeable Certificates | S-220 | ||
The Master Servicer and the Special Servicer | S-96 | Taxation of the Offered Certificates | S-220 | ||
The Outside Master Servicer | S-97 | Special Tax Attributes of the Certificates | S-223 | ||
Affiliations and Certain Relationships | S-99 | REMIC Administrative Provisions | S-224 | ||
DESCRIPTION OF THE OFFERED CERTIFICATES | S-100 | Taxes on a REMIC | S-224 | ||
General | S-100 | Backup Withholding | S-224 | ||
Certificate Principal Balances and Notional Amounts | S-101 | STATE AND LOCAL TAX CONSIDERATIONS | S-224 | ||
Pass-Through Rates | S-102 | CERTAIN LEGAL ASPECTS OF THE MORTGAGE | |||
Exchangeable Certificates | S-104 | LOANS | S-225 | ||
Accounts | S-105 | CERTAIN ERISA CONSIDERATIONS | S-225 | ||
Distributions | S-107 | Plan Assets and Prohibited Transactions | S-225 | ||
Optional Termination | S-120 | Special Exemption Applicable to the Offered | |||
Advances | S-120 | Certificates | S-226 | ||
Appraisal Reductions | S-124 | Insurance Company General Accounts | S-227 | ||
Reports to Certificateholders; Available Information | S-127 | General Investment Considerations | S-228 | ||
Example of Distributions | S-131 | LEGAL INVESTMENT | S-228 | ||
Expected Final Distribution Date | S-132 | USE OF PROCEEDS | S-228 | ||
Amendments to the Pooling and Servicing Agreement | S-132 | PLAN OF DISTRIBUTION (CONFLICTS OF INTEREST) | S-228 | ||
Evidence as to Compliance | S-134 | LEGAL MATTERS | S-230 | ||
Voting Rights | S-134 | RATINGS | S-230 | ||
Matters Regarding the Certificate Administrator | S-134 | INDEX OF SIGNIFICANT TERMS | S-232 | ||
The Trustee | S-135 | ||||
The Custodian | S-137 | APPENDIX I | Certain Characteristics of the Mortgage Loans | I-1 | |
Certificateholder Communications | S-138 | APPENDIX II | Mortgage Pool Information (Tables) | II-1 | |
Retention of Certain Certificates by Affiliates of | APPENDIX III | Significant Loan Summaries | III-1 | ||
Transaction Parties | S-138 | APPENDIX IV | Form of Distribution Date Statement | IV-1 | |
YIELD, PREPAYMENT AND MATURITY | APPENDIX V | Mortgage Loan Representations and | |||
CONSIDERATIONS | S-138 | Warranties | V-1 | ||
General | S-138 | APPENDIX VI | Exceptions to Mortgage Loan | ||
Pass-Through Rates | S-139 | Representations and Warranties | VI-1 | ||
Rate and Timing of Principal Payments | S-139 | APPENDIX VII | Class A-SB Planned Principal Balance | VII-1 | |
Yield on the Class X-A Certificates | S-140 | APPENDIX VIII | Alderwood Mall Mortgage Loan Amortization | ||
Unpaid Distributable Certificate Interest | S-140 | Schedule | VIII-1 | ||
Losses and Shortfalls | S-140 | EXHIBIT A | Additional Information Regarding the Alderwood | ||
Relevant Factors | S-141 | Mall Non-Serviced Loan Combination | A-1 | ||
Weighted Average Life | S-141 | ||||
Price/Yield Tables | S-146 | ||||
DESCRIPTION OF THE MORTGAGE POOL | S-150 | ||||
General | S-150 | ||||
Material Terms and Characteristics of the Mortgage | |||||
Loans | S-151 | ||||
The A/B Whole Loans and the Loan Pairs | S-160 | ||||
The Non-Serviced Loan Combinations | S-161 | ||||
Additional Mortgage Loan Information | S-180 | ||||
Standard Hazard Insurance | S-184 | ||||
Sale of the Mortgage Loans | S-185 | ||||
Representations and Warranties | S-185 | ||||
Repurchases and Other Remedies | S-186 | ||||
Changes In Mortgage Pool Characteristics | S-187 | ||||
SERVICING OF THE MORTGAGE LOANS | S-187 | ||||
General | S-187 | ||||
The Master Servicer | S-192 | ||||
The Special Servicer | S-195 | ||||
Rating Agency Confirmations | S-200 | ||||
Waivers of Servicer Termination Events | S-200 | ||||
Withdrawals from the Collection Account | S-201 | ||||
Enforcement of “Due-On-Sale” and | |||||
“Due-On-Encumbrance” Clauses | S-201 | ||||
Inspections | S-202 | ||||
The Controlling Class Representative | S-202 | ||||
The Trust Advisor | S-205 |
S-6 |
EXECUTIVE SUMMARY | |||||||||||||||||
This Executive Summary highlights selected information regarding the certificates. It does not contain all of the information you need to consider in making your investment decision. To understand all of the terms of this offering and the underlying mortgage loans, you should read this entire prospectus supplement and the accompanying prospectus carefully. | |||||||||||||||||
Certificate Structure | |||||||||||||||||
Class | Approximate Initial Certificate Principal Balance or Notional Amount | Approximate Initial Credit Support | Approximate Initial Pass- Through Rate | Expected Final Distribution Date | Expected Weighted Average Life (yrs.) | Principal Window (months) | |||||||||||
Class A-1 | $ 31,800,000 | 30.000% | 1.638% | July 2020 | 2.79 | 1-60 | |||||||||||
Class A-2 | $ 17,000,000 | 30.000% | 3.261% | June 2022 | 6.94 | 83-83 | |||||||||||
Class A-SB | $ 45,200,000 | 30.000% | 3.458% | March 2025 | 7.45 | 60-116 | |||||||||||
Class A-3 | $ 215,000,000 | 30.000% | 3.510% | April 2025 | 9.71 | 116-117 | |||||||||||
Class A-4 | $ 310,798,000 | 30.000% | 3.779% | May 2025 | 9.81 | 117-118 | |||||||||||
Class X-A | $ 619,798,000 | N/A | 0.625% | May 2025 | N/A | N/A | |||||||||||
Class A-S | $ 52,019,000 | 24.125% | 4.163% | June 2025 | 9.86 | 118-119 | |||||||||||
Class B | $ 70,834,000 | 16.125% | 4.163% | June 2025 | 9.94 | 119-119 | |||||||||||
Class PST | $ 154,950,000 | 12.500% | N/A | June 2025 | 9.91 | 118-119 | |||||||||||
Class C | $ 32,097,000 | 12.500% | 4.163% | June 2025 | 9.94 | 119-119 | |||||||||||
Class D | $ 40,951,000 | 7.875% | 4.163% | June 2025 | 9.94 | 119-119 | |||||||||||
Class E | $ 18,815,000 | 5.750% | 4.163% | July 2025 | 9.96 | 119-120 | |||||||||||
Class F | $ 14,388,000 | 4.125% | 4.163% | July 2025 | 10.02 | 120-120 | |||||||||||
Class G | $ 36,524,723 | 0.000% | 4.163% | May 2030 | 10.48 | 120-178 | |||||||||||
Class V | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||
Class R | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||
Offered certificates. | |||||||||||||||||
Certificates not offered pursuant to this prospectus supplement. | |||||||||||||||||
When reviewing the table on the cover page of this prospectus supplement and the table above entitled “Certificate Structure,” please note the following: | |||||||||||||||||
· | The certificate principal balances and notional amounts are approximate and on the closing date may vary by up to 5%. Mortgage loans may be removed from or added to the mortgage pool prior to the closing date within the same maximum permitted variance. Any reduction or increase in the aggregate principal balance of mortgage loans within these parameters will result in changes to the initial certificate principal balance or notional amount of each class of certificates (other than the Class V and Class R Certificates) and to the other statistical data contained in this prospectus supplement. | ||||||||||||||||
· | The Class A-S, Class B, Class PST and Class C Certificates are referred to herein as “exchangeable certificates.” On the closing date, the upper-tier REMIC of the issuing entity will issue the Class A-S, Class B and Class C trust components (each a “trust component”), which will have outstanding principal balances on the closing date of $52,019,000, $70,834,000 and $32,097,000, respectively. The trust components will be held in the grantor trust for the benefit of the holders of the Class A-S, Class B, Class PST and Class C Certificates. The Class A-S, Class B, Class PST and Class C Certificates will, at all times, represent undivided beneficial ownership interests, held through the grantor trust, in one or more of the trust components, and each class of the Class A-S, Class B and Class C Certificates will, at all times, represent an undivided beneficial ownership interest in a percentage of the outstanding principal balance of the trust component with the same alphabetical class designation. The Class PST Certificates will, at all times, represent an undivided beneficial ownership interest in the remaining percentages of the outstanding principal balances of the Class A-S, Class B and Class C trust components. | ||||||||||||||||
· | Distributions and allocations of payments and losses with respect to each of the Class A-S, Class B and Class C trust components will be allocated between the Class A-S, Class B or Class C Certificates, as applicable, on the one hand, and Class PST Certificates, on the other hand, in proportion to the percentages described in the preceding bullet. See “Description of the Offered Certificates—Distributions” and “Material Federal Income Tax Consequences—Tax Classification of the Issuing Entity” in this prospectus supplement. | ||||||||||||||||
· | The Class PST Certificates are exchangeable for the Class A-S, Class B and Class C Certificates, and vice versa, in each case in the proportions and in the manner described under “Description of the Offered Certificates—Exchangeable Certificates” in this prospectus supplement. See also “Risk Factors—Risks Related to the Offered Certificates—The Exchangeable Certificates Are Subject to Additional Risks.” Following any exchange of Class A-S, Class B and Class C Certificates for Class PST Certificates, or vice versa, the percentage interest or interests of the outstanding principal balances of the Class A-S, Class B and Class C trust components that is represented by the Class A-S, Class B, Class PST and Class C Certificates will be increased or decreased accordingly. | ||||||||||||||||
· | The maximum principal balance of the Class PST Certificates is set forth in the table above and the table on the cover page but is not included in the aggregate certificate principal balance of the offered certificates set forth on the cover page and back cover of this prospectus supplement. Such amount represents the maximum certificate principal balance of the Class PST Certificates that could be issued in an exchange. The maximum certificate principal balance of each class of the Class A-S, Class B and Class C Certificates is set forth in the table above and the table on the cover page and is included in the aggregate certificate principal balance of the offered certificates set forth on the cover page and back cover of this prospectus supplement. Each such amount represents the maximum | ||||||||||||||||
S-7 |
certificate principal balance of such class without giving effect to any exchange. On the closing date, the certificate principal balances of the Class A-S, Class B, Class PST and Class C Certificates will be $52,019,000, $70,834,000, $0 and $32,097,000, respectively. | |||
· | The expected final distribution date for each class of certificates is the date on which that class is expected to be paid in full (or, in the case of the Class X-A Certificates, the date on which the related notional amount is reduced to zero), based on the assumptions described in “Description of the Offered Certificates—Expected Final Distribution Date” in this prospectus supplement. | ||
· | The pass-through rates for the Class A-1, Class A-2, Class A-SB and Class A-3 Certificates will at all times be fixed at their respective initial pass-through rates set forth in the table above. The pass-through rate for the Class A-4 Certificates will at all times be aper annum rate equal to the lesser of (i) 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 (12) 30-day months) and (ii) 3.779%. The pass-through rate for each class of the Class A-S, Class B and Class C Certificates will at all times be aper annum rate equal to 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 (12) 30-day months). The Class PST Certificates will not have a pass-through rate, but will be entitled to receive the sum of the interest distributable on its percentage interests in the Class A-S, Class B and Class C trust components. Any distribution of interest to the Class PST Certificates on the first distribution date is expected to be in an amount that would produce an effective pass-through rate equal to approximately 4.163%, which would be equal to the weighted average of the pass-through rates of the Class A-S, Class B and Class C trust components for the first distribution date. The pass-through rates for the Class A-S Certificates and the Class A-S trust component will, at all times, be the same. The pass-through rates for the Class B Certificates and the Class B trust component will, at all times, be the same. The pass-through rates for the Class C Certificates and the Class C trust component will, at all times, be the same. | ||
· | The pass-through rate for each class of the Class D, Class E, Class F and Class G Certificates will at all times be aper annum rate equal to 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 (12) 30-day months). | ||
· | The initial pass-through rates are approximate as of the closing date. The percentages indicated under the column “Approximate Initial Credit Support” with respect to the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates represent the approximate initial credit support for the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates, in the aggregate. The percentage indicated under the column “Approximate Initial Credit Support” with respect to the Class PST Certificates represents the approximate initial credit support for the percentage interest of the Class C trust component represented by the Class PST Certificates. | ||
· | The principal window is expressed in months following the closing date and reflects the period during which distributions of principal would be received under the assumptions set forth in the following sentence. The expected weighted average life and principal window figures set forth above are based on the following assumptions, among others: (i) no defaults or subsequent losses on the mortgage loans; (ii) no extensions of maturity dates of mortgage loans that do not have “anticipated repayment dates;” (iii) payment in full on the stated maturity date or, in the case of each mortgage loan having an anticipated repayment date, on the anticipated repayment date; and (iv) no prepayments of the mortgage loans prior to maturity or, in the case of a mortgage loan having an anticipated repayment date, prior to such anticipated repayment date. See the structuring assumptions set forth under “Yield, Prepayment and Maturity Considerations—Weighted Average Life” in this prospectus supplement. | ||
· | None of the Class D, Class E, Class F, Class G, Class V or Class R Certificates are offered pursuant to this prospectus supplement. We sometimes refer to these certificates collectively as the “privately offered certificates.” | ||
· | The Class X-A Certificates (also referred to herein as the “Class X Certificates”) will not have certificate principal balances and will not be entitled to receive distributions of principal. Interest will accrue on the Class X-A Certificates at their pass-through rate based upon their notional amount. The notional amount of the Class X-A Certificates will be the aggregate principal balance of the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates outstanding from time to time. | ||
· | The pass-through rate on the Class X-A Certificates will generally be equal to the excess, if any, of (a) 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 (12) 30-day months), over (b) the weighted average of the pass-through rates of the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates as described in this prospectus supplement. | ||
· | The Class V and Class R Certificates will not have certificate principal balances, notional amounts or pass-through rates and will not be entitled to distributions of principal or interest (other than, with respect to the Class V Certificates, certain excess interest). The Class V Certificates represent a beneficial ownership interest held through the grantor trust in certain excess interest in respect of mortgage loans having anticipated repayment dates, if any. The Class R Certificates represent beneficial ownership of the residual interest in each of the real estate mortgage investment conduits, as further described in this prospectus supplement. | ||
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SUMMARY OF PROSPECTUS SUPPLEMENT | ||||
This summary highlights selected information from this prospectus supplement. It does not contain all of the information you need to consider in making your investment decision. To understand all of the terms of the certificates offered pursuant to this prospectus supplement, which we generally refer to as the “offered certificates,” you should read this entire prospectus supplement and the accompanying prospectus carefully. | ||||
What You Will Own | ||||
General | Your certificates (together with the privately offered certificates) will represent beneficial interests in the issuing entity created by Morgan Stanley Capital I Inc. on the closing date pursuant to a pooling and servicing agreement dated as of July 1, 2015. All payments to you will come only from the amounts received in connection with the assets of the issuing entity. The issuing entity’s assets will primarily consist of fifty-four (54) fixed rate mortgage loans secured by first liens on fifty-nine (59) multifamily and commercial properties. | |||
The transfers of the mortgage loans from the mortgage loan seller to the depositor, and from the depositor to the issuing entity in exchange for the certificates are illustrated below: | ||||
Title of Certificates | Commercial Mortgage Pass-Through Certificates, Series 2015-MS1. | |||
Mortgage Pool | The mortgage pool consists of fifty-four (54) mortgage loans with an aggregate principal balance as of July 1, 2015 of approximately $885,426,724, which may vary on the closing date by up to 5%. Each of the mortgage loans requires scheduled payments of principal and/or interest to be made monthly. For purposes of any mortgage loan that has a due date on a date other than the first of the month, we have assumed that amounts are due thereunder on the first of the month for purposes of determining its cut-off date and cut-off date balance. | |||
The portfolio of mortgaged properties identified on Appendix I to this prospectus supplement as TKG 3 Retail Portfolio secures a mortgage loan representing approximately 9.0% of the initial pool balance that has a servicedpari passu companion loan and is referred to herein (together with its related servicedpari passu companion loan) as a “loan pair.” | ||||
The mortgaged properties identified on Appendix I to this prospectus supplement as 300 South Riverside Plaza Fee, 32 Old Slip Fee, Waterfront at Port Chester, Alderwood Mall and Hilton Garden Inn W 54th Street secure mortgage loans representing approximately 7.6%, 6.8%, 6.0%, 5.7% and 4.5%, respectively, of the initial pool balance that each have a relatedpari passu non-serviced companion loan (and, in the case of each of the Alderwood Mall mortgage loan and the Hilton Garden Inn W 54th Street mortgage loan, one or more related subordinate B notes). Each such mortgage loan is referred to herein as a “mortgage loan” and a “non-serviced mortgage loan” and, together with itspari passu non-serviced companion loan (and any related subordinate B note), as a “non-serviced loan combination.” Nopari passu non-serviced companion loan (or related B note) will be a “mortgage loan” hereunder. The 300 South Riverside Plaza Fee, Waterfront at Port Chester and Hilton Garden Inn W 54th Street non-serviced loan combinations will be serviced under the MSBAM 2015-C22 pooling and servicing agreement. The 32 Old Slip | ||||
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Fee non-serviced loan combination will be serviced under the MSBAM 2015-C23 pooling and servicing agreement. The Alderwood Mall non-serviced loan combination will be serviced under the MSCCG 2015-ALDR trust and servicing agreement. | |||||
There will be no A/B whole loans related to the issuing entity as of the closing date. See “Information About the Mortgage Pool—Characteristics of the Mortgage Pool—The A/B Whole Loans, Loan Pairs and Non-Serviced Loan Combinations” below. | |||||
Relevant Parties, Dates and Periods | |||||
Issuing Entity | Morgan Stanley Capital I Trust 2015-MS1, a New York common law trust, will issue the certificates. The issuing entity will be formed pursuant to a pooling and servicing agreement to be dated as of July 1, 2015, between the depositor, the master servicer, the special servicer, the trustee, the certificate administrator, the custodian and the trust advisor, in each case identified below in this “—Relevant Parties, Dates and Periods” section. See “Transaction Parties—The Issuing Entity” in this prospectus supplement. | ||||
Depositor | Morgan Stanley Capital I Inc., a Delaware corporation, is the depositor. As depositor, Morgan Stanley Capital I Inc. will acquire the mortgage loans from the mortgage loan seller and deposit them into the issuing entity. The principal executive offices of Morgan Stanley Capital I Inc. are located at 1585 Broadway, New York, New York 10036, and its telephone number is (212) 761-4000. See “Transaction Parties—The Depositor” in this prospectus supplement and “The Depositor” in the accompanying prospectus. | ||||
Master Servicer | Midland Loan Services, a Division of PNC Bank, National Association, a national banking association (“Midland”), will act as master servicer with respect to all of the mortgage loans in the issuing entity and will be primarily responsible for servicing and administering, directly or through sub-servicers (including any primary servicer), the mortgage loans (other than any non-serviced mortgage loans) and any related serviced B note or serviced companion loan pursuant to the pooling and servicing agreement. In addition, the master servicer will be the primary party responsible for making principal and interest advances and, other than with respect to any non-serviced mortgage loan, servicing advances under the pooling and servicing agreement. The principal commercial mortgage master servicing offices of the master servicer are located at 10851 Mastin Street, Building 82, Suite 300, Overland Park, Kansas 66210, and its telephone number is (913) 253-9000. See “Servicing of the Mortgage Loans—General,” “Transaction Parties—The Master Servicer and the Special Servicer” and “Servicing of the Mortgage Loans—The Master Servicer” in this prospectus supplement. | ||||
The master servicer’s principal compensation for its servicing activities will be the master servicing fee. See “Offered Certificates—Distributions—Servicing and Administration Fees” below and “Servicing of the Mortgage Loans—General,” “Transaction Parties—The Master Servicer and the Special Servicer” and “Servicing of the Mortgage Loans—The Master Servicer” in this prospectus supplement. In addition, the master servicer will be entitled to retain certain borrower paid fees and certain income from investment of certain accounts maintained as part of the issuing entity, as additional servicing compensation. | |||||
As described below, Wells Fargo Bank, National Association, a national banking association (in such capacity, the “outside master servicer” or a “non-serviced mortgage loan master servicer”), is the master servicer under the MSBAM 2015-C22 pooling and servicing agreement, pursuant to the 300 South Riverside Plaza Fee, Waterfront at Port Chester and Hilton Garden Inn W 54th Street non-serviced loan combinations are serviced, and is the master servicer under the MSBAM 2015-C23 pooling and servicing agreement, pursuant to which the 32 Old Slip Fee non-serviced loan combination is serviced. The principal west coast commercial mortgage master servicing and special servicing offices of Wells Fargo are located at MAC A0227-020, 1901 Harrison Street, Oakland, California 94612. The principal east coast commercial mortgage master servicing and special servicing offices of Wells Fargo are located at MAC D1086, 550 South Tryon Street, Charlotte, North Carolina 28202. | |||||
Each non-serviced mortgage loan will be serviced by the master servicer under, and pursuant to the terms of, the pooling and servicing agreement or trust and servicing agreement, as applicable, governing the securitization of the related non-serviced companion loan (or applicable portion thereof) as follows: | |||||
· | The mortgage loans secured by the mortgaged properties identified on Appendix I to this prospectus supplement as 300 South Riverside Plaza Fee, Waterfront at Port Chester and Hilton Garden Inn W 54th Street, representing approximately 7.6%, 6.0% and 4.5%, respectively, of the initial pool balance, will be serviced by the master servicer under the pooling and servicing agreement for the MSBAM 2015-C22 securitization (currently Wells Fargo Bank, National Association), which is substantially similar to the pooling and servicing agreement for this securitization in respect of servicing. | ||||
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· | The mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as 32 Old Slip Fee, representing approximately 6.8% of the initial pool balance, will be serviced by the master servicer under the pooling and servicing agreement for the MSBAM 2015-C23 securitization (currently Wells Fargo Bank, National Association), which is substantially similar to the pooling and servicing agreement for this securitization in respect of servicing. | ||||
· | The mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as Alderwood Mall, representing approximately 5.7% of the initial pool balance, will be serviced by the master servicer under the trust and servicing agreement for the MSCCG 2015-ALDR securitization (currently KeyBank National Association), which is similar to the pooling and servicing agreement for this securitization in respect of servicing. | ||||
Each servicer of a non-serviced mortgage loan will be entitled to receive a primary servicing fee with respect to such non-serviced mortgage loan; however, the master servicer under the pooling and servicing agreement for this securitization will continue to be primarily responsible for making debt service advances with respect to such non-serviced mortgage loan (and will not be responsible for making debt service advances with respect to the related non-serviced companion loan). See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations” and “Servicing of the Mortgage Loans—Additional Matters Relating to the Servicing of the Non-Serviced Mortgage Loans” in this prospectus supplement. | |||||
Special Servicer | Midland Loan Services, a Division of PNC Bank, National Association, a national banking association, will act as special servicer with respect to all of the mortgage loans in the issuing entity (other than any non-serviced mortgage loans) pursuant to the pooling and servicing agreement. The special servicer will be primarily responsible for making decisions and performing certain servicing functions with respect to such mortgage loans (and any related serviced companion loan or serviced B note) and any REO loans in respect of the foregoing, in each case that, in general, are in default or as to which default is imminent. Midland is anticipated to be the special servicer at the request of DoubleLine Capital LP or an affiliate thereof, which is expected to be the initial controlling class representative. See “—Controlling Class Representative” below. The primary servicing office of Midland is located at 10851 Mastin Street, Building 82, Suite 300, Overland Park, Kansas 66210, and its telephone number is (913) 253-9000. See “Servicing of the Mortgage Loans—General,” “Transaction Parties—The Master Servicer and the Special Servicer” and “Servicing of the Mortgage Loans—The Special Servicer” in this prospectus supplement. | ||||
The special servicer’s principal compensation for its special servicing activities will be the special servicing fee, the workout fee and the liquidation fee. See “Offered Certificates—Distributions—Servicing and Administration Fees” below and “Servicing of the Mortgage Loans—General,” “Transaction Parties—The Master Servicer and the Special Servicer” and “Servicing of the Mortgage Loans—The Special Servicer” in this prospectus supplement. In addition, the special servicer will be entitled to retain certain borrower paid fees and certain income from investment of certain accounts maintained as part of the issuing entity, as additional servicing compensation. | |||||
Each non-serviced mortgage loan will be specially serviced, if necessary, by the special servicer under, and pursuant to the terms of, the pooling and servicing agreement or trust and servicing agreement, as applicable, governing the securitization of the related non-serviced companion loan (or applicable portion thereof) as follows: | |||||
· | If necessary, the mortgage loans secured by the mortgaged properties identified on Appendix I to this prospectus supplement as 300 South Riverside Plaza Fee, Waterfront at Port Chester and Hilton Garden Inn W 54th Street, representing approximately 7.6%, 6.0% and 4.5%, respectively, of the initial pool balance, will be specially serviced by the special servicer under the pooling and servicing agreement for the MSBAM 2015-C22 securitization (currently Midland Loan Services, a Division of PNC Bank, National Association), which is substantially similar to the pooling and servicing agreement for this securitization in respect of servicing. | ||||
· | If necessary, the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as 32 Old Slip Fee, representing approximately 6.8% of the initial pool balance, will be specially serviced by the special servicer under the pooling and servicing agreement for the MSBAM 2015-C23 securitization (currently LNR Partners, LLC), which is substantially similar to the pooling and servicing agreement for this securitization in respect of servicing. | ||||
· | If necessary, the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as Alderwood Mall, representing approximately 5.7% of the initial pool balance, will be specially serviced by the special servicer under the trust and servicing agreement for the MSCCG 2015-ALDR | ||||
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securitization (currently KeyBank National Association), which is similar to the pooling and servicing agreement for this securitization in respect of servicing. | |||||
See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations” and “Servicing of the Mortgage Loans—Additional Matters Relating to the Servicing of the Non-Serviced Mortgage Loans” in this prospectus supplement. | |||||
With respect to each non-serviced mortgage loan, the holder of the related controlling note (or a representative thereof) will be entitled to direct the servicing of the related non-serviced loan combination;however, the controlling class representative (during any Subordinate Control Period and Collective Consultation Period) will have certain consultation rights with respect to such servicing and the right to require the replacement of the special servicer for the non-serviced loan combination in certain circumstances after a servicer termination event with respect to such special servicer. There is no controlling note with respect to the Alderwood Mall non-serviced mortgage loan and consequently, no holder of a note comprising the Alderwood Mall non-serviced loan combination will be entitled to direct the servicing of such non-serviced loan combination. Furthermore, the MSCCG 2015-ALDR securitization does not have a controlling class representative or its equivalent. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations” in this prospectus supplement. | |||||
The special servicer under the pooling and servicing agreement for this securitization may be removed, with or without cause, and a successor special servicer appointed, at any time, as follows: | |||||
· | with respect to the pool of mortgage loans other than any non-serviced mortgage loan (and in the case of a mortgage loan that is part of an A/B whole loan or loan pair, subject to the third bullet of this paragraph), during any Subordinate Control Period (as defined below), at the direction of the controlling class representative; | ||||
· | with respect to the pool of mortgage loans other than any non-serviced mortgage loan (and in the case of a mortgage loan that is part of an A/B whole loan or loan pair, subject to the third bullet of this paragraph), during any Collective Consultation Period and any Senior Consultation Period (each such term, as defined below), if the holders of at least 25% of the voting rights of the certificates request a vote to replace the special servicer, by the holders of certificates evidencing at least 75% of the voting rights of the certificates; and | ||||
· | in the case of a mortgage loan that is part of an A/B whole loan or loan pair serviced under the pooling and servicing agreement, to the extent provided for in the related intercreditor agreement, the holder of a related serviced B note or serviced companion loan, as applicable (for so long as such holder is the directing holder in respect of such A/B whole loan or loan pair, as applicable), may, without cause, replace the special servicer for the related A/B whole loan or loan pair. | ||||
With respect to the Hilton Garden Inn W 54th Street non-serviced loan combination, the related special servicer under the MSBAM 2015-C22 pooling and servicing agreement may be removed, with or without cause, and a successor special servicer appointed, at any time, by the holder of the related B note if the principal balance of such B note (as reduced or notionally reduced, as applicable, by the application of payments, losses and appraisal reductions) has not been reduced below 25% of its original principal balance (as reduced by principal payments), and (if such B note does not satisfy such criteria) by the MSBAM 2015-C22 controlling class representative or certificateholders with the requisite MSBAM 2015-C22 voting rights, as applicable, all pursuant to the terms of the related intercreditor agreement and the MSBAM 2015-C22 pooling and servicing agreement, the terms of which pooling and servicing agreement are substantially similar to those contained in the pooling and servicing agreement for this transaction. | |||||
In addition, with respect to each of the 300 South Riverside Plaza Fee mortgage loan, the 32 Old Slip Fee mortgage loan, the Waterfront at Port Chester mortgage loan and the Alderwood Mall mortgage loan, the applicable special servicer will be subject to removal (and replacement by a successor special servicer) pursuant to similar terms contained in the pooling and servicing agreement or trust and servicing agreement, as applicable, related to the securitization of the relatedpari passu companion loan (or the applicable portion thereof), subject to (i) variations in the percentage of certificateholders required to consent to a removal of the special servicer and (ii) different (or no) limitations on the ability of the applicable controlling class representative to remove the special servicer without cause;provided, that with respect to the Alderwood Mall mortgage loan, there will be no controlling class representative related to the securitization of the relatedpari passu companion loan, and the related special servicer may only be removed by a vote of certificateholders under such securitization. | |||||
See “—Directing Holders” below and “Servicing of the Mortgage Loans—The Special Servicer—Replacement of the Special Servicer Without Cause,” “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” and “—The Non-Serviced Loan Combinations” in this prospectus supplement. |
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Trustee, Certificate Administrator | ||||
and Custodian | Wells Fargo Bank, National Association, a national banking association, will act as the trustee of the issuing entity on behalf of the certificateholders, as the certificate administrator, certificate registrar and authenticating agent for the certificates and as custodian of the mortgage loan files (or, in the case of any non-serviced mortgage loan, of just the related mortgage note). The corporate trust offices of Wells Fargo Bank, National Association are located at 9062 Old Annapolis Road, Columbia, Maryland 21045, and the office designated for purposes of certificate transfers and exchanges is located at Wells Fargo Center, Sixth Street & Marquette Avenue, Minneapolis, Minnesota 55479-0113, Attn: Morgan Stanley Capital I Trust 2015-MS1. The certificate administrator will be primarily responsible for making allocations and distributions to the holders of the certificates. Following the transfer of the mortgage loans into the issuing entity, the trustee on behalf of the issuing entity, will become the mortgagee of record of each mortgage loan transferred to the issuing entity (other than any non-serviced mortgage loan, with respect to which the mortgagee of record will be the holder of the related non-serviced companion loan or applicable portion thereof (or the trustee for any securitization that holds such non-serviced companion loan or applicable portion thereof)). In addition, the trustee will be primarily responsible for back-up advancing if the master servicer fails to perform its advancing obligations. The certificate administrator will have, or will be responsible for appointing an agent to perform, additional duties with respect to tax administration of the issuing entity. See “Transaction Parties—The Trustee, Certificate Administrator and Custodian” in this prospectus supplement. | |||
Controlling Class Representative | The controlling class representative will be the representative appointed by more than 50% of the controlling class certificateholders (by certificate principal balance), as determined by the certificate registrar from time to time as provided in the pooling and servicing agreement. A summary of the consent and consultation rights of the controlling class representative, and the limitations thereon, is set forth below. It is anticipated that DoubleLine Capital LP or an affiliate thereof will be the initial controlling class representative. | |||
The controlling class means, as of any time of determination, the most subordinate class of Control Eligible Certificates then outstanding that has an aggregate certificate principal balance (taking into account the application of any appraisal reductions to notionally reduce the aggregate certificate principal balance of such class) at least equal to 25% of the initial certificate principal balance of such class;provided that if no class of Control Eligible Certificates has an aggregate certificate principal balance (taking into account the application of any appraisal reductions to notionally reduce the aggregate certificate principal balance of such class) at least equal to 25% of the initial aggregate certificate principal balance of such class, then the controlling class will be the most senior class of Control Eligible Certificates. The controlling class on the closing date will be the Class G Certificates. | ||||
Control Eligible Certificates will be the Class E, Class F and Class G Certificates. No other class of certificates will be eligible to act as the controlling class or appoint the controlling class representative. | ||||
A Subordinate Control Period means any period when the aggregate certificate principal balance of the Class E Certificates (taking into account the application of appraisal reductions to notionally reduce the aggregate certificate principal balance of such class) is at least 25% of the initial aggregate certificate principal balance of the Class E Certificates. | ||||
A Collective Consultation Period means any period when both (i) the aggregate certificate principal balance of the Class E Certificates (taking into account the application of appraisal reductions to notionally reduce the aggregate certificate principal balance of such class) is less than 25% of the initial aggregate certificate principal balance of the Class E Certificates and (ii) the aggregate certificate principal balance of the Class E Certificates (without regard to any appraisal reductions allocable to such class) is at least 25% of the initial aggregate certificate principal balance of the Class E Certificates. | ||||
A Senior Consultation Period means any period when the aggregate certificate principal balance of the Class E Certificates (without regard to any appraisal reductions allocable to such class) is less than 25% of the initial aggregate certificate principal balance of the Class E Certificates. | ||||
During any Subordinate Control Period, the controlling class representative will have certain consent and consultation rights under the pooling and servicing agreement with respect to certain major decisions and other matters. | ||||
During any Collective Consultation Period and any Senior Consultation Period, the controlling class representative will not have any consent rights. However, during any Collective Consultation Period, the controlling class representative will have non-binding consultation rights with respect to certain major decisions and other matters in accordance with the pooling and servicing agreement. | ||||
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During any Senior Consultation Period, the controlling class representative will not have any consent or consultation rights, except with respect to any such rights that are expressly operative during such period pursuant to the pooling and servicing agreement. See “Servicing of the Mortgage Loans—The Controlling Class Representative” in this prospectus supplement. | ||||
If any mortgage loan is part of an A/B whole loan, loan pair or non-serviced loan combination, the controlling class representative’s consent and/or consultation rights with respect thereto may be limited as further described in this prospectus supplement. The existence of a Subordinate Control Period, Collective Consultation Period or Senior Consultation Period will not limit any control and/or consultation rights of the holder of any related B note or companion loan. See “—Directing Holders” below, and “Risk Factors—Risks Related to the Offered Certificates—Realization on a Mortgage Loan That Is Part of an A/B Whole Loan or Loan Pair May Be Adversely Affected by the Rights of the Related Directing Holder,” “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” and “—The Non-Serviced Loan Combinations” in this prospectus supplement. | ||||
The controlling class representative will have certain approval rights and rights to direct and consult with the special servicer as described under “Servicing of the Mortgage Loans—The Controlling Class Representative” in this prospectus supplement. For instance, during a Subordinate Control Period, the controlling class representative may direct the special servicer to take actions that conflict with and adversely affect the interests of holders of certain classes of certificates. | ||||
In connection with the servicing of the mortgage loans, the special servicer may, at the direction of the controlling class representative or a directing holder, as applicable, take actions with respect to the mortgage loans (other than any non-serviced mortgage loan) that could adversely affect the holders of some of the classes of certificates. Additionally, the special servicer may be removed without cause by the controlling class representative (during a Subordinate Control Period), or with respect to a mortgage loan that is part of an A/B whole loan or loan pair, by the related directing holder. As a result of these rights, the controlling class representative and any directing holder may have interests in conflict with those of the other certificateholders. See “Risk Factors—Risks Related to Conflicts of Interest—Conflicts of Interest of the Controlling Class Representative; Rights of the Controlling Class Representative Could Adversely Affect Your Investment” and “—Conflicts of Interest of the Directing Holders; Rights of the Directing Holders Could Adversely Affect Your Investment” in this prospectus supplement. | ||||
The controlling class representative may have interests that differ from or are in conflict with those of other certificateholders and its decisions may not be in the best interest of or may be adverse to other certificateholders. | ||||
The anticipated initial investor in the Control Eligible Certificates (referred to herein as the B-piece buyer) may act as, or appoint, the controlling class representative. The B-piece buyer was given the opportunity by the sponsor to perform due diligence on the mortgage loans originally identified by the sponsor for inclusion in the issuing entity, and may have been given the opportunity to request the removal or re-sizing of, or the modification of certain features of, some or all of the mortgage loans. We cannot assure you that you or another investor would make the same requests to modify the original pool as the B-piece buyer, or that the final mortgage pool, to the extent influenced by the B-piece buyer’s feedback, will not adversely affect the performance of your certificates and benefit the performance of the B-piece buyer’s certificates. Because of the differing subordination levels, the B-piece buyer has interests that may, in some circumstances, differ from those of purchasers of other classes of certificates, and may desire a portfolio composition that benefits the B-piece buyer but that does not benefit other investors. The B-piece buyer performed any such due diligence for its own benefit and has no obligation or duty to anyone else. You should not take the B-piece buyer’s acceptance of any mortgage loan as an endorsement of that mortgage loan or its quality. See “Risk Factors—Risks Related to Conflicts of Interest—Conflicts in the Selection of the Underlying Mortgage Loans” in this prospectus supplement. | ||||
For additional information regarding the controlling class representative, see “Servicing of the Mortgage Loans—The Controlling Class Representative” in this prospectus supplement. | ||||
Trust Advisor | Park Bridge Lender Services LLC, a New York limited liability company and an indirect wholly-owned subsidiary of Park Bridge Financial LLC, will act as the trust advisor with respect to all of the mortgage loans except any non-serviced mortgage loan. The trust advisor will be required to promptly review all information available to certain privileged persons on the certificate administrator’s website related to any specially serviced mortgage loan or REO property and each asset status report with respect to specially serviced mortgage loans (provided, that during any Subordinate Control Period, the trust advisor may only review final asset status reports). | |||
During any Collective Consultation Period and any Senior Consultation Period, within sixty (60) days after the end of each calendar year during which any mortgage loan was a | ||||
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specially serviced mortgage loan or any mortgaged property was an REO property, the trust advisor will be required to meet with representatives of the special servicer to review certain operational practices of the special servicer related to specially serviced mortgage loans and REO properties. | ||||
In addition, during any Collective Consultation Period and any Senior Consultation Period, based on (i) the trust advisor’s annual meeting with the special servicer and (ii) the trust advisor’s review of any asset status reports and other information delivered to the trust advisor by the special servicer and any other information available to certain privileged persons on the certificate administrator’s website, the trust advisor will be required to prepare an annual report to be provided to the certificate administrator (and to be made available through the certificate administrator’s website) setting forth its assessment of the special servicer’s performance of its duties under the pooling and servicing agreement during the prior calendar year on a platform-level basis with respect to the resolution and liquidation of specially serviced mortgage loans and REO properties. No such annual report will be required to be prepared or delivered with respect to any calendar year as to which no annual meeting is required to be held or with respect to any calendar year during which no asset status reports have been prepared in connection with a specially serviced mortgage loan or REO property. | ||||
Furthermore, during any Collective Consultation Period and any Senior Consultation Period, the special servicer will be required to consult (on a non-binding basis) with the trust advisor in connection with certain major decisions involving any mortgage loan, A/B whole loan, loan pair or any related REO property to the extent described in this prospectus supplement and as set forth in the pooling and servicing agreement;provided, that with respect to matters relating to any A/B whole loan or loan pair, the special servicer will only be required to consult with the trust advisor with regard to such matters if the holder of the related serviced B note or serviced companion loan, as applicable, is not (or is no longer) the directing holder with respect to such A/B whole loan or loan pair pursuant to the terms of the applicable intercreditor agreement. | ||||
During any Subordinate Control Period, (A) there will be no annual meeting between the trust advisor and special servicer or any annual report prepared by the trust advisor and (B) the trust advisor will not distribute any report based on any review of the special servicer’s actions. In addition, the trust advisor will not have the right or obligation during any Subordinate Control Period to consult with regard to any particular servicing actions, or otherwise opine on the actions of the special servicer with respect to any mortgage loan. In no event will the trust advisor have any consent right with respect to any particular servicing actions. | ||||
Notwithstanding the foregoing, the trust advisor will have no role or obligation with respect to any non-serviced mortgage loan or any related REO property. | ||||
The trust advisor will be subject to confidentiality and other limitations described in this prospectus supplement and set forth in the pooling and servicing agreement. | ||||
If the holders of at least 25% of the voting rights of the certificates request a vote to terminate and/or replace the trust advisor, then the holders of at least 75% of the voting rights of the certificates may vote to either (i) terminate all rights and obligations of the trust advisor with respect to the mortgage loans under the pooling and servicing agreement and replace the trust advisor, or (ii) terminate all rights and obligations of the trust advisor in respect of the mortgage loans under the pooling and servicing agreement and not appoint a replacement trust advisor, in which case all references to the trust advisor in the pooling and servicing agreement will be of no force and effect;provided, that if holders of at least 25% of the voting rights of the certificates subsequently request a vote to reinstate the role of trust advisor and appoint a new trust advisor under the pooling and servicing agreement, and the holders of at least 75% of the voting rights of the certificates vote in favor of such appointment, then a new trust advisor will be appointed in respect of such mortgage loans and references to such trust advisor in the pooling and servicing agreement will again be applicable. During any Subordinate Control Period and any Collective Consultation Period, the controlling class representative will have the right to consent, such consent not to be unreasonably withheld, to any such replacement trust advisor;provided, that such consent will be deemed granted if no objection is made within ten (10) business days following the controlling class representative’s receipt of the request for consent. Any such consent will be required to be solicited from the controlling class representative before any related vote. See “Servicing of the Mortgage Loans—The Trust Advisor—Termination of the Trust Advisor Without Cause” in this prospectus supplement. | ||||
In addition, during any Senior Consultation Period, if the trust advisor determines that the special servicer is not performing its duties in accordance with the servicing standard, the trust advisor may recommend the replacement of the special servicer to the trustee. The trust advisor’s recommendation to replace the special servicer must be confirmed by an affirmative vote of holders of a majority of the voting rights of the principal balance certificates. See “Servicing of the Mortgage Loans—The Special Servicer—Replacement of the Special Servicer Without Cause” in this prospectus supplement. | ||||
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The trust advisor may have interests that are in conflict with those of certificateholders and its advice and consultations may not be in the best interest of certificateholders. See “Risk Factors—Risks Related to Conflicts of Interest—Conflicts of Interest of the Trust Advisor” in this prospectus supplement. | ||||
For additional information regarding the responsibilities of the trust advisor and regarding the trust advisor itself, see “Servicing of the Mortgage Loans—The Trust Advisor” and “Transaction Parties—The Trust Advisor” in this prospectus supplement. | ||||
Directing Holders | If a mortgage loan is part of an A/B whole loan or loan pair, then as of the closing date the holder of a related B note or serviced companion loan, as applicable, which B note and/or serviced companion loan will be held outside the issuing entity, will be the directing holder if and to the extent described under “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs.” If and for so long as the holder of a B note or serviced companion loan is the related directing holder pursuant to the terms of the related intercreditor agreement, such holder will have broad consent and/or consultation rights with respect to the related A/B whole loan or loan pair and may have the right to replace the special servicer with respect to the related mortgage loan. | |||
No directing holder will be a party to the pooling and servicing agreement, but its rights may affect the servicing of the related mortgage loan. Further, a directing holder may have interests that are in conflict with those of certificateholders and its decisions may not be in the best interest of certificateholders. See “Servicing of the Mortgage Loans” and “Risk Factors—Risks Related to Conflicts of Interest—Conflicts of Interest of the Directing Holders; Rights of the Directing Holders Could Adversely Affect Your Investment” in this prospectus supplement. | ||||
The rights of a directing holder will be unaffected by the existence of any Subordinate Control Period, Collective Consultation Period or Senior Consultation Period. | ||||
With respect to the 300 South Riverside Plaza Fee and Waterfront at Port Chester non-serviced loan combinations, the MSBAM 2015-C22 controlling class representative (during a MSBAM 2015-C22 subordinate control period) will be entitled to exercise the rights of the controlling note holder under the related intercreditor agreement pursuant to the terms thereof and the MSBAM 2015-C22 pooling and servicing agreement. See “—Special Servicer” above and “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The 300 South Riverside Plaza Fee Non-Serviced Loan Combination” and “—The Waterfront at Port Chester Non-Serviced Loan Combination” herein. | ||||
With respect to the 32 Old Slip Fee non-serviced loan combination, the MSBAM 2015-C23 controlling class representative (during a MSBAM 2015-C23 subordinate control period) will be entitled to exercise the rights of the controlling note holder under the related intercreditor agreement pursuant to the terms thereof and the MSBAM 2015-C23 pooling and servicing agreement. See “—Special Servicer” above and “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The 32 Old Slip Fee Non-Serviced Loan Combination” herein. | ||||
There is no directing holder with respect to the Alderwood Mall non-serviced loan combination. | ||||
With respect to the Hilton Garden Inn W 54th Street non-serviced loan combination, the holder of the related B note, so long as the principal balance of such B note (as reduced or notionally reduced, as applicable, by the application of payments, losses and appraisal reductions) has not been reduced below 25% of its original principal balance (as reduced by principal payments), or (if the B note does not satisfy such criteria) the MSBAM 2015-C22 controlling class representative (during a MSBAM 2015-C22 subordinate control period), will be the directing holder under the related intercreditor agreement pursuant to the terms thereof and the MSBAM 2015-C22 pooling and servicing agreement. See “—Special Servicer” above and “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The Hilton Garden Inn W 54th Street Non-Serviced Loan Combination” herein. | ||||
See “Risk Factors—Risks Related to the Offered Certificates—Realization on a Mortgage Loan That Is Part of an A/B Whole Loan or Loan Pair May Be Adversely Affected by the Rights of the Related Directing Holder” and “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” in this prospectus supplement. | ||||
Sponsor | Morgan Stanley Mortgage Capital Holdings LLC, a New York limited liability company, is the sponsor of this transaction. As sponsor, Morgan Stanley Mortgage Capital Holdings LLC organized and initiated the issuance of the certificates and will sell mortgage loans to the depositor. The depositor will transfer the mortgage loans to the issuing entity, and the issuing entity will then issue the certificates. See “Transaction Parties—The Sponsor, Mortgage Loan Seller and Originator” in this prospectus supplement and “The Sponsor” and “Other Sponsors, Mortgage Loan Sellers and Originator” in the accompanying prospectus. | |||
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Mortgage Loan Seller | Morgan Stanley Mortgage Capital Holdings LLC will sell us fifty-four (54) mortgage loans, representing 100% of the initial pool balance. See “Transaction Parties—The Sponsor, Mortgage Loan Seller and Originator” in this prospectus supplement. | ||||
Originator | Morgan Stanley Bank, N.A., an affiliate of the mortgage loan seller, originated all of the mortgage loans to be contributed by the mortgage loan seller to this securitization; provided, that one (1) mortgage loan, representing approximately 5.7% of the initial pool balance, was originated by Morgan Stanley Bank, N.A. in conjunction with a third party. See “Transaction Parties—The Sponsor, Mortgage Loan Seller and Originator” in this prospectus supplement. | ||||
Conflicts of Interest | The relationships between the parties to this transaction and the activities of those parties or their affiliates and the relationships between certain other parties may give rise to certain conflicts of interest. These conflicts of interests may arise from, among other things, the following relationships and activities: | ||||
· | the relationships, including financial dealings, of the sponsor, the underwriter, the master servicer, a sub-servicer, the special servicer, the trust advisor or any of their respective affiliates, especially if the master servicer, a sub-servicer, the special servicer, the trust advisor or any of their respective affiliates holds certificates or interests in, or securities backed by, B notes, serviced companion loans or non-serviced companion loans, or has financial interests in or other financial dealings with a borrower or a property sponsor; | ||||
· | the broker-dealer activities of the underwriter and its affiliates, including investing or taking long or short positions in the offered certificates and rendering services to, and engaging in transactions with, the borrowers, the property sponsors and their respective affiliates; | ||||
· | the obligation of the special servicer to take actions at the direction of the controlling class representative and any directing holder; | ||||
· | the ownership of any certificates or interests in, or securities backed by, B notes, mezzanine debt, serviced companion loans or non-serviced companion loans by the depositor, mortgage loan seller, underwriter, master servicer, special servicer, trust advisor or any of their affiliates; | ||||
· | the relationships between the managers of the mortgaged properties and the borrowers, particularly because a substantial number of mortgaged properties are managed by property managers affiliated with the respective borrowers; | ||||
· | the consent and/or consultation rights of the controlling class representative, the trust advisor and any directing holder to certain actions taken by the special servicer; | ||||
· | any opportunity of the B-piece buyer to request the removal, re-sizing or modification of or other changes to the features of some or all of the mortgage loans; and | ||||
· | the activities of the master servicer, a sub-servicer, the special servicer, the trust advisor, the mortgage loan seller or any of their affiliates in connection with any other transaction. | ||||
With respect to any non-serviced mortgage loan, the related master servicer, special servicer and any other entity party to any securitization of the related non-serviced companion loan (or applicable portion thereof) will have similar conflicts of interest, particularly if such entity owns certificates issued pursuant to such securitization. | |||||
See “Risk Factors—Risks Related to Conflicts of Interest” in this prospectus supplement. | |||||
Significant Obligors | There are no significant obligors related to the issuing entity. | ||||
Underwriter | Morgan Stanley & Co. LLC will act as underwriter with respect to the offered certificates. | ||||
Certain Affiliations | Morgan Stanley Mortgage Capital Holdings LLC and its affiliates have several roles in this transaction. Morgan Stanley Mortgage Capital Holdings LLC, the mortgage loan seller and sponsor, is an affiliate of Morgan Stanley Capital I Inc., the depositor, Morgan Stanley Bank, N.A., the originator and the initial holder of a portion of the 32 Old Slip Fee non-serviced companion loan, and Morgan Stanley & Co. LLC, the underwriter and the entity that is expected to be the initial holder of 20.3% of the notional amount of the Class X-A Certificates and 100% of the percentage interests in the Class V Certificates on the closing date. | ||||
Midland Loan Services, a Division of PNC Bank, National Association, will acquire the right to act as master servicer and/or primary servicer (and the related right to receive and retain the excess servicing strip) with respect to the mortgage loans sold to the depositor by the mortgage loan seller pursuant to one or more servicing rights appointment agreements entered into on the closing date. | |||||
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Midland Loan Services, a Division of PNC Bank, National Association, the master servicer, is also the special servicer with respect to this securitization and the current special servicer under the pooling and servicing agreement for the MSBAM 2015-C22 securitization, pursuant to which the 300 South Riverside Plaza Fee, Waterfront at Port Chester and Hilton Garden Inn W 54th Street non-serviced loan combinations are being serviced. | ||||
Midland Loan Services, a Division of PNC Bank, National Association, the special servicer, will be appointed by the entity that is expected to be the initial controlling class representative and that is expected to purchase the Class E, Class F and Class G Certificates on the closing date: DoubleLine Capital LP or an affiliate thereof. An affiliate of the depositor may purchase less than 50% of each such class upon the initial issuance thereof or thereafter; however, such affiliate will not be entitled to act as or appoint the controlling class representative, and any certificates held by such affiliate will not be considered to be outstanding for purposes of determining the identity of the controlling class representative. DoubleLine Capital LP or an affiliate thereof engaged Midland Loan Services, a Division of PNC Bank, National Association as an independent contractor to conduct due diligence with respect to the mortgage loans included in the mortgage pool. | ||||
Wells Fargo Bank, National Association, the trustee, certificate administrator and custodian, is also (i) the current master servicer, certificate administrator and custodian under the pooling and servicing agreement for the MSBAM 2015-C22 securitization, pursuant to which the 300 South Riverside Plaza Fee, Waterfront at Port Chester and Hilton Garden Inn W 54th Street non-serviced loan combinations are being serviced, (ii) the current master servicer, certificate administrator, custodian and excluded mortgage loan special servicer for the MSBAM 2015-C23 securitization, pursuant to which the 32 Old Slip Fee non-serviced loan combination is being serviced and pursuant to which the TKG 3 Retail Portfolio loan pair is being serviced prior to the closing date and (iii) the current certificate administrator and trustee under the trust and servicing agreement for the MSCCG 2015-ALDR securitization, pursuant to which the Alderwood Mall non-serviced loan combination is being serviced. Wells Fargo Bank, National Association is also an affiliate of Wells Fargo Securities, LLC, one of the initial purchasers of the non-offered certificates. | ||||
Pursuant to an interim servicing agreement between Morgan Stanley Mortgage Capital Holdings LLC and certain of its affiliates, on the one hand, and Wells Fargo Bank, National Association, on the other hand, Wells Fargo Bank, National Association acts as interim servicer with respect to certain of the mortgage loans owned from time to time by Morgan Stanley Mortgage Capital Holdings LLC and those affiliates thereof, including, prior to their inclusion in the issuing entity, thirty (30) of the mortgage loans to be contributed by Morgan Stanley Mortgage Capital Holdings LLC to this securitization, representing approximately 75.3% of the initial pool balance. Morgan Stanley Mortgage Capital Holdings LLC is also a party to a custodial agreement with Wells Fargo Bank, National Association, pursuant to which Wells Fargo Bank, National Association acts as interim custodian with respect to the mortgage loan files for the mortgage loans Morgan Stanley Mortgage Capital Holdings LLC is selling to the depositor for this securitization (other than any non-serviced mortgage loans). | ||||
These roles and other potential relationships may give rise to conflicts of interest as further described in this prospectus supplement under “Risk Factors—Risks Related to Conflicts of Interest.” | ||||
Cut-off Date | July 1, 2015. For purposes of the information contained in this prospectus supplement (including the appendices to this prospectus supplement), scheduled payments due in July 2015 with respect to mortgage loans not having payment dates on the first day of each month have been deemed received on July 1, 2015, not the actual day or days on which such scheduled payments were due. | |||
Closing Date | On or about July 8, 2015. | |||
Determination Date | The 11th calendar day of each month, or, if the 11th calendar day is not a business day, the next succeeding business day, commencing in August 2015. | |||
Distribution Date | The 4th business day after the related determination date, commencing in August 2015. The first distribution date will be August 17, 2015. | |||
Record Date | With respect to each distribution date, for each class of offered certificates, the close of business on the last business day of the preceding calendar month. | |||
Expected Final Distribution Dates | The expected final distribution date for each class of offered certificates is set forth on the cover of this prospectus supplement and is the date on which that class is expected to be paid in full (or, in the case of the Class X-A Certificates, the date on which the related notional amount is reduced to zero), assuming no delinquencies, losses, modifications, extensions of maturity dates, repurchases or prepayments of the mortgage loans after the initial issuance of the certificates and according to the structuring assumptions described under “Yield, Prepayment and Maturity Considerations—Weighted Average Life” in this prospectus supplement. Any mortgage loans with anticipated repayment dates are | |||
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assumed to repay in full on those dates. The actual final distribution date for any class of offered certificates may be earlier or later (and could be substantially later) than the expected final distribution date. | |||||
Collection Period | Amounts available for payment on the certificates on any distribution date will depend on the payments and other collections received, and any advances of payments due, on or with respect to the mortgage loans during the related collection period. Each collection period: | ||||
· | will relate to a particular distribution date; | ||||
· | will be approximately one month long; | ||||
· | will begin when the prior collection period ends or, in the case of the first collection period, will begin on the day following the cut-off date; and | ||||
· | will end at the close of business on the determination date immediately preceding the related distribution date. | ||||
Interest Accrual Period | The amount of interest payable with respect to the certificates on any distribution date will be a function of the interest accrued during the related interest accrual period. The interest accrual period for the certificates will be the calendar month immediately preceding the month in which that distribution date occurs. | ||||
Offered Certificates | |||||
General | We are offering the following ten (10) classes of Commercial Mortgage Pass-Through Certificates, Series 2015-MS1 pursuant to this prospectus supplement: Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4, Class X-A, Class A-S, Class B, Class PST and Class C. | ||||
The entire series will consist of a total of sixteen (16) classes, the following six (6) of which are not being offered by this prospectus supplement and the accompanying prospectus: Class D, Class E, Class F, Class G, Class V and Class R. | |||||
The Class A-S, Class B, Class PST and Class C Certificates are offered by this prospectus supplement and the accompanying prospectus, are referred to herein as exchangeable certificates and may be exchanged in the proportions and in the manner described under “Description of the Offered Certificates—Exchangeable Certificates” in this prospectus supplement. | |||||
Certificate Principal Balances | |||||
and Notional Amounts | Subject to the discussion below regarding exchangeable certificates, your certificates will have the approximate aggregate initial certificate principal balance or initial notional amount presented on the cover page of this prospectus supplement, and this certificate principal balance may vary by up to 5% on the closing date. Mortgage loans may be removed from or added to the mortgage pool prior to the closing date within this same maximum permitted variance. Any reduction or increase in the aggregate principal balance of mortgage loans within these parameters will result in changes to the initial certificate principal balance or notional amount, as the case may be, of each class of certificates and to the other statistical data contained in this prospectus supplement. | ||||
The certificate principal balance at any time is the maximum amount of principal distributable with respect to a class of certificates or a trust component and is subject to adjustment on each distribution date to reflect any reductions resulting from (1) distributions of principal to that class or trust component or (2) any allocations of losses and, solely in the case of the certificates that are not Control Eligible Certificates and in the case of the trust components, trust advisor expenses in reduction of the certificate principal balance of that class or trust component. | |||||
The Class X-A Certificates will not have certificate principal balances. Such class of certificates will instead represent the right to receive distributions of interest accrued on a notional amount as described in thisprospectus supplement. The notional amount of the Class X-A Certificates will be equal to the aggregate principal balance of the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates outstanding from time to time. | |||||
Accordingly, the notional amount of the Class X-A Certificates will be reduced on each distribution date by any distributions of principal actually made on, and any losses and/or expenses actually allocated to any related class of the Class A-1, Class A-2, Class A-SB, Class A-3 or Class A-4 Certificates and in each case, outstanding from time to time. | |||||
The maximum principal balance of the Class PST Certificates is set forth on the cover page of this prospectus supplement but is not included in the aggregate certificate principal balance of the offered certificates set forth on the cover page and back cover of this prospectus supplement. The maximum certificate principal balance of each class of the Class A-S, Class B and Class C Certificates is set forth on the cover page of this prospectus supplement and is included in the aggregate certificate principal balance of the | |||||
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offered certificates set forth on the cover page and back cover of this prospectus supplement. On the closing date, the certificate principal balances of the Class A-S, Class B, Class PST and Class C Certificates will be $52,019,000, $70,834,000, $0 and $32,097,000, respectively. | ||||
Pass-Through Rates | Your certificates (other than any Class PST Certificates) will accrue interest at an annual rate called a pass-through rate. The approximate initial pass-through rate for each class of offered certificates is set forth on the cover page of this prospectus supplement. | |||
Interest on the offered certificates will be calculated on the basis of a 360-day year consisting of twelve (12) 30-day months, also referred to in this prospectus supplement as a 30/360 basis. | ||||
The pass-through rates for the Class A-1, Class A-2, Class A-SB and Class A-3 Certificates will at all times be fixed at their respective initial pass-through rates set forth on the cover page of this prospectus supplement. The pass-through rate for the Class A-4 Certificates will at all times be a per annum rate equal to the lesser of (i) 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 (12) 30-day months) and (ii) 3.779%. The pass-through rate for each class of the Class A-S, Class B and Class C Certificates will at all times be a per annum rate equal to 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 (12) 30-day months). The Class PST Certificates will not have a pass-through rate, but will be entitled to receive the sum of the interest distributable on its percentage interests in the Class A-S, Class B and Class C trust components. The pass-through rates for the Class A-S Certificates and the Class A-S trust component will, at all times, be the same. The pass-through rates for the Class B Certificates and the Class B trust component will, at all times, be the same. The pass-through rates for the Class C Certificates and the Class C trust component will, at all times, be the same. | ||||
The pass-through rate for each class of the Class D, Class E, Class F and Class G Certificates will at all times be a per annum rate equal to 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 (12) 30-day months). | ||||
For purposes of calculating the weighted average of the net interest rates on the mortgage loans for a particular distribution date in connection with determining the respective pass-through rates on the certificates (other than the Class PST, Class V and Class R Certificates): (i) the relevant weighting is based upon the respective stated principal balances (as described under “Description of the Offered Certificates—Pass-Through Rates” in this prospectus supplement) of the mortgage loans as in effect immediately prior to the relevant distribution date, (ii) the mortgage interest rate on each mortgage loan is reduced by the related annual administrative fee rate, which includes the master servicing fee rate, the trust advisor fee rate, the certificate administrator fee rate (which includes the trustee fee rate and the custodian fee rate) and the CREFC® license fee rate, (iii) the mortgage loan interest rates will not reflect any increase therein as a result of a continuing default or, if applicable, a mortgage loan remaining outstanding past its anticipated repayment date (if any), (iv) the mortgage loan interest rates will also be determined without regard to any loan term modifications agreed to by the special servicer or resulting from any borrower’s bankruptcy or insolvency, and (v) if a mortgage loan does not accrue interest on a 30/360 basis, its interest rate for any month will, in general, be deemed to be the rateper annum that, when calculated on a 30/360 basis, will produce the amount of interest that accrues on an actual/360 basis on that mortgage loan in that month, at the related mortgage interest rate minus the related administrative fee rate (taking into account certain interest reserve adjustments for distribution dates in January, February and March). | ||||
The pass-through rate for the Class X-A Certificates for any distribution date will equal the weighted average of the applicable Class X strip rates for the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates for such distribution date (weighted on the basis of the respective principal balances of such classes of certificates immediately prior to such distribution date). | ||||
The applicable Class X strip rate with respect to each class of the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates, for any distribution date will be aper annum rate equal to the excess, if any, of (a) the weighted average of the net interest rates on the mortgage loans for such distribution date (in each case, adjusted, if necessary, to accrue on the basis of a 360-day year consisting of twelve (12) 30-day months), over (b) the pass-through rate for such distribution date for such class of certificates. Under no circumstances will any Class X strip rate be less than zero. | ||||
Exchanging Certificates through | ||||
Combination and Recombination | If you own exchangeable certificates in an exchange proportion that we describe in this prospectus supplement, you will be able to exchange them for a proportionate interest in the related exchangeable certificates. You can exchange your exchangeable certificates by notifying the certificate administrator. If exchangeable certificates are outstanding and | |||
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held by certificateholders, those certificates will receive principal and interest that would otherwise have been payable on the same proportion of certificates exchanged therefor if those certificates were outstanding and held by certificateholders. Any such allocations of principal and interest as between classes of exchangeable certificates will have no effect on the principal or interest entitlements of any other class of certificates. Exchanges will be subject to various conditions that we describe in this prospectus supplement. | ||||||
See “Description of the Offered Certificates—Exchangeable Certificates” in this prospectus supplement and “Description of the Certificates—Depositable and Exchangeable Certificates” in the accompanying prospectus for a description of the exchangeable certificates and exchange procedures. See also “Risk Factors—Risks Related to the Offered Certificates—The Exchangeable Certificates Are Subject to Additional Risks” in this prospectus supplement. | ||||||
Distributions | ||||||
A. | Amount and Order of Distributions | On each distribution date, you will be entitled to receive interest and principal distributed from funds available for distribution from the mortgage loans. Funds available for distribution to the certificates will be net of excess interest, excess liquidation proceeds and specified trust expenses, including all advance reimbursements (with interest) and all servicing fees and expenses, certificate administrator fees (which include the trustee fees and custodian fees) and expenses, special servicer compensation and trust advisor fees (with respect to any trust advisor consulting fee, solely to the extent that such fee is actually received from the related borrower) and expenses and CREFC® license fees as set forth below. Distributions to you will be in an amount equal to your certificate’s interest and principal entitlement, subject to: | ||||
(i) | payment of the respective interest entitlement for any other class of certificates bearing an earlier alphanumeric designation (except in respect of the distribution of interest (x) among the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4 and Class X-A Certificates, which will have the same senior priority and be distributedpro rata, and (y) to the Class PST Certificates, which will be entitled to receive distributions of interest in respect of the components comprising the Class PST Certificates,pro ratawith each of the Class A-S, Class B and Class C Certificates to the extent of their respective percentage interests in the Class A-S, Class B and Class C trust components); | |||||
(ii) | if applicable, payment of the respective principal entitlement for the distribution date to the outstanding classes of principal balance certificates,first, to the Class A-SB Certificates, until the principal balance of such class has been reduced to the planned principal balance for the related distribution date set forth on Appendix VII hereto,then, to the Class A-1 Certificates, to the Class A-2 Certificates, to the Class A-3 Certificates, to the Class A-4 Certificates and to the Class A-SB Certificates, in that order, until the principal balance of each such class has been reduced to zero (or, if the principal balance of each class of principal balance certificates other than the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates has been reduced to zero as a result of the allocation of mortgage loan losses or trust advisor expenses to those certificates, or if the aggregate appraisal reduction equals or exceeds the aggregate certificate principal balance of the Class A-S through Class G Certificates (including the Class PST Certificates), then on apro rata basis among the holders of the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates),then, to the Class A-S, Class B and Class C Certificates, in that order, in each casepro ratawith the Class PST Certificates based on their respective percentage interests in the Class A-S, Class B and Class C trust components, respectively, andthen, to the Class D, Class E, Class F and Class G Certificates, in that order, until the principal balance of each such class has been reduced to zero; and | |||||
(iii) | the allocation of trust advisor expenses, (i) first, to reduce payments of interest on the Class D Certificates, the Class C Certificates and the Class PST Certificates (pro rata based on their respective percentage interests in the Class C trust component), and the Class B Certificates and the Class PST Certificates (pro ratabased on their respective percentage interests in the Class B trust component), in that order, (ii) second, to reduce payments of principal on the Class D Certificates, the Class C Certificates and the Class PST Certificates (pro ratabased on their respective percentage interests in the Class C trust component), the Class B Certificates and the Class PST Certificates (pro ratabased on their respective percentage interests in the Class B trust component) and the Class A-S Certificates and the Class PST Certificates (pro ratabased on their respective percentage interests in the Class A-S trust component), in that order, and (iii) third, to reduce payments of principal on the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates on apro ratabasis. | |||||
No trust advisor expenses (other than the trust advisor fee) will be allocated to or otherwise borne by the Control Eligible Certificates. As a result, no class of Control Eligible | ||||||
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Certificates will provide protection to the more senior classes of certificates for the purposes of allocating losses based on trust advisor expenses. See “Servicing of the Mortgage Loans—The Trust Advisor” and “Description of the Offered Certificates—Distributions—Allocation of Trust Advisor Expenses” in this prospectus supplement. | ||||||
Each certificateholder will receive its share of distributions on its class of certificates on apro rata basis with all other holders of certificates of the same class. See “Description of the Offered Certificates—Distributions” in this prospectus supplement. | ||||||
B. | Interest and Principal Entitlements | A description of the interest entitlement, if any, payable to each class is presented under “Description of the Offered Certificates—Distributions” in this prospectus supplement. As described in that section, there are circumstances relating to the timing of prepayments 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 balance (or, with respect to a Class PST Certificate, the pass-through rates on the principal balances of the components comprising the Class PST Certificates). In addition, the right of the master servicer, the special servicer and the trustee to reimbursement for payment of advances (with interest thereon) and the right of such parties, the certificate administrator, the custodian and, subject to certain limitations, the trust advisor to the payment of compensation and reimbursement of certain costs and expenses will be prior to your right to receive distributions of principal or interest. In addition, the right of the trust advisor to receive reimbursement of trust advisor expenses will be senior to the right of the holders of the Class B, Class PST, Class C and Class D Certificates to receive payments of interest, and to the right of the holders of the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4, Class A-S, Class B, Class PST, Class C and Class D Certificates to receive payments of principal. The Class V, Class R and Class X-A Certificates will not be entitled to principal distributions. | ||||
The total amount of principal required to be distributed on the classes and, without duplication, trust components, entitled to principal on a particular distribution date will, in general, subject to adjustment for trust advisor indemnifications and expenses, nonrecoverable advances and workout-delayed reimbursement amounts, be equal to the sum of: | ||||||
· | the principal portion of all scheduled payments, other than balloon payments, to the extent received during the related collection period or advanced by the master servicer or other party (in accordance with the pooling and servicing agreement) in respect of such distribution date; | |||||
· | all principal prepayments and, to the extent not previously advanced, the principal portion of balloon payments received during the related collection period; | |||||
· | the principal portion of other collections on the mortgage loans received during the related collection period (for example, liquidation proceeds, condemnation proceeds, insurance proceeds and income on “real estate owned”), net of any portion thereof that constitutes late collections of principal in respect of the related mortgage loan as to which there is an outstanding advance; and | |||||
· | the principal portion of proceeds of mortgage loan repurchases received during the related collection period, net of any portion thereof that constitutes late collections of principal in respect of the related mortgage loan as to which there is an outstanding advance. | |||||
See the definition of “Principal Distribution Amount” under “Description of the Offered Certificates—Distributions” in this prospectus supplement. | ||||||
On each distribution date, the Class PST Certificates will be entitled to receive a proportionate share of the amounts distributable on the related trust components, and therefore, of the amounts that would otherwise have been distributed as interest and principal payments on the Class A-S, Class B and Class C Certificates had an exchange not occurred, as described under “Description of the Offered Certificates—Exchangeable Certificates” in this prospectus supplement. Any such allocations of principal and interest as between the Class PST Certificates, on the one hand, and the Class A-S, Class B and Class C Certificates, on the other, will have no effect on the principal or interest entitlements of any other class of certificates. | ||||||
C. | Servicing and Administration Fees | The master servicer and the special servicer are entitled to a master servicing fee and a special servicing fee, respectively, payable from general collections on the mortgage loans, the serviced companion loans and any B notes serviced under the pooling and servicing agreement for this securitization (each such B note sometimes being referred to in this prospectus supplement as a “serviced B note”). The master servicing fee for each distribution date is calculated based on the outstanding principal balance of each mortgage loan and any related serviced B note or serviced companion loan (and in each case including any deemed mortgage loan, serviced B note or serviced companion loan as to which the related mortgaged property has become an REO property) at a rate equal to (i) |
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with respect to each mortgage loan(other than the 300 South Riverside Plaza Fee mortgage loan, the 32 Old Slip Fee mortgage loan, the Waterfront at Port Chester mortgage loan, the Alderwood Mall mortgage loan and the Hilton Garden Inn W 54th Street mortgage loan), 0.0050%per annum plus the primary servicing fee rate set forth next to such mortgage loan on Appendix I to this prospectus supplement, (ii) with respect to the TKG 3 Retail Portfolio serviced companion loan, 0.0050%per annum, and (iii) with respect to the 300 South Riverside Plaza Fee mortgage loan, the 32 Old Slip Fee mortgage loan, the Waterfront at Port Chester mortgage loan, the Alderwood Mall mortgage loan and the Hilton Garden Inn W 54th Street mortgage loan, 0.0050%per annum. In addition, the master servicer under the MSBAM 2015-C22 transaction will be paid a primary servicing fee in respect of the 300 South Riverside Plaza Fee mortgage loan, the Waterfront at Port Chester mortgage loan and the Hilton Garden Inn W 54th Street mortgage loan at a rate equal to the relatedpari passu primary servicing fee rate (0.0050%per annum), the master servicer under the MSBAM 2015-C23 transaction will be paid a primary servicing fee in respect of the 32 Old Slip Fee mortgage loan at a rate equal to the relatedpari passu primary servicing fee rate (0.0050%per annum) and the master servicer under the MSCCG 2015-ALDR transaction will be paid a primary servicing fee in respect of the Alderwood Mall mortgage loan at a rate equal to the relatedpari passu primary servicing fee rate (0.0050%per annum). The special servicing fee for each distribution date is calculated based on the outstanding principal balance of each mortgage loan (other than any non-serviced mortgage loan), serviced B note and serviced companion loan that is being specially serviced or as to which the related mortgaged property has become an REO property, at the special servicing fee rate, which is equal to 0.25%per annum. Any primary servicing fee or sub-servicing fee (other than with respect to any non-serviced mortgage loan) will be paid by the master servicer or special servicer, as applicable, out of the fees described above. The master servicer and special servicer are also entitled to additional fees and amounts, including, without limitation, income on the amounts held in permitted investments. The special servicer will also be entitled, except in connection with non-serviced mortgage loans, to (i) liquidation fees generally equal to 1.0% of liquidation proceeds in respect of a specially serviced mortgage loan (and any related serviced B note or serviced companion loan) or REO property and (ii) workout fees generally equal to 1.0% of interest and principal payments made in respect of a rehabilitated mortgage loan (and any related serviced B note or serviced companion loan), subject to a cap with respect to each such fee of $1,000,000 with respect to any mortgage loan, loan pair, non-serviced loan combination, A/B whole loan or REO property and subject to certain adjustments and exceptions as described herein under “Servicing of the Mortgage Loans—The Special Servicer—Special Servicer Compensation.” | |||||
The special servicer under the MSBAM 2015-C22 securitization (with respect to the 300 South Riverside Plaza Fee, Waterfront at Port Chester and Hilton Garden Inn W 54th Street mortgage loans), the special servicer under the MSBAM 2015-C23 securitization (with respect to the 32 Old Slip Fee mortgage loan) and the special servicer under the MSCCG 2015-ALDR securitization (with respect to the Alderwood Mall mortgage loan) will be entitled to similar compensation if the related mortgage loan becomes specially serviced or if the related mortgaged property becomes REO property, although in any such case any related fees may accrue at a different rate and there may be a higher cap (or no cap) on workout fees and/or liquidation fees. | |||||
The trust advisor will be entitled to the trust advisor fee for each distribution date, calculated based on the outstanding principal balance of each mortgage loan (other than any non-serviced mortgage loan) in the issuing entity at the trust advisor fee rate, which will equal (i) 0.0027%per annum with respect to each such mortgage loan (other than the TKG 3 Retail Portfolio mortgage loan) and (ii) 0.0064%per annumwith respect to the TKG 3 Retail Portfolio mortgage loan. In addition, the trust advisor will be entitled to a consulting fee equal to $10,000 (or such lesser amount as the related borrower agrees to pay) with respect to each major decision relating to a mortgage loan (other than any non-serviced mortgage loan), A/B whole loan or loan pair as to which the trust advisor has consultation rights, in each case to the extent that such fee is actually received from the related borrower;provided, that the aggregate amount of such consulting fees with respect to any such mortgage loan, A/B whole loan or loan pair, as applicable, will not exceed $10,000 in any calendar year. See “Servicing of the Mortgage Loans—The Trust Advisor” in this prospectus supplement. | |||||
The certificate administrator is entitled to a certificate administrator fee payable from general collections on the mortgage loans, which for each distribution date is calculated on the outstanding principal balance of each mortgage loan at the certificate administrator fee rate, which is equal to 0.0045%per annum. The trustee fee and the custodian fee for each distribution date is a portion of the certificate administrator fee. | |||||
A license fee equal to 0.0005%per annum (calculated on the outstanding principal balance of each mortgage loan) will be payable to CREFC® from general collections on the mortgage loans (to the extent any funds are remaining in the collection account after the payment of fees and expenses to the trustee, the certificate administrator, the master servicer, the special servicer and the trust advisor). | |||||
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Each of the master servicing fee, the special servicing fee, the trust advisor fee, the certificate administrator fee and the CREFC® license fee will be calculated on the same interest accrual basis as is interest on the related mortgage loan and will be prorated for any partial period. Such fees, as well as the liquidation fee, the workout fee and the trust advisor consulting fee (to the extent that such fee is actually received from the related borrower), will be paid from the collection account prior to distributions to certificateholders of the available distribution amount as described under “Servicing of the Mortgage Loans—Withdrawals from the Collection Account” and “Transaction Parties—The Trustee, Certificate Administrator and Custodian,” “—The Master Servicer and the Special Servicer” and “—The Trust Advisor” in this prospectus supplement. All of the parties to the pooling and servicing agreement will also have certain rights to reimbursement for certain expenses by the issuing entity. See “Servicing of the Mortgage Loans—The Master Servicer—Master Servicer Compensation,” “—The Special Servicer—Special Servicer Compensation,” “Description of the Offered Certificates—Matters Regarding the Certificate Administrator” and “Description of the Offered Certificates—The Trustee—Trustee Compensation” in this prospectus supplement. | ||||||
The administrative fee rate will be the sum of the master servicing fee rate, the trust advisor fee rate, the certificate administrator fee rate and the CREFC® license fee rate, and is set forth on Appendix I to this prospectus supplement for each mortgage loan. The administrative fee rate with respect to any non-serviced mortgage loan will also include any servicing fee payable to the applicable servicer under the related pooling and servicing agreement or trust and servicing agreement, as applicable. | ||||||
D. | Amortization, Liquidation | |||||
and Payment Triggers | Because of losses on the underlying mortgage loans and/or default-related or other unanticipated expenses of the issuing entity, the certificate principal balance of the Class A-S through Class GCertificates (including the Class PST Certificates) could be reduced to zero, or because of a decline in mortgaged property values, the aggregate appraisal reduction may equal or exceed the aggregate certificate principal balance of the Class A-S through Class G Certificates (including the Class PST Certificates), in any event at a time when the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates, or any two or more classes of those certificates, remain outstanding. Under those circumstances, any distributions of principal on the outstanding Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates will be made on apro rata basis, rather than sequentially, in accordance with their respective certificate principal balances. | |||||
E. | Prepayment Premiums/Yield | |||||
Maintenance Charges | The manner in which any prepayment premiums and yield maintenance charges received in respect of the mortgage loans during a particular collection period will be allocated to the Class X-A Certificates, on the one hand, and the classes of certificates entitled to principal, on the other hand, as well as between the various classes of certificates entitled to principal, is described in “Description of the Offered Certificates—Distributions” in this prospectus supplement. | |||||
F. | Excess Interest | On each Distribution Date, any collections of “excess interest” on mortgage loans with anticipated repayment dates (that is, certain additional interest that accrues if the mortgage loan is not repaid in full by its anticipated repayment date) will be distributed to the holders of the Class V Certificates on the related distribution date. Excess interest will not be available to make distributions to any other class of certificates or to provide credit support for other classes of certificates or offset any interest shortfalls or to pay any other amounts to any other party under the pooling and servicing agreement. | ||||
Subordination | ||||||
A. | General | The chart below describes the manner in which the rights of various classes will be senior to the rights of other classes. Entitlement to receive principal and interest (other than excess liquidation proceeds and certain excess interest in connection with any mortgage loan having an anticipated repayment date) on any distribution date is depicted in descending order. The manner in which mortgage loan losses are allocated is depicted in ascending order (including interest losses, other than losses with respect to certain “excess interest” in connection with any mortgage loan having an anticipated repayment date). | ||||
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No other form of credit enhancement will be available to you as a holder of certificates. | |||||
* | Interest only certificates. No principal payments or realized loan losses in respect of principal will be allocated to the Class X-A Certificates. However, mortgage loan losses will reduce the notional amount of the Class X-A Certificates to the extent such losses reduce the principal amount of the related classes of principal balance certificates. | ||||
** | Distributions of principal and interest and allocations of mortgage loan losses to the Class A-S trust component will be made pro rata to the Class A-S Certificates and the Class PST Certificates in proportion to their respective percentage interests in the Class A-S trust component. Distributions of principal and interest and allocations of mortgage loan losses to the Class B trust component will be made pro rata to the Class B Certificates and the Class PST Certificates in proportion to their respective percentage interests in the Class B trust component. Distributions of principal and interest and allocations of mortgage loan losses to the Class C trust component will be made pro rata to the Class C Certificates and the Class PST Certificates in proportion to their respective percentage interests in the Class C trust component. See “Description of the Offered Certificates—Distributions” in this prospectus supplement. | ||||
*** | Other than the Class V and Class R Certificates. The Class V and Class R Certificates will not be entitled to distributions of principal and interest (other than, with respect to the Class V Certificates, certain excess interest) and will be entitled to receive only such distributions as are described under “Description of the Offered Certificates—Distributions” in this prospectus supplement. | ||||
Principal losses on the mortgage loans allocated to a class of certificates or trust component will reduce the certificate principal balance of such class or trust component. No such losses will be allocated to the Class V, Class R or Class X-A Certificates, although loan losses will reduce the respective notional amounts of the Class X-A Certificates (to the extent such losses are allocated to the Class A-1, Class A-2, Class A-SB, Class A-3 or Class A-4 Certificates) and, therefore, the amount of interest they accrue. To the extent funds are available on a subsequent distribution date for distribution on your certificates, you will be reimbursed for any losses allocated to your certificates with interest at the pass-through rate on your certificates (or, with respect to the Class PST Certificates, the pass-through rates on the related components comprising the Class PST Certificates). | |||||
In addition, any trust advisor expenses that are in excess of trust advisor expenses that are allocated to reduce the payment of interest on the Class B trust component (and correspondingly, the Class B and Class PST Certificates,pro rata based on their respective percentage interests in the Class B trust component), the Class C trust component (and correspondingly, the Class C and Class PST Certificates,pro rata based on their respective percentage interests in the Class C trust component) and the Class D Certificates will be allocated to reduce the principal balances of the certificates and trust components in the following order: to the Class D Certificates, the Class C trust component (and correspondingly, the Class C and Class PST Certificates,pro ratabased on their respective percentage interests in the Class C trust component), the Class B trust component (and correspondingly, the Class B and Class PST Certificates,pro ratabased on their respective percentage interests in the Class B trust component) and the Class A-S trust component (and correspondingly, the Class A-S and Class PST Certificates,pro ratabased on their respective percentage interests in the Class A-S trust component), in each case, until the remaining principal balance of such class of certificates or trust component, as applicable, has been reduced to zero. Following the reduction of the principal balances of the foregoing classes of principal balance certificates and trust components to zero, such excess trust advisor expenses will then be allocated among the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates,pro rata(based upon their respective certificate principal balances), until the remaining certificate principal balances of such classes of certificates have been reduced to zero. | |||||
In addition to losses caused by mortgage loan defaults, shortfalls in payments to holders of certificates may occur as a result of the master servicer’s, the special servicer’s and the trustee’s right to receive payments of interest on unreimbursed advances (to the extent not |
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covered by default interest and late payment charges or certain other fees paid by the related borrower or other borrowers that are not paid to the master servicer or the special servicer as compensation or, in the case of the Alderwood Mall non-serviced loan combination or the Hilton Garden Inn W 54th Street non-serviced loan combination, borne by the related B note(s)), the special servicer’s right to compensation with respect to mortgage loans which are or have been serviced by the special servicer, a modification of a mortgage loan’s interest rate or principal balance or as a result of other unanticipated expenses of the issuing entity. These shortfalls, if they occur, would reduce distributions to the classes of certificates or trust components with the lowest payment priorities (except that any such shortfalls would be allocated to each class of the Class A-S, Class B and Class C Certificates,pro ratawith the Class PST Certificates based on their respective percentage interests of the principal balance of the related trust component). In addition, prepayment interest shortfalls that are not covered by certain compensating interest payments made by the master servicer are required to be allocated to all of the classes of interest-bearing certificates (other than the Class A-S, Class B, Class PST and Class C Certificates) and the trust components, on apro rata basis, to reduce the amount of interest payable on such certificates and the trust components. Any such amounts allocated to the Class A-S, Class B or Class C trust component will correspondingly be allocated between the Class A-S, Class B or Class C Certificates, as applicable, on the one hand, and the Class PST Certificates, on the other,pro ratabased on their respective percentage interests of the principal balance of the Class A-S, Class B or Class C trust component, as the case may be. | ||||||
Notwithstanding the foregoing, upon liquidation of any mortgage loan, all liquidation proceeds, net of unreimbursed advances and interest thereon, servicing compensation, and other amounts payable or reimbursable therefrom, will be applied so that amounts allocated as a recovery of accrued and unpaid interest will not, in the first instance, include any amount by which the interest portion of P&I advances previously made was reduced as a result of appraisal reductions. After the adjusted interest amount is so allocated, any remaining net liquidation proceeds will be allocated to pay principal on the mortgage loan until the unpaid principal amount of the mortgage loan has been reduced to zero. Any remaining liquidation proceeds would then be allocated as a recovery of accrued and unpaid interest corresponding to the amount by which the interest portion of P&I advances previously made was reduced as a result of appraisal reductions. | ||||||
B. | Shortfalls in Available Funds | The following types of shortfalls in available funds will reduce amounts available for distribution and will be allocated in the same manner as mortgage loan losses: | ||||
· | shortfalls resulting from compensation that the special servicer is entitled to receive; | |||||
· | shortfalls resulting from interest on advances made by the master servicer, the special servicer or the trustee, to the extent not covered by default interest, late payment charges, excess liquidation proceeds or certain other fees paid by the borrower or other borrowers that are not paid to the master servicer or the special servicer as compensation; | |||||
· | shortfalls due to nonrecoverable advances being reimbursed from principal and/or interest collections; | |||||
· | shortfalls resulting from items relating to a non-serviced mortgage loan similar to the preceding bullets arising under and pursuant to the pooling and servicing agreement pursuant to which such non-serviced mortgage loan is serviced; and | |||||
· | shortfalls resulting from a reduction of a mortgage loan’s interest rate or principal amount by a bankruptcy court or other modification or from other unanticipated, extraordinary or default-related expenses of the issuing entity; | |||||
provided,that shortfalls in available funds resulting from any of the foregoing with respect to a loan pair, an A/B whole loan or a non-serviced loan combination may be borne, in whole or in part, by a related serviced companion loan, B note or non-serviced companion loan as and to the extent described under “Description of the Mortgage Pool—The A/B Whole Loans and the LoanPairs” and“—The Non-Serviced Loan Combinations” in this prospectus supplement. | ||||||
Information About The Mortgage Pool | ||||||
Characteristics of the Mortgage Pool | ||||||
A. | General | All numerical information in this prospectus supplement concerning the mortgage loans is approximate. All weighted average information regarding the mortgage loans reflects the weighting of the mortgage loans based upon their outstanding principal balances as of the cut-off date. With respect to mortgage loans not having due dates on the first day of each month, scheduled payments due in July 2015 have been deemed received on July 1, 2015. | ||||
When information presented in this prospectus supplement with respect to mortgaged properties is expressed as a percentage of the initial pool balance, the percentages are |
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based upon the cut-off date principal balances of the related mortgage loans or, with respect to an individual property securing a multi-property mortgage loan (other than through cross-collateralization of that mortgage loan with other mortgage loans), the portions of those loan balances allocated to such properties. The allocated loan amount for each such mortgaged property securing a multi-property mortgage loan is set forth on Appendix I to this prospectus supplement. | ||||||
With respect to mortgage loans that are cross-collateralized and cross-defaulted with one or more other mortgage loans, the information regarding those mortgage loans is presented as if each of them were secured only by the related mortgaged property identified on Appendix I to this prospectus supplement, except that loan-to-value ratio, debt service coverage ratio, debt yield and cut-off date balance per square foot information is presented for a cross-collateralized group on an aggregate basis in the manner described in this prospectus supplement. | ||||||
Each of the mortgaged properties identified on Appendix I to this prospectus supplement as TKG 3 Retail Portfolio, 300 South Riverside Plaza Fee, 32 Old Slip Fee and Waterfront at Port Chester, securing mortgage loans representing approximately 9.0%, 7.6%, 6.8% and 6.0%, respectively, of the initial pool balance, also secures apari passu companion loan that is not included in the issuing entity. The debt service coverage ratio, loan-to-value ratio and debt yield for each such mortgage loan have been calculated based on the subject mortgage loan together with the relatedpari passu companion loan. | ||||||
Each of the mortgaged properties identified on Appendix I to this prospectus supplement as Alderwood Mall and Hilton Garden Inn W 54th Street, securing mortgage loans representing approximately 5.7% and 4.5%, respectively, of the initial pool balance, also secures apari passu non-serviced companion loan and one or more subordinate B notes, each of which is not included in the issuing entity, the debt service coverage ratio, loan-to-value ratio and debt yield for each such mortgage loan have been calculated based on the subject mortgage loan together with the relatedpari passu non-serviced companion loan and without regard to any related subordinate B note. | ||||||
B. | Principal Balances | The issuing entity’s primary assets will be fifty-four (54) mortgage loans with an aggregate principal balance as of the cut-off date (referred to in this prospectus supplement as the “initial pool balance”) of approximately $885,426,724. It is possible that the initial pool balance will vary by up to 5% on the closing date. As of the cut-off date, the principal balance of the mortgage loans in the mortgage pool ranged from approximately $1,900,000 to approximately $80,000,000, and the mortgage loans had an approximate average balance of $16,396,791. | ||||
C. | Fee Simple/Leasehold | Fifty-eight (58) mortgaged properties, representing approximately 98.9% of the initial pool balance by allocated loan amount, are each subject to a mortgage, deed of trust or similar security instrument that creates a first mortgage lien on a fee simple estate in the entire related mortgaged property. Two (2) of such fifty-eight (58) mortgaged properties, representing approximately 14.3% of the initial pool balance by allocated loan amount, are each comprised of a fee interest in land subject to a ground lease (or air rights subject to an air rights lease). In each such case, the related leasehold estate is not collateral for the mortgage loan included in the issuing entity and is operated as an office property. See “Risk Factors—Risks Related to the Mortgage Loans—Leased Fee Properties Entail Risks that May Adversely Affect Payments on Your Certificates” in this prospectus supplement. One (1) of such fifty-eight (58) mortgaged properties, representing approximately 6.0% of the initial pool balance by allocated loan amount, is subject to a mortgage, deed of trust or similar security instrument that creates a first mortgage lien on both the borrower’s leasehold interest in the entire related mortgaged property and on the corresponding fee interest of the ground lessor in such mortgaged property, which we have treated as simply an encumbered fee interest. One (1) mortgaged property, representing approximately 1.1% of the initial pool balance by allocated loan amount, is subject to a mortgage, deed of trust or similar security instrument that creates a first mortgage lien solely on a leasehold interest in the entire related mortgaged property. | ||||
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D. | Property Types | The number of mortgaged properties, and the approximate percentage of the initial pool balance secured by, mortgaged properties operated primarily for each indicated purpose are as described in the table below: | |||||||||
Property Type | Percentage of Initial Pool Balance(1) | Number of Mortgaged Properties | |||||||||
Retail | 41.9% | 29 | |||||||||
Multifamily | 16.7% | 12 | |||||||||
Leased Fee(2) | 14.3% | 2 | |||||||||
Hospitality | 8.7% | 5 | |||||||||
Mixed Use | 8.0% | 4 | |||||||||
Office | 6.4% | 4 | |||||||||
Industrial | 2.2% | 1 | |||||||||
Self Storage | 1.7% | 2 | |||||||||
(1) | Because this table presents information relating to the mortgaged properties and not the mortgage loans, the information for any mortgaged property that relates to a mortgage loan secured by more than one mortgaged property (other than by cross-collateralization with another mortgage loan) is based on allocated loan amounts (which amounts, if not specified in the related mortgage loan documents, are based on the appraised values and/or square footage of each mortgaged property and/or each mortgaged property’s underwritten net cash flow). | ||||||||||
(2) | One (1) of such mortgaged properties, representing approximately 7.6% of the initial pool balance by allocated loan amount, is comprised of a fee interest in air rights subject to an air rights lease granted by the borrower to another party, which party owns the improvements. The related leasehold estate is not collateral for the mortgage loan included in the issuing entity and is operated as an office property. The other such mortgaged property, representing approximately 6.8% of the initial pool balance by allocated loan amount, is comprised of a fee interest in land rights subject to a ground lease granted by the borrower to another party, which party owns the improvements. The related leasehold estate is not collateral for the mortgage loan included in the issuing entity and is operated as an office property. | ||||||||||
E. | Property Location | The number of mortgaged properties, and the approximate percentage of the initial pool balance secured by mortgaged properties, located in geographic areas with a 5% or greater concentration of mortgaged properties (by allocated loan amount) are as described in the table below: | |||||||||
Geographic Area | Percentage of Initial Pool Balance(1) | Number of Mortgaged Properties | |||||||||
New York | 26.4% | 6 | |||||||||
California | 20.9% | 13 | |||||||||
Illinois | 8.9% | 3 | |||||||||
Washington | 8.4% | 3 | |||||||||
Texas | 6.7% | 8 | |||||||||
Florida | 6.2% | 6 | |||||||||
(1) | Because this table presents information relating to the mortgaged properties and not the mortgage loans, the information for any mortgaged property that relates to a mortgage loan secured by more than one mortgaged property (other than by cross-collateralization with another mortgage loan) is based on allocated loan amounts (which amounts, if not specified in the related mortgage loan documents, are based on the appraised values and/or square footage of each mortgaged property and/or each mortgaged property’s underwritten net cash flow). | ||||||||||
The remaining mortgaged properties are located throughout sixteen (16) other states. None of these property locations has a concentration of mortgaged properties that represents security for more than 3.8% of the initial pool balance. | |||||||||||
F. | Other Mortgage Loan Features | As of the cut-off date, the mortgage loans had the following characteristics: | |||||||||
· | The most recent scheduled payment of principal and interest on any mortgage loan was not thirty (30) days or more past due, and no mortgage loan had been thirty (30) days or more past due in the twelve-month period immediately preceding the cut-off date. | ||||||||||
· | Six (6) groups of mortgage loans, representing approximately 3.6%, 2.4%, 1.9%, 1.7%, 0.6% and 0.6%, respectively, of the initial pool balance, were made to the same borrower or to borrowers that are affiliated with one another through partial or complete direct or indirect common ownership and, in general, have related mortgaged properties that are commonly managed. One (1) of these groups of mortgage loans, representing approximately 1.7% of the initial pool balance, is also cross-collateralized and cross-defaulted. See Appendix I to this prospectus supplement. | ||||||||||
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· | Six (6) mortgaged properties, representing approximately 6.1% of the initial pool balance by allocated loan amount, are each entirely, or almost entirely, leased to a single tenant. | ||||||
· | All of the mortgage loans bear interest at fixed rates. | ||||||
· | Fixed periodic payments on the mortgage loans are generally determined assuming interest is calculated on a 30/360 basis, but interest actually accrues and is applied on certain mortgage loans on an actual/360 basis. Accordingly, there will be less amortization of the principal balance during the term of these mortgage loans, resulting in a higher final payment on these mortgage loans. | ||||||
· | No mortgage loan permits negative amortization or the deferral of accrued interest (except excess interest that would accrue in the case of any mortgage loan having an anticipated repayment date after the applicable anticipated repayment date for the related mortgage loan). | ||||||
G. | Balloon Loans/ARD Loans | Fifty-three (53) of the mortgage loans, representing approximately 98.2% of the initial pool balance, are “balloon loans.” For purposes of this prospectus supplement, we consider a mortgage loan to be a “balloon loan” if its principal balance is not scheduled to be fully or substantially amortized by the mortgage loan’s stated maturity date or anticipated repayment date. As of the cut-off date, two (2) of these balloon loans, representing approximately 14.3% of the initial pool balance, are mortgage loans that have an anticipated repayment date and provide for an increase in the mortgage rate and/or principal amortization at a specified date prior to stated maturity. Each such mortgage loan is structured to encourage the related borrower to repay the mortgage loan in full by the specified date upon which such increase occurs (which is prior to the mortgage loan’s stated maturity date). One (1) of the mortgage loans, representing approximately 1.8% of the initial pool balance, is fully amortizing and is expected to have less than 1% of the original principal balance outstanding as of its stated maturity date. | |||||
H. | Interest Only Loans | As of the cut-off date, fourteen (14) mortgage loans, representing approximately 54.9% of the initial pool balance, currently provide for monthly payments of interest only for their entire terms to maturity or anticipated repayment date, as applicable, and twenty (20) mortgage loans, representing approximately 19.8% of the initial pool balance, currently provide for monthly payments of interest only for a portion of their respective terms and then provide for the monthly payment of principal and interest over their respective remaining terms. | |||||
I. | Prepayment/Defeasance/ | ||||||
Property Release Provisions | As of the cut-off date, each of the mortgage loans restricted voluntary principal prepayments in one of the following ways: | ||||||
· | Forty-three (43) mortgage loans, representing approximately 80.8% of the initial pool balance, prohibit voluntary principal prepayments but permit the related borrower, after an initial period of at least two (2) years following the date of initial issuance of the certificates, to defease the mortgage loan prior to the commencement of an open period by pledging to the issuing entity “government securities” as defined in the Investment Company Act of 1940, which may be subject to rating agency approval, and to thereby obtain the release of the mortgaged property (or, in some cases involving a portfolio of mortgaged properties, one or more of those mortgaged properties) from the lien of the mortgage. | ||||||
· | Seven (7) mortgage loans, representing approximately 15.2% of the initial pool balance, prohibit voluntary principal prepayments during a prepayment lock-out period, and following such period, permit for a specified period prior to the commencement of an open period voluntary principal prepayments if accompanied by a prepayment premium calculated as the greater of a yield maintenance formula and a specified percentage of the amount prepaid as set forth on Appendix I to this prospectus supplement. | ||||||
· | One (1) mortgage loan, representing approximately 2.0% of the initial pool balance, prohibits voluntary principal prepayments during a prepayment lock-out period and, following such period, permits for a specified period prior to the commencement of an open period both (i) voluntary principal prepayments if accompanied by a prepayment premium calculated as the greater of a yield maintenance formula and a specified percentage of the amount prepaid as set forth on Appendix I to this prospectus supplement and (ii) the related borrower to defease the related mortgage loan by pledging to the issuing entity “government securities” as defined in the Investment Company Act of 1940, which may be subject to rating agency approval, and to thereby obtain the release of the mortgaged property from the lien of the mortgage. | ||||||
· | Three (3) mortgage loans, representing approximately 1.9% of the initial pool balance, prohibit voluntary principal prepayments during a prepayment lock-out period and, | ||||||
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following such period, permit voluntary principal prepayments for a specified period if accompanied by a prepayment premium calculated as the greater of a yield maintenance formula and a specified percentage of the amount prepaid as set forth on Appendix I to this prospectus supplement, and after such period, permit for a specified period prior to the commencement of an open period both (i) voluntary principal prepayments if accompanied by a prepayment premium calculated as the greater of a yield maintenance formula and a specified percentage of the amount prepaid as set forth on Appendix I to this prospectus supplement and (ii) the related borrower to defease the related mortgage loan by pledging to the issuing entity “government securities” as defined in the Investment Company Act of 1940, which may be subject to rating agency approval, and to thereby obtain the release of the mortgaged property from the lien of the mortgage. | |||||||
In addition to the above, the mortgage loans generally (i) permit prepayment at any time (without regard to any lockout period) in connection with casualty or condemnation and certain other matters without payment of a prepayment premium or yield maintenance charge and (ii) provide for a specified period commencing prior to and including the maturity date or the anticipated repayment date during which the related borrower may prepay the mortgage loan without payment of a prepayment premium or yield maintenance charge. See “Description of the Mortgage Pool—Material Terms and Characteristics of the Mortgage Loans—Prepayment Provisions” and “—Material Terms and Characteristics of the Mortgage Loans—Defeasance Loans” in this prospectus supplement. See also Appendix I to this prospectus supplement for more details concerning certain of the foregoing provisions including the method of calculation of any prepayment premium or yield maintenance charge, which will vary for any mortgage loan. | |||||||
Certain of the mortgage loans also provide for releases of portions of the related real estate collateral in connection with a partial prepayment (without regard to any lockout period) or partial defeasance as described below: | |||||||
· | One (1) mortgage loan, representing approximately 9.0% of the initial pool balance, allows the release of a specified portion of the real estate collateral for such mortgage loan in connection with a prepayment (which may occur during a period in which voluntary prepayments are otherwise not permitted) of a portion of the outstanding principal balance of the mortgage loan in a specified percentage of the allocated loan amount for such portion of the real estate collateral being released. | ||||||
· | One (1) mortgage loan,representing approximately 6.0% of the initial pool balance, allows the release of a portion of the real estate collateral for such mortgage loan through a partial defeasance provided that certain conditions are met, after an initial lock-out period of at least two (2) years following the date of the issuance of the certificates, by pledging to the issuing entity “government securities” as defined in the Investment Company Act of 1940 in a specified percentage of the allocated loan amount for the portion of the real estate collateral for such mortgage loan being released. | ||||||
See “Description of the Mortgage Pool—Material Terms and Characteristics of the Mortgage Loans—Partial Releases Other Than in Connection with Defeasance” in this prospectus supplement. | |||||||
In addition, certain mortgage loans permit the free release of outparcels or other portions of the related mortgaged property which were given no value or minimal value in the underwriting process. | |||||||
See Appendix I to this prospectus supplement for more details concerning certain of the foregoing provisions. | |||||||
In addition, one (1) mortgage loan, representing approximately 5.7% of the initial pool balance, permits the related borrower to add or substitute additional parcels as part of the related mortgaged property under certain circumstances. See “Description of the Alderwood Mall Non-Serviced Loan Combination—Release/Substitution of Vacant, Non-Income Producing Parcels” in Exhibit A attached to this prospectus supplement. See also“Mortgage Loan No. 5—Alderwood Mall” in Appendix III to this prospectus supplement. | |||||||
J. | Mortgage Loan Ranges | ||||||
and Weighted Averages | As of the cut-off date, the mortgage loans had the following additional characteristics: | ||||||
i. Mortgage Interest Rates | Mortgage interest rates ranging from 3.350%per annum to 4.855%per annum, and a weighted average mortgage interest rate of approximately 4.054%per annum. | ||||||
ii. Original Terms | Original terms to scheduled maturity (or, if applicable, to an anticipated repayment date) ranging from eighty-four (84)months to one hundred eighty (180)months, and a weighted average original term to scheduled maturity (or, if applicable, to an anticipated repayment date) of approximately one hundred twenty (120)months. | ||||||
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iii. | Remaining Terms | Remaining terms to scheduled maturity (or, if applicable, to an anticipated repayment date) ranging from eighty-three (83)months to one hundred seventy-eight (178)months, and a weighted average remaining term to scheduled maturity (or, if applicable, to an anticipated repayment date) of approximately one hundred eighteen (118)months. | |||||
iv. | Remaining | ||||||
Amortization Terms | Remaining amortization terms (excluding loans which provide for interest only payments for the entire loan term) ranging from one hundred seventy-eight (178) months to three hundred sixty (360) months, and a weighted average remaining amortization term of approximately three hundred forty-nine (349) months. | ||||||
v. | Loan-to-Value Ratios | Loan-to-value ratios, calculated as described in this prospectus supplement, ranging from 17.9% to 78.2%, and a weighted average loan-to-value ratio, calculated as described in this prospectus supplement, of approximately 62.5%. For each of the mortgage loans, the loan-to-value ratio was calculated according to the methodology set forth in this prospectus supplement based on the estimate of value from a third-party appraisal, which was generally conducted between December 2014 and May 2015. | |||||
See the definition of “Appraised Value” under “Description of the Mortgage Pool—Additional Mortgage Loan Information” in this prospectus supplement. See also “Description of the Mortgage Pool—Assessments of Property Value and Condition—Appraisals” and “Description of the Mortgage Pool—Additional Mortgage Loan Information” in this prospectus supplement. | |||||||
vi. | Debt Service | ||||||
Coverage Ratios | Debt service coverage ratios, determined according to the methodology presented in this prospectus supplement, ranging from 1.15x to 5.97x, and a weighted average debt service coverage ratio, calculated as described in this prospectus supplement, of approximately 1.98x. These calculations are based on underwritten net cash flow and actual debt service of the related mortgage loans as described in this prospectus supplement. | ||||||
See “Description of the Mortgage Pool—Additional Mortgage Loan Information” in this prospectus supplement. | |||||||
vii. | IO Period UW NCF DSCR | IO Period UW NCF DSCR, determined according to the methodology presented in this prospectus supplement, ranging from 1.48x to 3.12x, and a weighted average IO Period UW NCF DSCR, calculated as described in this prospectus supplement, of approximately 2.06x. Twenty (20) mortgage loans, representing approximately 19.8% of the initial pool balance, provide for monthly payments of interest only for a portion of their respective original terms ranging from twelve (12) months to sixty (60) months and then provide for the monthly payment of principal and interest over their respective remaining terms. | |||||
“IO Period UW NCF DSCR” means, with respect to the related mortgage loan that has an interest only period that has not expired as of the cut-off date but will expire prior to maturity, a debt service coverage ratio calculated assuming that the amount of the monthly debt service payment considered in the calculation is the average monthly debt service payment during such interest only period. After such interest only period, the debt service coverage ratio will be calculated based on the monthly debt service payments due on such mortgage loan. See “Description of the Mortgage Pool—Additional Mortgage Loan Information” in this prospectus supplement. | |||||||
K. | Modified and Refinanced | ||||||
Mortgage Loans | Forty-one (41) mortgage loans, representing approximately 76.1% of the initial pool balance, were originated in connection with the related borrower’s refinancing of a previous mortgage loan, and thirteen (13) mortgage loans, representing approximately 23.9% of the initial pool balance, were originated in connection with the related borrower’s acquisition of the related mortgaged property. | ||||||
See “Description of the Mortgage Pool—Material Terms and Characteristics of the Mortgage Loans—Modified and Refinanced Mortgage Loans” in this prospectus supplement. | |||||||
L. | Mortgaged Properties | ||||||
with Limited or No Operating History | Thirteen (13) of the mortgaged properties, representing approximately 12.0% of the initial pool balance by allocated loan amount, were recently acquired by the related borrower within thirty-six (36) calendar months prior to the cut-off date, and consequently such mortgaged properties do not have, or have limited, historical financial information. | ||||||
Four (4) of the mortgaged properties, representing approximately 14.3% of the initial pool balance by allocated loan amount, were recently constructed or renovated within thirty-six (36) calendar months prior to the cut-off date and either have no prior operating history or do not have historical financial information. | |||||||
See “Description of the Mortgage Pool—Material Terms and Characteristics of the Mortgage Loans—Mortgaged Properties with Limited or No Operating History” in this prospectus supplement. | |||||||
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M. | Certain Mortgage Loans with | ||||
Material Lease Termination Options | At least two (2) of the ten (10) largest mortgage loans or groups of cross-collateralized mortgage loans by principal balance, representing approximately 13.2% of the initial pool balance, is secured by mortgaged properties that have leases with material early termination options. See“Risk Factors—Risks Related to the Mortgage Loans—Risks of Lease Early Termination Options” and “Description of the Mortgage Pool—Material Terms and Characteristics of the Mortgage Loans—Mortgage Loans with Material Lease Termination Options” in this prospectus supplement. See also“Mortgage Loan No. 2—300 South Riverside Plaza Fee” and“Mortgage Loan No. 6—841-853 Broadway” in Appendix III to this prospectus supplement. | ||||
N. | Certain Variances from | ||||
Underwriting Standards | The mortgage loans to be contributed by Morgan Stanley Mortgage Capital Holdings LLC were originated in accordance with Morgan Stanley Bank, N.A.’s underwriting standards and acquired from Morgan Stanley Bank, N.A. (or, with respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as Alderwood Mall, representing approximately 5.7% of the initial pool balance, was originated in conjunction with a third party), except with respect to the mortgage loans secured by the mortgaged properties identified on Appendix I to this prospectus supplement as TKG 3 Retail Portfolio, 841-853 Broadway, Hilton Garden Inn W 54th Street, Premier Apartments, Signature Apartments and 58 E 56th Street, representing approximately 9.0%, 5.6%, 4.5%, 3.8%, 1.8% and 0.6%, respectively, of the initial pool balance, as described under“Transaction Parties—The Sponsor, Mortgage Loan Seller and Originator—Morgan Stanley Mortgage Capital Holdings LLC—MSMCH’s Underwriting Standards”and“—Morgan Stanley Bank, N.A.—Morgan Stanley Bank’s Underwriting Standards” in this prospectus supplement. | ||||
O. | The A/B Whole Loans, Loan Pairs and | ||||
Non-Serviced Loan Combinations | The portfolio of mortgaged properties identified on Appendix I to this prospectus supplement as TKG 3 Retail Portfolio secures (1) a mortgage loan (referred to in this prospectus supplement as the “TKG 3 Retail Portfolio mortgage loan”) with an outstanding principal balance as of the cut-off date of $80,000,000, representing approximately 9.0% of the initial pool balance, and (2) twopari passu promissory notes, which are currently held by the MSBAM 2015-C23 securitization trust (collectively referred to in this prospectus supplement as the “TKG 3 Retail Portfolio serviced companion loan” and a “serviced companion loan”), with an aggregate outstanding principal balance as of the cut-off date of $79,708,750. The TKG 3 Retail Portfolio mortgage loan and the TKG 3 Retail Portfolio serviced companion loan are collectively referred to in this prospectus supplement as the “TKG 3 Retail Portfolio loan pair” and a “loan pair.” The TKG 3 Retail Portfolio loan pair will be serviced under the pooling and servicing agreement for this securitization. | ||||
The mortgaged property identified on Appendix I to this prospectus supplement as 300 South Riverside Plaza Fee secures (1) a mortgage loan (referred to in this prospectus supplement as the “300 South Riverside Plaza Fee mortgage loan”) with an outstanding principal balance as of the cut-off date of $67,000,000, representing approximately 7.6% of the initial pool balance, and (2) apari passu promissory note, which is currently held by the MSBAM 2015-C22 securitization trust (referred to in this prospectus supplement as the “300 South Riverside Plaza Fee non-serviced companion loan” and a “non-serviced companion loan”), with an outstanding principal balance as of the cut-off date of $100,000,000. The 300 South Riverside Plaza Fee mortgage loan and the 300 South Riverside Plaza Fee non-serviced companion loan are collectively referred to in this prospectus supplement as the “300 South Riverside Plaza Fee non-serviced loan combination” and a “non-serviced loan combination.” The 300 South Riverside Plaza Fee non-serviced loan combination will be serviced under the MSBAM 2015-C22 pooling and servicing agreement.
The mortgaged property identified on Appendix I to this prospectus supplement as Waterfront at Port Chester secures (1) a mortgage loan (referred to in this prospectus supplement as the “Waterfront at Port Chester mortgage loan”) with an outstanding
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principal balance as of the cut-off date of $53,500,000, representing approximately 6.0% of the initial pool balance, and (2) apari passu promissory note, which is currently held by the MSBAM 2015-C22 securitization trust (referred to in this prospectus supplement as the “Waterfront at Port Chester non-serviced companion loan” and a “non-serviced companion loan”), with an outstanding principal balance as of the cut-off date of $80,000,000. The Waterfront at Port Chester mortgage loan and the Waterfront at Port Chester non-serviced companion loan are collectively referred to in this prospectus supplement as the “Waterfront at Port Chester non-serviced loan combination” and a “non-serviced loan combination.” The Waterfront at Port Chester non-serviced loan combination will be serviced under the MSBAM 2015-C22 pooling and servicing agreement. | |||||
The mortgaged property identified on Appendix I to this prospectus supplement as Alderwood Mall secures (1) a mortgage loan (referred to in this prospectus supplement as the “Alderwood Mall mortgage loan”) with an outstanding principal balance as of the cut-off date of $50,275,604, representing approximately 5.7% of the initial pool balance, (2) threepari passu promissory notes, two of which are currently held by the MSCCG 2015-ALDR securitization trust and the other of which is currently held by Citigroup Global Markets Realty Corp. (collectively referred to in this prospectus supplement as the “Alderwood Mall non-serviced companion loan” and a “non-serviced companion loan”), with an aggregate outstanding principal balance as of the cut-off date of $176,363,626 and (3) two subordinate promissory notes with an aggregate outstanding principal balance as of the cut-off date of $127,800,000 (collectively referred to in this prospectus supplement as the “Alderwood Mall B note” and each, a “B note”), which are currently held by the MSCCG 2015-ALDR securitization trust. The Alderwood Mall mortgage loan, the Alderwood Mall non-serviced companion loan and the Alderwood Mall B note are collectively referred to in this prospectus supplement as the “Alderwood Mall non-serviced loan combination” and a “non-serviced loan combination.” The Alderwood Mall non-serviced loan combination will be serviced under the MSCCG 2015-ALDR trust and servicing agreement. | |||||
The Alderwood Mall mortgage loan is generallypari passu in right of payment with the Alderwood Mall non-serviced companion loan, and the Alderwood Mall mortgage loan and the Alderwood Mall non-serviced companion loan are, together, generally senior in right of payment to the Alderwood Mall B note. | |||||
The mortgaged property identified on Appendix I to this prospectus supplement as Hilton Garden Inn W 54th Street secures (1) a mortgage loan (referred to in this prospectus supplement as the “Hilton Garden Inn W 54th Street mortgage loan”) with an outstanding principal balance as of the cut-off date of $40,000,000, representing approximately 4.5% of the initial pool balance, (2) twopari passu promissory notes, one of which is currently held by the MSBAM 2015-C22 securitization trust and the other of which is currently held by the MSBAM 2015-C23 securitization trust (suchpari passupromissory notes are collectively referred to in this prospectus supplement as the “Hilton Garden Inn W 54th Street non-serviced companion loan” and a “non-serviced companion loan”), with an aggregate outstanding principal balance as of the cut-off date of $115,000,000 and (3) a subordinate B note with an outstanding principal balance as of the cut-off date of $20,000,000 (referred to in this prospectus supplement as the “Hilton Garden Inn W 54th Street B note” and a “B note”), which is currently held by Aareal Capital Corporation. The Hilton Garden Inn W 54th Street mortgage loan, the Hilton Garden Inn W 54th Street non-serviced companion loan and the Hilton Garden Inn W 54th Street B note are collectively referred to in this prospectus supplement as the “Hilton Garden Inn W 54th Street non-serviced loan combination” and a “non-serviced loan combination.” The Hilton Garden Inn W 54th Street non-serviced loan combination will be serviced under the MSBAM 2015-C22 pooling and servicing agreement. | |||||
The Hilton Garden Inn W 54th Street mortgage loan is generallypari passu in right of payment with the Hilton Garden Inn W 54th Street non-serviced companion loan, and the Hilton Garden Inn W 54th Street mortgage loan and the Hilton Garden Inn W 54th Street non-serviced companion loan are, together, generally senior in right of payment to the Hilton Garden Inn W 54th Street B note. | |||||
No other mortgage loans have a companion loan or B note associated with them and, except as described above, all of the mortgage loans are being serviced under the pooling and servicing agreement. Accordingly, there are no other “loan pairs,” “non-serviced loan combinations,” “non-serviced mortgage loans” or “non-serviced companion loans,” and there are no “A/B whole loans,” related to the issuing entity. | |||||
For additional information regarding each A/B whole loan, loan pair and non-serviced loan combination, if any, see “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” and “—The Non-Serviced Loan Combinations” in this prospectus supplement. | |||||
Advances | |||||
A. | P&I Advances | Subject to a recoverability determination described in this prospectus supplement, the master servicer (and the trustee, if applicable) will be required to advance delinquent monthly mortgage loan payments for mortgage loans (including any non-serviced mortgage loans) that are included in the issuing entity (net of related master servicing fees). The |
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master servicer and the trustee willnot be required to advance any additional interest accrued as a result of the imposition of any default rate or any rate increase after an anticipated repayment date. The master servicer and the trustee also arenot required to advance prepayment premiums, yield maintenance charges or balloon payments. In addition, the master servicer and the trustee will not be required to make any advance for delinquent mortgage loan payments on any B note, serviced companion loan or non-serviced companion loan. With respect to any balloon payment, the master servicer (and the trustee, if applicable) will instead be required to advance an amount equal to the scheduled payment that would have been due if the related balloon payment had not become due. If a P&I advance is made, the master servicer will defer rather than advance its master servicing fee, but will advance the trust advisor fee (but not any trust advisor consulting fee), the certificate administrator fee and the CREFC®license fee. | |||||
For an REO property, subject to a recoverability determination described in this prospectus supplement, the required P&I advance will equal the scheduled payment that would have been due if the predecessor mortgage loan had remained outstanding and continued to amortize in accordance with its amortization schedule in effect immediately before the REO property was acquired (net of related master servicing fees). | |||||
B. | Servicing Advances | Subject to a recoverability determination described in this prospectus supplement, with respect to each mortgage loan (other than any non-serviced mortgage loan) and any related B note or serviced companion loan, the master servicer and/or the trustee may also make servicing advances to pay delinquent real estate taxes, insurance premiums and similar expenses necessary to protect, lease, manage and maintain the mortgaged property, to maintain the lien on the mortgaged property or to enforce the mortgage loan documents. In addition, the special servicer may, but is not required to, make servicing advances on an emergency basis. Notwithstanding the foregoing, with respect to any non-serviced mortgage loan, which will be serviced pursuant to the terms of the pooling and servicing agreement or trust and servicing agreement, as applicable, for another securitization, the master servicer, special servicer and trustee under such other securitization will be the parties required or permitted, as applicable, to make such servicing advances. | |||
C. | Interest on Advances | All advances made by the master servicer, the special servicer or the trustee will accrue interest at a rate equal to the “prime rate” as reported inThe Wall Street Journal. All servicing advances made by the applicable master servicer, special servicer or trustee with respect to a non-serviced mortgage loan under a pooling and servicing agreement or trust and servicing agreement, as applicable, pursuant to which the related non-serviced loan combination is being serviced will also accrue interest at a rate equal to the “prime rate” as reported inThe Wall Street Journal. | |||
D. | Back-up Advances | Pursuant to the requirements of the pooling and servicing agreement, if the master servicer fails to make a required advance, the trustee will be required to make the advance, subject to the same limitations, and with the same rights, as the master servicer. | |||
E. | Recoverability | None of the master servicer, the special servicer or the trustee will be required to make any advance if the master servicer, the special servicer or the trustee, as the case may be, reasonably determines that the advance would not be recoverable out of collections on the related mortgage loan (or, in the case of servicing advances made on any A/B whole loan or loan pair, out of collections on such A/B whole loan or loan pair, as applicable). In addition, the master servicer and the trustee may not make any advance if the special servicer determines in accordance with the servicing standard that such advance, if made, would be nonrecoverable. The master servicer’s or special servicer’s determination of nonrecoverability will be conclusive and binding upon the certificateholders and the trustee. The trustee will be entitled to rely conclusively on any determination by the master servicer or special servicer of nonrecoverability, and the master servicer will be entitled to rely conclusively on any determination by the special servicer of nonrecoverability, with respect to any advance. | |||
F. | Advances During an Appraisal Event | The occurrence of certain adverse events affecting a mortgage loan will require the special servicer to obtain a new appraisal or other valuation of the related mortgaged property. In general, if the principal amount of a mortgage loan plus all other amounts due under the mortgage loan and interest on advances made with respect to the mortgage loan exceeds 90% of the value of the mortgaged property determined by an appraisal or other valuation, an appraisal reduction may be created in the amount of the excess as described in this prospectus supplement. If an appraisal reduction exists for any mortgage loan, the interest portion of the amount required to be advanced on that mortgage loan will be reduced in the same proportion that the appraisal reduction bears to the stated principal balance of the related mortgage loan. This will reduce the funds available to pay interest on the most subordinate class or classes of certificates then outstanding. | |||
If there are any A/B whole loans or loan pairs related to the issuing entity, any appraisal reduction will be calculated in respect of such A/B whole loan or loan pair taken as a whole. With respect to an A/B whole loan, any such appraisal reduction will be allocated first to the related B note and then to the related A note. With respect to a loan pair, any such | |||||
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appraisal reduction will be allocated between the mortgage loan and the related serviced companion loan on apro ratabasis by unpaid principal balance. See “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs.” | |||||
If there are any non-serviced mortgage loans included in the mortgage pool, any appraisal reduction in respect of such non-serviced mortgage loan will be calculated by the applicable servicer under, and will be allocated as set forth in, the related non-serviced mortgage loan pooling and servicing agreement or trust and servicing agreement, as applicable. See “Description of the Mortgage Pool—Non-Serviced Loan Combinations” in this prospectus supplement. | |||||
See “Description of the Offered Certificates—Advances” and “—Appraisal Reductions” in this prospectus supplement. | |||||
Additional Aspects of Certificates | |||||
Ratings | The depositor expects that the certificates offered pursuant to this prospectus supplement will, in the case of each class thereof, receive investment grade ratings from one or more nationally recognized statistical rating organizations engaged by the depositor. | ||||
A rating agency may lower or withdraw a security rating at any time. Each of the rating agencies engaged by the depositor is expected to perform ratings surveillance with respect to its ratings for so long as the certificates remain outstanding, except that a rating agency may stop performing ratings surveillance at any time if, among other reasons, that rating agency does not have sufficient information to allow it to continue to perform ratings surveillance on the certificates. The depositor has no ability to ensure that any rating agencies will perform ratings surveillance. | |||||
Additionally, nationally recognized statistical rating organizations that we have not engaged to rate any class of certificates may nevertheless issue unsolicited credit ratings on one or more classes of certificates and any one or more of the rating agencies engaged by the depositor to rate certain classes of certificates may issue unsolicited credit ratings on one or more classes of certificates that it was not engaged to rate upon initial issuance, in each case relying on information they receive pursuant to Rule 17g-5 under the Securities Exchange Act of 1934, as amended, or otherwise. If any such unsolicited ratings are issued with respect to any particular class of certificates, we cannot assure you that they will not be lower than the rating(s) assigned by any of the rating agencies engaged by the depositor to rate that class of certificates on the closing date. The issuance of any such unsolicited ratings with respect to any particular class of certificates that are lower than the rating(s) assigned to it by any of the engaged rating agencies on the closing date may negatively impact the liquidity, market value and regulatory characteristics of that class of certificates. Although unsolicited ratings may be issued by any rating agency, a rating agency might be more likely to issue an unsolicited rating if it was not selected after having provided preliminary feedback to the depositor. | |||||
As part of the process of obtaining ratings for the certificates, the depositor had initial discussions with and submitted certain materials to five (5) nationally recognized statistical rating organizations. Based on preliminary feedback from those rating agencies at that time, the depositor selected three (3) of them to rate some or all of the classes of offered certificates and certain classes of the privately offered certificates (although each such engaged rating agency may not ultimately issue ratings on all classes of certificates). The decision not to engage certain rating agencies to rate any of the certificates was due, in part, to those agencies’ initial subordination levels for the various classes of rated certificates. Likewise, the decision to engage one or more of the engaged rating agencies to only rate certain classes of certificates, but not others, was also due, in part, to those engaged rating agencies’ initial subordination levels for such classes of certificates. Had the depositor selected rating agencies (other than the engaged rating agencies) to rate any one or more classes of the certificates, or had it engaged all of the engaged rating agencies to rate all classes of the certificates, the depositor cannot assure you as to the ratings that such rating agencies would have ultimately assigned to those classes of certificates. In addition, the decision not to engage one or more of the engaged rating agencies in the rating of certain classes of certificates to be issued in connection with this transaction, may negatively impact the liquidity, market value and regulatory characteristics of those classes of certificates. Neither the depositor nor any other person or entity will have any duty to notify you if any other nationally recognized statistical rating organization issues, or delivers notice of its intention to issue, unsolicited ratings on one or more classes of the offered certificates after the date of this prospectus supplement. | |||||
Furthermore, the Securities and Exchange Commission may determine that one or more of the rating agencies engaged by the depositor no longer qualifies as a nationally recognized statistical rating organization, or is no longer qualified to rate the certificates, and that determination may have an adverse effect on the liquidity, market value and regulatory characteristics of the certificates. | |||||
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The security ratings do not address the frequency of prepayments (whether voluntary or involuntary) of mortgage loans, or the degree to which the prepayments might differ from those originally anticipated, or the likelihood of collection of default interest, excess interest, late payment charges, prepayment premiums or yield maintenance charges, or the tax treatment of the certificates. | |||||
See “Risk Factors” and “Yield, Prepayment and Maturity Considerations” in this prospectus supplement. Also see “Ratings” in this prospectus supplement and “Rating” in the accompanying prospectus for a further discussion of the basis upon which ratings are given, the limitations of and restrictions on the ratings, and the conclusions that should not be drawn from a rating. | |||||
Important Disclaimer: Credit ratings are forward-looking opinions about credit risk and express a rating agency’s opinion about the ability and willingness of an issuer of securities to meet its financial obligations in full and on time. Ratings are not indications of investment merit and are not buy, sell, or hold recommendations, a measure of asset value, or an indication of the suitability of an investment. | |||||
Repurchase or Substitution | The mortgage loan seller will make those certain representations and warranties listed in Appendix V to this prospectus supplement with respect to the mortgage loans sold by it, as described under “Description of the Mortgage Pool—Representations and Warranties” and “—Repurchases and Other Remedies.” If the mortgage loan seller has been notified of a material breach of any of its representations and warranties or a material defect in the documentation of any mortgage loan as described under “Description of the Mortgage Pool—Repurchases and Other Remedies,” then the mortgage loan seller will be required to either cure the breach, repurchase the affected mortgage loan from the issuing entity or replace the affected mortgage loan with another mortgage loan. Any such repurchase would have the same effect on the offered certificates as a prepayment in full of such mortgage loan, except that the purchase will not be accompanied by any prepayment premium or yield maintenance charge. In addition, certain mortgage loans may be purchased from the issuing entity by the holder of a B note, serviced companion loan, non-serviced companion loan or mezzanine loan under certain circumstances. See “Risk Factors—Risks Related to the Offered Certificates—The Mortgage Loan Seller May Not Make a Required Repurchase or Substitution of a Defective Mortgage Loan” and “Description of the Mortgage Pool—Material Terms and Characteristics of the Mortgage Loans—Subordinate and Other Financing” in this prospectus supplement. | ||||
Sale of Defaulted Mortgage Loans | |||||
and REO Properties | Pursuant to the pooling and servicing agreement, the special servicer is required to solicit offers for defaulted mortgage loans (other than any non-serviced mortgage loan) if it determines in accordance with the servicing standard that such a sale would be in the best interests of the certificateholders (as a collective whole as if such certificateholders constituted a single lender), and the special servicer is required to accept the first (and, if multiple bids are contemporaneously received, the highest) cash bid from any person that constitutes a fair price for the defaulted mortgage loan, determined as described in “Servicing of the Mortgage Loans—Sale of Defaulted Mortgage Loans and REO Properties—Sale of Defaulted Mortgage Loans” in this prospectus supplement, unless the special servicer determines, in accordance with the servicing standard, that rejection of such offer would be in the best interests of the certificateholders (as a collective whole). The sale of defaulted mortgage loans (other than any non-serviced mortgage loan) is generally subject to (i) with respect to any mortgage loan that is part of an A/B whole loan or loan pair or any mortgage loan with existing mezzanine debt, to the extent set forth in the related intercreditor agreement, the right of the holder of the related debt held outside the issuing entity to purchase the related mortgage loan, and (ii) any consent or consultation rights of the controlling class representative or, with respect to any mortgage loan that is part of an A/B whole loan or loan pair, the related directing holder (if any), to the extent set forth in the related intercreditor agreement, as further described in this prospectus supplement under “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs.” | ||||
In addition, with respect to the mortgage loans secured by the mortgaged properties identified on Appendix I to this prospectus supplement as TKG 3 Retail Portfolio, 300 South Riverside Plaza Fee, 32 Old Slip Fee, Waterfront at Port Chester, Alderwood Mall and Hilton Garden Inn W 54th Street, representing approximately 9.0%, 7.6%, 6.8%, 6.0%, 5.7% and 4.5%, respectively, of the initial pool balance, if any such mortgage loan becomes a defaulted mortgage loan and the applicable special servicer determines to sell such mortgage loan, the applicable special servicer will be required to sell such mortgage loan together with the related companion loan (and, with respect to the Alderwood Mall mortgage loan, any related B note) as notes evidencing one whole loan, in accordance with the provisions of the related intercreditor agreement and the applicable pooling and servicing agreement or trust and servicing agreement. See “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs”and “—The Non-Serviced Loan Combinations”and “Servicing of the Mortgage Loans—Sale of Defaulted Mortgage Loans and REO Properties—Sale of Defaulted Mortgage Loans—Matters Relating to A/B Whole Loans and Loan Pairs” in this prospectus supplement. | |||||
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Pursuant to the pooling and servicing agreement, if title to any REO property is acquired by the issuing entity or its nominee in respect of any mortgage loan (other than any non-serviced mortgage loan), the special servicer is required to use its reasonable best efforts to sell the REO property for cash as soon as practicable consistent with the requirement to maximize proceeds for all certificateholders (and, with respect to a companion loan or a B note (in each case that is serviced under the pooling and servicing agreement for this securitization), for the certificateholders and the holder of such serviced companion loan or B note, as a collective whole taking into account the subordinate nature of any related B note), but in no event later than three (3) years after the end of the year in which it was acquired, and in any event prior to the distribution date in May 2048 or earlier to the extent necessary to comply with REMIC provisions, unless (i) the trustee or the special servicer has been granted an extension of time by the IRS or is permitted under the REMIC provisions to continue to hold such REO property during the period in which an application for an extension is pending or (ii) the special servicer receives an opinion of counsel that holding such REO property beyond the period specified above will not result in the imposition of taxes on “prohibited transactions” under the REMIC provisions or cause any REMIC to fail to qualify as a REMIC;provided, that in no event may the issuing entity hold any REO property beyond the end of the sixth (6th) calendar year following the end of the year of such REO property’s acquisition. If the special servicer is unable to sell such REO property for cash within such time period (as such period may be extended under certain circumstances), the special servicer will be required, after consultation with the controlling class representative during any Subordinate Control Period and any Collective Consultation Period and, in the case of a sale of any REO property relating to an A/B whole loan or loan pair, the related directing holder to the extent set forth in the related intercreditor agreement, to auction the REO property to the highest bidder (which may be the special servicer or another interested person) in accordance with the servicing standard. See “Servicing of the Mortgage Loans—Sale of Defaulted Mortgage Loans and REO Properties—Sale of REO Properties” in this prospectus supplement. | ||||
Optional Termination | On any distribution date, if the aggregate principal balance of the mortgage loans is less than or equal to 1.0% of the initial pool balance, the holders of a majority of the most subordinate class of certificates (other than the Class V and Class R Certificates) outstanding (for this purpose considering each of the Class A-S, Class B and Class C Certificates together with the corresponding portion of the Class PST Certificates representing an interest in the trust component bearing the same alphabetic designation), the special servicer, the master servicer and any holder of a majority interest in the Class R Certificates, in that order of priority, will have the option to purchase all of the remaining mortgage loans, and all property acquired through exercise of remedies in respect of any mortgage loan, at the price specified in this prospectus supplement. Exercise of this option would terminate the issuing entity and retire the then outstanding certificates. | |||
In addition, if at any time (i) the aggregate certificate principal balances or notional amounts, as applicable, of the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4, Class X-A, Class A-S, Class B, Class PST, Class C and Class D Certificates have been reduced to zero and (ii) there is only one holder (or a group of holders acting in unanimity) of all the outstanding certificates (excluding the Class V and Class R Certificates), such certificateholder will have the right to exchange all of its certificates (other than the Class V and Class R Certificates) for the mortgage loans and each REO property remaining in the issuing entity if such certificateholder makes a payment to the master servicer as described under “Description of the Offered Certificates—Optional Termination” in this prospectus supplement. |
See “Description of the Offered Certificates—Optional Termination” in this prospectus supplement. | |||||
Denominations | The offered certificates (other than the Class X-A Certificates) will be initially offered and sold in minimum denominations of $10,000 and integral multiples of $1 in excess of $10,000. The Class X-A Certificates will be initially offered and sold in minimum denominations of $100,000 and integral multiples of $1 in excess of $100,000. | ||||
Registration, Clearance and | |||||
Settlement | Your certificates will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, and will not be registered in your name. You will not receive a definitive certificate representing your ownership interest, except in very limited circumstances described in this prospectus supplement. As a result, you will hold your certificates only in book-entry form and will not be a certificateholder of record. You will receive distributions on your certificates and reports relating to distributions only through The Depository Trust Company (commonly known as DTC), Clearstream Banking, société anonyme (commonly known as Clearstream) or the Euroclear System (commonly known as Euroclear) or through participants in DTC, Clearstream or Euroclear. | ||||
You may hold your certificates through: | |||||
· | DTC in the United States; or | ||||
· | Clearstream or Euroclear in Europe. | ||||
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Transfers within DTC, Clearstream or Euroclear will be made in accordance with the usual rules and operating procedures of those systems. Cross-market transfers between persons holding directly through DTC, Clearstream or Euroclear will be effected in DTC through the relevant depositories of Clearstream or Euroclear. | |||||
All or any portion of the certificates offered to you may be converted to definitive certificates and reissued to beneficial owners or their nominees, rather than to DTC or its nominee, if we notify DTC of our intent to terminate the book-entry system and, upon receipt of notice of such intent from DTC, the participants holding interests in the certificates agree to initiate such termination. | |||||
We expect that the certificates offered to you will be delivered in book-entry form through the facilities of DTC, Clearstream or Euroclear on or about the closing date. | |||||
Tax Status | For federal income tax purposes, the issuing entity will consist of a grantor trust and one or more real estate mortgage investment conduits, each a REMIC, arranged in a tiered structure. The highest REMIC will be referred to as the Upper-Tier REMIC and each REMIC below the Upper-Tier REMIC (if any) will be referred to as a Lower-Tier REMIC. Each Lower-Tier REMIC (if any) will issue multiple classes of uncertificated, regular interests that will be held by another REMIC above it in the tiered structure, and a single residual interest. The assets of the lowest Lower-Tier REMIC in this tiered structure (or the Upper-Tier REMIC if there is no Lower-Tier REMIC) will consist of the mortgage loans (other than the entitlement to any Excess Interest (as defined under “Material Federal Income Tax Consequences” in this prospectus supplement)) and any other assets designated in the pooling and servicing agreement. The Upper-Tier REMIC will issue multiple classes of regular interests and a single residual interest. Except for the Class A-S, Class B, Class PST, Class C, Class V and Class R Certificates, all of the certificates will represent regular interests in the Upper-Tier REMIC. | ||||
The Class A-S, Class B, Class PST and Class C Certificates will represent undivided beneficial ownership interests, held through the grantor trust, in one or more of the Class A-S, Class B and Class C trust components. Each of the Class A-S, Class B and Class C Certificates will represent a beneficial interest in a percentage of the outstanding principal balance of the Class A-S, Class B and Class C trust components, respectively. The Class PST Certificates will represent a beneficial interest in the remaining percentages of the outstanding principal balances of the Class A-S, Class B and Class C trust components. Following any exchange as described under “Description of the Offered Certificates—Exchangeable Certificates,” the percentage ownership interests of the certificates received in such exchange (as a percentage of the Class A-S, Class B and Class C trust components) will increase, and the percentage ownership interests of the surrendered certificates (as a percentage of the Class A-S, Class B and Class C trust components) will correspondingly decrease. | |||||
The Class V Certificates will represent an undivided beneficial ownership interest, held through the grantor trust, in certain excess interest collected on mortgage loans with anticipated repayment dates, if any. The Class R Certificates will represent the beneficial ownership of the residual interest in each Lower-Tier REMIC (if any) and of the residual interest in the Upper-Tier REMIC. The certificates that represent direct ownership of regular interests in the Upper-Tier REMIC are referred to herein as the REMIC Regular Certificates. The REMIC Regular Certificates and the Class A-S, Class B and Class C trust components (which are held in the grantor trust and beneficially owned by the holders of the Class A-S, Class B, Class PST and Class C Certificates) will be designated as the regular interests in the Upper-Tier REMIC. | |||||
Pertinent federal income tax consequences of an investment in the certificates include: | |||||
· | the regular interests will be treated as newly originated debt instruments for federal income tax purposes; | ||||
· | beneficial owners of regular interests will be required to report income on the regular interests in accordance with the accrual method of accounting; | ||||
· | the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4 and Class A-S Certificates will be issued at a premium for federal income tax reporting purposes; | ||||
· | the Class B Certificates will be issued with ade minimisamount of original issue discount for federal income tax reporting purposes; and | ||||
· | the Class X-A, Class C, Class D, Class E, Class F and Class G Certificates will be issued with more than ade minimis amount of original issue discount for federal income tax reporting purposes. | ||||
See “Material Federal Income Tax Consequences” in this prospectus supplement and “Federal Income Tax Consequences” in the accompanying prospectus. |
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Considerations Related to Title I of the Employee Retirement Income Security Act of 1974 |
Fiduciaries of employee benefit plans subject to the Employee Retirement Income Security Act of 1974, as amended, commonly known as ERISA, or plans subject to Section 4975 of the Internal Revenue Code of 1986, as amended (referred to herein as the Code), or governmental plans (as defined in Section 3(32) of ERISA) or non-U.S. plans (as described in Section 4(b)(4) of ERISA) that are subject to any federal, state, local or non-U.S. law which is, to a material extent, similar to the foregoing provisions of ERISA or the Code, should carefully review with their legal advisors whether the purchase or holding of the certificates could give rise to a transaction prohibited or not otherwise permissible under ERISA, the Code or similar law. The U.S. Department of Labor has granted an administrative exemption to the predecessor of Morgan Stanley & Co. LLC, Prohibited Transaction Exemption 90-24, 55 Fed. Reg. 20,548 (May 17, 1990), as amended by Prohibited Transaction Exemption 2013-08, 78 Fed. Reg. 41,090 (July 9, 2013), which may exempt from the application of certain of the prohibited transaction provisions of Section 406 of ERISA and the excise taxes imposed on such prohibited transactions by Code Sections 4975(a) and (b), transactions relating to the purchase, sale and holding of pass-through certificates underwritten by a selling group of which the underwriter serves as a manager or co-manager, and the servicing and operation of related mortgage pools,provided that certain conditions are met. The depositor expects that the exemption granted to the predecessor of Morgan Stanley & Co. LLC will generally apply to the offered certificates, provided that certain conditions are satisfied. See “Certain ERISA Considerations” in this prospectus supplement and “ERISA Considerations” in the accompanying prospectus.
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Legal Investment | The offered certificates willnot constitute “mortgage related securities” for purposes of the Secondary Mortgage Market Enhancement Act of 1984, as amended. If your investment activities are subject to legal investment laws and regulations, regulatory capital requirements or review by regulatory authorities, then you may be subject to restrictions on investment in the offered certificates. You should consult your own legal advisors for assistance in determining the suitability of and consequences to you of the purchase, ownership and sale of the offered certificates. | ||||
The issuing entity will not be registered under the Investment Company Act. The issuing entity will be relying on an exclusion or exemption from the definition of “investment company” under the Investment Company Act contained in Section 3(c)(5) of the Investment Company Act or Rule 3a-7 under the Investment Company Act, although there may be additional exclusions or exemptions available to the issuing entity. The issuing entity will not be relying upon Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act as a basis for not registering under the Investment Company Act. The issuing entity is being structured so as not to constitute a “covered fund” for purposes of the Volcker Rule (as defined in this prospectus supplement) under the Dodd-Frank Act. | |||||
See “Legal Investment” in this prospectus supplement and in the accompanying prospectus. | |||||
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RISK FACTORS
You should carefully consider the risks involved in owning a certificate before purchasing an offered certificate. Among other risks, the payments you receive on your certificates will depend on payments received on and other recoveries with respect to the mortgage loans. Therefore, you should carefully consider both the risk factors relating to the mortgage loans and the mortgaged properties and the other risks relating to the offered certificates.
The risks and uncertainties described in this section, together with those risks described in the accompanying prospectus under “Risk Factors,” summarize material risks relating to your certificates. Additional risks and uncertainties not presently known to us may also impair your investment.
If you are considering an investment in a class of exchangeable certificates you should carefully consider the risks that are specifically applicable to the related class(es) of certificates exchangeable therefor, since they would generally apply to your certificates if you make an exchange.
General Risks
The Offered Certificates May Not Be a Suitable Investment for You
The offered certificates are not suitable investments for all investors. In particular, you should not purchase any class of offered certificates unless you understand and are able to bear the risk of material variability in the yield to maturity and the aggregate amount and timing of distributions on the offered certificates, which gives rise to the potential for significant loss over the life of the offered certificates. An investment in the offered certificates involves substantial risks and uncertainties and should be considered only by sophisticated institutional investors with substantial investment experience with similar types of securities and who have conducted appropriate due diligence on the mortgage loans and the offered certificates.
Risks Related to Market Conditions
The Volatile Economy and Credit Crisis May Increase Loan Defaults and Affect the Value and Liquidity of Your Investment
In recent years, the real estate and securitization markets, including the market for commercial mortgage-backed securities, as well as global financial markets and the economy generally, have experienced significant dislocations, illiquidity and volatility. The United States economic recovery has been weak and may not be sustainable for any specific period of time, and the global or United States economy could slip into an even more significant recession. Declining real estate values, coupled with diminished availability of leverage and/or refinancings for commercial real estate, have resulted in increased delinquencies and defaults on commercial mortgage loans. In addition, the downturn in the general economy has affected the financial strength of many commercial real estate tenants and has resulted in increased rent delinquencies and increased vacancies. Any continued downturn would likely have an adverse effect on commercial mortgage-backed securities that are backed by loans secured by such commercial real estate. In the event of default by borrowers under the mortgage loans, holders of the offered certificates may suffer a partial or total loss of their investment.
A substantial amount of United States commercial mortgage loans, with balloon payment obligations in excess of their respective current property values, are maturing in the near future. The lack of credit liquidity, decreases in the value of commercial properties and, in some instances, correspondingly higher mortgage rates have prevented many commercial mortgage borrowers from refinancing their mortgages. These circumstances have increased delinquency and default rates of securitized commercial mortgage loans, and may lead to widespread commercial mortgage defaults, further credit constraints, further declines in property values and further adverse effects on the perception of the value of commercial mortgage-backed securities.
In light of the circumstances described above, the risks we described elsewhere under “Risk Factors” in this prospectus supplement and in the accompanying prospectus are heightened substantially, and you should review and carefully consider such risk factors in light of such circumstances.
External Factors May Adversely Affect the Value and Liquidity of Your Investment
Factors not directly relating to the offered certificates or the underlying mortgage loans may nevertheless cause the market value of the offered certificates to decline even if the offered certificates, the mortgage loans or the mortgaged properties are performing at or above your expectations.
Global, National and Local Economic Factors. The global financial markets have recently experienced increased volatility due to uncertainty surrounding the level and sustainability of the sovereign debt of various countries. Much of this uncertainty has related to certain countries that participate in the European Monetary Union and whose sovereign debt is generally denominated in euros. In addition, some economists, observers and market participants have expressed concerns regarding the sustainability of the monetary union and the common currency in their current form. Concerns regarding sovereign debt may spread to other countries at any time. Furthermore, many state and local governments in the United States are experiencing, and are expected to continue to experience, severe budgetary strain. One or more states could default on their debt, or one or more significant local governments could default on their debt or seek relief from their debt under Title 11 of the United States Code or by agreement with their creditors. Any of the circumstances described above may lead to further volatility in or disruption of the credit markets.
Other Events May Affect Your Investment. Moreover, other types of events may affect general economic conditions and financial markets and therefore may adversely affect the performance of the mortgage loans and the performance of the offered certificates:
· | Wars, revolutions, insurrections, armed conflicts, terrorism, political crises, natural disasters and man-made disasters may have an adverse effect on the mortgaged properties and/or your certificates. |
· | Trading activity associated with indices of commercial mortgage-backed securities may drive spreads on those indices wider than spreads on commercial mortgage-backed securities, thereby resulting in a decrease in value of such commercial mortgage-backed securities, including your certificates, and spreads on those indices may be affected by a variety of factors, |
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and may or may not be affected for reasons involving the commercial and multifamily real estate markets and may be affected for reasons that are unknown and cannot be discerned. |
· | The market value of your certificates also may be affected by many other factors, including then-prevailing interest rates and market perceptions of risks associated with commercial mortgage lending. A change in the market value of the certificates may be disproportionately impacted by upward or downward movements in current interest rates. |
See “Risk Factors—Risks Related to the Offered Certificates—Limited Liquidity and Market Value May Adversely Affect Payments on Your Certificates” below.
Risks Related to the Mortgage Loans
Your Investment Is Not Insured or Guaranteed and Your Source for Repayments Is Limited to Payments Under the Mortgage Loans
Payments under the mortgage loans and the certificates are not insured or guaranteed by any governmental entity or mortgage insurer. Accordingly, the sources for repayment of your certificates are limited to amounts due with respect to the mortgage loans. Payment of amounts due under a mortgage loan prior to its maturity or anticipated repayment date is primarily dependent on the sufficiency of the net operating income of the related mortgaged property. Payment of the balloon payment of a mortgage loan that is a balloon loan at its maturity, or on its anticipated repayment date, is primarily dependent upon the borrower’s ability to sell or refinance the mortgaged property for an amount sufficient to repay the mortgage loan.
You should consider all of the mortgage loans to be non-recourse loans. Even in those cases where recourse to a borrower or guarantor is permitted under the related mortgage loan documents, we have not necessarily undertaken an evaluation of the financial condition of any of these persons. If a default occurs, the lender’s remedies generally are limited to foreclosing against the specific properties and other assets that have been pledged to secure the mortgage loan. Those remedies may be insufficient to provide a full return on your investment.
It is common for non-recourse mortgage loans to provide for certain carveouts to the non-recourse provisions, such as for fraud and other bad acts, among other things. Often, an individual or entity separate from the related borrower will provide a guaranty of payment with respect to the non-recourse carve-outs. However, such a guaranty may often be limited. For example, with respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as Grapevine Town Center, representing approximately 2.1% of the initial pool balance, the carveout to the non-recourse provisions, and therefore the related guaranty, is limited to the voluntary bankruptcy of the related borrower entity.
In addition, in connection with the origination of certain mortgage loans, the related borrower may have been permitted to provide a guaranty from its parent or loan sponsor in lieu of funding a reserve or providing an irrevocable letter of credit. Such a guaranty may also be permitted in lieu of funding a reserve or providing an irrevocable letter of credit in the future. As among the ten (10) largest mortgage loans or groups of cross-collateralized mortgage loans in the mortgage pool, examples include the following:
· | With respect to the TKG 3 Retail Portfolio mortgage loan, representing approximately 9.0% of the initial pool balance, E. Stanley Kroenke, the non-recourse carveout guarantor of the related mortgage loan, provided a guaranty for the payment of taxes, insurance, replacement costs and tenant improvements and leasing commissions in lieu of the related borrower funding cash escrow reserves at the origination of the related mortgage loan. |
· | With respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as Alderwood Mall, representing approximately 5.7% of the initial pool balance, GGP/Homart II L.L.C., the related non-recourse carveout guarantor, delivered an indemnity agreement for tenant improvement costs and leasing commissions in lieu of establishing the up front deposit in escrow of $591,860 required under the related mortgage loan agreement. During any related trigger period, GGP/Homart II L.L.C. must make monthly deposits of $32,712 for tenant improvement costs and leasing commissions reserves, provided that such deposits are not required to the extent that the amount then on deposit in the related reserve account equals or exceeds $392,541. |
A loan sponsor on a guaranty in lieu of reserves will typically be an individual or operating entity; as such, it is capable of incurring liabilities, whether intentionally (such as incurring other debt) or unintentionally (such as being named in a lawsuit). In addition, such individuals and entities are not restricted from filing for bankruptcy protection. A loan sponsor on a guaranty may be a guarantor of obligations other than related to the mortgage loan. As such, the net worth of a guarantor may be significantly reduced over time. It should also be noted that in most cases, the net worth of a guarantor is less than (and in most cases, significantly less than) the balance of the mortgage loan. Notwithstanding any net worth requirements that may be contained in a guaranty, there can be no assurance that the net worth requirements are adequate to satisfy guaranteed risks. Furthermore, there can be no assurance that a loan sponsor or guarantor will be willing or financially able to satisfy guaranteed obligations.
The Repayment of a Commercial Mortgage Loan Is Dependent on the Cash Flow Produced by the Property Which Can Be Volatile and Insufficient to Allow Timely Payment on Your Certificates
The mortgage loans are secured by various types of income-producing multifamily and commercial properties. Commercial lending is generally thought to expose a lender to greater risk than one-to-four family residential lending because, among other things, it typically involves larger loans.
The repayment of a commercial mortgage loan is typically dependent upon the ability of the applicable property to produce cash flow. Repayment of mortgage loans secured by cooperative properties typically depends upon the payments received by the cooperative corporation from its tenants/shareholders. Even the liquidation value of a commercial property is determined, in substantial part, by the amount of the property’s cash flow (or its potential to generate cash flow). However, net operating income and cash flow can be volatile and may be insufficient to cover debt service on the loan at any given time. See “Risk Factors—Many Risk Factors Are Common to Most or All Multifamily and Commercial Properties” in the accompanying prospectus.
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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 under mortgage loans secured by such properties.
In addition, underwritten or adjusted cash flows, by their nature, are speculative and are based upon certain assumptions and projections. The failure of any such assumptions or projections in whole or in part could cause the underwritten or adjusted cash flows to vary substantially from the actual net operating income of a mortgaged property. See “—Debt Service Coverage Ratio and Net Cash Flow Information is Based on Numerous Assumptions” below.
The Prospective Performance of the Commercial and Multifamily Mortgage Loans Included in the Issuing Entity Should Be Evaluated Separately from the Performance of the Mortgage Loans in any of Our Other Trusts
As a result of the distinct nature of each pool of commercial mortgage loans and the separate mortgage loans within the pool, this prospectus supplement does not include disclosure concerning the delinquency and loss experience of static pools of periodic originations by the sponsors of commercial mortgage loans (known as “static pool information”). Because of the highly heterogeneous nature of the mortgaged properties securing the mortgage loans in commercial mortgage-backed securities transactions, static pool information for prior securitized pools, even those involving the same property types (e.g., hotels or office buildings), may be misleading, since the economics of the properties and terms of the loans may be materially different. Therefore, you should evaluate this offering on the basis of the information set forth in this prospectus supplement with respect to the mortgage loans, and not on the basis of any successful performance of other pools of securitized commercial mortgage loans.
Certain Mortgage Loans Are Secured By Mortgaged Properties That Have a Limited Operating History or Do Not Have Historical Financial Information
100% of the mortgage loans were originated within the twelve (12) months prior to the cut-off date. The mortgaged properties securing certain of the mortgage loans are newly constructed, recently opened and/or recently acquired and, as such, have a limited operating history or do not have historical financial information. There can be no assurance that any of the properties, whether newly constructed and/or recently opened or otherwise, will perform as anticipated. See “Description of the Mortgage Pool—Material Terms and Characteristics of the Mortgage Loans—Mortgaged Properties with Limited or No Operating History” in this prospectus supplement.
Converting Commercial Properties to Alternative Uses May Require Significant Expenses Which Could Reduce Payments on Your Certificates
Some of the mortgaged properties may not be readily convertible to alternative uses if those properties were to become unprofitable for any reason under their current use. For example:
· | converting commercial properties to alternate uses or converting single-tenant commercial properties to multi-tenant properties generally requires substantial capital expenditures; |
· | a mortgaged property may not be readily convertible due to restrictive covenants related to such mortgaged property, such as use and other restrictions imposed by a condominium declaration or a related ground lease; |
· | certain properties may be subject to certain restrictions in order to remain eligible for low income housing tax credits or governmental subsidized rental payments that could prevent the conversion of the mortgaged property to alternative uses; |
· | zoning or other restrictions, including the designation of a property as a historical landmark, may prevent alternative uses; |
· | movie theater space would not easily be converted to other uses due to the unique construction requirements of movie theaters; and |
· | properties that are legally permitted to be used in a non-conforming manner may be subject to restrictions that would require compliance with current zoning laws, which may include non-operation of the subject property for a period of time. |
In addition, with respect to the mortgaged property identified on Appendix I to this prospectus supplement as Preferred Freezer - Vernon, CA, representing approximately 2.2% of the initial pool balance, 100% of the net rentable square footage of such mortgaged property is operated as a refrigerated cold storage facility. Cold storage facilities may have unique risks such as short term leases due to seasonal use, making income potentially more volatile than for properties with longer term leases, and customized refrigeration design, rendering such facilities less readily convertible to alternative uses.
With respect to any such mortgaged properties, conversion could result in a significant adverse effect on, or interruption of, the revenues generated by such mortgaged properties. The liquidation value of such a mortgaged property may be substantially less than would be the case if the mortgaged property were readily adaptable to other uses, and as a result, less funds would be available for distributions on your certificates.
Certain Risks of Movie Theater Tenants. Certain of the mortgaged properties may include tenants that operate as movie theaters. Three (3) mortgaged properties, securing mortgage loans representing approximately 12.6% of the initial pool balance, have a movie theater that is among the five (5) largest tenants at the related mortgaged property. See Appendix I to this prospectus supplement. Properties with movie theater tenants are exposed to unique risks. Aspects of building site design and adaptability affect the value of a theater and make it difficult to easily convert to another use. Decreasing attendance at a theater could also adversely affect revenue of the theater, which may, in turn, cause the tenant to experience financial difficulties, resulting in downgrades in their tenant ratings, if applicable, and in certain cases, bankruptcy.
Certain Risks of Restaurant Tenants. Certain of the mortgaged properties may include tenants that operate as restaurants. Fourteen (14) mortgaged properties, securing mortgage loans representing approximately 15.5% of the initial pool balance, have a restaurant that is among the five (5) largest tenants at the related mortgaged property. See Appendix I to this prospectus supplement. Restaurants are subject to certain unique risks including that restaurant space is not easily convertible to other types of retail space (or office space, if applicable) and that restaurant receipts are not only affected by objective factors but by subjective factors. For instance, restaurant receipts are affected by such varied influences as the current personal income levels in the community, an individual consumer’s preference for type of
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food, style of dining and restaurant atmosphere, the perceived popularity of a restaurant, food safety concerns related to personal health or the handling of food items at the restaurant or by food suppliers and the actions/behaviors of staff and management and level of service to the customers.
Certain Risks of Medical or Dental Office Tenants. Certain of the mortgaged properties may be operated in whole or in part as medical or dental offices. Ten (10) mortgaged properties, securing mortgage loans representing approximately 16.4% of the initial pool balance, have a medical or dental office that is among the five (5) largest tenants at the related mortgaged property. See Appendix I to this prospectus supplement. In addition, tenants at certain of the office properties may operate as medical or dental offices. The performance of a medical or dental office property may depend on the proximity of the property to a hospital or other health care establishment and on reimbursements for patient fees from private or government-sponsored insurance companies. The sudden closure of a nearby hospital may adversely affect the value of a medical or dental office property. In addition, issues related to reimbursement (ranging from nonpayment to delays in payment) from private or government-sponsored insurers could adversely impact cash flow at such mortgaged properties. Moreover, medical or dental office properties may appeal to a narrow market of tenants and the value of such a property may be adversely affected by the availability of competing medical or dental office properties.
Certain Risks of Retail Bank Branches. Certain of the mortgaged properties may include tenants that operate as bank branches. Six (6) mortgaged properties, securing mortgage loans representing approximately 11.4% of the initial pool balance, have a bank branch that is among the five (5) largest tenants at the related mortgaged property. See Appendix I to this prospectus supplement. Bank branches are specialty-use properties that are outfitted with vaults, teller counters and other customary installations and equipment that require significant capital expenditures. The ability to lease these properties to entities other than financial institutions may be difficult due to the added cost and time of refitting the properties. Additionally, certain of these mortgaged properties may have been designated as historic or landmark buildings or may be located in areas designated as historic or landmark. Such properties may have restrictions related to renovations, construction or other restrictions and may not be permitted to be converted to alternative uses because of such restrictions.
A concentration of leases to banks as to a related mortgage loan or an individual mortgaged property securing a related mortgage loan could have a negative effect on net operating income in the event of a downturn in the banking industry or a shift in the banking industry business model concerning retail branches. Individual banks, as well as the banking industry in general, may be adversely affected by negative economic and market conditions throughout the United States or in the local economies in which regional or community banks operate. In addition, changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, may have an adverse impact on banks’ loan portfolios and allowances for loan losses. As a result, the mortgaged properties may experience higher rates of lease default or terminations in the event of a downturn in the banking industry than they would if the tenant base were more diversified. This, in turn, could cause losses on the mortgage loans and on your investment in the certificates offered hereby.
Certain Risks of Health Club, Fitness Center or Exercise Studio Space Tenants. Certain of the mortgaged properties may include tenants that operate as health clubs, fitness centers or exercise studios. Eight (8) mortgaged properties, securing mortgage loans representing approximately 23.5% of the initial pool balance, have a health club, fitness center or exercise studio that is among the five (5) largest tenants at the related mortgaged property. See Appendix I to this prospectus supplement. Several factors may adversely affect the value and successful operation of a health club, fitness center or exercise studio, including:
· | the physical attributes of the property (e.g., its age, appearance and layout); |
· | the reputation, safety, convenience and attractiveness of the property to users; |
· | the quality and philosophy of management; |
· | management’s ability to control membership growth and attrition; |
· | competition in the tenant’s marketplace from other health clubs and alternatives to health clubs; and |
· | adverse changes in economic and social conditions and demographic changes (e.g., population decreases or changes in average age or income), which may result in decreased demand. |
In addition, there may be significant costs associated with changing consumer preferences (e.g., multi-purpose clubs from single-purpose clubs or varieties of equipment, classes, services and amenities). In addition, health clubs, fitness centers and exercise studios may not be readily convertible to alternative uses if those properties were to become unprofitable for any reason. The liquidation value of any such health club, fitness center or exercise studio consequently may be less than would be the case if the property were readily adaptable to changing consumer preferences for other uses.
Tenant Concentration Increases the Risk That Cash Flow Will Be Interrupted Which Could Reduce Payments on Your Certificates
A deterioration in the financial condition of a tenant can be particularly significant if a mortgaged property is leased to a single or large tenant or a small number of tenants, because rent payable by such tenants generally will represent all or a significant portion of the cash flow available to the borrower to pay its obligations to the lender. In addition, more time may be required to re-lease a larger tenant’s space, and substantial capital costs may be incurred to make the space appropriate for replacement tenants. We cannot provide assurances that any major tenant will continue to perform its obligations under its lease or that if it fails to perform, a replacement tenant could be readily found.
Such risks are particularly significant with respect to retail properties, in which case fluctuations in the financial performance of an anchor, shadow anchor or large tenant may significantly impact the financial performance of the related property. Such fluctuations may have a particularly impact the financial performance of smaller tenants and may trigger cotenancy provisions in such tenants’ leases that reduce the amount of rent payable or permit such tenants to terminate their leases. We note that several large retail companies have recently announced store closures in response to decreased consumer demand and increased competitive pressures. For example, (i) on March 29, 2012, Best Buy announced its plan to close 50 of its U.S. stores in 2013 and cut $800 million in costs by 2015, (ii) on December 4, 2014, Sears Holdings Corporation announced plans to close approximately 235 stores in 2014 and indicated that it may close additional stores beyond that target, and (iii) on January 15, 2014, J.C. Penney announced that it expects to close 33 underperforming stores. One or more of such companies may be an anchor, shadow anchor or large tenant at, or with respect to, certain mortgaged properties. For example, with respect to the
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mortgaged property identified on Appendix I to this prospectus supplement as Alderwood Mall, representing approximately 5.7% of the initial pool balance, Sears and J.C. Penney are anchor stores, however, each such anchor owns its own space and is therefore not a tenant at the related mortgaged property. In addition, with respect to the mortgaged property identified on Appendix I to this prospectus supplement as TKG 3 Retail Portfolio – Manhattan Marketplace, KS, representing approximately 1.1% of the initial pool balance by allocated loan amount, Best Buy is the second largest tenant at the related mortgaged property, representing approximately 20.2% of the net square footage. We cannot assure you that any store not listed in a store closure plan will remain open for business or that, in light of increased competitive pressures in the retail industry, any retail anchor, large anchor or large tenant will continue to operate in its leased space. See “—A Significant Concentration of Retail Properties in the Mortgage Pool Will Subject Your Investment to the Special Risks of Retail Properties—Competition May Adversely Affect the Performance of the Mortgaged Property” herein.
Six (6) of the mortgaged properties, representing approximately 6.1% of the initial pool balance by allocated loan amount, are entirely, or almost entirely, leased to a single tenant. In addition, some of the tenants at the mortgaged properties (including sole tenants or other significant concentrations of tenants) have lease termination option dates or lease expiration dates that are prior to or shortly after the related maturity date or anticipated repayment date, and such expirations or terminations may not have been addressed by escrow requirements or other mitigating provisions. See Appendix I to this prospectus supplement for the lease expiration dates for each of the five (5) largest tenants by square footage with respect to each retail, office, industrial and mixed use mortgaged property. Even if none of the top five (5) tenants at a particular mortgaged property have leases that expire before the maturity of the related mortgage loan, there may be a significant percentage of leases at a particular mortgaged property that expire in a single calendar year, a rolling 12-month period or prior to the maturity of a mortgage loan. Eight (8) of the fifteen (15) largest mortgage loans or groups of cross-collateralized mortgage loans, representing approximately 39.3% of the initial pool balance, are secured, in whole or in part, by retail, office, industrial and/or mixed use mortgaged properties at which more than 50% of the leases by net rentable area expire during the term of the related mortgage loan. We cannot assure you that such leases will be renewed or, even if renewed, will be renewed at the same rate.
In some cases the sole tenant or major tenant related to the borrower is physically occupying space related to its business; in other cases, the borrower tenant is a tenant under a master lease with the borrower, under which the affiliated tenant is obligated to make rent payments but does not physically occupy the related space at the mortgaged property. See “Description of the Mortgage Pool—Additional Mortgage Loan Information” for a description of “master leases.” There can be no assurance the space “leased” by this borrower affiliate will eventually be occupied by third party tenants.
In addition to tenant concentration, another factor that you should consider is that retail, industrial and office properties also may be adversely affected if there is a concentration of tenants in the same or similar business or industry. In these cases, an issue with a particular tenant could have a disproportionately large impact on the mortgage pool and adversely affect distributions to certificateholders. Similarly, an issue with respect to a particular industry or entity could also have a disproportionately large impact on the mortgage pool.
Please see Appendix III to this prospectus supplement for more information on any of the mortgaged properties related to the fifteen (15) largest mortgage loans or groups of cross-collateralized mortgage loans in the mortgage pool.
The Related Borrowers May Have Difficulty Re-Leasing Mortgaged Properties
Repayment of mortgage loans secured by retail, office and industrial properties will be affected by the expiration of leases and the ability of the related borrowers and property managers to renew the leases or to relet the space on comparable terms. In addition, certain properties may have tenants that are paying rent but are not in occupancy or may have vacant space that is not leased. Any “dark” space may cause the property to be less desirable to other potential tenants or the related tenant may be more likely to default in its obligations under the lease. We cannot assure you that those tenants will continue to fulfill their lease obligations or that the space will be relet.
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 related mortgaged properties. Certain mortgage loans require reserves for tenant improvements and leasing commissions, which may serve to defray some of, but not necessarily all of, those costs.
If a mortgaged property has multiple tenants, re-leasing costs and costs of enforcing remedies against defaulting tenants may be more frequent than in the case of mortgaged properties with fewer tenants, thereby reducing the cash flow available for debt service payments. These costs may cause a borrower to default in its obligations to a lender. Multi-tenanted mortgaged properties also may experience higher continuing vacancy rates and greater volatility in rental income and expenses.
A Concentration of Mortgage Loans in the Mortgage Pool Increases the Sensitivity to Loss Which Could Reduce Payments on Your Certificates
The three (3) largest mortgage loans or groups of cross-collateralized mortgage loans represent approximately 9.0%, 7.6% and 6.8% respectively, of the initial pool balance. The ten (10) largest mortgage loans or groups of cross-collateralized mortgage loans in the aggregate represent approximately 57.7% of the initial pool balance. Each of the other mortgage loans in the mortgage pool represents no more than approximately 2.7% of the initial pool balance. See Appendix III to this prospectus supplement for more information on the fifteen (15) largest mortgage loans or groups of cross-collateralized mortgage loans.
A Concentration of Mortgage Loans with the Same or Related Borrowers Increases the Possibility of Loss on Those Mortgage Loans Which Could Reduce Payments on Your Certificates
Six (6) groups of mortgage loans, representing approximately 3.6%, 2.4%, 1.9%, 1.7%, 0.6% and 0.6%, respectively, of the initial pool balance, were made to the same borrower or to borrowers that are affiliated with one another through partial or complete direct or indirect common ownership and, in general, have related mortgaged properties that are commonly managed. The mortgage loans secured by the mortgaged properties identified on Appendix I to this prospectus supplement as XL Self Storage Portfolio - Rancho Cucamonga and XL Self Storage Portfolio - Salt Lake City, representing approximately 1.0% and 0.7%, respectively, of the initial pool balance, are also cross-collateralized and cross-defaulted.
Mortgage loans with the same borrower or related borrowers pose additional risks. Among other things:
· | financial difficulty at one mortgaged property could cause the owner to defer maintenance at another mortgaged property in order to satisfy current expenses with respect to the troubled mortgaged property; |
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· | the quality and experience of the persons or entities who control the borrower as operators of commercial real estate may affect all related mortgaged properties; |
· | the owner could attempt to avert foreclosure on one mortgaged property by filing a bankruptcy petition that might have the effect of interrupting monthly payments for an indefinite period on all of the related mortgage loans; and |
· | the bankruptcy or insolvency of any such borrower or respective affiliate could have an adverse effect on the operation of all of the related mortgaged properties and on the ability of such related mortgaged properties to produce sufficient cash flow to make required payments on the related mortgage loans. |
For more information regarding risks associated with cross-collateralization arrangements, see “Risk Factors—Some Provisions in the Mortgage Loans Underlying Your Offered Certificates May Be Challenged as Being Unenforceable” in the accompanying prospectus.
See “Risk Factors—Borrower Concentration Within a Trust Exposes Investors to Greater Risk of Default and Loss” in the accompanying prospectus.
A Concentration of Mortgaged Properties in a Limited Number of Locations May Adversely Affect Payments on Your Certificates
Concentrations of mortgaged properties in geographic areas may increase the risk that adverse economic or other developments or a natural disaster or act of terrorism affecting a particular region of the country could increase the frequency and severity of losses on mortgage loans secured by those properties. In the past, several regions of the United States have experienced significant real estate downturns at times when other regions have not. Regional economic declines or adverse conditions in regional real estate markets could adversely affect the income from, and market value of, the mortgaged properties located in the region. Other regional factors—e.g., earthquakes, floods or hurricanes or changes in governmental rules or fiscal policies—also may adversely affect those mortgaged properties.
The mortgaged properties are located in twenty-two (22) different states. Approximately 26.4%, 20.9%, 8.9%, 8.4%, 6.7% and 6.2% of the mortgaged properties, by allocated loan amount, are located in New York, California, Illinois, Washington, Texas and Florida, respectively; concentrations of mortgaged properties in other states do not exceed 3.8% of the initial pool balance. Approximately 20.9%, 6.7%, 6.2% and 0.7% of the mortgaged properties by allocated loan amount are located in California, Texas, Florida and Georgia, respectively, and may be more susceptible to special hazards that may not be adequately covered by insurance (such as earthquakes, flooding and hurricanes). The mortgage loans generally do not require any borrowers to maintain earthquake insurance. Mortgaged properties located in coastal areas, including, but not limited to, Texas, Florida and Georgia, also may be more generally susceptible to hurricanes. Over the past several years, hurricanes in the Gulf Coast region of the United States have resulted in severe property damage as a result of the high winds and associated flooding. The mortgage loans do not all require flood insurance unless the related mortgaged properties are in a flood zone and flood insurance is available. We cannot assure you that any hurricane damage would be covered by insurance. Regional areas affected by such events often experience disruptions in travel, transportation and tourism, loss of jobs and an overall decrease in consumer activity, and often a decline in real estate-related investments. We cannot assure you that the economies in such impacted areas would recover sufficiently to support income-producing real estate at pre-event levels or that the costs of the related clean-up would not have a material adverse effect on the local or national economy. If a borrower does not have insurance against such risks and a severe casualty occurs at a mortgaged property, the borrower may be unable to generate income from the mortgaged property in order to make payments on the related mortgage loan.
Some of the mortgaged properties are located in areas that, based on low population density, poor economic demographics (such as higher than average unemployment rates, lower than average annual household income and/or overall loss of jobs) and/or negative trends in such regards, would be considered secondary or tertiary markets.
See “Risk Factors—Geographic Concentration Within a Trust Exposes Investors to Greater Risk of Default and Loss” in the accompanying prospectus.
A Concentration of Mortgage Loans with the Same Property Types Increases the Possibility of Loss on Those Mortgage Loans Which Could Reduce Payments on Your Certificates
A concentration of mortgage loans secured by the same property type can increase the risk that a decline in a particular industry will have a disproportionately large impact on the pool of mortgage loans. The following property types represent the indicated percentage of the initial pool balance by allocated loan amount:
· | retail properties represent approximately 41.9%; |
· | multifamily properties represent approximately 16.7%; |
· | leased fee properties represent approximately 14.3%; |
· | hospitality properties represent approximately 8.7%; |
· | mixed use properties represent approximately 8.0%; |
· | office properties represent approximately 6.4%; |
· | industrial properties represent approximately 2.2%; and |
· | self storage properties represent approximately 1.7%. |
See “Risk Factors—Repayment of a Commercial or Multifamily Mortgage Loan Depends Upon the Performance and Value of the Underlying Real Property, Which May Decline Over Time, and the Related Borrower’s Ability to Refinance the Property, of Which There Is No Assurance” and “Risk Factors—The Various Types of Multifamily and Commercial Properties that May Secure Mortgage Loans Underlying a Series of Offered Certificates May Present Special Risks” in the accompanying prospectus.
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A Significant Concentration of Retail Properties in the Mortgage Pool Will Subject Your Investment to the Special Risks of Retail Properties
Twenty-nine (29) of the mortgaged properties, representing approximately 41.9% of the initial pool balance by allocated loan amount, are retail properties. Certain other mortgaged properties, although not characterized as retail properties in this prospectus supplement, may have a retail component. The quality and success of a retail property’s tenants significantly affect the property’s value. The success of retail properties can be adversely affected by local competitive conditions and changes in consumer spending patterns. A borrower’s ability to make debt service payments can be adversely affected if rents are based on a percentage of the tenant’s sales and sales decline or if the closure of one store gives rise to lease provisions permitting the closure of another store. Additional factors that can affect the success of a retail property include rights that certain tenants may have to terminate their leases, the location of the subject property and the physical condition and amenities of the subject property in relation to competing buildings.
See also “Risk Factors—The Various Types of Multifamily and Commercial Properties that May Secure Mortgage Loans Underlying a Series of Offered Certificates May Present Special Risks—Retail Properties” in the accompanying prospectus.
The Presence or Absence of an “Anchor Tenant” May Adversely Affect the Economic Performance of a Retail Property. Whether a retail property is “anchored,” “shadow anchored” or “unanchored” is also an important consideration. The presence or absence of an “anchor tenant” or a “shadow anchor tenant” in or near a retail property 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” located on the related property is usually proportionately larger in size than most other tenants in the property and is vital in attracting customers to a retail property. Eight (8) of the mortgaged properties, representing approximately 17.3% of the initial pool balance by allocated loan amount, are properties considered by the mortgage loan seller to be leased in whole or in part to or are occupied by anchor tenants.
Many of the retail properties securing one or more mortgage loans also have shadow anchor tenants. A “shadow anchor tenant” is usually proportionally larger in size than most tenants in the property, is important in attracting customers to a retail property and is located sufficiently close and convenient to the property so as to influence and attract potential customers, but is not located on the mortgaged property.
The economic performance of an anchored or shadow anchored retail property will consequently be adversely affected by:
· | an anchor tenant’s or shadow anchor tenant’s failure to renew its lease or termination of an anchor tenant’s or shadow anchor tenant’s lease; |
· | if the anchor tenant or shadow anchor tenant owns its own site, a decision to vacate; |
· | the bankruptcy or economic decline of an anchor tenant, shadow anchor tenant or self-owned anchor; or |
· | the cessation of the business of an anchor tenant, a shadow anchor tenant or of a self-owned anchor (notwithstanding its continued payment of rent). |
Several mortgaged properties securing mortgage loans in the mortgage pool have anchor tenants whose leases expire during the term of the related mortgage loan. See Appendix I to this prospectus supplement. Furthermore, there may be retail properties with anchors (which may or may not be tenants) that are permitted to cease operating at any time because their leases or other operative agreements do not impose an obligation to remain open for business, or because such obligations have expired.
There may be retail properties with anchors (which may or may not be tenants) that are permitted to cease operating at any time if certain other stores are not operated at those locations. Furthermore, there may be non-anchor tenants that are permitted to offset all or a portion of their rent, pay rent based solely on a percentage of their sales or to terminate their leases if certain anchors and/or major tenants are either not operated or fail to meet certain business objectives. See also “—Tenant Concentration Increases the Risk That Cash Flow Will Be Interrupted Which Could Reduce Payments on Your Certificates,” “—The Related Borrowers May Have Difficulty Re-Leasing Mortgaged Properties” and “—Risks of Lease Early Termination Options” in this prospectus supplement.
Competition May Adversely Affect the Performance of the Mortgaged Property. 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 securing mortgage loans included in the mortgage pool, as well as the income from, and market value of, the mortgaged properties. Moreover, competing retail properties may be located or built in the areas where the retail properties are located, which could adversely affect the rents collectible at the retail properties securing mortgage loans included in the mortgage pool, as well as the income from, and market value of, the mortgaged properties.
A Significant Concentration of Hospitality Properties in the Mortgage Pool Will Subject Your Investment to the Special Risks of Hospitality Properties
Five (5) of the mortgaged properties, representing approximately 8.7% of the initial pool balance by allocated loan amount, are hospitality properties. Various factors may adversely affect the economic performance of a hospitality property, including:
· | location of property and proximity to transportation, major population centers or attractions; |
· | adverse economic and social conditions, either local, regional, national or international which may limit the amount that can be charged for a room, reduce occupancy levels and reduce the demand for conference and other venue space at the related property; |
· | the presence or construction of competing hotels or resorts; |
· | continuing expenditures for modernizing, refurbishing, and maintaining existing facilities prior to the expiration of their anticipated useful lives; |
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· | franchise affiliation (or lack thereof); |
· | limited service hospitality properties have lower barriers to entry than other types of hospitality properties, and over-building could occur; |
· | a deterioration in the financial strength or managerial capabilities of the owner and/or operator of a hotel; |
· | changes in travel patterns, terrorist attacks, increases in energy prices, strikes, natural disasters, bad weather, relocation of highways or the construction of additional highways; |
· | management ability of property managers and/or whether management contracts or franchise agreements are renewed or extended upon expiration; |
· | suitability for a particular occupant or category of occupants; |
· | building design and adaptability; and |
· | relative illiquidity of hotel investments which limits the ability of the borrowers and property managers to respond to changes in economic or other conditions. |
Because hotel rooms generally are rented for short periods of time, the financial performance of hotels tends to be affected by adverse economic conditions, natural disasters and competition more quickly than are other types of commercial properties.
Moreover, the hotel and lodging industry is generally seasonal in nature. This seasonality can be expected to cause periodic fluctuations in a hotel property’s revenues, occupancy levels, room rates and operating expenses.
A hotel’s ability to attract customers and/or a portion of its revenues may depend on its having a liquor license. The laws and regulations relating to liquor licenses generally prohibit the transfer of those liquor licenses to any other person. In the event of a foreclosure of a hotel property with a liquor license, the special servicer on behalf of the issuing entity or a purchaser in a foreclosure sale would likely have to apply for a new license. There can be no assurance that a new liquor 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 generated by the hotel.
The availability of competing hospitality properties may also have an effect on the financial performance of such mortgaged properties, and consequently, on the related borrower’s ability to repay its mortgage loan. For example, with respect to the mortgaged property identified on Appendix I to this prospectus supplement as Hilton Garden Inn W 54th Street, securing a mortgage loan representing approximately 4.5% of the initial pool balance, a total of 4,737 new hotel rooms are expected to be delivered in Manhattan in 2015 and 4,373 new hotel rooms are expected to be delivered in 2016, including approximately 2,085 such rooms in the same neighborhood as the related mortgaged property over such period.
The Performance of a Hospitality Property Depends in Part on the Performance of its Franchisor or Management Company. A hotel property securing a mortgage loan may be affiliated with a franchise company through a franchise agreement or a hotel management company through a management agreement. The performance of a hotel property affiliated with a franchise or hotel management company depends in part on:
· | the continued existence, reputation and financial strength of the franchisor or hotel management company; |
· | the public perception of the franchise or management company or hotel chain service mark; and |
· | the duration of the franchise licensing agreement or management agreement. |
The continuation of a franchise agreement or management agreement is subject to specified operating standards and other terms and conditions set forth in such agreements. The failure of a borrower to maintain such standards or adhere to other applicable terms and conditions could result in the loss or cancellation of their rights under the franchise or hotel management agreement.
Certain franchise agreements or management agreements may expire or grant the franchisor a termination right that is exercisable during the term of the related mortgage loan or soon thereafter, and there can be no assurance that they can be renewed.
In addition, certain franchise agreements may not be automatically assignable to subsequent holders of the mortgage loan, and there can be no assurance that a future assignment of the franchise agreement will be approved by the franchisor. Further, replacement franchises and/or hotel managers may require significantly higher fees as well as the investment of capital to bring the hotel into compliance with the requirements of the replacement franchisor and/or hotel managers.
Any provision in a franchise agreement or management agreement providing for termination because of the bankruptcy of a franchisor or manager generally will not be enforceable. 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.
In some cases where a hospitality property is subject to a license or franchise agreement, the licensor or franchisor has required the completion of various repairs and/or renovations pursuant to a property improvement plan issued by the franchisor. Failure to complete those repairs and/or renovations in accordance with the plan could result in the hospitality property’s losing its license or franchise. In these circumstances, the terms of the related mortgage loan will often require the establishment of reserves in connection with any of those repairs and/or renovations. However, we cannot assure you that any amounts reserved will be sufficient to complete the repairs and/or renovations required with respect to any affected hospitality property. In addition, in some cases, those reserves will be maintained by the franchisor or property manager. Furthermore, the lender may not require a reserve for repairs and/or renovations in all instances. In addition, the related borrower with respect to such mortgaged property has the right to replace the existing license agreement with an alternative license or franchise agreement.
In addition, in certain cases, mortgaged properties may not be, or in the future may no longer be, affiliated with a franchise under a franchise agreement. The lack of a nationally recognized franchise may impact occupancy and revenue as the related mortgaged property
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does not have the benefit of a nationally linked reservation system or the marketing benefits which come from association with a nationally recognized franchisor.
See also “Risk Factors—The Various Types of Multifamily and Commercial Properties that May Secure Mortgage Loans Underlying a Series of Offered Certificates May Present Special Risks—Hospitality Properties” in the accompanying prospectus.
Mortgaged Properties with Condominium Ownership Could Adversely Affect Payments on Your Certificates
One (1) of the mortgage loans, representing approximately 6.0% of the initial pool balance, is secured in whole or in part by the related borrower’s fee simple or leasehold interest in one or more condominium units (including, solely for purposes of the discussions herein relating to condominiums, planned unit developments). The management and operation of a condominium is generally controlled by a condominium board representing the owners of the individual condominium units, subject to the terms of the related condominium rules or by-laws. Generally, the consent of a majority of the board members is required for any actions of the condominium board. The condominium interests described above in some cases may constitute less than a majority of such voting rights and/or may not entail an ability to prevent adverse changes in the governing organizational document for the condominium entity. The condominium board is generally responsible for administration of the affairs of the condominium, including providing for maintenance and repair of common areas, adopting rules and regulations regarding common areas, and obtaining insurance and repairing and restoring the common areas of the property after a casualty. There can be no assurance that the borrower under a mortgage loan secured by one or more interests in that condominium will have any control over decisions made by the related condominium board. There can be no assurance that the related condominium board will always act in the best interests of the borrower under those mortgage loans. Notwithstanding the insurance and casualty provisions of the related mortgage loan documents, the condominium board may have the right to control the use of casualty proceeds. In addition, the condominium board generally has the right to assess individual unit owners for their share of expenses related to the operation and maintenance of the common elements. If an owner of another unit fails to pay its allocated assessments, the related borrower may be required to pay those assessments in order to properly maintain and operate the common elements of the property. Although the condominium board generally may obtain a lien against any unit owner for common expenses that are not paid, the lien is generally extinguished if a mortgagee takes possession pursuant to a foreclosure. Each unit owner is responsible for maintenance of its respective unit and retains essential operational control over its unit.
Due to the nature of condominiums and a borrower’s ownership interest therein, a default on a loan secured by the borrower’s interest in one or more condominium units may not allow the holder of the mortgage loan the same flexibility in realizing upon the underlying real property as is generally available with respect to properties that are not secured by condominiums. The rights of any other unit owners, the governing documents of the owners’ association and state and local laws applicable to condominiums must be considered and respected. Consequently, servicing and realizing upon such collateral could subject the issuing entity to greater delay, expense and risk than servicing and realizing upon collateral for other loans that are not secured by condominiums. For example, with respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as Waterfront at Port Chester, representing approximately 6.0% of the initial pool balance, the three-floor parking garage located on the mortgaged property is owned in a condominium structure with the Metropolitan Transportation Authority (“MTA”) whereby the related borrower owns the first and third floors and the MTA owns the second floor. The borrower’s unit (Unit A) comprises 73.8% of the common interests and provides the borrower control over 66.7% of the board of managers of the related condominium. The MTA reimburses the borrower annually for its pro rata share of operating expenses associated with the parking garage. The borrower has control over all decisions and actions of the related condominium, other than decisions to terminate the condominium regime and amending the condominium documents, which decisions and actions require the consent of all condominium unit owners.
For additional information related to the mortgaged properties primarily secured by the related borrower’s fee simple ownership interest in one or more condominium units, please see Appendix I to this prospectus supplement.
A Significant Concentration Of Multifamily Properties In The Mortgage Pool Will Subject Your Investment To The Special Risks Of Multifamily Properties
Twelve (12) of the mortgaged properties, representing approximately 16.7% of the initial pool balance by allocated loan amount, are multifamily properties. A large number of factors may adversely affect the value and successful operation of a multifamily property, including:
· | the physical attributes of the apartment building, such as its age, condition, design, appearance, access to transportation and construction quality; |
· | the quality of property management; |
· | the location of the property; |
· | distance from employment centers and shopping areas; |
· | the ability of management to provide adequate maintenance and insurance; |
· | the types of services and amenities provided at the property; |
· | the property’s reputation; |
· | the level of mortgage interest rates and favorable income and economic conditions (which may encourage tenants to purchase rather than rent housing); |
· | rent concessions and month-to-month leases, which may impact cash flow at the property; |
· | the presence of competing properties; |
· | adverse local or national economic conditions which may limit the rent that may be charged and which may result in increased vacancies; |
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· | the tenant mix (such as tenants being predominantly students or military personnel or employees of a particular business or industry) and requirements that tenants meet certain criteria (such as age restrictions for senior housing); |
· | in the case of any student housing facilities, which may be more susceptible to damage or wear and tear than other types of multifamily housing, the reliance on the financial well-being of the college or university to which it relates, competition from on-campus housing units (which may adversely affect occupancy), the physical layout of the housing (which may not be readily convertible to traditional multifamily use), and that student tenants have a higher turnover rate than other types of multifamily tenants, which in certain cases is compounded by the fact that student leases are available for periods of less than 12 months; |
· | state and local regulations (which may limit the ability to increase rents); |
· | government assistance/rent subsidy programs (which may influence tenant mobility); and |
· | national, state or local politics. |
State Regulation and Rent Control Ordinances May Affect a Borrower’s Ability to Repay its Multifamily Mortgage Loan. In addition to state regulation of the landlord tenant relationship, certain counties and municipalities impose rent control on apartment buildings. For example, with respect to the mortgaged property identified on Appendix I to this prospectus supplement as Premier Apartments, representing approximately 3.8% of the initial pool balance, twenty (20) of the apartment units (approximately 12.5% of total units) are required to be leased according to the Montgomery County’s Moderately Priced Dwelling Unit (MPDU) income and rent restrictions. These ordinances may restrict the related borrower’s ability to charge market rent and may limit rent increases to fixed percentages, to percentages of increases in the consumer price index, to increases set or approved by a governmental agency, or to increases determined through mediation or binding arbitration. Any limitations on a borrower’s ability to set or raise property rents may impair such borrower’s ability to repay its multifamily loan from its net operating income or the proceeds of a sale or refinancing of the related multifamily property.
Limitations and Restrictions Imposed by Affordable Housing Covenants, Federal Housing Subsidies, Rent Stabilization Programs or Similar Programs May Result in Losses on Mortgage Loans. Certain of the mortgage loans are secured or may be secured in the future by mortgaged properties that are subject to certain affordable housing covenants and other covenants and restrictions with respect to various tax credit, city, state and federal housing subsidies, rent stabilization or similar programs, in respect of various units within the mortgaged properties. The limitations and restrictions imposed by these programs could result in losses on the mortgage loans. In addition, in the event that the program is cancelled, it could result in less income for the project. In certain cases, housing assistance program contracts may not be assigned to the related borrower or purchaser of the property until after the origination date of the mortgage loan. We cannot assure you that these contracts will ultimately be assigned. These programs may include, among others:
· | rent limitations that would adversely affect the ability of borrower to increase rents to maintain the condition of their mortgaged properties and satisfy operating expenses; |
· | covenants that require a minimum number or percentage of units be rented to tenants who have incomes that are substantially lower than median incomes in the applicable area or region; and |
· | tenant income restrictions that may reduce the number of eligible tenants in those mortgaged properties and result in a reduction in occupancy rates. |
The difference in rents between subsidized or supported properties and other multifamily rental properties in the same area may not be a sufficient economic incentive for some eligible tenants to reside at a subsidized or supported property that may have fewer amenities or be less attractive as a residence. As a result, occupancy levels at a subsidized or supported property may decline, which may adversely affect the value and successful operation of such property.
In addition, multifamily rental properties are part of a market that, in general, is characterized by low barriers to entry. Thus, a particular multifamily rental property market with historically low vacancies could experience substantial new construction and a resultant oversupply of rental units within a relatively short period of time. Because leases with respect to a multifamily rental property are typically leased on a short-term basis, the tenants residing at a particular property may easily move to alternative multifamily rental properties with more desirable amenities or locations or to single family housing.
Government Subsidies and Federal Statutes May Affect a Borrower’s Ability to Repay its Multifamily Mortgage Loan. Some of the mortgaged properties may have tenants that rely on rent subsidies under various government funded programs, including the Section 8 Tenant-Based Assistance Rental Certificate Program of the United States Department of Housing and Urban Development. With respect to certain of the mortgage loans, the borrower may receive subsidies or other assistance from government programs. The mortgage loan seller may have underwritten the related mortgage loan on the assumption that such assistance will continue. Loss of any applicable assistance could have an adverse effect on the ability of the related borrower to make timely payments of debt service. In addition, the restrictions described above relating to the use of the related mortgaged property could reduce the market value of the related mortgaged property.
Generally, the mortgaged property must satisfy certain requirements, the borrower must observe certain leasing practices and/or the tenant(s) must regularly meet certain income requirements or the mortgaged property must have certain other characteristics consistent with government policy related to the applicable program. There is no assurance that such programs will be continued in their present form, that the borrower will continue to comply with the requirements of the programs to enable the borrower to receive the subsidies in the future, that the investors in such borrower will continue to receive the related tax benefit or that the level of assistance provided will be sufficient to generate enough revenues for the related borrower to meet its obligations under the related mortgage loans.
In addition, under the Federal Fair Housing Act, analogous statutes in some states and regulations and guidelines issued pursuant to those laws, any and all otherwise-available units in a multifamily apartment building must be made available to any disabled person who meets the financial criteria generally applied by the landlord, including implementing alterations and accommodations in certain circumstances. The costs of this compliance may be high and the penalties for noncompliance may be severe. Thus, these fair housing statutes, regulations and guidelines present a risk of increased operating costs to the borrowers under the pooled mortgage loans secured by multifamily apartment buildings, which may reduce (perhaps significantly) amounts available for payment on the related mortgage loan.
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See also “Risk Factors—The Various Types of Multifamily and Commercial Properties that May Secure Mortgage Loans Underlying a Series of Offered Certificates May Present Special Risks—Multifamily Rental Properties” in the accompanying prospectus.
A Significant Concentration of Office Properties in the Mortgage Pool Will Subject Your Investment to the Special Risks of Office Properties
Four (4) of the mortgaged properties, representing approximately 6.4% of the initial pool balance by allocated loan amount, are office properties. A large number of factors may affect the value of these office properties, including:
· | the quality of an office building’s tenants; |
· | the diversity of an office building’s tenants, reliance on a single or dominant tenant or tenants in a volatile industry (e.g., technology and internet companies that have experienced or may in the future experience circumstances that make their businesses volatile); |
· | adverse changes in population, employment growth and patterns of telecommuting and sharing office spaces; |
· | the physical attributes of the building in relation to competing buildings (e.g., age, condition, design, location, access to transportation and ability to offer certain amenities, such as sophisticated building systems); |
· | the availability of parking; |
· | the desirability of the area as a business location; |
· | the strength and nature of the local economy (including labor costs and quality, tax environment and quality of life for employees); and |
· | the suitability of a space for re-leasing without significant build-out costs. |
Moreover, the cost of refitting office space for a new tenant is often higher than the cost of refitting other types of property.
If one or more major tenants at a particular office property were to close or remain vacant, we cannot assure you that such tenants would be replaced in a timely manner or without incurring material additional costs to the related borrower and resulting in adverse economic effects.
See “—Tenant Concentration Increases the Risk That Cash Flow Will Be Interrupted Which Could Reduce Payments on Your Certificates” above. See also “Risk Factors—The Various Types of Multifamily and Commercial Properties that May Secure Mortgage Loans Underlying a Series of Offered Certificates May Present Special Risks—Office Properties” in the accompanying prospectus.
Leased Fee Properties Entail Risks that May Adversely Affect Payments on Your Certificates
Two (2) of the mortgaged properties, representing approximately 14.3% of the initial pool balance by allocated loan amount, are comprised of a fee interest in land subject to a ground lease (or, with respect to a leasehold interest that is a space lease or air rights lease, the space lease or air rights lease) granted by the borrower to another party, which party owns the improvements. In each case, the related leasehold estate is not collateral for the mortgage loan included in the issuing entity and is operated as an office property.
Land subject to a ground lease (or air rights subject to an air rights lease) presents special risks. In such cases, where the borrower owns the fee interest but not the related improvements, such related borrower will only receive the rental income from the ground lease (or air rights lease) and not from the operation of any related improvements. Any default by the lessee would adversely affect the related borrower’s ability to make payments on the related mortgage loan. While ground leases (or air rights leases) may contain certain restrictions on the use and operation of the related mortgaged property, the lessee generally enjoys the rights and privileges of a fee owner, including the right to construct, alter and remove improvements and fixtures from the land and to assign and sublet the leasehold interest. However, the borrower has the same risk of interruptions in cash flow if such lessee defaults under its lease as it would on another single tenant commercial property, without the control over the premises that it would ordinarily have as landlord. The lessee is commonly permitted to mortgage its leasehold interest, and although the leasehold mortgage is generally subject and subordinate to the fee mortgage and the ground lease (or air rights lease), the leasehold lender will often have notice and cure rights with respect to material defaults under the lease. In addition, leased fee interests are less frequently purchased and sold than other interest in commercial real property. It may be difficult for the issuing entity, if it became a foreclosing lender, to sell the fee interest if the tenant and its improvements remain on the land. In addition, if the improvements are nearing the end of their useful life, there could be a risk that the tenant defaults in lieu of performing any obligations it may otherwise have to raze the structure and return the land in raw form to the developer. Furthermore, leased fee interests are generally subject to the same risks associated with the property type of the lessee’s use of the premises because that use is a source of revenue for the payment of rent under the ground lease (or air rights lease). See “—A Significant Concentration of Office Properties in the Mortgage Pool Will Subject Your Investment to the Special Risks of Office Properties” above.
A Significant Concentration of Industrial Properties in the Mortgage Pool Will Subject Your Investment to the Special Risks of Industrial Properties
One (1) of the mortgaged properties, representing approximately 2.2% of the initial pool balance by allocated loan amount, is an industrial property. Various factors may adversely affect the economic performance of this industrial property, which could adversely affect payments on your certificates, including:
· | quality of tenant; |
· | reduced demand for industrial space because of a decline in a particular industry segment; |
· | increased supply of competing industrial space because of relative ease in constructing buildings of this type; |
· | a property becoming functionally obsolete; |
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· | insufficient supply of labor to meet demand; |
· | changes in access to the property, energy prices, strikes, relocation of highways or the construction of additional highways; |
· | location of the property in relation to access to transportation; |
· | suitability for a particular tenant; |
· | building design and adaptability; |
· | expense to convert a previously adapted space to another use; |
· | a change in the proximity of supply sources; and |
· | environmental hazards. |
Concerns about the quality of tenants, particularly major tenants, are similar in both office properties and industrial properties, although industrial properties may be more frequently dependent on a single or a few tenants.
Industrial properties may be adversely affected by reduced demand for industrial space occasioned by a decline in a particular industry segment in which the related tenant(s) conduct their businesses (for example, a decline in consumer demand for products sold by a tenant using the property as a distribution center). In addition, 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. Furthermore, lease terms with respect to industrial properties are generally for shorter periods of time and may result in a substantial percentage of leases expiring in the same year at any particular industrial property. Also, mortgaged properties used for many industrial purposes are more prone to environmental concerns than other property types.
Aspects of building site design and adaptability affect the value of an industrial property. Site characteristics that are generally desirable 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, a layout that can accommodate large truck minimum turning radii and overall functionality and accessibility.
In addition, because of unique construction requirements of many industrial properties, any vacant industrial property space may not be easily converted to other uses. Thus, if the operation of any of the industrial properties becomes unprofitable due to competition, age of the improvements or other factors such that the borrower becomes unable to meet its obligations on the related mortgage loan, the liquidation value of that industrial property may be substantially less, relative to the amount owing on the related mortgage loan, than would be the case if the industrial property were readily adaptable to other uses.
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.
See also “Risk Factors—The Various Types of Multifamily and Commercial Properties that May Secure Mortgage Loans Underlying a Series of Offered Certificates May Present Special Risks—Industrial Properties” in the accompanying prospectus.
A Significant Concentration of Mixed Use Properties in the Mortgage Pool Will Subject Your Investment to the Special Risks of Mixed Use Properties
Four (4) of the mortgaged properties, representing approximately 8.0% of the initial pool balance by allocated loan amount, are mixed use properties. Such mixed use mortgaged properties consist of office, multifamily, retail and other components and as such, the mortgage loans secured by such mixed use mortgaged properties will share risks associated with such underlying components. In addition, a mixed use property may be managed by a manager that is not experienced in managing all of the property types comprising the mortgaged property. See “—The Operation of Commercial Properties Is Dependent Upon Successful Management” in this prospectus supplement.
A Significant Concentration of Self Storage Facilities in the Mortgage Pool Will Subject Your Investment to the Special Risks of Self Storage Facilities
Two (2) of the mortgaged properties, representing approximately 1.7% of the initial pool balance by allocated loan amount, are self storage properties. Self storage facilities are considered vulnerable to competition, because both acquisition and development costs and break-even occupancy are relatively low. The conversion of self storage facilities to alternative uses would generally require substantial capital expenditures. Thus, if the operation of any of the self storage mortgaged properties becomes unprofitable due to:
· | decreased demand; |
· | competition; |
· | lack of proximity to apartment complexes or commercial users; |
· | apartment tenants moving to single-family homes; |
· | decline in services rendered, including security; |
· | dependence on business activity ancillary to renting units; |
· | security concerns; |
· | age of improvements; or |
· | other factors; |
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so that the borrower becomes unable to meet its obligations on the related mortgage loan, the liquidation value of that self storage mortgaged property may be substantially less, relative to the amount owing on the mortgage loan, than if the self storage mortgaged property were readily adaptable to other uses.
Tenant privacy, anonymity and efficient and/or unsupervised access may heighten environmental risks (although lease agreements generally prohibit users from storing hazardous substance in the units). No environmental assessment of a mortgaged property included an inspection of the contents of the self storage units included in the self storage mortgaged properties and there is no assurance that all of the units included in the self storage mortgaged properties are free from hazardous substances or other pollutants or contaminants or will remain so in the future.
See also “Risk Factors—The Various Types of Multifamily and Commercial Properties that May Secure Mortgage Loans Underlying a Series of Offered Certificates May Present Special Risks—Warehouse, Mini-Warehouse and Self-Storage Facilities” in the accompanying prospectus.
Leasehold Interests Entail Certain Risks Which May Adversely Affect Payments on Your Certificates
One (1) mortgaged property, representing approximately 1.1% of the initial pool balance by allocated loan amount, is subject to a mortgage, deed of trust or similar security instrument that creates a first mortgage lien solely on a leasehold interest, which may be a space lease or air rights lease, in the entire mortgaged property.
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 risk with respect to leasehold mortgage loans is that if the borrower’s leasehold were to be terminated upon a lease default, the lender would lose its security interest in the leasehold estate. Generally, each related ground lease requires the lessor to give the lender notice of the borrower’s defaults under the ground lease and an opportunity to cure them, permits the leasehold interest to be assigned to the lender or the purchaser at a foreclosure sale, in some cases only upon the consent of the lessor, and contains certain other protective provisions typically included in a “mortgageable” ground lease.
Certain of the mortgaged properties are also subject to various use restrictions imposed by a related ground lease, and these limitations could adversely affect the ability of the related borrower to lease or sell the mortgaged property on favorable terms, thus adversely affecting the borrower’s ability to fulfill its obligations under the related mortgage loan.
Ground leases securing the mortgaged properties may provide that the ground rent payable under the ground lease increases or otherwise varies during the term of the lease. Any such increases or rent variations may adversely affect the cash flow and net income of the borrower from the mortgaged property.
With respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as San Marcos Civic Center, representing approximately 1.1% of the initial pool balance, the related mortgaged property is ground leased to the related borrower. The ground lease does not provide that the ground lessor must obtain the consent of the lender prior to terminating the ground lease, but the lender has the right to enter into a replacement ground lease with the ground lessor on the same terms as the terminated ground lease provided that the lender provides notice, pays all costs and remedies all defaults. Under the ground lease, in the case of a loss where the reasonable cost estimate to reconstruct the improvements exceeds 50% of the replacement value of the improvements, the related borrower may terminate the ground lease and in such event, the insurance proceeds allocable to the related borrower’s interest must be used to return the mortgaged property to a safe and broom clean condition, with the remaining insurance proceeds to be paid to the ground lessor and not to the payment of the outstanding principal balance of the mortgage loan. However, the related borrower (i) is prohibited from terminating the ground lease and (ii) is required to rebuild the improvements in the case of such loss.
Upon the bankruptcy of a lessor or a lessee under a ground lease (or, with respect to a leasehold interest that is a space lease or air rights lease, the space lease or air rights lease), the debtor entity has the right to assume or reject the lease. If a debtor lessor rejects the lease, the lessee has the right to treat such lease as terminated by rejection or to remain in possession of its leased premises for the rent otherwise payable under the lease for the term of the lease (including renewals). If a debtor lessee/borrower rejects the lease, the leasehold lender could succeed to the lessee/borrower’s position under the lease only if the lease specifically grants the lender such right. If both the lessor and the lessee/borrower are involved in bankruptcy proceedings, the trustee may be unable to enforce the bankrupt lessee/borrower’s pre-petition agreement to refuse to treat a ground lease (or space lease or air rights lease) rejected by a bankrupt lessor as terminated. In such circumstances, a lease could be terminated notwithstanding lender protection provisions contained therein or in the mortgage.
Tenancies in Common, Delaware Statutory Trusts and Indemnity Deeds of Trust May Hinder Recovery
Borrowers under four (4) mortgage loans, representing in the aggregate approximately 16.2% of the initial pool balance, own the related mortgaged properties as tenants in common. In general, with respect to a tenant-in-common ownership structure, each tenant-in-common owns an undivided interest in the property and if such tenant-in-common desires to sell its interest in the property (and is unable to find a buyer or otherwise needs to force a partition) the tenant-in-common has the ability to request that a court order a sale of the property and distribute the proceeds to each tenant-in-common proportionally.
The bankruptcy, dissolution or action for partition by one or more of the tenants-in-common could result in an early repayment of the related mortgage loan, a significant delay in recovery against the tenant-in-common borrowers, a material impairment in property management and a substantial decrease in the amount recoverable upon the related mortgage loan. Even if the related tenant-in-common borrower has waived its right to partition, which would reduce the risk of partition, there can be no assurance that, if challenged, any such waiver would be enforceable. The tenant-in-common structure may cause delays in the enforcement of remedies because each time a tenant-in-common borrower files for bankruptcy, the bankruptcy court stay will be reinstated. There can be no assurance that a bankruptcy proceeding by a single tenant-in-common borrower will not delay enforcement of this mortgage loan.
In certain instances where borrowers under mortgage loans use a Delaware statutory trust structure in order to gain certain tax free exchange treatment for property of like kind under section 1031 of the Code, these borrowers generally are restricted in their ability to actively operate a property, including with respect to loan work outs, leasing and re-leasing, making material improvements and other material actions affecting the related mortgaged property. In addition, in the case of a mortgaged property that is owned by a Delaware statutory trust, certain decisions may require the consent of the holders of the beneficial interests in the Delaware statutory trust and, in such event, there is a risk
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that obtaining such consent will be time consuming and cause delays in the event certain actions need to be taken by or on behalf of the borrower or with respect to the mortgaged property.
Certain of the mortgage loans may not expressly prohibit transfers of ownership interests in the related borrower to entities structured as tenants-in-common and/or Delaware statutory trusts, however, other conditions are typically required to be satisfied in connection with any such transfer, including, but not limited to one or more of the following: (i) that the lender receive rating agency confirmation in connection with such transfer; (ii) that the transferee be a special purpose entity; (iii) that the transferee be affiliated with the borrower; and/or (iv) that the lender or its counsel approve of the organizational documents of the transferee.
State and Local Mortgage Recording Taxes May Apply Upon a Foreclosure or Deed in Lieu of Foreclosure and Reduce Net Proceeds
Many jurisdictions impose recording taxes on mortgages which, if not paid at the time of the recording of the mortgage, may impair the ability of the lender to foreclose the mortgage. Under certain circumstances, governmental authorities could assert that a mortgage could not be foreclosed without payment of the mortgage recording tax, and possibly interest and penalties as well. Such taxes, interest and penalties could be significant in amount and would, if imposed, reduce the net proceeds realized by the issuing entity in liquidating the real property securing the related mortgage loan.
A Tenant Bankruptcy May Adversely Affect the Income Produced by a Mortgaged Property and May Adversely Affect the Payments on Your Certificates
Certain of the tenants at some of the mortgaged properties may have been, may currently be, or may in the future become a party in a bankruptcy proceeding. The bankruptcy or insolvency of a major tenant, or a number of smaller tenants, in retail, industrial and office properties may adversely affect the income produced by the property.
In addition, any tenant may, from time to time, experience a downturn in its business, which may weaken its financial condition and result in a reduction or failure to make rental payments when due. If tenants’ sales were to decline, percentage rents may decline and, further, tenants may be unable to pay their base rent or other occupancy costs. If a tenant defaults in its obligations to a property owner, that property owner may experience delays in enforcing its rights as lessor and may incur substantial costs and experience significant delays associated with protecting its investment, including costs incurred in renovating and reletting the property.
Section 365(e) of the bankruptcy code generally invalidates clauses that terminate contracts automatically upon the filing by one of the parties of a bankruptcy petition or that are conditioned on a party’s solvency, but the bankruptcy code allows the debtor to assume or reject or, subject to certain conditions, assume and assign to a third party, any unexpired lease in full (which, as a practical matter, may give the debtor leverage to seek amendments to the lease in order to avoid a rejection). If the tenant rejects the lease, the landlord’s claim for breach of the lease would (absent collateral securing the claim) be treated as a general unsecured claim against the tenant. The amount of the claim would be limited to the amount owed for unpaid rent under the lease for the periods prior to the bankruptcy petition, or earlier repossession or surrender of the lease premises, plus the rent under the lease for the greater of one year, or 15%, not to exceed three years, of the remaining term of such lease, and the actual amount of the recovery could be less than the amount of the claim. If a tenant assigns or assumes and assigns its lease, the tenant must cure all defaults under the lease and provide the landlord with adequate assurance of its future performance under the lease. We cannot assure you that tenants of the mortgaged properties will continue making payments under their leases or that tenants will not file for bankruptcy protection in the future or, if any tenants so file, that they will continue to make rental payments in the future or, if any tenants so file, that they will continue to make rental payments in a timely manner.
Under the Federal Deposit Insurance Act, upon the insolvency of certain banking institutions, the Federal Deposit Insurance Corporation would be appointed as receiver for such tenant and has the option to disaffirm any lease it determines to be burdensome if disaffirmance will permit the orderly administration of the failed bank. In such event, where a bank was the lessee, damages would be limited to contractual rent accruing before the later of the date (i) the notice of disaffirmance was mailed by the Federal Deposit Insurance Corporation or (ii) the disaffirmance becomes effective, unless the lessor is in breach of the lease. Upon such a disaffirmance, the landlord will also generally have a claim for unpaid rent due as the date of appointment of the receiver, subject to all defenses, and to the limitation on claims of the failed tenant’s creditors generally. To the extent the landlord’s claim for past rent is unsecured, such claim may be further limited by the depositor preference provisions of the Federal Deposit Insurance Act that could cause the bulk of the failed tenant’s assets to be paid to depositors and the Federal Deposit Insurance Corporation as the subrogee of any depositors paid by the Federal Deposit Insurance Corporation in its capacity as insurer.
See “Risk Factors—Tenant Bankruptcy Adversely Affects Property Performance” in the accompanying prospectus.
Environmental Risks Relating to Specific Mortgaged Properties May Adversely Affect Payments on Your Certificates
The issuing entity could become liable for a material adverse environmental condition at an underlying mortgaged property. For example:
· | With respect to the mortgaged property identified on Appendix I to this prospectus supplement as Waterfront at Port Chester, representing approximately 6.0% of the initial pool balance, the related Phase I environmental assessment stated that the mortgaged property was historically used as a manufactured gas plant from the late nineteenth century through 1910. Remediation of the former site of the manufactured gas plant was completed in 2006 under the oversight of the relevant governmental authorities. In connection with such remediation, a deed restriction was required, as well as ongoing monitoring in compliance with a site management plan approved by the relevant governmental authorities. Such ongoing compliance during the term of the site management plan is estimated to cost approximately $50,000, and a reserve in the amount of $62,500 was established at origination with respect to such costs. |
· | With respect to the mortgaged property identified on Appendix I to this prospectus supplement as Weston Town Center Shoppes, representing approximately 0.8% of the initial pool balance, the related Phase II environmental assessment recommended remeditation in connection with former dry cleaning operations at the mortgaged property. An environmental escrow of $212,500 (equal to 125% of the estimated cost of installing the recommended soil vapor extraction system and three years of monitoring) was established at closing with respect to such remediation. |
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Any potential liability with respect to any such mortgaged property or any other mortgaged property could reduce or delay payments on the certificates.
100% of the mortgaged properties securing the mortgage loans have been subject to environmental site assessments, or in some cases an update of a previous assessment, in connection with the origination or securitization of the loans. In all cases, the environmental site assessment was a Phase I environmental assessment, although in some cases a Phase II site assessment was also performed.
If the foregoing environmental site assessments revealed any such circumstances or conditions with respect to the related mortgaged property, then generally, with certain exceptions, one or more of the following was the case:
· | an escrow of funds exists reasonably estimated to be sufficient for purposes of effecting such remediation; |
· | if the only environmental condition relates to the presence of asbestos-containing materials, radon in indoor air, lead based paint or lead in drinking water, the environmental site assessment recommended only the implementation of an operations and maintenance program, which the related borrower is required to do; |
· | the identified environmental condition was remediated, abated or contained in all material respects and, if and as appropriate, a no further action, completion or closure letter was obtained from the applicable governmental regulatory authority (or such governmental authority listed the condition as “closed” or a reputable environmental consultant has concluded that no further action or investigation is required); |
· | the related mortgaged property is insured under a qualified policy of insurance against certain losses arising from such circumstances or conditions; |
· | a party not related to the related borrower with financial resources reasonably adequate to cure the subject violation in all material respects was identified as a responsible party for such circumstance or condition; or |
· | a party related to the related borrower with financial resources reasonably adequate to cure the subject violation in all material respects is required to take action. |
Some borrowers under the mortgage loans may not have satisfied or may not satisfy all post-closing obligations required by the related mortgage loan documents with respect to environmental matters. There can be no assurance that recommended operations and maintenance plans have been implemented or will continue to be complied with.
Some mortgage loans provide that the liability of the environmental indemnitors will terminate upon the satisfaction of certain conditions or as of a certain date.
We cannot assure you, however, that the environmental assessments revealed or accurately quantified all existing or potential environmental risks or that all adverse environmental conditions have been completely abated or remediated or that any reserves, insurance or operations and maintenance plans will be sufficient to remediate the environmental conditions. Moreover, we cannot assure you that:
· | future laws, ordinances or regulations will not impose any material environmental liability; or |
· | the current environmental condition of the mortgaged properties will not be adversely affected by tenants or by the condition of land or operations in the vicinity of the mortgaged properties (such as underground storage tanks). |
Environmental Laws Entail Risks that May Adversely Affect Payments on Your Certificates. Under various United States federal, state, local and municipal environmental laws, ordinances and regulations, a current or previous owner or operator of real property may be liable for the costs of removal or remediation of hazardous or toxic substances on, under or adjacent to the property. Those laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of the hazardous or toxic substances. For example, certain laws impose liability for release of asbestos-containing materials into the air or require the removal or containment of asbestos-containing materials. In some states, contamination of a property may give rise to a lien on the property to assure payment of the costs of cleanup. In some states, this lien has priority over the lien of a pre-existing mortgage. Additionally, third parties may seek recovery from owners or operators of real properties for cleanup costs, property damage or personal injury associated with releases of, or other exposure to hazardous substances related to the properties.
The owner’s liability for any required remediation generally is not limited by law and could, accordingly, exceed the value of the property and/or the aggregate assets of the owner. The presence of, or strong potential for contamination by, hazardous substances consequently can have a materially adverse effect on the owner’s ability to refinance the property or to sell the property to a third party, the value of the property and a borrower’s ability to repay its mortgage loan.
Certain Types of Operations Involved in the Use and Storage of Hazardous Materials May Lead to an Increased Risk of Issuing Entity Liability. Portions of some of the mortgaged properties securing the mortgage loans may include tenants that operate as, were previously operated as, or are located near other properties currently or previously operated as, on-site dry-cleaners or gasoline stations. Both types of operations involve the use and storage of hazardous materials, leading to an increased risk of liability to the tenant, the landowner and, under certain circumstances, a lender (such as the issuing entity) under environmental laws. These operations incur ongoing costs to comply with environmental permit or license requirements and other environmental laws governing, among other things, containment systems and underground storage tank systems. Any liability to borrowers under environmental laws, especially in connection with releases into the environment of gasoline, dry-cleaning solvents or other hazardous substances from underground storage tank systems or otherwise, could also adversely impact the related borrower’s ability to repay the related mortgage loan.
Problems Associated with Mold May Affect the Value of a Mortgaged Property and/or Lead to an Increased Risk of Issuing Entity Liability. Problems associated with mold may pose risks to real property and may also be the basis for personal injury claims against a borrower. Although, in general, the mortgaged properties are required to be inspected periodically, there is no set of generally accepted standards for the assessment of any existing mold. In addition, many of the insurance policies presently covering the mortgaged properties may specifically exclude losses due to mold. If left unchecked, problems associated with mold could result in the interruption of cash flow, remediation expenses and litigation which could adversely impact collections from a mortgaged property.
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Environmental Assessments May Delay Recovery on a Mortgaged Property. Before the special servicer acquires title to a mortgaged property on behalf of the issuing entity or assumes operation of the property, it must obtain an environmental assessment of the property, or rely on a recent environmental assessment. This requirement will decrease the likelihood that the issuing entity will become liable under any environmental law. However, this requirement may effectively preclude foreclosure until a satisfactory environmental assessment is obtained, or until any required remedial action is thereafter taken. There is accordingly some risk that the mortgaged property will decline in value while this assessment is being obtained. Moreover, we cannot assure you that this requirement will effectively insulate the issuing entity from potential liability under environmental laws. Any such potential liability could reduce or delay payments to certificateholders.
You May Experience a Loss If a Borrower is Unable to Repay Its Loan on Its Maturity Date, and the Risk of Non-Payment is Greater for Balloon Loans; Longer Amortization Schedules and Interest-Only Provisions Create Risks
Fifty-three (53) of the mortgage loans, representing approximately 98.2% of the initial pool balance, are balloon loans. For purposes of this prospectus supplement, we consider a mortgage loan to be a “balloon loan” if its principal balance is not scheduled to be fully or substantially amortized by the loan’s respective anticipated repayment date (in the case of a loan having an anticipated repayment date) or maturity date. Two (2) of these balloon loans, representing approximately 14.3% of the initial pool balance, are mortgage loans that have an anticipated repayment date and provide for an increase in the mortgage rate and/or principal amortization at a specified date prior to stated maturity (loans of such type are also referred to in this prospectus supplement as “ARD loans”). ARD loans are structured to encourage the borrower to repay the mortgage loan in full by the specified date upon which these increases occur (which is prior to the mortgage loan’s stated maturity date). Also included in the mortgage pool are fourteen (14) mortgage loans, representing approximately 54.9% of the initial pool balance, that currently provide for monthly payments of interest only for their respective terms to maturity or anticipated repayment date, as applicable, and twenty (20) mortgage loans, representing approximately 19.8% of the initial pool balance, that provide for monthly payments of interest only for a portion of their respective original terms ranging from twelve (12) months to sixty (60) months and then provide for the monthly payment of principal and interest over their respective remaining terms.
A longer amortization schedule or an interest-only provision in a mortgage loan will result in a higher amount of principal outstanding under the mortgage loan at any particular time, including at the maturity date or anticipated repayment date of the mortgage loan, than would have otherwise been the case had a shorter amortization schedule been used or had the mortgage loan had a shorter interest-only period or not included an interest-only provision at all. That higher principal amount outstanding could both (i) make it more difficult for the related borrower to make the required balloon or ARD payment at maturity or on the related anticipated repayment date and (ii) lead to increased losses for the trust either during the loan term or at maturity or such anticipated repayment date if the mortgage loan becomes a defaulted mortgage loan.
Mortgage loans with substantial remaining principal balances at their stated maturity date involve greater risk than fully amortizing mortgage loans. With respect to the mortgage loans secured by the mortgaged properties identified on Appendix I to this prospectus supplement as TKG 3 Retail Portfolio, 300 South Riverside Plaza Fee, 32 Old Slip Fee and Waterfront at Port Chester, representing approximately 9.0%, 7.6%, 6.8% and 6.0%, respectively, of the initial pool balance, such balloon risk is, in each such case, enhanced by the existence of apari passu companion loan that is also secured by the related mortgaged property. With respect to each of the mortgage loans secured by the mortgaged properties identified on Appendix I to this prospectus supplement as Alderwood Mall and Hilton Garden Inn W 54th Street, representing approximately 5.7% and 4.5%, respectively, of the initial pool balance, such balloon risk is enhanced by the existence of apari passu non-serviced companion loan and one or more subordinate B notes, each of which is also secured by the related mortgaged property. In addition, fully amortizing mortgage loans that pay interest on an actual/360 basis but have fixed monthly payments may, in effect, have a small balloon payment due at maturity. We cannot assure you that each borrower will have the ability to repay the outstanding principal balance of the applicable mortgage loan on the pertinent date, especially under a scenario where interest rates are higher than when such mortgage loan was originated. A borrower’s ability to repay a mortgage loan on its anticipated repayment date or stated maturity date typically will depend upon its ability either to refinance the mortgage loan or to sell the mortgaged property at a price sufficient to permit repayment. Neither the mortgage loan seller nor any of its affiliates are under any obligation to refinance any mortgage loan. Whether or not losses are ultimately sustained, any delay in the collection of a balloon payment on the maturity date will likely extend the weighted average life of your certificates.
In addition, in order to maximize recoveries on defaulted mortgage loans, the pooling and servicing agreement enables the special servicer (and, in certain cases, the master servicer subject to the consent of the special servicer) to extend and modify the terms of mortgage loans (other than any non-serviced mortgage loans, which are serviced pursuant to separate servicing agreements) that are in material default or as to which a payment default (including the failure to make a balloon payment) is reasonably foreseeable, subject, however, to the limitations described under “Servicing of the Mortgage Loans—Mortgage Loan Modifications” in this prospectus supplement. The master servicer or special servicer is only required to determine that any such extension or modification is reasonably likely to produce a greater recovery than a liquidation of the real property securing such mortgage loan. There is a risk that the decision of the master servicer or special servicer to extend or modify a mortgage loan may not in fact produce a greater recovery on your certificate. There can be no assurance that any extension or modification will increase the present value of recoveries in a given case. Neither the master servicer nor the special servicer will have the ability to extend or modify any non-serviced mortgage loan because such mortgage loan will be serviced pursuant to, and by another master servicer and special servicer under, a separate servicing agreement. Any delay in the collection of a balloon payment that would otherwise be distributable in respect of a class of certificates offered in this prospectus supplement, whether such delay is due to borrower default or to modification of the related mortgage loan by the applicable master servicer or special servicer, will likely extend the weighted average life of such class of certificates.
See “—The Repayment of a Commercial Mortgage Loan Is Dependent on the Cash Flow Produced by the Property Which Can Be Volatile and Insufficient to Allow Timely Payment on Your Certificates” and “Risk Factors—Risks Related to Market Conditions—The Volatile Economy and Credit Crisis May Increase Loan Defaults and Affect the Value and Liquidity of Your Investment” above and “Description of the Mortgage Pool—Material Terms and Characteristics of the Mortgage Loans” in this prospectus supplement.
A Borrower’s Other Loans May Reduce the Cash Flow Available to the Mortgaged Property Which May Adversely Affect Payments on Your Certificates
Each of the mortgaged properties identified on Appendix I to this prospectus supplement as TKG 3 Retail Portfolio, 300 South Riverside Plaza Fee, 32 Old Slip Fee and Waterfront at Port Chester, securing mortgage loans representing approximately 9.0%, 7.6%, 6.8% and 6.0%, respectively, of the initial pool balance, also secures a related companion loan, which related companion loans have outstanding
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principal balances as of the cut-off date of $79,708,750, $100,000,000, $116,000,000 and $80,000,000, respectively. Each such companion loan ispari passu in right of payment with the related mortgage loan.
The mortgaged property identified on Appendix I to this prospectus supplement as Alderwood Mall, securing a mortgage loan representing approximately 5.7% of the initial pool balance, also secures a non-serviced companion loan, which non-serviced companion loan has an outstanding principal balance as of the cut-off date of $176,363,626, and two related subordinate B notes, with an aggregate outstanding principal balance as of the cut-off date of $127,800,000. Such non-serviced companion loan ispari passu in right of payment with the related mortgage loan, and such non-serviced companion loan and the related mortgage loan are generally senior in right of payment to the related subordinate B notes.
The mortgaged property identified on Appendix I to this prospectus supplement as Hilton Garden Inn W 54th Street, securing a mortgage loan representing approximately 4.5% of the initial pool balance, also secures a non-serviced companion loan, which non-serviced companion loan has an outstanding principal balance as of the cut-off date of $115,000,000, and a subordinate B note, with a principal balance as of the cut-off date of $20,000,000. Such non-serviced companion loan ispari passu in right of payment with the related mortgage loan, and such non-serviced companion loan and the related mortgage loan are generally senior in right of payment to the related B note.
With respect to the mortgage loans secured by the mortgaged properties identified on Appendix I to this prospectus supplement as Hilton Garden Inn W 54th Street and Premier Apartments, representing approximately 4.5% and 3.8%, respectively, of the initial pool balance, the related loan sponsors or their affiliates have entered into mezzanine financing that is secured by pledges of the equity interests in the related mortgage borrower. See “Mortgage Loan No. 8—Hilton Garden Inn W 54th Street” and “Mortgage Loan No. 9—Premier Apartments” on Appendix III to this prospectus supplement. The holders of each related mortgage loan and mezzanine loan have entered into a related intercreditor agreement that governs the rights and duties of such parties. With respect to six (6) mortgage loans, representing approximately 13.0% of the initial pool balance, the related loan sponsors are permitted to enter into future mezzanine financing that is secured by a pledge of some or all of the equity interests in the related borrower; provided that certain debt service coverage ratio and/or loan-to-value ratio tests, as well as other related conditions, are satisfied. See “Mortgage Loan No. 5—Alderwood Mall,” “Mortgage Loan No. 10—West Valley Medical Center” and “Mortgage Loan No. 15—Campus Quarters” on Appendix III to this prospectus supplement for a description of the future mezzanine financing permitted with respect to the related mortgage loans.
In the case of some or all of the mortgage loans with existing subordinate or mezzanine debt, the holder of the subordinate or mezzanine loan has the right to cure certain defaults occurring on the mortgage loan and/or the right to purchase the mortgage loan from the issuing entity if certain defaults on the mortgage loan occur. The purchase price required to be paid in connection with such a purchase is generally equal to the outstanding principal balance of the mortgage loan, together with accrued and unpaid interest on, and all unpaid servicing expenses and advances relating to, the mortgage loan and, to the extent set forth in any related intercreditor agreement, will include special servicing fees, liquidation fees and other additional trust fund expenses. Such purchase price generally does not include a yield maintenance charge or prepayment premium. Accordingly, such purchase (if made prior to the maturity date or anticipated repayment date) will have the effect of a prepayment made without payment of a yield maintenance charge or prepayment premium. In addition, if the holder of the subordinate or mezzanine loan is not obligated to pay some or all of the aforementioned fees and additional expenses, including any liquidation fee payable to the special servicer under the terms of the pooling and servicing agreement, then the exercise of such party’s purchase option may result in a loss to the trust in the amount of those fees and additional expenses.
Holders of subordinate debt may also have the right to replace the manager of the related mortgaged property, to approve annual budgets, to approve certain material amendments to the related mortgage loan documents and, in certain cases, replace the special servicer with respect to the related mortgage loan. We make no representation as to whether any other secured subordinate financing currently encumbers any mortgaged property or whether a third-party holds debt secured by a pledge of equity ownership interests in a related borrower.
Further, a third party may have, or may be permitted in the future to have, a preferred equity interest in the related borrower, entitling it to a specified rate of return on its equity investment. For example, with respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as Hilton Garden Inn W 54th Street, representing approximately 4.5% of the initial pool balance, a preferred equity (or other similar) investment is permitted subject to various conditions, including among other conditions: (i) no event of default is continuing, (ii) the investment is in the direct or indirect owner of the borrower of the mezzanine loan related to the Hilton Garden Inn W 54th Street mortgage loan in an amount not to exceed $20,000,000, (iii) the investment is not secured by the related mortgaged property (or any direct or indirect equity interests in the related borrower or the related mezzanine borrower) or evidenced by a promissory note, (iv) the investment does not require the lender under the Hilton Garden Inn W 54th Street mortgage loan or the related mezzanine loan to enter into an intercreditor agreement (or other recognition agreement) with the investor in the preferred equity investment or provide any rights or remedies to such investor arising out of any defaults that would lead to a change in control of the related borrower, the related mezzanine borrower or the related mortgaged property, (v) the permitted preferred equity requires fixed payment obligations only and is payable only from excess cash flow on the related mortgaged property and (vi) the preferred equity documents and payments to the investor in the permitted preferred equity are subordinate to the loan documents, and payments required pursuant to the loan documents, for the mortgage loan and the related mezzanine loan. A preferred equity investor may also be entitled to consent with respect to certain major decisions relating to the management of the related borrower and may be permitted to cause the managing member of the borrower to enter into a sale of the related mortgaged property. Preferred equity interests may subject the borrower to the same risks and difficulties associated with other types of additional financing on or related to the mortgaged property. See “Description of the Mortgage Pool—Material Terms and Characteristics of the Mortgage Loans—Subordinate and Other Financing” in this prospectus supplement.
Generally, all of the mortgage loans also permit the related borrower to incur other unsecured indebtedness, including but not limited to trade payables, in the ordinary course of business and to incur indebtedness secured by equipment or other personal property located at the mortgaged property.
Furthermore, borrowers that have not agreed to certain special purpose covenants in the related mortgage loan documents may also be permitted to incur additional financing that is not secured by the mortgaged property.
When a mortgage loan borrower, or its constituent members, also has or guarantees one or more other outstanding loans, even if the loans are subordinated or are mezzanine loans not directly secured by the mortgaged property, the issuing entity is subjected to certain risks, including:
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· | the borrower may have difficulty servicing and repaying multiple loans; |
· | the existence of another loan generally will make it more difficult for the borrower to obtain refinancing of the mortgage loan and may thus jeopardize the borrower’s ability to repay any balloon payment due under the mortgage loan at maturity or on its anticipated repayment date; |
· | the need to service additional debt may reduce the cash flow available to the borrower to operate and maintain the mortgaged property; and |
· | the existence of such debt effectively reduces the equity owners’ economic stake in the related mortgaged property and may increase the likelihood that the owner of a borrower will permit the value or income-producing potential of a mortgaged property to suffer by not making capital infusions to support the mortgaged property. |
See “Description of the Mortgage Pool—Material Terms and Characteristics of the Mortgage Loans—Subordinate and Other Financing” in this prospectus supplement.
Actions Taken by Other Lenders in a Subordinate or Mezzanine Financing May Affect the Security Available to the Issuing Entity. If the borrower, or its constituent members, is obligated to another lender, actions taken by other lenders could impair the security available to the issuing entity. If another lender files an involuntary bankruptcy petition against the borrower, or the borrower files a voluntary bankruptcy petition to stay enforcement by another lender, the issuing entity’s ability to foreclose on the property will be automatically stayed, and principal and interest payments might not be made during the course of the bankruptcy case. The bankruptcy of another lender also may operate to stay foreclosure by the issuing entity.
Generally, upon a default under a mezzanine loan, the holder of the mezzanine loan would be entitled to foreclose upon the equity in the related borrower, which has been pledged to secure payment of such mezzanine debt. Although this transfer of equity may not trigger the due on sale clause under the related mortgage loan, it could cause a change in control of the borrower and/or cause the obligor under the mezzanine debt to file for bankruptcy, which could negatively affect the operation of the related mortgaged property and the related borrower’s ability to make payments on the related mortgage loan in a timely manner.
Further, if another loan secured by the mortgaged property is in default, the other lender may foreclose on the mortgaged property, absent an agreement to the contrary, thereby causing a delay in payments and/or an involuntary repayment of the mortgage loan prior to maturity. The issuing entity may also be subject to the costs and administrative burdens of involvement in foreclosure proceedings or related litigation.
Even if a subordinate lender has agreed not to take any direct actions with respect to the related subordinate debt, including any actions relating to the bankruptcy of the borrower, and has agreed that the holder of the mortgage loan will have all rights to direct all such actions, there can be no assurance that in the event of the borrower’s bankruptcy, a court will enforce such restrictions against a subordinate lender. In its decision inIn re 203 North LaSalle Street Partnership, 246 B.R. 325 (Bankr. N.D. Ill. March 10, 2000), the United States Bankruptcy Court for the Northern District of Illinois refused to enforce a provision of a subordination agreement that allowed a first mortgagee to vote a second mortgagee’s claim with respect to a Chapter 11 reorganization plan on the grounds that pre-bankruptcy contracts cannot override rights expressly provided by the federal bankruptcy code. This holding, which at least one court has already followed, potentially limits the ability of a senior lender to accept or reject a reorganization plan or to control the enforcement of remedies against a common borrower over a subordinated lender’s objections.
For further information with respect to subordinate debt, mezzanine debt and other financing, see Appendix II to this prospectus supplement.
Bankruptcy Proceedings Relating to a Borrower Can Result in Dissolution of the Borrower and the Acceleration of the Related Mortgage Loan and Can Otherwise Adversely Impact Repayment of the Related Mortgage Loan
Under the federal bankruptcy code, the filing of a bankruptcy petition by or against a borrower will stay a sale of real 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 reduce the amount of secured indebtedness to the then current value of the mortgaged property. Such an 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:
· | grant a debtor a reasonable time to cure a payment default on a mortgage loan; |
· | reduce monthly payments due under a mortgage loan; |
· | reduce the amount of principal due and owing under a mortgage loan; |
· | change the rate of interest due on a mortgage loan; or |
· | otherwise alter the terms of the mortgage loan, including the repayment schedule. |
Additionally, the trustee of the borrower’s bankruptcy estate or the borrower, as debtor-in-possession, has special powers to avoid, subordinate or disallow debts. In some circumstances, the claims of the mortgage lender may be subordinated to financing obtained by a debtor-in-possession subsequent to its bankruptcy.
The filing of a bankruptcy petition will also stay the lender from enforcing a borrower’s assignment of rents and leases. The federal bankruptcy code also may interfere with the trustee’s ability to enforce any lockbox requirements. The legal proceedings necessary to resolve these issues can be time consuming and costly and may significantly delay or reduce the lender’s receipt of rents. A bankruptcy court may also permit rents otherwise subject to an assignment and/or lockbox arrangement to be used by the borrower to maintain the mortgaged property or for other court authorized expenses.
As a result of the foregoing, the 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.
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A number of the borrowers under the mortgage loans are limited or general partnerships. Under some circumstances, the bankruptcy of a general partner of the partnership may result in the dissolution of that partnership. The dissolution of a borrower partnership, the winding up of its affairs and the distribution of its assets could result in an early repayment of the related mortgage loan.
See also, “—A Borrower’s Other Loans May Reduce the Cash Flow Available to the Mortgaged Property Which May Adversely Affect Payments on Your Certificates” above and “Risk Factors—Tenant Bankruptcy Adversely Affects Property Performance” in the accompanying prospectus.
Reserves to Fund Certain Necessary Expenditures Under the Mortgage Loans May Be Insufficient for the Purpose for Which They Were Established
The borrowers under some of the mortgage loans made upfront deposits, and/or agreed to make ongoing deposits, to reserves for the payment of various anticipated or potential expenditures, such as (but not limited to) the costs of tenant improvements and leasing commissions, recommended immediate repairs and seasonality reserves. We cannot assure you that any such reserve will be sufficient, that borrowers will reserve the required amount of funds or that cash flow from the properties will be sufficient to fully fund such reserves. See Appendix I to this prospectus supplement for additional information with respect to the reserves established for the mortgage loans.
Borrowers That Are Not Special Purpose Entities May Be More Likely to File Bankruptcy Petitions and This May Adversely Affect Payments on Your Certificates
While many of the borrowers have agreed to certain special purpose covenants to limit the bankruptcy risk arising from activities unrelated to the operation of the property, some borrowers may not be special purpose entities. The loan documents and organizational documents of these borrowers that are not special purpose entities generally do not limit the purpose of the borrowers to owning the mortgaged properties and do not contain the representations, warranties and covenants customarily employed to ensure that a borrower is a special purpose entity (such as limitations on indebtedness, affiliate transactions and the conduct of other businesses, restrictions on the borrower’s ability to dissolve, liquidate, consolidate, merge or sell all of its assets and restrictions upon amending its organizational documents). Consequently, these borrowers may have other monetary obligations, and certain of the loan documents provide that a default under any such other obligations constitutes a default under the related mortgage loan.
In addition, many of the borrowers and their owners may not have an independent director whose consent would be required to file a bankruptcy petition on behalf of the borrower. For example, with respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as Grapevine Town Center, representing approximately 2.1% of the initial pool balance, the related borrower is not required to have independent directors. With respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as Campus Quarters, representing approximately 2.0% of the initial pool balance, the related borrower is 50% indirectly owned by the related non-recourse carve-out guarantor and does not have independent directors. One of the purposes of an independent director is to avoid a bankruptcy petition filing that is intended solely to benefit a borrower’s affiliate and is not justified by the borrower’s own economic circumstances. Therefore, borrowers without an independent director may be more likely to file or be subject to voluntary or involuntary bankruptcy petitions which may adversely affect payments on your certificates. See “Risk Factors—The Borrower’s Form of Entity May Cause Special Risks and/or Hinder Recovery” in the accompanying prospectus.
The Operation of Commercial Properties Is Dependent Upon Successful Management
The successful operation of a real estate project depends upon the property manager’s performance and viability. The property manager is generally responsible for:
· | responding to changes in the local market; |
· | planning and implementing the rental structure; |
· | operating the property and providing building services; |
· | managing operating expenses; and |
· | 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. A property manager, by controlling costs, providing appropriate service to tenants and seeing to property maintenance and general upkeep, can improve cash flow, reduce vacancy, leasing and repair costs and preserve building value. On the other hand, management errors can, in some cases, impair short-term cash flow and the long-term viability of an income-producing property.
Many of the mortgaged properties are managed by affiliates of the related borrower, which may not manage properties for non-affiliates. If a mortgage loan is in default or undergoing special servicing, such relationship could disrupt the management of the related mortgaged property, which may adversely affect cash flow. However, the related mortgage loans may permit the lender to remove the related property manager upon the occurrence of an event of default, a decline in cash flow below a specified level or the failure to satisfy some other specified performance trigger (in some cases, subject to lender approval).
With respect to six (6) mortgaged properties that are each leased entirely, or almost entirely, to a single tenant (representing in the aggregate approximately 6.1% of the initial pool balance by allocated loan amount), several of such properties are leased under a net lease pursuant to which the tenant is responsible for all aspects of property management, and as a result there is no management agreement in place with respect to such properties.
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. Further, certain individuals involved in the management or general business development at certain mortgaged properties may engage in unlawful activities or otherwise exhibit poor business judgment that adversely affect operations and ultimately cash flow at such properties.
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The Benefits of Multi-Property or Portfolio Mortgage Loans May Be Limited
The mortgage pool includes one (1) mortgage loan, representing approximately 9.0% of the initial pool balance, secured by multiple mortgaged properties (other than through cross-collateralization of a mortgage loan with other mortgage loans). These arrangements attempt to reduce the risk that one mortgaged property may not generate enough net operating income to pay debt service.
Cross-collateralization arrangements involving more than one borrower could be challenged as fraudulent conveyances if:
· | one of the borrowers were to become a debtor in a bankruptcy case, or were to become subject to an action brought by one or more of its creditors outside a bankruptcy case; |
· | the related borrower did not receive fair consideration or reasonably equivalent value when it allowed its mortgaged real property or properties to be encumbered by a lien benefiting the other borrowers; or |
· | the borrower was insolvent when it granted the lien, was rendered insolvent by the granting of the lien or was left with inadequate capital, or was unable to pay its debts as they matured. |
Among other things, a legal challenge to the granting of the liens may focus on:
· | the benefits realized by such borrower entity from the respective mortgage loan proceeds as compared to the value of its respective property; and |
· | the overall cross-collateralization. |
If a court were to conclude that the granting of the liens was an avoidable fraudulent conveyance, that court could subordinate all or part of the borrower’s respective mortgage loan to existing or future indebtedness of that borrower. The court also could recover payments made under that mortgage loan or take other actions detrimental to the holders of certificates, including, under certain circumstances, invalidating the loan or the related mortgages that are subject to such cross-collateralization.
In addition, when multiple real properties secure a mortgage loan or group of cross-collateralized mortgage loans, the amount of the mortgage encumbering any particular one of those properties may be less than the full amount of the related mortgage loan or group of cross-collateralized mortgage loans, generally, to minimize recording tax. This mortgage amount may equal the appraised value or allocated loan amount for the mortgaged property and will limit the extent to which proceeds from the property will be available to offset declines in value of the other properties securing the same mortgage loan or group of cross-collateralized mortgage loans.
The foregoing mortgage loans may be secured by mortgaged properties located in various states. Foreclosure actions are brought in state court and the courts of one state cannot exercise jurisdiction over property in another state. Upon a default under any of these mortgage loans, it may not be possible to foreclose on the related mortgaged properties simultaneously.
Inadequacy of Title Insurers May Adversely Affect Payments on Your Certificates
Title insurance for a mortgaged property generally insures a lender against risks relating to a lender not having a first lien with respect to a mortgaged property as of the date such policy is issued, and in some cases can insure a lender against specific other risks. The protection afforded by title insurance depends on the ability of the title insurer to pay claims made upon it. We cannot assure you that:
· | a title insurer will have the ability to pay title insurance claims made upon it; |
· | a title insurer will maintain its present financial strength; or |
· | a title insurer will not contest claims made upon it. |
In addition, title insurance policies do not cover all risks relating to a lender not having a first lien with respect to a mortgaged property, and in certain cases, the lender may be subject to a more senior lien despite the existence of a title insurance policy. In those circumstances, the existence of a senior lien may limit the issuing entity’s recovery on that property, which may adversely affect payments on your certificates.
Mortgaged Properties Securing the Mortgage Loans That Are Not in Compliance with Zoning and Building Code Requirements and Use Restrictions Could Adversely Affect Payments on Your Certificates
Noncompliance with zoning and building codes may cause the borrower to experience cash flow delays and shortfalls that would reduce or delay the amount of proceeds available for distributions on your certificates. At origination of the mortgage loans, the mortgage loan originators took steps to establish that the use and operation of the mortgaged properties securing the mortgage loans were in compliance in all material respects with, or were legally existing non-conforming uses or structures under, all applicable zoning, land-use and building ordinances, rules, regulations, and orders. Evidence of this compliance may be in the form of legal opinions, confirmations from government officials, title policy endorsements, appraisals, zoning consultants’ reports and/or representations by the related borrower in the related mortgage loan documents. These steps may not have revealed all possible violations and certain mortgaged properties that were in compliance may not remain in compliance. As among the fifteen (15) largest mortgage loans or groups of cross-collateralized mortgage loans in the mortgage pool, examples include the following:
· | With respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as 32 Old Slip Fee, representing approximately 6.8% of the initial pool balance, according to a zoning report obtained by the lender, under applicable law, the building is legal non-conforming because (a) the maximum base height is exceeded by up to 140 feet, (b) the height setbacks are deficient by up to 20 feet, (c) its floor area ratio exceeds the maximum permitted by 1.39, (d) its maximum lot coverage from 85 feet to 300 feet and above 300 feet is exceeded by 7% and 5%, respectively, and (e) the maximum horizontal dimension above 300 feet is exceeded by an estimated 15 feet. |
· | With respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as 841-853 Broadway, representing approximately 5.6% of the initial pool balance, according to a zoning report obtained by |
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the lender, under applicable law, the building is legal non-conforming because (a) it is not setback at the maximum permitted street wall height, therefore penetrating the sky exposure plane and exceeding permitted height, and (b) its floor area ratio exceeds the maximum permitted. |
· | With respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as West Valley Medical Center, representing approximately 3.0% of the initial pool balance, according to a zoning report obtained by the lender, under applicable law, the related mortgaged property is legal non-conforming due to a deficiency of 126 parking spaces and the existing building height of five stories exceeds the maximum allowable height of three stories. |
· | With respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as Northeastern Apartments, representing approximately 2.7% of the initial pool balance, according to the two zoning reports obtained by the lender, the related mortgaged property is legal non-conforming due to the fact that (a) for one building, the rear setback is deficient by 20 feet and the usable open space is deficient by 10,300 square feet and (b) for the other building, the rear setback is deficient by 15 feet and the usable open space is deficient by 2,400 square feet. |
Some violations of zoning, land use and building regulations may be known to exist at any particular mortgaged property, but the mortgage loan seller generally does not consider those defects known to it to be material or have obtained policy endorsements and/or law and ordinance insurance to mitigate the risk of loss associated with any material violation or noncompliance. In some cases, the use, operation and/or structure of a mortgaged property constitutes a permitted nonconforming use and/or structure as a result of changes in zoning laws after such mortgaged properties were constructed and the structure may not be rebuilt to its current state or be used for its current purpose if a material casualty event occurs. In some cases, permitted nonconforming uses and/or structures may be subject to the effects of zoning compliance requirements that are not casualty-related, such as the lifting of a parking compliance moratorium. In some cases, the related borrower has obtained law and ordinance insurance to cover additional costs that result from rebuilding the mortgaged property in accordance with current zoning requirements. However, if as a result of the applicable zoning laws the rebuilt improvements are constrained by size or square footage limitations, or otherwise are limited in the type of property that may be rebuilt as compared to the original improvements, any potential loss in income will generally not be covered by law and ordinance insurance. Regardless of the type of insurance, insurance proceeds may not be sufficient to pay the mortgage loan in full if a material casualty event were to occur or if a mortgaged property, as rebuilt for a conforming use, is less valuable or generates less revenue. In such cases, the borrower might experience cash flow delays and shortfalls or be subject to penalties that would reduce or delay the amount of proceeds available for distributions on your certificates.
Certain mortgaged properties may be subject to use restrictions pursuant to reciprocal easement or operating agreements which could limit the borrower’s right to operate certain types of facilities within a prescribed radius. These limitations could adversely affect the ability of the borrower to lease the mortgaged property on favorable terms.
The Absence of or Inadequacy of Insurance Coverage on the Property May Adversely Affect Payments on Your Certificates
Certain Risks Are Not Covered Under Standard Insurance Policies. The mortgaged properties may suffer casualty losses due to risks that are not covered by insurance (including acts of terrorism) or for which insurance coverage is not adequate or available at commercially reasonable rates. In addition, some of the mortgaged properties are located in California, Texas, Florida, North Carolina, Georgia and the Gulf Coast of the United States, and in other coastal areas of certain states, which are areas that have historically been at greater risk of acts of nature, including earthquakes, fires, hurricanes and floods. The mortgage loans generally do not require borrowers to maintain earthquake, hurricane or flood insurance and we cannot assure you that borrowers will attempt or be able to obtain adequate insurance against such risks. If a borrower does not have insurance against such risks and a casualty occurs at a mortgaged property, the borrower may be unable to generate income from the mortgaged property in order to make payments on the related mortgage loan.
Moreover, if reconstruction or major repairs are required following a casualty, changes in laws that have occurred since the time of original construction may materially impair the borrower’s ability to effect such reconstruction or major repairs or may materially increase their cost.
As a result of these factors, the amount available to make distributions on your certificates could be reduced.
Terrorism Insurance May Not Be Available or Adequately Insure Against Risks of Terrorism and Similar Acts. After the September 11, 2001 terrorist attacks in New York City and the Washington, D.C. area, all forms of insurance were impacted, particularly from a cost and availability perspective, including comprehensive general liability and business interruption or rent loss insurance policies required by typical mortgage loans. To give time for private markets to develop a pricing mechanism for terrorism risk and to build capacity to absorb future losses that may occur due to terrorism, the Terrorism Risk Insurance Act of 2002 was enacted on November 26, 2002, establishing the Terrorism Insurance Program. The Terrorism Insurance Program was extended through December 31, 2014 by the Terrorism Risk Insurance Program Reauthorization Act of 2007 and was subsequently reauthorized on January 12, 2015 for a period of six years through December 31, 2020 pursuant to the Terrorism Risk Insurance Program Reauthorization Act of 2015 ( “TRIPRA”).
The Terrorism Insurance Program requires insurance carriers to provide terrorism coverage in their basic “all-risk” policies. Any commercial property and casualty terrorism insurance exclusion that was in force on November 26, 2002 is automatically void to the extent that it excluded losses that would otherwise be insured losses. Any state approval of those types of exclusions in force on November 26, 2002 is also void.
Under the Terrorism Insurance Program, the federal government shares in the risk of losses occurring within the United States resulting from acts committed in an effort to influence or coerce United States civilians or the United States government. The federal share of compensation for insured losses of an insurer equals 85% (subject to annual 1% decreases beginning in 2016 until such percentage equals 80%) of the portion of such insured losses that exceed a deductible equal to 20% of the value of the insurer’s direct earned premiums over the calendar year immediately preceding that program year. Federal compensation in any program year is capped at $100 billion (with insurers being liable for any amount that exceeds such cap), and no compensation is payable with respect to a terrorist act unless the aggregate industry losses relating to such act exceed $100 million (subject to annual $20 million increases beginning in 2016 until such threshold equals $200 million). The Terrorism Insurance Program does not cover nuclear, biological, chemical or radiological attacks. Unless a borrower obtains separate coverage for events that do not meet the thresholds or other requirements above, such events will not be covered.
If the Terrorism Insurance Program is not reenacted after its expiration in 2020, premiums for terrorism insurance coverage will likely increase and the terms of such insurance policies may be materially amended to increase stated exclusions or to otherwise effectively
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decrease the scope of coverage available (perhaps to the point where it is effectively not available). In addition, to the extent that any insurance policies contain “sunset clauses” (i.e., clauses that void terrorism coverage if the federal insurance backstop program is not renewed), then such policies may cease to provide terrorism insurance upon the expiration of the Terrorism Insurance Program. We cannot assure you that the Terrorism Insurance Program or any successor program will create any long term changes in the availability and cost of such insurance. Moreover, future legislation, including regulations expected to be adopted by the Treasury Department pursuant to TRIPRA, may have a material effect on the availability of federal assistance in the terrorism insurance market. To the extent that uninsured or underinsured casualty losses occur with respect to the related mortgaged properties, losses on the mortgage loans may result. In addition, the failure to maintain such terrorism insurance may constitute a default under the related mortgage loan
Certain of the mortgage loans are secured by mortgaged properties that are not insured for acts of terrorism. Additionally, certain mortgage loans are secured by mortgaged properties for which coverage for acts of terrorism is required only if certain conditions (such as availability at reasonable rates or maximum cost limits) are satisfied. In both cases, if those casualty losses are not covered by standard casualty insurance policies, then in the event of a casualty from an act of terrorism, the amount available to make distributions on your certificates could be reduced. As among the fifteen (15) largest mortgage loans or groups of cross-collateralized mortgage loans in the mortgage pool, examples include the following:
· | With respect to the mortgaged property identified on Appendix I to this prospectus supplement as Alderwood Mall, securing a mortgage loan representing approximately 5.7% of the initial pool balance, the related borrower is not obligated to spend an amount more than two times the amount of the annual insurance premium with respect to the comprehensive special perils insurance on the improvements and personal property and the business income insurance (without giving effect to the cost of earthquake insurance or terrorism insurance components of the related policies) and allocable to the related mortgaged property based on market rates in any policy year on the premiums for required terrorism insurance (and if the cost of the required terrorism insurance exceeds such amount, then the related borrower is required to purchase the maximum amount of terrorism insurance available with funds equal to such amount). |
See the summaries of the ten (10) largest mortgage loans or groups of cross-collateralized mortgage loans on Appendix III to this prospectus supplement for additional detail regarding terrorism and insurance risks relating to the mortgaged properties securing certain of those mortgage loans.
Certain Other Risks Related to Casualty and Casualty Insurance
The loan documents for each mortgage loan generally require that (A) “special form” (formerly known as “all-risk”) or “fire and extended perils coverage” insurance policies be maintained in an amount equal to either (i) not less than the full replacement cost of the related mortgaged property or (ii) the lesser of the full replacement cost of each related mortgaged property and the outstanding principal balance of the mortgage loan or (B) the related borrower will maintain such insurance coverages in such amounts as the lender may reasonably require. Certain mortgage loans require that the related mortgaged property be covered by windstorm coverage in an amount that is at least equal to the probable maximum loss as determined by a reputable, independent firm. Notwithstanding such requirement, however, under insurance law, if an insured property is not rebuilt, insurance companies are generally required to pay only the “actual cash value” of the property, which is generally equal to the replacement cost of the property less physical depreciation. The determination of “actual cash value” is both inexact and heavily dependent on facts and circumstances. Notwithstanding the requirements of the loan documents, an insurer may refuse to insure a mortgaged property for the loan amount if it determines that the “actual cash value” of the mortgaged property would be a lower amount, and even if it does insure a mortgaged property for the full loan amount, if at the time of casualty the “actual cash value” is lower, and the mortgaged property is not restored, only the “actual cash value” will be paid. Accordingly, if a borrower does not meet the conditions to restore a mortgaged property and the mortgagee elects to require the borrower to apply the insurance proceeds to repay the mortgage loan, rather than toward restoration, there can be no assurance that such proceeds will be sufficient to repay the mortgage loan, which may adversely affect payments on your certificates.
In addition, certain leases may provide that they are terminable in connection with a casualty or condemnation including in the event the leased premises are not repaired or restored within a specified time period. Lease terminations in such circumstances may impair the ability of the related borrower to repay the related mortgage loan and adversely affect payments on your certificates.
Risks Associated with Blanket Insurance Policies or Self-Insurance
Certain of the mortgaged properties, including mortgaged properties securing certain of the fifteen (15) largest mortgage loans or groups of cross-collateralized mortgage loans in the mortgage pool, are covered by blanket insurance policies, which also cover other properties of the related borrower or its affiliates (including certain properties in close proximity to the mortgaged properties). In the event that such policies are drawn on to cover losses on such other properties, the amount of insurance coverage available under such policies would thereby be reduced and could be insufficient to cover insurable risks at the related mortgaged property. In addition, with respect to some of the mortgaged properties, a tenant or an affiliate of the related borrower is permitted to provide self-insurance against risks. To the extent that insurance coverage relies on self-insurance, there is risk that the “insurer” will not be willing or have the financial ability to satisfy the claim when a loss occurs. Additionally, the risk of blanket or self-insurance can be magnified if affiliated borrowers under multiple mortgage loans in the trust are covered under the same blanket policy.
Property Inspections and Engineering Reports May Not Reflect All Conditions That Require Repair on the Property
Licensed engineers or consultants generally inspected the mortgaged properties and prepared engineering reports in connection with the origination or securitization of the mortgage loans to assess items such as integrity of the buildings and other improvements on the mortgaged property, including, structure, exterior walls, roofing, interior construction, mechanical and electrical systems and general condition of the site, buildings and other improvements. However, any such report represents only the analysis of the individual consultant, engineer or inspector preparing such report at the time of such report, and may not reveal all necessary or desirable repairs, maintenance and capital improvement items. In those cases where a material condition was disclosed, such condition has been or is required to be remedied to the mortgage loan seller’s satisfaction, or funds as deemed necessary by the mortgage loan seller, or the related engineer or consultant have been reserved to remedy the material condition. No additional property inspections were conducted by us in connection with the issuance of the certificates.
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Risks Related to Redevelopment and Renovation at the Mortgaged Properties
Certain of the mortgaged properties may be currently undergoing or may undergo in the future redevelopment or renovation. For example, with respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as 841-853 Broadway, representing approximately 5.6% of the initial pool balance, the related borrower is currently renovating portions of the related mortgaged property at an estimated total cost of approximately $14,900,000, including renovation of the lobbies, upgrade of the elevators, upgrade of electrical and plumbing systems and common area renovations. As of March 6, 2015, approximately $7,400,000 of budgeted work was outstanding. There was no reserve established to fund any remaining renovation costs, except for certain expenses allocated under the lease between the borrower and Capital One, the second-largest tenant.
There can be no assurance that current or planned redevelopment or renovation will be completed, that such redevelopment or renovation will be completed in the time frame contemplated, or that, when and if redevelopment or renovation is completed, such redevelopment or renovation will improve the operations at, or increase the value of, the subject property. Failure of any of the foregoing to occur could have a material negative impact on the related mortgage loan, which could affect the ability of the related borrower to repay the related mortgage loan.
If the related borrower fails to pay the costs of work completed or material delivered in connection with such ongoing redevelopment or renovation, the portion of the mortgaged property on which there are renovations may be subject to mechanic’s or materialmen’s liens that may be senior to the lien of the related mortgage loan.
The existence of construction or renovation at a mortgaged property may make such mortgaged property less attractive to tenants or their customers, and accordingly could have a negative effect on net operating income.
If the special servicer forecloses on behalf of the trust on a mortgaged property that is being redeveloped or renovated, pursuant to the REMIC provisions, the special servicer will only be permitted to arrange for completion of the redevelopment or renovation if at least 10% of the costs of construction were incurred at the time the default on the related mortgage loan became imminent. As a result, the issuing entity may not realize as much proceeds upon disposition of a foreclosure property as it would if it were permitted to complete construction.
Debt Service Coverage Ratio and Net Cash Flow Information is Based on Numerous Assumptions
As described under “Description of the Mortgage Pool—Additional Mortgage Loan Information,” underwritten net cash flow means cash flow (including in certain instances any cash flow from master leases and interest guarantees) adjusted based on a number of assumptions and subjective judgments used by the mortgage loan seller. Some assumptions and subjective judgments related to future events, conditions and circumstances, including future income and expense levels, and the re-leasing of occupied space, which will be affected by a variety of complex factors over which none of the issuing entity, the depositor, the mortgage loan seller, the master servicer, the special servicer, the trust advisor, the certificate administrator, the trustee or the custodian have control. In some cases, the underwritten net cash flow for any mortgaged property is higher or lower, and may be materially higher or lower, than the actual annual net operating income for that mortgaged property, based on historical operating statements. If ultimately proven erroneous, such assumptions could cause the actual operating income for such mortgaged property to differ materially from the underwritten net cash flow set forth in this prospectus supplement. No representation is made that the underwritten net cash flow set forth in this prospectus supplement as of the cut-off date or any other date represents future net cash flows. You should review the types of assumptions described below and make your own determination of the appropriate assumptions to be used in determining underwritten net cash flow.
The underwritten net cash flow and underwritten net operating income for such mortgaged properties are derived principally from current rent rolls or tenant leases and historical expenses, adjusted to account for inflation, contractual rent increases, significant occupancy increases and a market rate management fee. In some cases, underwritten net cash flow and underwritten net operating income are based on tenants that may have signed a lease or lease amendment expanding its space but are not yet in occupancy, in operation and/or paying rent, or on tenants paying temporarily abated rent. There can be no assurance that such tenants will be in a position to pay full rent when in occupancy or when any free rent or rent abatement period expires. With respect to any such tenants, we cannot assure you that these tenants will take occupancy, begin paying rent or accept possession of the premises, as applicable. If these tenants do not take occupancy of the leased space and/or begin paying rent, such tenants may, in some cases, be permitted to terminate the related lease. This will result in a higher vacancy rate and re-leasing costs that may adversely affect cash flow on the related mortgage loan. As among the twenty (20) largest mortgage loans or groups of cross-collateralized mortgage loans in the mortgage pool, examples include the following:
· | With respect to the mortgaged property identified on Appendix I to this prospectus supplement as 841-853 Broadway, securing a mortgage loan representing approximately 5.6% of the initial pool balance, the largest and second largest tenants, Centro, Inc. and Capital One, representing approximately 10.5% and 6.4% of the net rentable square footage, respectively, have each executed a lease but have not yet taken occupancy. Centro, Inc. is expected to take possession of the leased space between May 1, 2015 and August 1, 2015 and is required to begin rental payments on the later of July 1, 2015 and the first day following the 60-day period following the day on which it takes possession of the leased space. Capital One is expected to take occupancy between May 1, 2015 and August 29, 2015. A reserve with respect to Capital One in the amount of $3,266,667 was established at origination of the related mortgage loan, to be released to the related borrower pending occupancy of such tenant. No such reserve was established with respect to Centro, Inc. Each such lease was underwritten as though the related tenant were in occupancy and currently paying full rent. |
· | With respect to the mortgaged property identified on Appendix I to this prospectus supplement as Shoppes at Westlake Village, representing approximately 5.6% of the initial pool balance, two (2) tenants, representing approximately 10.6% of the net rentable square footage in the aggregate, have executed leases but are not expected to take occupancy by the closing date for this securitization. A reserve in the amount of $645,000 was established at origination of the related mortgage loan with respect to such tenants, to be released to the related borrower pending receipt of estoppel from each tenant certifying that the lease is in full force and effect with such tenant in full occupancy paying full unabated rent with no right to set-off or other free rent period due. One such tenant, DaVita, representing approximately 7.9% of the net rentable square footage, is scheduled to open and begin rent payments on or about August 10, 2015. Such mortgage loan was underwritten without regard to any such free rent obligations as though such tenants were in occupancy and currently paying full rent. |
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In addition, certain tenants currently may be in a “free rent” or rent abatement period, although the related mortgage loan may have been underwritten as though such tenant were currently paying full rent. There can be no assurance that such tenants will be in a position to pay full rent when any such period expires. For example, with respect to the mortgaged property identified on Appendix I to this prospectus supplement as West Valley Medical Center, representing approximately 3.0% of the initial pool balance, at origination of the related mortgage loan, the borrower deposited with lender $198,106 for free rent related to six (6) tenants (one of which is the largest tenant at such mortgaged property and the other of which is the third largest tenant at such mortgaged property). Such mortgage loan was underwritten without regard to any such free rent obligations as though such tenants were in occupancy and currently paying full rent.
The amounts representing net operating income and underwritten net cash flow are not a substitute for, or an improvement upon, net income (as determined in accordance with generally accepted accounting principles) as a measure of the results of the mortgaged property’s operations, or a substitute for cash flows from operating activities (as determined in accordance with generally accepted accounting principles) as a measure of liquidity.
In addition, the debt service coverage ratios set forth in this prospectus supplement for the mortgage loans and the mortgaged properties vary, and may vary substantially, from the debt service coverage ratios for the mortgage loans and the mortgaged properties as calculated pursuant to the definition of such ratios as set forth in the related mortgage loan documents.
Limitations of Appraisals
Appraisals were obtained with respect to each of the mortgaged properties at or about the time of the origination of the applicable mortgage loan, or in connection with the transfer of mortgage loans to this securitization transaction. 100% of the mortgage loans have appraisals dated within the twelve (12) months prior to the cut-off date.
In certain cases, appraisals may reflect both “as-stabilized” and “as-is” values, although the appraised values reflected in this prospectus supplement with respect to the mortgaged properties generally reflect only the “as-is” value unless otherwise stated herein.
In general, appraisals represent the analysis and opinion of qualified appraisers, but appraisals are not guarantees of present or future value. One appraiser may reach a different conclusion than another appraiser. In some cases, the related appraisal may value the property on a portfolio basis, which may result in a higher value than the aggregate value that would result from a separate individual appraisal on each mortgaged property. Moreover, the values of the mortgaged properties may have fluctuated significantly since the appraisals were performed. The 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 that could be 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.
The Timing of Mortgage Loan Amortization May Cause Increased Pool Concentration, Which May Adversely Affect Payments on Your Certificates
As principal payments or prepayments are made on mortgage loans, the remaining mortgage pool may be subject to increased concentrations of property types, geographic locations and other pool characteristics of the mortgage loans and the mortgaged properties, some of which may be unfavorable. Classes of certificates that have a lower payment priority are more likely to be exposed to this concentration risk than are certificate classes with a higher payment priority. This occurs because realized losses are allocated to the class outstanding at any time with the lowest payment priority and principal on the certificates entitled to principal is generally payable in sequential order or alphanumeric order, with such classes generally not being entitled to receive principal until the preceding class or classes entitled to receive principal have been retired.
The Operation of the Mortgaged Property Following Foreclosure of the Mortgage Loan May Affect the Tax Status of the Issuing Entity and May Adversely Affect Payments on Your Certificates
If the issuing entity acquires a mortgaged property pursuant to a foreclosure or deed in lieu of foreclosure, the special servicer will generally be required to retain an independent contractor to operate and manage the mortgaged property.
Among other things, the independent contractor generally will not be able to perform construction work, other than repair, maintenance or certain types of tenant build outs, unless the construction was more than 10% completed when default on the mortgage loan becomes imminent. Furthermore, any (i) net income from such operation (other than qualifying “rents from real property”), (ii) rental income based on the net profits of a tenant or sub-tenant or allocable to a non-customary service and (iii) rental income attributable to personal property leased in connection with a lease of real property, if the rent attributable to the personal property exceeds 15% of the total rent for the taxable year, will subject the related Lower-Tier REMIC to federal tax on such income at the highest marginal corporate tax rate (currently 35%) and possibly state or local tax. No determination has been made whether any portion of the income from the mortgaged properties constitutes “rents from real property.” In the event the issuing entity acquires mortgaged properties that do not generate “rents from real property,” the net proceeds available for distribution to certificateholders may be reduced. Nevertheless, the special servicer may permit the related 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 leasing the mortgaged property.
In addition, if the issuing entity were to acquire one or more mortgaged properties pursuant to a foreclosure or deed in lieu of foreclosure, upon acquisition of those mortgaged properties, the issuing entity may in certain jurisdictions, particularly in New York, be required to pay state or local transfer or excise taxes upon liquidation of the properties. These state or local taxes may reduce net proceeds available for distribution with respect to the certificates.
Tenant Leases May Have Provisions That Could Adversely Affect Payments on Your Certificates
In certain jurisdictions, if a tenant lease is subordinate to the lien created by the mortgage and does not contain attornment provisions which require the tenant to recognize a successor owner (following foreclosure) as landlord under the lease, such lease may terminate upon the transfer of the property to a foreclosing lender or purchaser at foreclosure. Not all leases were reviewed to ascertain the existence of these provisions. Accordingly, if a mortgaged property is located in such a jurisdiction and is leased to such a tenant, such
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mortgaged property could experience a further decline in value if such tenant’s lease were terminated. This is particularly likely if such tenants were paying above-market rents or could not be replaced.
Some of the leases at the mortgaged properties may not be subordinate to the related mortgage, in which case the issuing entity will not possess the right to dispossess the tenant upon foreclosure of the mortgaged property. In addition, if the lease contains provisions inconsistent with the mortgage (e.g., with respect to the application of insurance proceeds or condemnation awards) or which could affect the enforcement of the lender’s rights (e.g., an option to purchase the mortgaged property or a related right of first refusal), the provisions of the lease will control.
Additionally, with respect to certain of the mortgage loans, the related borrower may have granted certain tenants or certain third parties a right of first offer or right of first refusal with respect to, or an option to purchase, all or a portion of the mortgaged property. In addition, state statutes may grant a right of first refusal to certain designated parties. Such provisions, if not waived or subordinated, may impede the lender’s ability to sell the related mortgaged property at foreclosure or adversely affect the foreclosure bid price. For example, with respect to the mortgaged property identified as TKG 3 Retail Portfolio – Riverside Center, NY, securing approximately 2.8% of the initial pool balance by allocated loan amount, Lowe’s, the second largest tenant at the related mortgaged property (representing approximately 9.2% of the aggregate square footage of the related portfolio of mortgaged properties) has a right of first refusal to purchase its related demised premises upon terms acceptable to the related borrower in the event the related borrower elects to sell such demised premises. Lowe’s will have seven (7) business days following receipt of borrower’s offer to notify the borrower of its intention to purchase its demised premises. Such right of first refusal does not apply in the case of a transfer of the related mortgaged property through foreclosure or deed in lieu thereof.
Risks of Lease Early Termination Options
Leases often give tenants the right to terminate the related lease or abate or reduce the related rent:
· | if the landlord/borrower of the applicable mortgaged property allows uses at the mortgaged property in violation of use restrictions in current tenant leases; |
· | if the landlord/borrower or any of its affiliates owns other properties within a certain radius of the mortgaged property and allows uses at those properties in violation of use restrictions; |
· | if the related landlord/borrower fails to provide a designated number of parking spaces; |
· | if there is construction at the related mortgaged property or an adjacent property (whether or not such adjacent property is owned or controlled by the landlord/borrower or any of its affiliates) that may interfere with visibility or a tenant’s use of the mortgaged property; |
· | upon casualty or condemnation with respect to all or a portion of the mortgaged property that renders such mortgaged property unsuitable for a tenant’s use or if the landlord/borrower fails to rebuild such mortgaged property within a certain time; |
· | if a tenant’s use is not permitted by zoning or applicable law; or |
· | if the landlord/borrower defaults on its obligations under the lease. |
In each identified instance the borrower may have interests adverse to the lender, and we cannot assure you that the landlord/borrower will not violate those restrictions if it feels that such violation may otherwise benefit it or its affiliates to do so, even where such action is to the detriment of the mortgaged property. Certain other tenants may have the right to terminate the related lease or abate or reduce the related rent if the related landlord/borrower violates covenants under the related lease or if third parties take certain actions that adversely affect such tenants’ business or operations. We cannot assure you that all or any of the landlords/borrowers will comply with their lease covenants or such third parties will act in a manner required to avoid any termination and/or abatement rights of the related tenant.
In addition, it is common for non-anchor tenants at anchored or shadowed anchored retail centers to have the right to terminate their lease or abate or reduce rent if the anchor or shadow anchor tenant goes dark. Even if non-anchor tenants do not have termination or rent abatement rights, because the anchor or shadow anchor tenant plays a key role in generating customer traffic and making a center desirable for other tenants, we cannot assure you that any loss of an anchor tenant will not have a material adverse impact on the non-anchor tenant’s ability to operate, which may in turn adversely impact the landlord’s/borrower’s ability to meet its obligations under the related loan documents. If an anchor tenant goes dark, generally the landlord’s/borrower’s only remedy is to terminate that lease after the anchor tenant has been dark for a specified amount of time. See“—The Related Borrowers May Have Difficulty Re-Leasing Mortgaged Properties” above.
Certain of the tenant leases for the mortgaged properties may permit the affected tenants to terminate their leases and/or abate or reduce rent if such tenants fail to meet certain sales targets or other business objectives for a specified period of time or if a certain number of anchor tenants, shadow anchors and/or a percentage of the tenants cease to operate at the applicable mortgaged property. In certain cases, the related tenant may be permitted to terminate its lease in its sole discretion without any such triggers. See “Description of the Mortgage Pool—Material Terms and Characteristics of the Mortgage Loans—Certain Mortgage Loans with Material Lease Termination Options.”
Certain mortgaged properties may be leased in whole or in part to government sponsored tenants who have the right to cancel their leases at any time because of lack of appropriations or otherwise. For example, with respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as 32 Old Slip Fee, representing approximately 6.8% of the initial pool balance, the United States Department of Education, the fourth largest tenant, representing approximately 5.8% of net square footage of the non-collateral improvements, may terminate its lease at any time upon not less than 180 days’ prior written notice.
In addition, certain mortgaged properties may have tenants that are charitable or other non-profit institutions that generally rely on contributions from individuals and government grants or other subsidies to pay rent on office space and other operating expenses. There may be other mortgaged properties that are leased to tenants that are charitable or non-profit institutions, some of which tenants are identified on Appendix I to this prospectus supplement. There can be no assurance that the rate, frequency and level of individual contributions or governmental grants and subsidies will continue with respect to any such institution. A reduction in contributions or grants may impact the ability of the related institution to pay rent, and there can be no assurance that the related borrower will be in a position to meet its obligations under the related mortgage loan documents if such tenant fails to pay its rent.
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In general, the mortgage loan seller has underwritten the mortgage loans with lease expiration dates matching the related early termination option date. However, any exercise of the foregoing termination rights could result in vacant space at the related mortgaged property, renegotiation of the lease with the related tenant or re-letting of the space. We cannot assure you that any vacated space could or would be re-let. Furthermore, we cannot assure you that the foregoing termination and/or abatement rights will not arise in the future or materially adversely affect the related borrower’s ability to meet its obligations under the related loan documents.
The Performance of a Mortgage Loan and Its Related Mortgaged Property Depends in Part on Who Controls the Borrower and Mortgaged Property
The operation and performance of a mortgage loan will depend in part on the identity of the persons or entities who control the borrower and the mortgaged property. The performance of a mortgage loan may be adversely affected if control of a borrower changes, which may occur, for example, by means of transfers of direct or indirect ownership interests in the borrower, or if the mortgage loan is assigned to and assumed by another person or entity along with a transfer of the property to that person or entity.
Many of the mortgage loans generally place certain restrictions on the transfer and/or pledging of general partnership and managing member equity interests in a borrower such as specific percentage or control limitations. The terms of the mortgages generally permit, subject to certain limitations, affiliate, estate planning and family transfers and the transfer or pledge of less than a controlling portion of the partnership, members’ or other non-managing member equity interests in a borrower. Certain of the mortgage loans do not restrict the pledging of direct or indirect ownership interests in the related borrower, but do restrict the transfer of ownership interests in the related borrower by imposing a specific percentage, a control limitation or requiring the consent of the mortgagee to any such transfer. Certain of the mortgage loans do not prohibit the pledge by direct or indirect owners of the related borrower of equity distributions that may be made from time to time by the borrower to its equity owners. We cannot assure you the ownership of any of the borrowers would not change during the term of the related mortgage loan and result in a material adverse effect on your certificates.
Litigation, Bankruptcy or Other Legal Proceedings Could Adversely Affect the Mortgage Loans
There may be pending or threatened legal proceedings against, or other past or present adverse regulatory circumstances experienced by, the borrowers, their sponsors and managers of the mortgaged properties and their respective affiliates related to the business of or arising out of the ordinary business of the borrowers, their sponsors, managers and affiliates. For example, with respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as 841-853 Broadway, representing approximately 5.6% of the initial pool balance, the related borrower sponsor, Jeffrey Feil, is a defendant in various lawsuits initiated by his sisters who allege, among other things, that Mr. Feil has wrongfully withheld distributions owed to them under their father’s estate.
Any such litigation or proceedings could adversely impact the related borrower’s ability to meet its obligations under the related mortgage loan and, as a result, have a material adverse effect on your certificates.
In addition, certain of the borrower sponsors, property managers, affiliates thereof and/or entities controlled thereby have been a party to bankruptcy proceedings, mortgage loan defaults and restructures, discounted payoffs, foreclosure proceedings or deed-in-lieu of foreclosure transactions, or other material proceedings (including criminal proceedings) in the past, which in some cases may have involved the same property that currently secures the related mortgage loan. In most, but not all cases relating to bankruptcy, the related entity or person has emerged from bankruptcy or, in the case of previous foreclosure actions, is generally, but not in all cases, not permitted to directly or indirectly manage the related borrower. In some cases, mortgaged properties securing certain of the mortgage loans previously secured other loans that had been in default, restructured or the subject of a discounted payoff, foreclosure or deed-in-lieu of foreclosure.
For example, with respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as Alderwood Mall, representing approximately 5.7% of the initial pool balance, General Growth Properties, Inc., which, through its various holding companies, owns approximately 49% of the equity in the related borrower sponsor, filed for Chapter 11 bankruptcy on April 16, 2009 and emerged from bankruptcy on November 9, 2010. General Growth Properties, Inc. was the subject of the court case referenced in the accompanying prospectus under “Risk Factors—Risks Related to the Mortgage Loan—The Borrower’s Form of Entity May Cause Special Risks and/or Hinder Recovery.”
In addition, with respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as Northeastern Apartments, representing approximately 2.7% of the initial pool balance, in 1995, the related borrower sponsor, Anwar N. Faisal, was ordered to pay a special assessment of $200 and serve 10 months of probation, including six months served in home confinement with electronic monitoring pursuant to a plea-bargain arrangement arising out of four counts of making false statements on mortgage loan documents. In addition, Mr. Faisal has attracted negative local news media attention in connection with his operation of student housing in the City of Boston.
Certain of the borrower sponsors may have a history of litigation or other proceedings against their lender, in some cases involving various parties to a securitization transaction. There can be no assurance that the borrower sponsors that have engaged in litigation or other proceedings in the past will not commence action against the trust in the future upon any attempt by the special servicer to enforce the mortgage loan documents. Any such actions by the borrower or borrower sponsor may result in significant expense and potential loss to the issuing entity and a shortfall in funds available to make payments on the offered certificates.
If a borrower or a principal of a borrower or affiliate has been a party to a bankruptcy, foreclosure, litigation or other proceeding, particularly against a lender, or has been convicted of a crime in the past, we cannot assure you that the borrower or principal will not be more likely than other borrowers or principals to avail itself or cause a borrower to avail itself of its legal rights, under the federal bankruptcy code or otherwise, in the event of an action or threatened action by the lender or its servicer to enforce the related mortgage loan documents, or otherwise conduct its operations in a manner that is in the best interests of the lender and/or the mortgaged property. We cannot assure you that any such proceedings or actions will not have a material adverse effect upon distributions on your certificates.
Further, borrowers, principals of borrowers, property managers and affiliates thereof may, in the future, be involved in bankruptcy proceedings, foreclosure proceedings or other material proceedings (including criminal proceedings), whether or not related to the mortgage loans. There can be no assurance that any such proceedings or similar proceedings with respect to borrowers, principals of borrowers, property managers and affiliates thereof will not negatively impact a borrower’s or loan sponsor’s ability to meet its obligations under the related mortgage loan and, as a result could have a material adverse effect upon your certificates.
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Often it is difficult to confirm the identity of owners of all of the equity in a borrower, which means that past issues may not be discovered as to such owners. We cannot assure you that any such actions, suits or proceedings would not have a material adverse effect on your certificates.
Increases in Real Estate Taxes Due to Termination of a PILOT Program or Other Tax Abatement Arrangements May Reduce Payments to Certificateholders
Certain of the mortgaged properties securing the mortgage loans have or may in the future have the benefit of reduced real estate taxes under a local government program of payment in lieu of taxes (often known as a PILOT program) or other tax abatement arrangements. For example, with respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as Waterfront at Port Chester, representing approximately 6.0% of the initial pool balance, the mortgaged property is ground leased to the related borrower by the Village of Port Chester Industrial Development Agency and the related borrower makes payments in lieu of taxes and assessments in exchange for exemption from real property taxes. Any default under the documents establishing the PILOT program or failure to pay the PILOT payments is a default under the mortgage loan documents.
Some of these programs or arrangements may be scheduled to terminate or have significant tax increases prior to the maturity of the related mortgage loan, resulting in higher, and in some cases substantially higher, real estate tax obligations for the related borrower. An increase in real estate taxes may impact the ability of the borrower to pay debt service on its mortgage loan. There are no assurances that any such program will continue for the duration of the related mortgage loan or would survive a mortgage loan foreclosure or deed in lieu of foreclosure. The termination of any such program could affect the ability of the related borrower to repay the related mortgage loan.
Risks Relating to Tax Credits
With respect to certain mortgage loans secured by multifamily properties, the related property owners may be entitled to receive low-income housing tax credits pursuant to Section 42 of the Internal Revenue Code, which provides a tax credit for owners of multifamily rental properties meeting the definition of low-income housing, who receive a tax credit allocation from the state tax credit allocating agency. The total amount of tax credits to which the property owner is entitled is based upon the percentage of total units made available to qualified tenants. The owners of the mortgaged properties subject to the tax credit provisions may use the tax credits to offset income tax that they may otherwise owe and the tax credits may be shared among the equity owners of the project. In general, the tax credits on the mortgage loans have been allocated to equity investors in the borrower.
The tax credit provisions limit the gross rent for each low-income unit. Under the tax credit provisions, a property owner must comply with the tenant income restrictions and rental restrictions over a minimum 15-year compliance period, although the property owner may take the tax credits on an accelerated basis over a 10-year period. In the event a multifamily rental property does not maintain compliance with the tax credit restrictions on tenant income or rental rates or otherwise satisfy the tax credit provisions of the Internal Revenue Code, the property owner 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 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 the property owner to keep the related multifamily rental property in compliance with these tax credit restrictions, which may limit the income derived from the related property.
If the issuing entity were to foreclose on such a property it would be unable to take advantage of the tax credits, but could sell the property with the right to the remaining credits to a tax paying investor. Any subsequent property owner would continue to be subject to rent limitations unless an election was made to terminate the tax credits, in which case the property could be operated as a market rate property after the expiration of three years. The limitations on rent and on the ability of potential buyers to take advantage of the tax credits may limit the issuing entity’s recovery on that property.
The Mortgage Loans Have Not Been Reunderwritten By Us
We have not reunderwritten the mortgage loans to determine that such mortgage loans were originated in accordance with the related originator’s underwriting guidelines. Instead, we have relied on the representations and warranties made by the related sponsor and the remedies for breach of a representation and warranty, as described under “Description of the Mortgage Pool—Representations and Warranties” and “—Repurchases and Other Remedies” in this prospectus supplement.
If we had reunderwritten the mortgage loans to determine that such mortgage loans were originated in accordance with the related originator’s underwriting guidelines, it is possible that the reunderwriting process would have revealed problems with a mortgage loan not covered by a representation or warranty or would have revealed inaccuracies in the representations and warranties. See “—Risks Related to the Offered Certificates—The Mortgage Loan Seller May Not Make a Required Repurchase or Substitution of a Defective Mortgage Loan” below, and “Description of the Mortgage Pool—Representations and Warranties” and “—Repurchases and Other Remedies” in this prospectus supplement.
A review of the mortgage loans in the pool has been conducted by the mortgage loan seller as required by Rule 193 under the Securities Act of 1933. As part of such review, the mortgage loan seller and/or the underwriter on its behalf engaged a third party accounting firm to compare certain information set forth in this prospectus supplement against certain source documents and engaged one or more law firms to assist in preparing disclosure regarding certain loan and asset information. See “Transaction Parties—The Sponsor, Mortgage Loan Seller and Originator—Morgan Stanley Mortgage Capital Holdings LLC—MSMCH’s Underwriting Standards” and “—Morgan Stanley Bank, N.A.—Morgan Stanley Bank’s Underwriting Standards” in this prospectus supplement.
Risks Related to Conflicts of Interest
Conflicts of interest may have an adverse effect on your certificates. Each of the following relationships should be considered carefully by you before you invest in any certificates. In addition, investors should note that with respect to any non-serviced mortgage loan, conflicts similar to those described below may arise with respect to any securitization governing the related non-serviced loan combination.
Conflicts Between Various Certificateholders
The special servicer is given considerable latitude in determining whether and in what manner to liquidate or modify defaulted mortgage loans. During any Subordinate Control Period, the controlling class representative, if any, will have the right to replace the special
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servicer upon satisfaction of certain conditions set forth in the pooling and servicing agreement (other than, to the extent set forth in the related intercreditor agreement, with respect to any A/B whole loan or loan pair for so long as the related B note holder or serviced companion loan holder is the directing holder with respect to such A/B whole loan or loan pair, as applicable, and other than with respect to any non-serviced mortgage loan). At any given time, the controlling class representative will be controlled generally by the holders of the most subordinate class of Control Eligible Certificates then outstanding that has an aggregate certificate principal balance (as notionally reduced by any appraisal reductions allocable to such class) at least equal to 25% of the initial certificate principal balance of such class, and such holders may have interests in conflict with those of the holders of the other certificates. In addition, during any Subordinate Control Period (other than, to the extent set forth in the related intercreditor agreement, with respect to any A/B whole loan or loan pair for so long as the related B note holder or serviced companion loan holder is the directing holder with respect to such A/B whole loan or loan pair, as applicable, and other than with respect to any non-serviced mortgage loan) the controlling class representative will have the right to advise the special servicer, or will otherwise have approval rights, with respect to certain actions of the special servicer and, in connection with such rights, may act solely in the interest of the holders of certificates of the controlling class, without any liability to any certificateholder. For instance, the holders of certificates of the controlling class might desire to mitigate the potential for loss to that class from a troubled mortgage loan by deferring enforcement in the hope of maximizing future proceeds. However, the interests of the issuing entity may be better served by prompt action, since delay followed by a market downturn could result in less proceeds to the issuing entity than would have been realized if earlier action had been taken. In general, neither the master servicer nor the special servicer is required to act in a manner more favorable to the offered certificates than to the privately offered certificates. See “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” in this prospectus supplement. With respect to any non-serviced mortgage loan serviced pursuant to the pooling and servicing agreement or trust and servicing agreement, as applicable, for another securitization, similar conflicts of interest may arise with respect to the controlling class representative, master servicer and special servicer under such securitization.
The master servicer or the special servicer or an affiliate of either of them may hold subordinate mortgage notes or acquire certain of the most subordinated certificates, including those of the initial controlling class. The master servicer or the special servicer or an affiliate of either of them may also hold a material economic interest in the borrower under a mortgage loan that it is servicing. In addition, under certain circumstances the master servicer or the special servicer may be entitled to purchase defaulted mortgage loans and/or REO property from the issuing entity as described in this prospectus supplement. Under such circumstances, the master servicer and the special servicer may have interests that conflict with the interests of the other holders of the certificates and/or the issuing entity. In addition, the master servicer and the special servicer will service loans other than those included in the issuing entity in the ordinary course of their business. In these instances, the interests of the master servicer or the special servicer, as applicable, and their respective clients may differ from and compete with the interests of the issuing entity, and their activities may adversely affect the amount and timing of collections on the mortgage loans in the issuing entity notwithstanding the fact that the pooling and servicing agreement will provide that the mortgage loans are to be serviced in accordance with the servicing standard and without regard to ownership of any certificates by the master servicer or the special servicer, as applicable.
DoubleLine Capital LP or an affiliate thereof (which will appoint the special servicer on the closing date) is expected to acquire the Class E, Class F and Class G Certificates on the closing date, and is expected to act as the initial controlling class representative. DoubleLine Capital LP or an affiliate thereof engaged Midland Loan Services, a Division of PNC Bank, National Association as an independent contractor to conduct due diligence with respect to the mortgage loans included in the mortgage pool.
Conflicts of Interest of the Trust Advisor
In acting as trust advisor, the trust advisor is required to act solely on behalf of the issuing entity, in the best interest of, and for the benefit of, all of the certificateholders (as a collective whole as if such certificateholders constituted a single lender). See “Servicing of the Mortgage Loans—The Trust Advisor” in this prospectus supplement. Although the trust advisor is required to consider the servicing standard in connection with its activities under the pooling and servicing agreement, the trust advisor will not itself be bound by the servicing standard. In acting as trust advisor, the trust advisor is acting solely as a contracting party to the extent described in this prospectus supplement and will have no fiduciary duty to any party. In addition, the trust advisor will have no obligations or responsibilities with respect to any non-serviced mortgage loan (or any relatedpari passucompanion loan or B note).
Notwithstanding the foregoing, the trust advisor and its affiliates may have interests that are in conflict with those of certificateholders, especially if the trust advisor or any of its affiliates holds certificates or has financial interests in or other financial dealings with any of the parties to this transaction, a borrower or a parent of a borrower. Furthermore, in the normal course of its business, Park Bridge Lender Services LLC and its affiliates have rendered services to, performed surveillance of, and negotiated with, numerous parties engaged in activities related to structured finance and commercial mortgage securitization. These parties may have included the depositor, the sponsor, the mortgage loan seller, the originator, the certificate administrator, the trustee, the master servicer, the special servicer and/or the initial controlling class representative or affiliates of any of those parties.
Additionally, Park Bridge Lender Services LLC or its affiliates may, in the future, perform contract underwriting services and advisory services as well as act as servicer or special servicer, in the ordinary course of its or their business, with respect to existing and new mortgage loans for third parties, including portfolios of mortgage loans similar to the mortgage loans included in the issuing entity. The real properties securing these other mortgage loans may be in the same markets as, and compete with, certain of the mortgaged properties securing the mortgage loans that will be included in the issuing entity. Consequently, personnel of the trust advisor may perform services, on behalf of the issuing entity, with respect to the mortgage loans included in the issuing entity at the same time as they are performing services, on behalf of other persons, with respect to other mortgage loans secured by properties that compete with the mortgaged properties securing the mortgage loans included in the issuing entity.
The above-described relationships, to the extent they exist, may continue in the future. Each of these relationships may create a conflict of interest.
Conflicts of Interest of the Controlling Class Representative; Rights of the Controlling Class Representative Could Adversely Affect Your Investment
In connection with the servicing of the specially serviced mortgage loans, the special servicer may, at the direction of the controlling class representative (during any Subordinate Control Period and, in any event, subject to the rights of any A/B whole loan directing holder or any loan pair directing holder to the extent set forth in the related intercreditor agreement), take actions with respect to the specially serviced mortgage loans that could adversely affect the holders of some of the classes of certificates. The controlling class representative will be
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controlled by the controlling class certificateholders. An affiliate of the depositor may purchase less than 50% of each class of control eligible certificates upon the initial issuance thereof or thereafter; however, such affiliate will not be entitled to act as or appoint the controlling class representative, and any certificates held by such affiliate will not be considered to be outstanding for purposes of determining the identity of the controlling class representative. The controlling class representative may have interests in conflict with those of the other certificateholders. As a result, it is possible that the controlling class representative may direct the special servicer to take actions that conflict with the interests of holders of certain classes of the certificates. However, the special servicer is not permitted to take actions that are prohibited by law or violate the servicing standard, the REMIC provisions, the terms of the mortgage loan documents or the related intercreditor agreement. In addition, except as limited by certain conditions described under “Servicing of the Mortgage Loans—The Special Servicer” in this prospectus supplement (and other than, to the extent set forth in the related intercreditor agreement, with respect to any A/B whole loan or loan pair for so long as the related B note holder or serviced companion loan holder is the directing holder with respect to such A/B whole loan or loan pair, as applicable, and other than with respect to any non-serviced mortgage loan), the special servicer may be removed, with or without cause, by the controlling class representative, if any (during any Subordinate Control Period) or by the holders of 75% of the voting rights of the certificates (during any Collective Consultation Period and any Senior Consultation Period). See “Servicing of the Mortgage Loans—The Controlling Class Representative” and “Servicing of the Mortgage Loans—The Special Servicer” in this prospectus supplement. With respect to any non-serviced mortgage loan serviced pursuant to the pooling and servicing agreement or trust and servicing agreement, as applicable, for another securitization, similar conflicts of interest may arise with respect to the controlling class representative under such securitization. The controlling class representative under such securitization will be entitled to direct the related special servicer pursuant to provisions substantially similar to those described above.
Each certificateholder (by its acceptance of its certificates) acknowledges and agrees that (i) the controlling class representative, the controlling class and/or the holders of the Control Eligible Certificates may each have special relationships and interests that conflict with those of holders of the other classes of certificates; (ii) the controlling class representative, the controlling class and/or the holders of the Control Eligible Certificates may act solely in the interests of the Control Eligible Classes (or any of them); (iii) the controlling class representative, the controlling class and/or the holders of the Control Eligible Certificates do not have any duties to the issuing entity or to the holders of any class of certificates; (iv) the controlling class representative, the controlling class and/or the holders of the Control Eligible Certificates may take actions that favor interests of the Control Eligible Classes (or any of them) over the interests of the holders of one or more other classes of certificates; (v) none of the controlling class representative, the controlling class and/or the holders of the Control Eligible Certificates shall have any liability whatsoever to the issuing entity, the other parties to the pooling and servicing agreement, the certificateholders or any other person (including any borrower under a mortgage loan) for having acted or refrained from acting in accordance with or as permitted under the terms of the pooling and servicing agreement and this paragraph; and (vi) the certificateholders may not take any action whatsoever against the controlling class representative, the controlling class, any holder of a Control Eligible Certificate or any of the respective affiliates, directors, officers, shareholders, members, partners, agents or principals thereof as a result of the controlling class representative, the controlling class, and/or the holders of the Control Eligible Certificates, as applicable, for having acted or refrained from acting in accordance with the terms of and as permitted under the pooling and servicing agreement and this paragraph.
Conflicts of Interest of the Directing Holders; Rights of the Directing Holders Could Adversely Affect Your Investment
With respect to any A/B whole loan or loan pair, to the extent set forth in the related intercreditor agreement, a holder of a related B note or serviced companion loan will be the initial directing holder. In connection with the servicing of the mortgage loan that is part of any such A/B whole loan or loan pair, to the extent set forth in the related intercreditor agreement, such directing holder will be entitled to advise, grant or withhold approvals or direct the master servicer and the special servicer with respect to certain material servicing actions including foreclosing on and liquidating mortgaged properties. As a result, in connection with the servicing of the mortgage loan that is part of any such A/B whole loan or loan pair, the master servicer and the special servicer may, at the direction of the applicable directing holder, take actions with respect to such mortgage loan that could adversely affect the holders of some of the classes of certificates. Unless otherwise set forth in the related intercreditor agreement, any directing holder with respect to an A/B whole loan or loan pair will not have any duties to the holders of any class of certificates. As a result, it is possible that such a directing holder may direct the special servicer to take actions that conflict with the interests of holders of certain classes of the certificates. In addition, to the extent set forth in the related intercreditor agreement, the special servicer with respect to an A/B whole loan or loan pair may be removed with or without cause by the related directing holder. See “Servicing of the Mortgage Loans—The Controlling Class Representative,” “Servicing of the Mortgage Loans—The Special Servicer” and “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” in this prospectus supplement.
You will be acknowledging and agreeing, by your purchase of offered certificates, that any directing holder for any A/B whole loan or loan pair: (i) may have special relationships and interests that conflict with those of holders of one or more classes of certificates; (ii) may act solely in its own interests, without regard to your interests; (iii) does not have any duties to any other person, including the holders of any class of certificates; (iv) may take actions that favor its interests over the interests of the holders of one or more classes of certificates; and (v) will have no liability whatsoever for having so acted and that no certificateholder may take any action whatsoever against the directing holder or any director, officer, employee, agent or principal of the directing holder for having so acted.
Conflicts Between Certificateholders and the Holders of Subordinate Notes or Mezzanine Notes
As and to the extent provided for in the related co-lender or intercreditor agreements, neither the master servicer nor special servicer may enter into material amendments, modifications or extensions of a mortgage loan without the consent of the holder of the related subordinate or mezzanine note, subject to the expiration of the subordinate or mezzanine note holder’s consent rights. The holders of the subordinate or mezzanine notes (or their respective designees) may have interests in conflict with those of the certificateholders. As a result, approvals to proposed actions of the master servicer or special servicer, as applicable, under the pooling and servicing agreement may not be granted in all instances, thereby potentially adversely affecting some of the classes of certificates.
Conflicts Between Borrowers and Property Managers
It is likely that many of the property managers of the mortgaged properties, or their affiliates, manage additional properties, including properties that may compete with the mortgaged properties. Affiliates of the managers, and managers themselves, as well as affiliates of the related borrowers, also may own other properties, including competing properties. The related borrowers and the managers of the mortgaged properties may accordingly experience conflicts of interest in the ownership and/or management of such mortgaged properties.
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Conflicts Between the Issuing Entity and the Mortgage Loan Seller
The activities of the mortgage loan seller, and its affiliates or subsidiaries, may involve properties that are in the same markets as the mortgaged properties underlying the certificates. In such case, the interests of the mortgage loan seller, or its affiliates or subsidiaries, may differ from, and compete with, the interests of the issuing entity, and decisions made with respect to those assets may adversely affect the amount and timing of distributions with respect to the certificates. Conflicts of interest may also arise between the issuing entity and the mortgage loan seller, or its affiliates or subsidiaries, that engage in the acquisition, development, operation, leasing, financing and disposition of real estate if the mortgage loan seller acquires any certificates. In particular, if certificates held by the mortgage loan seller are part of a class that is or becomes the controlling class, the mortgage loan seller as part of the holders of the controlling class would have the ability to influence certain actions of the special servicer under circumstances where the interests of the issuing entity conflict with the interests of the mortgage loan seller, or its affiliates or subsidiaries, as acquirors, developers, operators, tenants, financers or sellers of real estate related assets.
In addition, any subordinate orpari passu indebtedness secured by the related mortgaged property, and any existing and/or future mezzanine loans related to certain of the mortgage loans, may be held by the seller or affiliates or subsidiaries thereof. For example, Morgan Stanley Bank, N.A., the originator and an affiliate of the mortgage loan seller, is the initial holder of a portion of the 32 Old Slip Fee non-serviced companion loan. The holders of any such indebtedness or mezzanine loans may have interests that conflict with the interests of the holders of the certificates.
Additionally, certain of the mortgage loans included in the issuing entity may have been refinancings of debt previously held by the mortgage loan seller, or an affiliate or subsidiary of the mortgage loan seller, and the mortgage loan seller, or its affiliates or subsidiaries, may have or have had equity investments in the borrowers (or in the owners of the borrowers) or properties under certain of the mortgage loans included in the issuing entity. The mortgage loan seller, and its affiliates or subsidiaries, have made and/or may make or have preferential rights to make loans to, or equity investments in, affiliates of the borrowers under the mortgage loans.
The mortgage loan seller and sponsor, Morgan Stanley Mortgage Capital Holdings LLC, and its affiliates expect to derive ancillary benefits from this offering, and their respective incentives may not be aligned with those of purchasers of the certificates. In particular, the mortgage loan seller and sponsor and its affiliates expect to receive compensation, commissions, payments, rebates, remuneration and business opportunities, in connection with or as a result of this offering of certificates and, accordingly, such parties may record a profit, in an amount based on, among other things, the amount of proceeds (net of transaction expenses) received from the sale of the certificates to investors relative to their investment in the mortgage loans. The benefits to Morgan Stanley Mortgage Capital Holdings LLC and its affiliates arising from the decision to securitize the mortgage loans may be greater than they would have been had other mortgage loans been selected.
In addition, the mortgage loan seller or its affiliate originated or purchased the mortgage loans in order to securitize them by means of a transaction such as the offering of the certificates. A completed sale of the certificates to third parties would reduce the mortgage loan seller’s and its affiliates’ exposure to the risk of ownership of the mortgage loans, and would effectively transfer such risk of ownership to the purchasers of the certificates.
Furthermore, the mortgage loan seller and its affiliates may benefit from a completed sale of the certificates because the sale would establish a market precedent and a valuation data point for securities similar to the certificates, thus enhancing the ability of the mortgage loan seller and its affiliates to conduct similar offerings in the future and permitting them to write up, avoid writing down or otherwise adjust the fair value of similar assets or securities held on their balance sheet.
Conflicts of Interest of the Underwriter and Its Affiliates
The activities of the underwriter and its affiliates (collectively referred to as the Underwriter Entities) may result in certain conflicts of interest. The Underwriter Entities may retain, or own in the future, classes of certificates, and any voting rights of that class could be exercised by them in a manner that could adversely impact the certificates. If an Underwriter Entity becomes a holder of any of the certificates, through market-making activity or otherwise, any actions that it takes in its capacity as certificateholder, including voting, providing consents or otherwise, will not necessarily be aligned with the interests of other holders of the same class or other classes of the certificates. To the extent an Underwriter Entity makes a market in the certificates (which it is under no obligation to do), it would expect to receive income from the spreads between its bid and offer prices for the certificates. The price at which an Underwriter Entity may be willing to purchase certificates, if it makes a market, will depend on market conditions and other relevant factors and may be significantly lower than the issue price for the certificates and significantly lower than the price at which it may be willing to sell the certificates.
Certain activities and interests of the Underwriter Entities will not align with, and may in fact be directly contrary to, those of the certificateholders. The Underwriter Entities are part of global investment banking, securities and investment management firms that provide a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high net worth individuals. As such, the Underwriter Entities actively make markets in and trade financial instruments for their own account and for the accounts of customers. These financial instruments include debt and equity securities, currencies, commodities, bank loans, indices, baskets and other products. The Underwriter Entities’ activities include, among other things, executing large block trades and taking long and short positions directly and indirectly, through derivative instruments or otherwise. The securities and instruments in which the Underwriter Entities take positions, or expect to take positions, include loans similar to the mortgage loans, securities and instruments similar to the certificates and other securities and instruments. Market making is an activity where the Underwriter Entities buy and sell on behalf of customers, or for their own account, to satisfy the expected demand of customers. By its nature, market making involves facilitating transactions among market participants that have differing views of securities and instruments. As a result, you should expect that the Underwriter Entities will take positions that are inconsistent with, or adverse to, the investment objectives of investors in the certificates.
As a result of the Underwriter Entities’ various financial market activities, including acting as a research provider, investment advisor, market maker or principal investor, you should expect that personnel in various businesses throughout the Underwriter Entities will have and express research or investment views and make recommendations that are inconsistent with, or adverse to, the objectives of investors in the certificates.
The Underwriter Entities and their respective clients acting through them from time to time buy, sell or hold securities or other instruments, which may include one or more classes of the certificates or credit derivative or other derivative transactions with other parties pursuant to which they sell or buy credit protection with respect to one or more of the certificates, and do so without consideration of the fact
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that the underwriter acted as underwriter for the certificates. Such transactions may result in Underwriter Entities and/or their clients having long or short positions in such instruments. Any short positions will increase in value if the related securities or other instruments decrease in value. In conducting such activities, none of the Underwriter Entities has any obligation to take into account the interests of the certificateholders or holders of B notes or serviced companion loans or any possible effect that such activities could have on them. The Underwriter Entities and their respective clients acting through them may execute such transactions, modify or terminate such derivative positions and otherwise act with respect to such transactions, and may exercise or enforce, or refrain from exercising or enforcing, any or all of their rights and powers in connection therewith, without regard to whether any such action might have an adverse effect on the certificates or the certificateholders or holders of B notes or serviced companion loans.
The Underwriter Entities expect that a completed offering will enhance their ability to assist clients and counterparties in the transaction contemplated by this prospectus supplement or in related transactions (including assisting clients in further purchases and sales of the certificates and hedging transactions). The Underwriter Entities expect to derive fees and other revenues from these transactions. In addition, participating in a successful offering and providing related services to clients may enhance the Underwriter Entities’ relationships with various parties, facilitate additional business development and enable them to obtain additional business and generate additional revenue.
In addition, the Underwriter Entities will have no obligation to monitor the performance of the certificates or the actions of the master servicer, the special servicer, the certificate administrator, the custodian, the trust advisor or the trustee and will have no authority to advise the master servicer, the special servicer, the certificate administrator, the custodian, the trust advisor or the trustee or to direct their actions.
Furthermore, the Underwriter Entities may have ongoing relationships with, render services to, and engage in transactions with the borrowers, the mortgage loan seller and sponsor and their respective affiliates, which relationships and transactions may create conflicts of interest between the Underwriter Entities, on the one hand, and the issuing entity, on the other hand. Morgan Stanley & Co. LLC, the underwriter and the entity that is expected to be the initial holder of 20.3% of the notional amount of the Class X-A Certificates and 100% of the percentage interests in the Class V Certificates on the closing date, is an affiliate of Morgan Stanley Capital I Inc., the depositor, Morgan Stanley Mortgage Capital Holdings LLC, the sponsor and mortgage loan seller, and Morgan Stanley Bank, N.A., the originator and the initial holder of a portion of the 32 Old Slip Fee non-serviced companion loan.
Conflicts in the Selection of the Underlying Mortgage Loans
The anticipated initial investor in the Control Eligible Certificates was given the opportunity by the mortgage loan seller to perform due diligence on the mortgage loans originally identified by the mortgage loan seller for inclusion in the issuing entity, and may have been given the opportunity to request the removal or re-sizing of, or the modification of the expected repayment dates or other features of, some or all of the mortgage loans. The mortgage pool as originally proposed by the mortgage loan seller may have been adjusted based on some of these requests, if any were made. In addition, the anticipated initial investor may have requested and received price adjustments or cost mitigation arrangements in connection with accepting certain mortgage loans included in the mortgage pool, which price adjustments or cost mitigation arrangements may have been effected through a payment by the mortgage loan seller to the anticipated initial investor out of the proceeds received by the mortgage loan seller in connection with this securitization.
We cannot assure you that you or another investor would make the same requests to modify the original pool as the anticipated initial investor or that the final pool if influenced by the anticipated initial investor’s feedback would not adversely affect the performance of your certificates and benefit the performance of the anticipated initial investor’s certificates. Because of the differing subordination levels, the anticipated initial investor has interests that may, in some circumstances, differ from those of purchasers of other classes of certificates, and may desire a portfolio composition that benefits the anticipated initial investor but that does not benefit other investors. In addition, the anticipated initial investor may enter into hedging or other transactions or otherwise have business objectives that also could cause its interests with respect to the mortgage pool to diverge from those of other purchasers of the certificates. The anticipated initial investor performed due diligence solely for its own benefit and has no liability to any person or entity for conducting its due diligence. The anticipated initial investor is not required to take into account the interests of any other investor in the certificates in exercising remedies or voting or other rights in its capacity as owner of the certificates it holds or in making requests or recommendations to the mortgage loan seller as to the selection of the mortgage loans and the establishment of other transaction terms. Investors are not entitled to rely on in any way the anticipated initial investor’s acceptance of a mortgage loan. The anticipated initial investor’s acceptance of a mortgage loan does not constitute and may not be construed as an endorsement of such mortgage loan, the underwriting for such mortgage loan or the originator of such mortgage loan.
The anticipated initial investor in the Control Eligible Certificates or its designee is expected to constitute the initial controlling class representative. The controlling class representative will have certain approval rights and rights to direct and consult with the special servicer as described under “Servicing of the Mortgage Loans—The Controlling Class Representative” in this prospectus supplement.
Because the incentives and actions of the anticipated initial investor may, in some circumstances, differ from or be adverse to those of purchasers of other classes of certificates, you are advised and encouraged to make your own investment decision based on a careful review of the information set forth in this prospectus supplement and your own view of the mortgage pool.
Conflicts May Occur as a Result of the Rights of Third Parties To Terminate the Special Servicer of an A/B Whole Loan, Loan Pair or Non-Serviced Loan Combination
With respect to an A/B whole loan, loan pair or non-serviced loan combination, to the extent set forth in the related intercreditor agreement, the holder of a related B note, serviced companion loan or non-serviced companion loan will be entitled, under certain circumstances, to remove the related special servicer for the related A/B whole loan, loan pair or non-serviced loan combination under the pooling and servicing agreement or trust and servicing agreement, as applicable, pursuant to which such A/B whole loan, loan pair or non-serviced loan combination is being serviced and appoint a successor special servicer for such A/B whole loan, loan pair or non-serviced loan combination. The party with this appointment power may have special relationships or interests that conflict with those of the holders of one or more classes of certificates. In addition, that party does not have any duties to the holders of any class of certificates, may act solely in its own interests, and will have no liability to any certificateholders for having done so. No certificateholder may take any action against the majority certificateholder of the controlling class under any such pooling and servicing agreement or trust and servicing agreement (as applicable), the holder of a related B note, serviced companion loan, non-serviced companion loan or other parties for having acted solely in their respective interests. See “Description of the Mortgage Pool—Material Terms and Characteristics of the Mortgage Loans” and “Description of the
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Mortgage Pool—The A/B Whole Loans and the Loan Pairs” and “—The Non-Serviced Loan Combinations” in this prospectus supplement for a description of these rights to terminate a special servicer.
Conflicts Between Certificateholders and Holders of Companion Loans or B Notes
Morgan Stanley Bank, N.A., the originator and an affiliate of Morgan Stanley & Co. LLC, the underwriter and the entity that is expected to be the initial holder of 20.3% of the notional amount of the Class X-A Certificates and 100% of the percentage interests in the Class V Certificates on the closing date, and of the mortgage loan seller, is the initial holder of a portion of the 32 Old Slip Fee non-serviced companion loan. With respect to each of the 300 South Riverside Plaza Fee and Waterfront at Port Chester mortgage loans, the related non-serviced companion loan is currently held by a securitization trust and backs securities held by third parties. With respect to the Alderwood Mall mortgage loan, the promissory notes comprising the related non-serviced companion loan and the related B notes are currently held by a securitization trust (the promissory notes held by which back securities held by third parties) and by Citigroup Global Markets Realty Corp. With respect to the Hilton Garden Inn W 54th Street mortgage loan, the promissory notes comprising the related non-serviced companion loan are currently held by a securitization trust (the promissory notes held by which back securities held by third parties) and by Morgan Stanley Bank, N.A., and the related subordinate B note is currently held by Aareal Capital Corporation. See “Summary of Prospectus Supplement—Information About the Mortgage Pool—Characteristics of the Mortgage Pool—The A/B Whole Loans, Loan Pairs and Non-Serviced Loan Combinations.”
The interests of the holder of any related serviced companion loan, non-serviced companion loan or B note (or its designee) entitled to exercise various rights with respect to the servicing of a mortgage loan and the related serviced companion loan, non-serviced companion loan or B note, as applicable, may conflict with the interests of, and its decisions may adversely affect, the holders of one or more classes of offered certificates. No certificateholder may take any action against any holder of a serviced companion loan, non-serviced companion loan or B note (or its designee) for having acted solely in its respective interest.
See “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” in this prospectus supplement. See also “Risks Related to the Offered Certificates—You Will Have No Control Over the Servicing of Non-Serviced Pari Passu Mortgage Loans” below for a discussion of the rights of certificateholders with respect to non-serviced mortgage loans.
Other Conflicts
The special servicer (or any prospective replacement special servicer) may enter into one or more arrangements with the controlling class representative, a controlling class certificateholder, a B note holder, a serviced companion loan holder and/or other persons or certificateholders who have the right to remove the special servicer (but may not enter into such arrangements with the trust advisor or any affiliate thereof), to provide for a discount and/or revenue sharing with respect to certain special servicer compensation in consideration of or as a condition of, among other things, the special servicer’s appointment or replacement as special servicer under the pooling and servicing agreement and, with respect to any A/B whole loan or loan pair, under the related intercreditor agreement. Any such party may further consider any such economic arrangements with the special servicer or a prospective replacement special servicer in entering into any decision to appoint or replace such party from time to time, and such considerations would not be required to take into account the best interests of the certificateholders or any group of certificateholders. A primary servicer or the master servicer may enter into an agreement with the mortgage loan seller or sponsor to purchase the servicing rights to related mortgage loans and/or the right to be appointed as the primary servicer or master servicer with respect to such mortgage loans. The mortgage loan seller, sponsor or directing holder may consider the economic arrangement with the servicer in entering into any decision to appoint such servicer from time to time, and such consideration would not be required to take into account the best interests of the certificateholders or any group of certificateholders.
Risks Related to the Offered Certificates
Subordination of Some Certificates May Affect the Timing of Payments and the Application of Losses on Your Certificates
As described in this prospectus supplement, the rights of the holders of each class of subordinate certificates, and the Class PST Certificates in respect of its various components, to receive payments of principal and interest otherwise payable on their certificates will be subordinated to such rights of the holders of the more senior certificates having an earlier alphabetical or alphanumeric class designation and to the rights of the holders of the Class PST Certificates in respect of any components thereof having an earlier alphabetical designation. Losses (other than losses attributable to trust advisor expenses) on the mortgage loans will be allocated to the Class G, Class F, Class E and Class D Certificates, the Class C and Class PST Certificates (pro rata based on their respective percentage interests in the Class C trust component), the Class B and Class PST Certificates (pro rata based on their respective percentage interests in the Class B trust component) and the Class A-S and Class PST Certificates (pro rata based on their respective percentage interests in the Class A-S trust component), in that order, reducing amounts otherwise payable to each such class or the Class PST Certificates, as applicable. Any remaining losses would then be allocated or cause shortfalls to the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates,pro rata, and, solely with respect to losses of interest, to the Class X-A Certificates, in proportion to the amounts of interest distributable on or the principal balances of, as applicable, those certificates. In addition, notwithstanding the foregoing, losses attributable to trust advisor expenses will not be allocated to the Control Eligible Certificates.
Certain Federal Income Tax Considerations Regarding Original Issue Discount
Certain classes of certificates may be issued with “original issue discount” for federal income tax purposes. Original issue discount is taxable when it accrues rather than when it is received, resulting in the recognition of original issue discount as taxable income before any cash attributable to that taxable income is received. Investors must have sufficient sources of cash other than a certificate to pay any federal, state or local income taxes that may be imposed on original issue discount. See “Material Federal Income Tax Consequences—Taxation of the Offered Certificates—Original Issue Discount” in this prospectus supplement.
The Mortgage Loan Seller May Not Make a Required Repurchase or Substitution of a Defective Mortgage Loan
In limited circumstances, the mortgage loan seller may be obligated to repurchase or replace a mortgage loan that it sold to us if the mortgage loan seller’s representations and warranties concerning that mortgage loan are materially breached or if there are material defects in the documentation for that mortgage loan. The mortgage loan seller is the sole warranting party in respect of the mortgage loans sold by the mortgage loan seller to us. There can be no assurance that the mortgage loan seller will effect a repurchase or substitution and neither we nor any of our affiliates (except, in certain circumstances, for Morgan Stanley Mortgage Capital Holdings LLC in its capacity as the mortgage
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loan seller) are obligated to repurchase or substitute any mortgage loan in connection with either a material breach of the mortgage loan seller’s representations and warranties or any material document defects, if the mortgage loan seller defaults on its obligation to do so. In addition, the mortgage loan seller may have various legal defenses available to it in connection with a repurchase or substitution obligation. The representations and warranties address the characteristics of the mortgage loans and mortgaged properties as of the date of issuance of the certificates. They do not relieve you or the issuing entity of the risk of defaults and losses on the mortgage loans. If the mortgage loan seller fails to fulfill such obligation, then you could experience cash flow disruptions or losses on your certificates. In addition, any mortgage loan that is not repurchased or substituted and that is not a “qualified mortgage” for a REMIC may cause the issuing entity to fail to qualify as one or more REMICs or cause the issuing entity to incur a tax. See “Description of the Mortgage Pool—Representations and Warranties” and “—Repurchases and Other Remedies” in this prospectus supplement.
Your Lack of Control Over the Issuing Entity Can Create Risks
Except as described below, 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 issuing entity. 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 special servicer, the trustee, the custodian or the certificate administrator, as applicable. Any decision made by one of those parties in respect of the issuing entity, 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.
During any Subordinate Control Period, the controlling class representative will have the right to replace the special servicer (other than with respect to a non-serviced loan combination) with or without cause. During any Collective Consultation Period and any Senior Consultation Period, the holders of at least 25% of the voting rights of the certificates may request a vote to replace the special servicer (other than with respect to a non-serviced loan combination). The subsequent vote may result in the termination and replacement of the special servicer if within one hundred eighty (180) days of the initial request for that vote the holders of at least 75% of the voting rights of the certificates, vote affirmatively to so replace. Notwithstanding the foregoing, in the case of an A/B whole loan or loan pair, for so long as the holder of the related B note or serviced companion loan is the directing holder with respect to such A/B whole loan or loan pair, and to the extent set forth in the related intercreditor agreement, only the holder of such B note or serviced companion loan, as applicable, may replace the special servicer for such A/B whole loan or loan pair, as applicable, without cause.
See “Servicing of the Mortgage Loans—The Controlling Class Representative,” “Description of the Mortgage Pool—Material Terms and Characteristics of the Mortgage Loans” and “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” in this prospectus supplement.
In addition, although there is a trust advisor with certain obligations in respect of reviewing the compliance of the special servicer with certain of its obligations under the pooling and servicing agreement, the trust advisor has no control or consultation rights over actions by the special servicer in respect of the mortgage loans during any Subordinate Control Period and will have no consent or consultation rights over actions by the related special servicer in respect of any non-serviced loan combination at any time. In addition, the trust advisor only has the limited obligations and duties set forth in the pooling and servicing agreement, and has no fiduciary or other duty to act on behalf of the certificateholders or the issuing entity or in the best interest of any particular certificateholder. It is not intended that the trust advisor act as a surrogate for the certificateholders. You should not rely on the trust advisor to affect the special servicer’s actions under the pooling and servicing agreement or to monitor the actions of the controlling class representative or special servicer, other than to the limited extent specifically required in respect of certain actions of the special servicer at certain prescribed times under the pooling and servicing agreement.
Furthermore, each non-serviced mortgage loan will be serviced pursuant to a separate pooling and servicing agreement or trust and servicing agreement, as applicable, and certificateholders will generally have no right to make, or consult in respect of, decisions with respect to the administration of such non-serviced mortgage loan (including the decision as to who will service or special service that mortgage loan); however, the issuing entity will be entitled to exercise all rights of the non-controlling note holder to the extent set forth in the related intercreditor agreement. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations.”
In certain limited circumstances, certificateholders have the right to vote on matters affecting the issuing entity. In some cases these votes are by certificateholders taken as a whole and in others the vote is by class. In all cases voting is based on the outstanding certificate principal balance, which is reduced by realized losses. In certain cases with respect to the termination of the special servicer and the trust advisor only, certain voting rights will also be reduced by appraisal reductions. These limitations on voting could adversely affect your ability to protect your interests with respect to matters voted on by certificateholders. See “Servicing of the Mortgage Loans—The Controlling Class Representative” in this prospectus supplement.
Rights of the Trust Advisor, the Controlling Class Representative and Any Directing Holder Could Adversely Affect Your Investment
During any Subordinate Control Period, in connection with certain material servicing actions with respect to the mortgage loans (other than with respect to any non-serviced mortgage loan or with respect to any A/B whole loan or loan pair (to the extent set forth in the related intercreditor agreement and for so long as the holder of the related B note or serviced companion loan is the directing holder with respect to such A/B whole loan or loan pair)), the special servicer generally will be required to obtain the consent of the controlling class representative. During any Collective Consultation Period and any Senior Consultation Period, the special servicer generally will be required to consult the trust advisor and, only during any Collective Consultation Period, the controlling class representative, in each case on a non-binding basis, in connection with certain material decisions with respect to the mortgage loans (other than with respect to any non-serviced mortgage loan or with respect to any A/B whole loan or loan pair (to the extent set forth in the related intercreditor agreement)). These actions and decisions include, among others, certain modifications to the mortgage loans, including modifications of monetary terms, foreclosure or comparable conversion of the related mortgaged properties, and certain sales of the mortgage loans or REO properties for less than the outstanding principal amount plus accrued interest, fees and expenses. See “Servicing of the Mortgage Loans—The Controlling Class Representative” and “—The Trust Advisor” in this prospectus supplement for a list of actions and decisions requiring consultation with the trust advisor and consultation with or the consent of the controlling class representative. As a result of these obligations, the special servicer may take actions with respect to a mortgage loan that could adversely affect the interests of investors in one or more classes of certificates.
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See “Risk Factors—Risks Related to Conflicts of Interest—Conflicts of Interest of the Trust Advisor” and “—Conflicts of Interest of the Controlling Class Representative; Rights of the Controlling Class Representative Could Adversely Affect Your Investment” for a discussion of certain conflicts of interest of the controlling class representative and the trust advisor.
Reimbursement of Trust Advisor Expenses Could Reduce Payments on the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4, Class A-S, Class B, Class PST, Class C and Class D Certificates
As described elsewhere in this prospectus supplement, in general, unless your certificates are Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4 or Class X-A Certificates, your right to receive distributions of amounts collected or advanced on or in respect of the mortgage loans will generally be subordinated to those of the holders of the certificates with a more senior payment priority (as described under “Description of the Certificates—Distributions—Application of the Available Distribution Amount” in this prospectus supplement) than your class and to those of the holders of Class PST Certificates in respect of the components thereof with a more senior payment priority (as described under “Description of the Certificates—Distributions—Application of the Available Distribution Amount” in this prospectus supplement) than your class. However, the Control Eligible Certificates will not provide subordination to the more senior classes of certificates in the event of losses incurred by the issuing entity due to reimbursement of trust advisor expenses (other than the trust advisor fee). Therefore, amounts that might otherwise be distributable in respect of the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4, Class A-S, Class B, Class PST, Class C and Class D Certificates may be used to reimburse trust advisor expenses in full without any corresponding reduction to amounts payable to the Control Eligible Certificates. See “—Subordination of Some Certificates May Affect the Timing of Payments and the Application of Losses on Your Certificates,” “Description of Certificates—Distributions—Allocation of Trust Advisor Expenses,” “Description of the Offered Certificates—Distributions—Application of the Available Distribution Amount” and “Description of the Offered Certificates—Distributions—Subordination; Allocation of Collateral Support Deficit” in this prospectus supplement.
The Yield on Your Certificates Will Be Affected By the Price at Which the Certificates Were Purchased and the Rate, Timing and Amount of Distributions on Your Certificates
The yield on any certificate will depend on (1) the price at which such certificate is purchased by you and (2) the rate, timing and amount of distributions on your certificate. The rate, timing and amount of distributions on any certificate will, in turn, depend on, among other things:
· | the interest rate for such certificate (or, in the case of a Class PST Certificate, for the respective components comprising such certificate); |
· | the rate and timing of principal payments (including principal prepayments) and other principal collections (including loan purchases in connection with breaches of representations and warranties or in connection with an optional termination of the issuing entity) on or in respect of the mortgage loans and the extent to which such amounts are to be applied or otherwise result in a reduction of the certificate principal balance or notional amount of such certificate; |
· | the rate, timing and severity of losses on or in respect of the mortgage loans or unanticipated expenses of the issuing entity; |
· | the rate and timing of any reimbursement of the master servicer, the special servicer or the trustee, as applicable, out of the collection account of nonrecoverable advances or advances remaining unreimbursed on a modified mortgage loan on the date of such modification; |
· | the timing and severity of any interest shortfalls resulting from prepayments to the extent not offset by a reduction in master servicer compensation as described in this prospectus supplement; |
· | the timing and severity of any reductions in the appraised value of any mortgaged property in a manner that has an effect on the amount of advancing required on the related mortgage loan; and |
· | the method of calculation of prepayment premiums and yield maintenance charges and the extent to which prepayment premiums and yield maintenance charges are collected and, in turn, distributed on such certificate. |
For this purpose, principal payments include both voluntary prepayments, if permitted, and involuntary prepayments, such as prepayments resulting from casualty or condemnation of mortgaged properties, defaults and liquidations by borrowers, or repurchases as a result of the mortgage loan seller’s material breach of representations and warranties or material defects in a mortgage loan’s documentation, or purchases by a mezzanine holder, a B note holder or a companion loan holder pursuant to a purchase option. In addition, certain of the mortgage loans may require that, upon the occurrence of certain events, funds held in escrow or proceeds from letters of credit are applied to the outstanding principal balance of such mortgage loans.
The yield on each class of certificates with (or evidencing an interest in a trust component with) a pass-through rate limited by, equal to or based on the weighted average net interest rate of the pool of mortgage loans could (and in the case of each class of certificates with (or evidencing an interest in a trust component with) a pass-through rate equal to or based on the weighted average net interest rate of the pool of mortgage loans, would) be adversely affected if mortgage loans with higher interest rates pay faster than the mortgage loans with lower interest rates. Such pass-through rates may be adversely affected as a result of a decrease in the weighted average of the net interest rates on the mortgage loans even if principal prepayments do not occur. In addition, because some mortgage loans will amortize their principal more quickly than others, any such pass-through rate may fluctuate over the life of your certificates. See “Yield, Prepayment and Maturity Considerations” in this prospectus supplement.
The Class X-A Certificates will not be entitled to distributions of principal but instead will accrue interest on their Notional Amount. Because the Notional Amount of the Class X-A Certificates is based upon the outstanding Certificate Principal Balances of the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates, the yield to maturity on the Class X-A Certificates will be extremely sensitive to the rate and timing of prepayments of principal, liquidations and principal losses on the mortgage loans to the extent allocated to the classes of principal balance certificates and, without duplication, any trust components whose Certificate Principal Balances comprise the related Notional Amount. A rapid rate of principal prepayments, liquidations and/or principal losses on the mortgage loans could result in the failure to recoup the initial investment in the Class X-A Certificates.
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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. In general, if you buy an offered certificate at a premium, and principal distributions occur faster than expected, your actual yield to maturity will be lower than expected. If the rate of principal prepayments on the mortgage loans is very high, holders of certificates purchased at a premium might experience yields that are lower, and potentially substantially lower, than anticipated. Conversely, if you buy an offered certificate at a discount and principal distributions occur more slowly than expected, your actual yield to maturity will be lower than expected. See “Yield, Prepayment and Maturity Considerations” in this prospectus supplement.
Any changes in the weighted average lives of your certificates may adversely affect your yield. Prepayments resulting in a shortening of weighted average lives of your certificates may be made at a time of low interest rates when you may be unable to reinvest any 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. Conversely, 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. See “Yield, Prepayment and Maturity Considerations” in this prospectus supplement.
The extent to which prepayments on the mortgage loans in the issuing entity ultimately affect the weighted average life of the certificates with certificate principal balances will depend on the terms of the certificates, and more particularly the order in which principal payments are made on the respective classes of certificates with certificate principal balances.
Reimbursements to the master servicer, special servicer or the trustee for nonrecoverable advances or workout delayed reimbursement amounts, or to the trust advisor for certain expenses in accordance with the pooling and servicing agreement, may reduce the amount of principal available to be distributed on your certificates and could extend the weighted average life of your certificates. See “Description of the Offered Certificates—Distributions” in this prospectus supplement.
Voluntary prepayments under some of the mortgage loans are prohibited for specified lock-out periods or, if permitted, generally require the payment of a prepayment premium or a yield maintenance charge or both, unless the prepayment occurs within a specified period prior to and including the anticipated repayment date or maturity date, as the case may be. Nevertheless, we cannot assure you that the related borrowers will refrain from prepaying their mortgage loans due to the existence of a prepayment premium or a yield maintenance charge or that the amount of such premium or charge will be sufficient to compensate you for shortfalls in payments on your certificates on account of such prepayments. We also cannot assure you that involuntary prepayments will not occur or that borrowers will not default in order to avoid the application of lock-out periods. The rate at which voluntary prepayments occur on the mortgage loans will be affected by a variety of factors, including:
· | the terms of the mortgage loans; |
· | the length of any prepayment lock-out period; |
· | the level of prevailing interest rates; |
· | the availability of mortgage credit; |
· | the applicable yield maintenance charges or prepayment premiums and the ability of the master servicer or special servicer to enforce the related provisions; |
· | the failure to meet certain requirements for the release of escrows/reserves that result in a prepayment; |
· | the occurrence of casualties or natural disasters; and |
· | economic, demographic, tax, legal or other factors. |
Variability in the Amounts and Enforcement of Yield Maintenance Charges and Prepayment Premiums May Affect the Yield to Maturity on Your Certificates. Generally, no yield maintenance charge or prepayment premium will be required for prepayments (i) in connection with a casualty or condemnation unless an event of default has occurred and is continuing or (ii) in connection with the resolution of a specially serviced mortgage loan. In addition, certain mortgage loans may allow for all or a portion of the outstanding principal amount to be prepaid, without any prepayment premium or yield maintenance charge, if any insurance proceeds or condemnation awards are applied against the outstanding principal amount of the loan. In addition, if the mortgage loan seller repurchases any mortgage loan from the issuing entity due to the material breach of a representation or warranty or a material document defect or the mortgage loan is otherwise purchased from the issuing entity, 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 yield maintenance charge or prepayment premium will be payable. Further, the holder of the related B note or serviced companion loan in an A/B whole loan or loan pair may or, in the case of a mortgage loan with a corresponding mezzanine loan, the related mezzanine lender may, have the option to purchase the related mortgage loan after certain defaults, and the purchase price may not include any yield maintenance payments or premium charges. See “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” and “Description of the Mortgage Pool—Material Terms and Characteristics of the Mortgage Loans—Subordinate and Other Financing” in this prospectus supplement. Any such repurchase or purchase may, therefore, adversely affect the yield to maturity on your certificates.
Although all of the mortgage loans have protection against voluntary prepayments in the form of lock-out periods, defeasance provisions, yield maintenance provisions and/or prepayment premium provisions, there can be no assurance that (i) borrowers will refrain from prepaying mortgage loans due to the existence of a yield maintenance charge or prepayment premium; (ii) involuntary prepayments or repurchases will not occur; or (iii) partial prepayments will not occur in the case of those loans that permit such prepayment without a yield maintenance charge or prepayment premium.
Provisions prohibiting prepayment during a lock-out period or requiring the payment of prepayment premiums or yield maintenance charges may not be enforceable, or may be deemed usurious, in some states and under federal bankruptcy law, regardless of whether the prepayment is voluntary or involuntary. We cannot assure you that foreclosure proceeds will be sufficient to pay an enforceable prepayment premium or yield maintenance charge. Additionally, although the collateral substitution provisions related to defeasance do not have the same
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effect on the certificateholders as prepayment, we cannot assure you that a court would not interpret those provisions as requiring a yield maintenance charge and therefore unenforceable under applicable law or public policy or usurious.
In addition, the yield maintenance formulas are not the same for all of the mortgage loans that have yield maintenance charges. This can lead to substantial variance from loan to loan with respect to the amount of yield maintenance charge that is due on the related prepayment. Also, the description in the mortgage notes of the method of calculation of prepayment premiums and yield maintenance charges is complex and subject to legal interpretation and it is possible that another person would interpret the methodology differently from the way we did in estimating an assumed yield to maturity on your certificates as described in this prospectus supplement.
See Appendix I to this prospectus supplement for a description of the various prepayment provisions.
Losses on the Mortgage Loans; Variability of Yield
The yield to maturity on the offered certificates will be sensitive in varying degrees (with the Class C Certificates and the Class PST Certificates (to the extent they represent an interest in the Class C trust component) being the most sensitive) to the default and loss experience on or in respect of the mortgage loans and to the timing of any such defaults or losses (including collateral support deficits). The rights of the holders of any class of offered certificates, other than the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4 and Class X-A Certificates, to receive distributions in respect of the mortgage loans will generally be subordinate to the rights of the holders of various classes of offered certificates as described under “Description of the Certificates—Distributions—Application of the Available Distribution Amount” in this prospectus supplement. See “—Subordination of Some Certificates May Affect the Timing of Payments and the Application of Losses on Your Certificates” above. The Class V and Class R Certificates do not have certificate principal balances and do not provide any material protection to the holders of the other certificates against losses and other shortfalls in collections on the mortgage loans. Investors in the offered certificates should consider the risk that losses on or in respect of the mortgage loans could result in the failure of such investors to fully recover their initial investments.
The yield to maturity on the offered certificates will also be affected by the rate and timing of principal payments (including by reason of principal prepayments, defaults and liquidations) on or in respect of the mortgage loans and the application of such payments to reduce the certificate principal balances or notional amounts of such certificates. The yield to maturity on the Class X-A Certificates will be highly sensitive to the rate and timing of principal payments (including by reason of prepayments, defaults and liquidations) on or in respect of the mortgage loans, and investors in the Class X-A Certificates should fully consider the associated risks, including the risk that an extremely rapid rate of amortization and prepayment of the mortgage loans (and correspondingly, of the aggregate notional amount of their certificates) could result in the failure of such investors to recoup their initial investment. As described herein, distributions of principal generally will not be made on any class of subordinate certificates until the aggregate certificate principal balance of each class of certificates, if any, with an earlier alphabetical class designation is reduced to zero (subject to the Class A-S Certificates being subordinate to the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4 and Class X-A Certificates and further subject to the allocation of payments and losses to the Class PST Certificates, which will be allocated in respect of the Class PST Components,pro rata with each class of the Class A-S, Class B and Class C Certificates to the extent of their respective percentage interests in the Class A-S, Class B and Class C trust components). For instance, distributions of principal will not be made on the Class D Certificates until the aggregate certificate principal balance of the Class C Certificates and the Class PST Component C is reduced to zero. The allocation to the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates for so long as they are outstanding, of all principal payments on or in respect of the mortgage pool will have the effect of accelerating the amortization of such certificates relative to the actual amortization of the mortgage pool, while increasing (in the absence of losses on the mortgage loans) the proportionate interest evidenced by the subordinate certificates in the mortgage pool, which is intended to preserve the availability of the subordination provided by such subordinate certificates to such certificates and will cause the certificate principal balances of such subordinate certificates to decline more slowly than would be the case if holders of such subordinate certificates received their proportionate share of principal payments on or in respect of the mortgage pool. As a result, the weighted average lives of such subordinate certificates will likely be longer than otherwise would be the case, and the performance characteristics of such subordinate certificates will be different from other mortgage pass-through certificates that do not disproportionately allocate principal payments on or in respect of the underlying mortgage assets according to the certificate class. With respect to each class of offered certificates (other than the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4 and Class X-A Certificates) being offered at a discount from its aggregate certificate principal balance, prospective investors should strongly consider the effects of the foregoing on their anticipated yields to maturity.
For an additional discussion of factors affecting the Class X-A Certificates, see “Yield, Prepayment and Maturity Considerations—Yield on the Class X-A Certificates” herein. For an additional discussion of factors affecting yield, see “Yield, Prepayment and Maturity Considerations” herein and “Yield Considerations” in the accompanying prospectus.
The Exchangeable Certificates Are Subject to Additional Risks
The characteristics of the Class PST Certificates, which are referred to as exchangeable certificates, will reflect the aggregate characteristics of the Class A-S, Class B and Class C Certificates, which are also referred to as exchangeable certificates. Investors should also consider a number of factors that will limit a certificateholder’s ability to exchange exchangeable certificates:
· | A certificateholder who desires to exchange Class A-S, Class B and Class C Certificates for Class PST Certificates must own Class A-S, Class B and Class C Certificates in an “Exchange Proportion” (as described in the bullet below) at the time of any proposed exchange. A certificateholder who desires to exchange Class PST Certificates for Class A-S, Class B and Class C Certificates would generally be entitled to receive Class A-S, Class B and Class C Certificates in an Exchange Proportion. |
· | An “Exchange Proportion” consists of Class A-S, Class B and Class C Certificates with original certificate principal balances (regardless of current certificate principal balance) that represent approximately 33.571%, 45.714% and 20.714%, respectively, of the aggregate original certificate principal balances of all Class A-S, Class B and Class C Certificates involved in the exchange. |
· | A certificateholder that owns exchangeable certificates and desires to make an exchange, but does not own exchangeable certificates that collectively are in the necessary proportions of original certificate principal balances to make the desired exchange, may be unable to obtain other exchangeable certificates sufficient to compose such an exchange proportion or may be able only to exchange the portion (if any) of its Exchangeable Certificates that represents an Exchange Proportion. Other certificateholders may be unwilling to sell their certificates at reasonable prices (or at any price) or may be unable to sell their |
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certificates, or certificates may have been purchased or placed into other financial structures and thus may be unavailable for purchase in any secondary market. Such circumstances may prevent you from obtaining exchangeable certificates in the proportions necessary to effect an exchange. |
· | Exchanges will not be permitted from and after the date when the Class A-S trust component (and therefore the Class A-S Certificates and the Class PST Component A-S of the Class PST Certificates) has been retired as a result of such class being paid all interest and principal on such class in full. |
· | Exchanges will not be permitted from and after any date when any class of exchangeable certificates ceases to be maintained in book-entry form. |
· | Exchangeable certificates may only be held in authorized denominations. |
See “Description of the Offered Certificates—Exchangeable Certificates” in this prospectus supplement and “Description of the Certificates—Depositable and Exchangeable Certificates” in the accompanying prospectus for further details.
Release of Collateral May Reduce the Yield on Your Certificates
Notwithstanding the prepayment provisions described in this prospectus supplement, certain of the mortgage loans permit the release of a mortgaged property (or a portion of the mortgaged property) subject to the satisfaction of certain conditions described in Appendix I to this prospectus supplement. In order to obtain such release (other than with respect to the release of certain non-material portions of the mortgaged properties which may not require payment of a release price), the related borrower may be required (among other things) to pay a release price, which in some cases does not include a prepayment premium or yield maintenance charge on all or a portion of such payment. Any such prepayment may adversely affect the yield to maturity of your certificates. See “—The Yield on Your Certificate Will Be Affected By the Price at Which the Certificate Was Purchased and the Rate, Timing and Amount of Distributions on Your Certificate” in this prospectus supplement.
In addition, certain mortgage loans provide for the release, without prepayment or defeasance, of outparcels or other portions of the related mortgaged property that were given no value or minimal value in the underwriting process, subject to the satisfaction of certain conditions. Certain of the mortgage loans also permit the related borrower to add or substitute collateral under certain circumstances.
See “Description of the Mortgage Pool—Material Terms and Characteristics of the Mortgage Loans—Partial Releases Other Than in Connection with Defeasance” and Appendix I to this prospectus supplement for further details regarding the various release provisions.
You Bear The Risk of Borrower Defaults
The rate and timing of delinquencies or defaults on the mortgage loans could affect the following aspects of your certificates:
· | the aggregate amount of distributions on them; |
· | their yields to maturity; |
· | their rates of principal payments; and |
· | their weighted average lives. |
The rights of holders of each class of subordinate certificates to receive payments of principal and interest otherwise payable on their certificates will be generally subordinated to such rights of the holders of the more senior certificates having an earlier alphabetical or alphanumeric class designation (subject to the allocations of payments and losses to the Class PST Certificates, which will be allocated in respect of the Class PST Components,pro rata with each of the Class A-S, Class B and Class C Certificates to the extent of their respective percentage interests in the related trust components). See “—Subordination of Some Certificates May Affect the Timing of Payments and the Application of Losses on Your Certificates” above.
If losses on the mortgage loans exceed the aggregate certificate principal balance of the classes of certificates (or related Class PST Components) subordinated to a particular class (or, in the case of the Class A-S, Class B or Class C Certificates, such class of certificates and any related Class PST Component), that particular class (and any related Class PST Component) will suffer a loss equal to the full amount of that excess up to the outstanding certificate principal balance of such class (and Class PST Component, as applicable).
If you calculate your anticipated yield based on assumed rates of default and losses that are lower than the default rate and losses actually experienced and such losses are allocable to your certificates, your actual yield to maturity will be lower than the assumed yield. Under certain scenarios, such yield could be negative. In general, the earlier a loss is borne by your certificates, the greater the effect on your yield to maturity.
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 such delinquency or default.
Also, if the related borrower does not repay a mortgage loan with an anticipated repayment date by its anticipated repayment date, the effect will be to increase the weighted average life of your certificates and may reduce your yield to maturity.
Furthermore, if principal and interest advances and/or servicing advances are made with respect to a mortgage loan after default and the mortgage loan is thereafter worked out under terms that do not provide for the repayment of those advances in full at the time of the workout, then any reimbursements of those advances prior to the actual collection of the amount for which the advance was made may also result in reductions in distributions of principal to the holders of the certificates for the current month.
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Realization on a Mortgage Loan That Is Part of an A/B Whole Loan or Loan Pair May Be Adversely Affected by the Rights of the Related Directing Holder
In connection with the making of any material decisions or the taking of any material actions with respect to a mortgage loan that is part of an A/B whole loan or loan pair, or the taking of certain specified actions that would constitute major decisions with respect to the servicing of such mortgage loan, the special servicer will, to the extent set forth in the related intercreditor agreement, be required to obtain the consent of any related directing holder. These actions and decisions may include, among others, certain modifications to such mortgage loan, including modifications, foreclosure or comparable conversion of the related mortgaged properties, sales of such mortgage loan or related REO properties for less than the outstanding principal amount plus accrued interest, fees and expenses, budget approvals, escrow releases, property alterations, replacement of the property manager, debt service coverage ratio determinations and the determination, declaration or waiver of an event of default. As a result of these obligations, the special servicer may take actions with respect to such a mortgage loan that is part of an A/B whole loan or loan pair that could adversely affect the interests of investors in one or more classes of certificates. In addition to the foregoing consent rights, a directing holder may have the right to (i) replace the special servicer with respect to the related A/B whole loan or loan pair at any time with or without cause and/or (ii) exercise a right to cure defaults and/or purchase the related mortgage loan after the mortgage loan becomes a defaulted mortgage loan. See “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” for a more complete list of actions and decisions with respect to the A/B whole loans and loan pairs requiring the consent of the related directing holder and a description of the rights of the related directing holder.
Any sale of a mortgage loan that is part of an A/B whole loan or loan pair by the special servicer will not terminate or otherwise limit the payment, servicing, intercreditor and other rights of the holder of the related B note or serviced companion loan. The attendant constraints on a prospective purchaser’s ability to control the servicing or special servicing, including the workout, foreclosure or other resolution of the related A/B whole loan or loan pair, may adversely affect the ability of the special servicer to sell the related mortgage loan after a loan default. In addition, the net proceeds of any such sale that does occur may be substantially less than would have been realized if the mortgage loan were not part of an A/B whole loan or loan pair.
You Will Have No Control Over the Servicing of Non-Serviced Pari Passu Mortgage Loans
Each non-serviced mortgage loan, if any, will be secured by a mortgaged property that also secures apari passu companion loan (and, with respect to the Alderwood Mall mortgage loan and the Hilton Garden Inn W 54th Street mortgage loan, one or more subordinate B notes) that is not an asset of the issuing entity. To the extent a relatedpari passu non-serviced companion loan (or controlling portion thereof) is included in another securitization, the non-serviced mortgage loan will be serviced and administered by the other master servicer and, if applicable, specially serviced by the other special servicer, in each case under the pooling and servicing agreement or trust and servicing agreement, as applicable, related to such other securitization. The controlling class representative under such other pooling and servicing agreement or trust and servicing agreement, as applicable, will generally have consent and consultation rights over the actions of the master servicer or special servicer under such pooling and servicing agreement or trust and servicing agreement, as applicable, with respect to the related non-serviced loan combination that are similar to the rights of the controlling class representative under this securitization with respect to the mortgage loans included in this securitization trust; provided, that with respect to the Hilton Garden Inn W 54th Street non-serviced loan combination, such other controlling class representative will only have such rights to the extent that the related B note is not the controlling note under the related intercreditor agreement. As a result, no certificateholders will have any control over any servicing of any non-serviced mortgage loan, except that the controlling class representative under this securitization will have the right to consult with respect to certain matters, on a non-binding basis, with the special servicer for any such other securitization to the extent set forth in the related intercreditor agreement. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations” and “—The A/B Whole Loans and the Loan Pairs” in this prospectus supplement.
Interest on Advances and Compensation to the Master Servicer, the Special Servicer and the Trustee May Have an Adverse Effect on the Payments on Your Certificates
To the extent described in this prospectus supplement, the master servicer, the special servicer or the trustee, if applicable, will be entitled to receive interest at the “prime rate,” as published in the Wall Street Journal, on unreimbursed advances they have made with respect to delinquent monthly payments or that are made with respect to the preservation and protection of the related mortgaged property or enforcement of the mortgage loan. In addition, the master servicer, special servicer and/or trustee under the applicable other pooling and servicing agreement or trust and servicing agreement, as applicable, with respect to any non-serviced loan combination will generally be entitled to receive interest at a similar or the same rate on unreimbursed servicing advances made by such party with respect to such non-serviced loan combination. This interest will generally accrue from the date on which the related advance is made or the related expense is incurred to the date of reimbursement. Advance interest generally will not accrue during the grace period, if any, for the related mortgage loan. This interest may be offset in part by default interest, late payment charges and excess liquidation proceeds paid by the borrower in connection with the mortgage loan or by certain other amounts. In addition, under certain circumstances, including delinquencies in the payment of principal and/or interest, a mortgage loan will be serviced by the special servicer under this transaction, or with respect to a non-serviced mortgage loan the related special servicer under the related other pooling and servicing agreement or trust and servicing agreement, as applicable, that controls servicing for the related non-serviced loan combination, and the related special servicer will generally be entitled to compensation for related special servicing activities. The right to receive reimbursement for an advance with interest on such advance or special servicing compensation will generally be senior to the rights of certificateholders to receive distributions of amounts paid by the related borrower under the related mortgage loan. The payment of interest on advances and the payment of compensation to the related special servicer may result in shortfalls in amounts otherwise distributable on your certificates.
Limited Obligations
The certificates, when issued, will represent beneficial interests in the issuing entity. The certificates will not represent an interest in, or obligation of, the mortgage loan seller or sponsor, the depositor, the master servicer, the special servicer, the trust advisor, the certificate administrator, the trustee, the custodian, any affiliate of any of the foregoing, or any other person. The primary assets of the issuing entity will be the notes evidencing the mortgage loans, and the primary security and source of payment for the mortgage loans will be the mortgaged properties and the other collateral described in this prospectus supplement. Payments on the certificates are expected to be derived from payments made by the borrowers on the mortgage loans. We cannot assure you that the cash flow from the mortgaged properties and the proceeds of any sale or refinancing of the mortgaged properties will be sufficient to pay the principal of, and interest on, the mortgage loans or to distribute in full the amounts of interest and principal to which the holders of the certificates would receive if all principal and interest payments were made on the mortgage loans.
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The Mortgage Loan Seller, the Sponsor and the Depositor Are Subject to Bankruptcy or Insolvency Laws That May Affect the Issuing Entity’s Ownership of the Mortgage Loans
In the event of the insolvency, receivership or conservatorship of the mortgage loan seller, the sponsor or the depositor (or certain affiliates thereof, including Morgan Stanley), it is possible that the issuing entity’s right to payment from or ownership of the mortgage loans could be challenged. Based upon an opinion of counsel that the conveyance of the mortgage loans would generally be respected in the event of insolvency of the mortgage loan seller, which opinion is subject to various assumptions and qualifications, the depositor believes that such a challenge will be unsuccessful, but there can be no assurance that a bankruptcy trustee, if applicable, or other interested party will not attempt to assert such a position. Legal opinions do not provide any guaranty as to what any particular court would actually decide, but rather an opinion as to the decision a court would reach if the issues were competently presented and the court followed existing precedent as to legal and equitable principles applicable in bankruptcy cases. In this regard, legal opinions on bankruptcy law matters have inherent limitations primarily because of the pervasive equity powers of bankruptcy courts, the overriding goal of reorganization to which other legal rights and other policies may be subordinated, the potential relevance to the exercise of judicial discretion of future arising facts and circumstances, and the nature of the bankruptcy process. As a result, the FDIC, a creditor, a bankruptcy trustee or another interested party, including an entity transferring a mortgage loan as debtor-in-possession, could still attempt to assert that the transfer of a mortgage loan was not a sale. If such party’s challenge were successful, payments on the certificates would be reduced or delayed. Even if the challenge were not successful, payments on the certificates would be delayed while a court resolves the claim.
The transfer of mortgage loans by Morgan Stanley Bank, N.A. to Morgan Stanley Mortgage Capital Holdings LLC in connection with this offering is not expected to qualify for the securitization safe harbor (referred to herein as the FDIC Safe Harbor) adopted by the FDIC for securitizations sponsored by insured depository institutions (12 C.F.R. § 360.6 (referred to herein as the Rule)). We cannot assure you that the FDIC, a bankruptcy trustee, if applicable, or another interested party would not attempt to assert that any such transfer was not a sale. Even if a challenge were not successful, it is possible that payments on the certificates would be delayed while a court resolves the claims.
The issuing entity has been organized as a common law trust, and as such is not eligible to be a “debtor” under the federal bankruptcy laws. If the issuing entity were instead characterized as a “business trust,” it could qualify as a debtor under those laws. Bankruptcy courts look at various considerations in making this determination, so it is not possible to predict with any certainty whether or not the issuing entity would be characterized as a “business trust.” If a bankruptcy court were to determine that the issuing entity was a “business trust,” it is possible that payments on the certificates would be delayed while the court resolved the issue.
Furthermore, Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act provides for an orderly liquidation authority (OLA) under which the FDIC can be appointed as receiver of certain systemically important non-bank financial companies and their direct or indirect subsidiaries in certain cases. In January 2011, the current (and then-acting) general counsel of the FDIC issued an opinion in which he expressed his view that the FDIC, as receiver under the OLA, will not, in the exercise of its OLA repudiation powers, recover as property of a financial company assets transferred by the financial company prior to the end of the applicable transition period to be set forth in future regulations of the FDIC, provided that the transfer satisfies the conditions for the exclusion of assets from the financial company’s estate under the Bankruptcy Code. The general counsel indicated he would recommend to the Board of Directors of the FDIC that such regulations set forth a transition period of at least 90 days. If, however, the FDIC were to disregard or differently interpret the FDIC general counsel’s opinion, delays or reductions in payments on the certificates could occur.
Limited Liquidity and Market Value May Adversely Affect Payments on Your Certificates
The mortgage-backed securities market has recently experienced disruptions resulting from reduced investor demand and increased yield requirements for those securities. As a result, the secondary market for mortgage-backed securities experienced extremely limited liquidity. These conditions may continue or worsen. Accordingly, it is possible that for some period of time investors who desire to sell their certificates in the secondary market may have to sell at a discount from the price paid for reasons unrelated to the performance of the certificates or the mortgage loans. See “Risk Factors—Risks Related to Market Conditions—The Volatile Economy and Credit Crisis May Increase Loan Defaults and Affect the Value and Liquidity of Your Investment” in this prospectus supplement.
In addition to the lack of liquidity due to market disruptions, there is currently no secondary market for your certificates and your certificates will not be listed on any national securities exchange or traded on any automated quotation systems of any registered securities association. While we have been advised by the underwriter that it currently intends to make a market in the certificates, the underwriter is not obligated to do so, any market-making may be discontinued at any time, and we cannot assure you that an active secondary market for the certificates will develop. Additionally, one or more purchasers may purchase substantial portions of one or more classes of certificates. 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, market perceptions of risks associated with commercial mortgage lending and trading activity associated with indices of commercial mortgage-backed securities. No representation is made by any person or entity as to what the market value of any certificate will be at any time. Furthermore, you should be aware that the market for securities of the same type as the certificates has in the recent past been volatile and offered very limited liquidity.
In addition, you will generally have no redemption rights, and the certificates will be subject to early retirement only under certain specified circumstances described in this prospectus supplement. See “Description of the Offered Certificates—Optional Termination” in this prospectus supplement.
The liquidity of the certificates may also be affected by present uncertainties and future unfavorable determinations concerning legal investment. For purposes of the Secondary Mortgage Market Enhancement Act of 1984, as amended, no class of certificates will constitute “mortgage related securities.” See “Legal Investment” in this prospectus supplement and in the accompanying prospectus.
In addition, the existence of any right of first refusal or purchase option in favor of any directing holder with respect to a mortgage loan (or related property) that is part of an A/B whole loan or loan pair, or any right of first refusal or purchase option in favor of any third party with respect to any other mortgage loan (or related property) could impede or otherwise adversely affect the ability of the special servicer to sell any such defaulted mortgage loan or the related REO property in a market bidding process, or to obtain competitive bids with respect thereto. In the event a lower price is obtained then would otherwise have been obtained without the existence of the right of first refusal or purchase option, the resulting loss could adversely affect payments on your certificates.
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Changes to Accounting Standards Could Have an Adverse Impact on the Offered Certificates
We make no representation or warranty regarding any accounting implications related to the offered certificates. The Financial Accounting Standards Board has adopted changes to the accounting standards for structured products that are effective as of the start of the first fiscal year that began after December 15, 2009 for each investor in the offered certificates. These changes, or any other future changes, may impact the accounting for entities such as the issuing entity and could require the issuing entity to be consolidated in an investor’s financial statements. Each investor in the offered certificates should consult its accounting advisor to determine the impact these accounting changes might have as a result of an investment in the offered certificates.
Ratings of the Offered Certificates Do Not Represent Any Assessment of the Yield to Maturity That a Certificateholder May Experience and Such Ratings May Be Reviewed, Revised, Suspended, Downgraded, Qualified or Withdrawn By the Applicable Rating Agency
Ratings assigned to the offered certificates by the rating agencies engaged by the depositor are based, among other things, on the economic characteristics of the mortgaged properties and other relevant structural features of the transaction. A security rating does not represent any assessment of the yield to maturity that a certificateholder may experience. Ratings assigned to the offered certificates reflect only the views of the respective rating agencies as of the date such ratings were issued. Future events could have an adverse impact on such ratings. Ratings may be reviewed, revised, suspended, downgraded, qualified or withdrawn entirely by the applicable rating agency as a result of changes in or unavailability of information. Ratings do not consider to what extent the offered certificates will be subject to prepayment or that the outstanding certificate principal balance, if any, of any class of offered certificates will be prepaid.
Furthermore, the amount, type and nature of credit support, if any, provided with respect to the offered certificates were determined on the basis of criteria established by the rating agencies engaged by the depositor. 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 the mortgage loans in the issuing entity. As evidenced by the significant amount of downgrades, qualifications and withdrawals of ratings assigned to previously issued commercial mortgage-backed securities during the recent credit crisis, rating agencies’ assumptions regarding the performance of the mortgage loans related to such commercial mortgage-backed securities are not, in all cases, correct.
Certain Adverse Changes May Affect Ratings of the Offered Certificates. We are not obligated to maintain any particular rating with respect to any class of offered certificates. Changes affecting the mortgaged properties, the mortgage loan seller or sponsor, the trustee, the certificate administrator, the custodian, the master servicer, the special servicer, the trust advisor or another person, or changes to ratings criteria in response to legislative and regulatory initiatives or legal actions directed against the rating agencies, may have an adverse effect on any ratings of the offered certificates, and thus on the liquidity, market value and regulatory characteristics of the offered certificates, although such adverse changes would not necessarily be an event of default under the applicable mortgage loan. See “Ratings” in this prospectus supplement.
In addition, a ratings downgrade of any class of offered certificates by the rating agencies could affect the ability of a benefit plan or other investor to purchase those certificates. See “Certain ERISA Considerations” and “Legal Investment” in this prospectus supplement.
Unsolicited Ratings and the Selection and Qualification of Rating Agencies Rating the Offered Certificates May Impact the Value of the Offered Certificates. Nationally recognized statistical rating organizations that the depositor has not engaged to rate any class of certificates may nevertheless issue unsolicited credit ratings on one or more classes of certificates and any one or more of the rating agencies engaged by the depositor to rate certain classes of certificates may issue unsolicited credit ratings on one or more classes of certificates that it was not engaged to rate upon initial issuance, in each case relying on information they receive pursuant to Rule 17g-5 under the Securities Exchange Act of 1934, as amended, or otherwise. If any such unsolicited ratings are issued with respect to any particular class of certificates, we cannot assure you that they will not be lower than the rating(s) assigned by any of the rating agencies engaged by the depositor to rate that class of certificates on the closing date. The issuance of any such unsolicited ratings with respect to any particular class of certificates that are lower than the rating(s) assigned to it by any of the engaged rating agencies on the closing date may negatively impact the liquidity, market value and regulatory characteristics of that class of certificates. Although unsolicited ratings may be issued by any rating agency, a rating agency might be more likely to issue an unsolicited rating if it was not selected after having provided preliminary feedback to the depositor.
As part of the process of obtaining ratings for the certificates, the depositor had initial discussions with and submitted certain materials to five (5) rating agencies. Based on preliminary feedback from those rating agencies at that time, the depositor selected three (3) of them to rate some or all of the classes of offered certificates and certain classes of the privately offered certificates (although each such engaged rating agency may not ultimately issue ratings on all classes of certificates). The decision not to engage certain rating agencies to rate any of the certificates was due, in part, to those agencies’ initial subordination levels for the various classes of rated certificates. Likewise, the decision to engage one or more of the engaged rating agencies to only rate certain classes of certificates, but not others, was also due, in part, to those engaged rating agencies’ initial subordination levels for such classes of certificates. Had the depositor selected rating agencies (other than the engaged rating agencies) to rate the any one or more classes of the certificates or had it engaged all of the applicable engaged rating agencies to rate all classes of certificates, the depositor cannot assure you as to the ratings that such rating agencies would have ultimately assigned to those classes of certificates. In addition, the decision not to engage one or more of the engaged rating agencies in the rating of certain classes of certificates to be issued in connection with this transaction, may negatively impact the liquidity, market value and regulatory characteristics of those classes of certificates. Neither the depositor nor any other person or entity will have any duty to notify you if any other nationally recognized statistical rating organization issues, or delivers notice of its intention to issue, unsolicited ratings on one or more classes of the offered certificates after the date of this prospectus supplement.
Furthermore, the Securities and Exchange Commission may determine that one or more of the rating agencies engaged by the depositor no longer qualifies as a nationally recognized statistical rating organization, or is no longer qualified to rate the certificates, and that determination may have an adverse effect on the liquidity, market value and regulatory characteristics of the certificates.
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Changes to REMIC Restrictions on Loan Modifications and REMIC Rules on Partial Releases May Impact an Investment in the Certificates
Ordinarily, a REMIC that modifies a mortgage loan jeopardizes its tax status as a REMIC and risks having a 100% penalty tax being imposed on any income from the mortgage loan. A REMIC may avoid such adverse REMIC consequences, however, if the mortgage loan is in default, default of such mortgage loan is “reasonably foreseeable” or other special circumstances apply.
Revenue Procedure 2009-45, issued by the Internal Revenue Service, eases the tax requirements for a servicer to modify a commercial or multifamily mortgage loan held in a REMIC by interpreting the circumstances under which default is “reasonably foreseeable” to include those where the servicer reasonably believes there is a “significant risk of default” with respect to the mortgage loan upon maturity of the loan or at an earlier date and that by making such modification the risk of default is substantially reduced. Accordingly, if the master servicer or the special servicer determined that an underlying mortgage loan was at significant risk of default and permitted one or more modifications otherwise consistent with the terms of the pooling and servicing agreement, any such modification may impact the timing and ultimate recovery on the mortgage loan, and likewise on one or more classes of certificates.
In addition, the IRS has issued final regulations under the REMIC provisions of the Internal Revenue Code that allow a servicer to modify terms of REMIC-held mortgage loans without risking adverse REMIC consequences provided that both (1) the modification relates to changes in collateral, credit enhancement and recourse features, and (2) after the modification the mortgage loan remains “principally secured by real property” (that is, as long as the loan continues to satisfy the “REMIC LTV Test”). In general, a mortgage loan meets the REMIC LTV Test if the loan-to-value ratio is no greater than 125%. One of the modifications covered by the final regulations is a release of a lien on one or more of the mortgaged properties securing a REMIC-held mortgage loan. Following such a release, however, it may be difficult to demonstrate that a mortgage loan still meets the REMIC LTV Test. To provide relief for taxpayers, the IRS has issued Revenue Procedure 2010-30, which describes circumstances in which the IRS will not challenge whether a mortgage loan satisfies the REMIC LTV Test following a lien release. The lien releases covered by Revenue Procedure 2010-30 are “grandfathered transactions” and transactions in which the release is part of a “qualified pay-down transaction.” If the value of the real property securing a mortgage loan were to decline, the need to comply with the rules of Revenue Procedure 2010-30 could restrict the special servicer’s actions in negotiating the terms of a workout or in allowing minor lien releases for cases in which a mortgage loan could fail the REMIC LTV Test following the release. This could impact the timing and ultimate recovery on a mortgage loan, and likewise on one or more classes of certificates.
You should consider the possible impact on your investment of any existing REMIC restrictions as well as any potential changes to the REMIC rules.
REMIC Status
Under the Internal Revenue Code of 1986, as amended, if, during any taxable year, an entity intended to qualify as a real estate mortgage investment conduit (“REMIC”) fails to satisfy one or more of the REMIC requirements, such entity will not be treated as a REMIC for that taxable year and any taxable year thereafter. In that event, the issuing entity, including the Upper-Tier REMIC and each Lower-Tier REMIC, could be taxable as corporations and one or more of the certificates could be treated as stock in the corporations rather than as debt instruments. The Internal Revenue Code of 1986, as amended, authorizes the IRS to grant an entity relief from the consequences of REMIC disqualification if such REMIC disqualification occurs inadvertently and steps are taken to correct the conditions that caused disqualification within a reasonable time after the discovery of the disqualification. The relief may take the form of allowing the entity to continue as a REMIC after it again qualifies as a REMIC or by ignoring the cessation of REMIC status entirely. Any relief may, however, be accompanied by sanctions, such as the imposition of a corporate tax on all or a portion of the REMIC’s income for the period during which it failed to meet the REMIC requirements. The Treasury Department and the IRS are authorized to issue regulations under these relief provisions, but no regulations have been proposed.
State and Local Tax Considerations
In addition to the federal income tax consequences described under the heading “Material Federal Income Tax Consequences” in this prospectus supplement, potential purchasers should consider the state and local, and any other, tax consequences of the acquisition, ownership and disposition of the certificates. State and local tax laws may differ substantially from the corresponding federal tax law, and this prospectus supplement does not purport to describe any aspects of the tax laws of the states or localities, or any other jurisdiction, in which the depositor, the trustee, the certificate administrator, the custodian, the sponsor, a related borrower or a mortgaged property are located or of any other applicable state or locality or other jurisdiction.
It is possible that one or more jurisdictions may (i) attempt to tax nonresident holders of certificates solely by reason of the location in that jurisdiction of the depositor, the trustee, the certificate administrator, the custodian, the sponsor, a related borrower or a mortgaged property or on some other basis, (ii) require nonresident holders of certificates to file returns in such jurisdiction or (iii) attempt to impose penalties for failure to file such returns, and it is possible that any such jurisdiction will ultimately succeed in collecting such taxes or penalties from nonresident holders of certificates. We cannot assure you that holders of certificates will not be subject to tax in any particular state, local or other taxing jurisdiction.
If any tax or penalty is successfully asserted by any state, local or other taxing jurisdiction, none of the depositor, the underwriter, the sponsor, the related borrower, the trustee, the certificate administrator, the custodian, the trust advisor, the master servicer or the special servicer will be obligated to indemnify or otherwise to reimburse the holders of certificates for that tax or penalty.
You should consult your own tax advisor with respect to the various state, local and other tax consequences of an investment in the certificates.
Articles 404 – 410 of the European Union Capital Requirements Regulation Could Adversely Affect the Liquidity of Your Certificates
Articles 404 – 410 of the European Union Capital Requirements Regulation (Regulation (EU) No 575/2013) (CRR) applies, in general, to securitizations issued on or after January 1, 2011 as well as certain existing securitizations issued prior to that date where new assets are added or substituted after December 31, 2014. The CRR restricts credit institutions and investment firms regulated in Member States of the European Economic Area (EEA) and consolidated group affiliates thereof (each referred to herein as an affected investor) from investing in securitizations (as defined by the CRR) unless an originator, sponsor or original lender in respect of that securitization has
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explicitly disclosed to the affected investor that it will retain, on an ongoing basis, a material net economic interest of not less than 5 percent in that securitization in the manner contemplated by Article 405 of the CRR. The CRR also requires that an affected investor be able to demonstrate that it has undertaken certain due diligence in respect of, among other things, the offered certificates it has acquired and the underlying exposures, and that procedures have been established for monitoring the performance of the underlying exposures on an ongoing basis. Failure to comply with one or more of the requirements set out in the CRR may result in the imposition of a penal capital charge with respect to the investment made in the securitization by an affected investor, which may include certain consolidated group affiliates that are based in the United States.
Article 17 of the European Union Alternative Investment Fund Managers Directive (Directive 2011/61/EU) (as supplemented by Section 5 of Commission Delegated Regulation (EU) No 231/2013) and Article 135(2) of the European Union Solvency II Directive 2009/138/EC (as supplemented by Articles 254-257 of Commission Delegated Regulation (EU) No 2015/35) contain requirements similar to those set out in Articles 404 – 410 of the CRR and apply, respectively, to EEA-regulated alternative investment fund managers and EEA-regulated insurance/reinsurance undertakings. Similar requirements are also scheduled to apply in the future to investment in securitizations by EEA-regulated UCITS funds. For the purpose of this provision, all such requirements, together with the Articles 404 – 410 of the CRR, are referred to as the “securitization retention requirements.” As used herein, “UCITS” refers to undertakings for collective investment in transferrable securities as defined in the EU Directive 2009/65/EC.
None of the originator, the sponsor, the mortgage loan seller, the depositor, the issuing entity or any other party to the transaction intends to retain a material net economic interest in the transaction in accordance with the securitization retention requirements or take any other action which may be required by investors for the purposes of their compliance with the securitization retention requirements. This may have a negative impact on the regulatory capital position of affected investors and on the value and liquidity of the offered certificates in the secondary market.
Investors in the offered certificates are responsible for analyzing their own regulatory position, and are encouraged to consult their own investment and legal advisors regarding compliance with securitization retention requirements and the suitability of the offered certificates for investment. None of the issuing entity, the depositor, the underwriter, the mortgage loan seller or any other party to the transaction makes any representation to any prospective investor or purchaser of the offered certificates regarding the regulatory capital treatment of their investment in the offered certificates on the closing date or at any time in the future.
Legal and Regulatory Provisions Affecting Investors Could Adversely Affect the Liquidity of the Certificates
We make no representation as to the proper characterization of the offered certificates for legal investment, financial institution regulatory, financial reporting or other purposes, as to the ability of particular investors to purchase the offered certificates under applicable legal investment or other restrictions, or as to the consequences of an investment in the offered certificates for such purposes or under such restrictions. We note that regulatory or legislative provisions applicable to certain investors may have the effect of limiting or restricting their ability to hold or acquire commercial mortgage-backed securities, which in turn may adversely affect the ability of investors in the offered certificates who are not subject to those provisions to resell such certificates in the secondary market. For example:
· | The Dodd-Frank Wall Street Reform and Consumer Protection Act enacted in the United States requires that federal banking regulators amend their regulations to remove reference to or reliance by national banks on credit agency ratings, including but not limited to those found in the federal banking agencies’ risk-based capital regulations. New regulations have been proposed, some of which have been adopted as final rules while others remain pending. Such regulations, when adopted and effective, may result in greater capital charges to financial institutions that own commercial mortgage-backed securities, or otherwise adversely affect the attractiveness of investments in or treatment of commercial mortgage-backed securities for regulatory capital purposes. |
· | The issuing entity will be relying on an exclusion or exemption under the Investment Company Act of 1940 contained in Section 3(c)(5) of the Investment Company Act of 1940 or Rule 3a-7 under the Investment Company Act of 1940, although there may be additional exclusions or exemptions available to the issuing entity. The issuing entity will not be relying upon Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act of 1940 as a basis for not registering under the Investment Company Act of 1940. The issuing entity is being structured so as not to constitute a “covered fund” for purposes of the regulations adopted to implement Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (such statutory provision together with such implementing regulations are commonly referred to as the “Volcker Rule”). The Volcker Rule generally prohibits “banking entities” (which is broadly defined to include U.S. banks and bank holding companies and many non-U.S. banking entities, together with their respective subsidiaries and other affiliates) from (i) engaging in proprietary trading, (ii) acquiring or retaining an ownership interest in or sponsoring a “covered fund” and (iii) entering into certain relationships with such funds. The Volcker Rule became effective on July 21, 2012, and final regulations implementing the Volcker Rule were adopted on December 10, 2013 and became effective on April 1, 2014. Conformance with the Volcker Rule and its implementing regulations is required by July 21, 2015 (or by July 21, 2016 in respect of investments in and relationships with “covered funds” that were in place prior to December 31, 2013, subject to the possibility of a one-year extension). In the interim, banking entities must make good-faith efforts to conform their activities and investments to the Volcker Rule. Under the Volcker Rule, unless otherwise jointly determined otherwise by specified federal regulators, a “covered fund” does not include an issuer that may rely on an exclusion or exemption from the definition of “investment company” under the Investment Company Act of 1940 other than the exclusions contained in Section 3(c)(1) and Section 3(c)(7) of the Investment Company Act of 1940. The general effects of the Volcker Rule remain uncertain. Any prospective investor in the certificates, including a U.S. or foreign bank or a subsidiary or other affiliate thereof, should consult its own legal advisors regarding such matters and other effects of the Volcker Rule. |
Accordingly, all prospective investors whose investment activities are subject to legal investment laws and regulations, regulatory capital requirements, or review by regulatory authorities should consult their own legal, accounting and other advisors in determining whether, and to what extent, the offered certificates will constitute legal investments for them or are subject to investment or other restrictions, unfavorable accounting treatment, capital charges or reserve requirements. See “Legal Investment” in this prospectus supplement.
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CAPITALIZED TERMS USED IN THIS PROSPECTUS SUPPLEMENT
From time to time we use capitalized terms in this prospectus supplement, including in the appendices to this prospectus supplement. In cases where a particular capitalized term is frequently used, it will have the meaning assigned to it in this prospectus supplement. See “Index of Significant Terms.”
FORWARD LOOKING STATEMENTS
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 a variety of factors, including the risks described above in the “Risk Factors” section and elsewhere in this prospectus supplement.
TRANSACTION PARTIES
The Sponsor, Mortgage Loan Seller and Originator
Morgan Stanley Mortgage Capital Holdings LLC
Morgan Stanley Mortgage Capital Holdings LLC, a New York limited liability company formed in March 2007 (“MSMCH”), is the sponsor of this transaction and the mortgage loan seller. MSMCH is a successor to Morgan Stanley Mortgage Capital Inc., a New York corporation formed in 1984, which was merged into MSMCH on June 15, 2007. MSMCH is an affiliate of Morgan Stanley Capital I Inc., the depositor, Morgan Stanley & Co. LLC, the underwriter and the entity that is expected to be the initial holder of 20.3% of the Notional Amount of the Class X-A Certificates and 100% of the Percentage Interests in the Class V Certificates on the Closing Date, and Morgan Stanley Bank, N.A., the originator and the initial holder of a portion of the 32 Old Slip Fee Non-Serviced Companion Loan. Since the merger, MSMCH has continued the business of Morgan Stanley Mortgage Capital Inc. The executive offices of MSMCH are located at 1585 Broadway, New York, New York 10036, telephone number (212) 761-4000. MSMCH also has offices in Los Angeles, California, Dallas, Texas and Sterling, Virginia. MSMCH originates and purchases multifamily, commercial and manufactured housing community mortgage loans primarily for securitization or resale. MSMCH has been involved with warehouse and repurchase financing to residential mortgage lenders, has in the past purchased residential mortgage loans for securitization or resale, or for its own investment, and has previously acted as a sponsor of residential mortgage loan securitizations. Neither MSMCH nor any of its affiliates currently acts as servicer of the mortgage loans in its commercial or residential mortgage loan securitizations. MSMCH purchased from Morgan Stanley Bank, N.A. all of the mortgage loans that it is selling to the depositor.
MSMCH’s Commercial Mortgage Securitization Program
MSMCH (or its predecessor) has been active as a sponsor of securitizations of commercial mortgage loans since its formation. As a sponsor, MSMCH originates or acquires mortgage loans and either by itself or together with other sponsors or mortgage loan sellers, initiates the securitization of the mortgage loans by transferring the mortgage loans to a securitization depositor, including Morgan Stanley Capital I Inc., or another entity that acts in a similar capacity. In coordination with its affiliate, Morgan Stanley & Co. LLC, and other underwriters, MSMCH works with rating agencies, investors, mortgage loan sellers and servicers in structuring securitization transactions. MSMCH has acted as sponsor and mortgage loan seller both in transactions in which it is the sole sponsor or mortgage loan seller and in transactions in which other entities act as sponsor or mortgage loan seller. MSMCH’s previous securitization programs, identified as “IQ,” “HQ” and “TOP,” typically involved multiple mortgage loan sellers.
Substantially all mortgage loans originated or acquired by MSMCH are either sold to securitizations as to which MSMCH acts as either sponsor or mortgage loan seller (or both) or otherwise sold or syndicated. Mortgage loans originated and securitized by MSMCH include both fixed rate and floating rate mortgage loans and both large mortgage loans and conduit mortgage loans (including those shown in the table below), and such mortgage loans were included in both public and private securitizations. MSMCH also originates subordinate and mezzanine debt which is generally not securitized. The following table sets forth information with respect to originations and securitizations of multifamily, commercial and manufactured housing community mortgage loans by MSMCH for the five years ending on December 31, 2014.
Period | Total Mortgage Loans(1)(2) | Total Mortgage Loans Securitized with Affiliated Depositor(2) | Total Mortgage Loans Securitized with Non-Affiliated Depositor(2) | Total Mortgage Loans Securitized(2) |
Year ending December 31, 2014 | 11.9 | 4.8 | 0.4 | 5.2 |
Year ending December 31, 2013 | 7.8 | 5.4 | 0.8 | 6.2 |
Year ending December 31, 2012 | 4.7 | 2.7 | 0.2 | 2.9 |
Year ending December 31, 2011 | 4.7 | 2.9 | 0.0 | 2.9 |
Year ending December 31, 2010 | 2.1 | 0.0 | 0.0 | 0.0 |
(1) | Includes all mortgage loans originated or purchased by MSMCH (or its predecessor) in the relevant year. Mortgage loans originated in a given year that were not securitized in that year generally were held for securitization in the following year or sold to third parties |
(2) | Approximate amounts show in billions of dollars |
MSMCH’s large mortgage loan program typically originates mortgage loans larger than $50 million, although MSMCH’s conduit mortgage loan program also sometimes originates such large mortgage loans. MSMCH originates commercial mortgage loans secured by multifamily, office, retail, industrial, hotel, manufactured housing community and self storage properties. The largest property concentrations of MSMCH securitized loans have been in retail and office properties, and the largest geographic concentrations have been in California and New York.
MSMCH’s Underwriting Standards
Overview. Commercial mortgage loans originated by MSMCH are primarily originated in accordance with the procedures and underwriting standards described below. However, given the unique nature of income-producing real properties, variations from these
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procedures and standards may be implemented as a result of various conditions, including a mortgage loan’s specific terms, the quality or location of the underlying real estate, the mortgaged property’s tenancy profile, the background or financial strength of the borrower or sponsor and any other pertinent information deemed material by MSMCH. Therefore, this general description of MSMCH’s origination procedures and underwriting standards is not intended as a representation that every commercial mortgage loan originated by it (or on its behalf) complies entirely with all standards set forth below. For important information about any circumstances that have affected the underwriting of a mortgage loan originated or purchased by MSMCH, see “—Exceptions to Underwriting Standards” below.
Process. The credit underwriting process for each MSMCH commercial mortgage loan is performed by a deal team comprised of real estate professionals that typically includes a commercial loan originator, underwriter and closer subject to the oversight and ultimate review and approval of MSMCH. This team conducts a review of the related mortgaged property, which typically includes an examination of the following information, to the extent both applicable and available: historical operating statements, rent rolls, certain tenant leases, current and historical real estate tax information, insurance policies and/or schedules and third party reports pertaining to appraisal, valuation, zoning, environmental status, physical condition and seismic and other engineering characteristics (see “—Escrow Requirements,” “—Zoning and Land Use,” “—Title Insurance Policy,” “— Property Insurance” and “—Third Party Reports” below). In some cases, certain of these documents may not be reviewed due to the nature of the related mortgaged property. For instance, historical operating statements may not be available with respect to a mortgaged property with a limited operating history or that has been recently acquired by its current owner. In addition, rent rolls would not be examined for certain property types (e.g., hospitality properties), and executed tenant leases would not be examined for certain property types (e.g., hospitality, self storage, multifamily and manufactured housing community properties), although forms of leases would typically be reviewed.
A member of the MSMCH deal team or one of its agents performs an inspection of the mortgaged property as well as a review of the surrounding market environment (including demand generators, competing properties (if any) and proximity to major thoroughfares and transportation centers) in order to confirm tenancy information, assess the physical quality and attributes (e.g., age, renovations, condition, parking, amenities, class, etc.) of the collateral, determine visibility and access characteristics and evaluate the mortgaged property’s competitiveness within its market.
The MSMCH deal team or one of its agents also performs a detailed review of the financial status, credit history, credit references and background of the borrower and certain key principals using financial statements, income tax returns, criminal and background investigations and searches in select jurisdictions for judgments, liens, bankruptcy and pending litigation. Circumstances may also warrant an examination of the financial strength and credit of key tenants as well as other factors that may impact the tenants’ ongoing occupancy or ability to pay rent.
After the compilation and review of all documentation and other relevant considerations, the deal team finalizes its detailed underwriting analysis of the mortgaged property’s cash flow in accordance with MSMCH’s property-specific, cash flow underwriting guidelines.
Determinations are also made regarding the implementation of appropriate loan terms to address certain risks, resulting in features such as ongoing escrows or up-front reserves, letters of credit, lockboxes, cash management agreements and guarantees. A complete credit committee package is prepared to summarize all of the above referenced information and circulated to credit committee for review.
Credit Approval. All commercial mortgage loans must be presented to one or more credit committees that include senior real estate professionals, among others. After a review of the credit committee package and a discussion of a mortgage loan, the committee may approve the mortgage loan as recommended, request additional due diligence, modify the terms or reject the mortgage loan entirely.
Debt Service Coverage and Loan to Value Requirements. MSMCH’s underwriting standards generally require a minimum debt service coverage ratio of 1.20x and permit a maximum loan-to-value ratio of 80%; however, these thresholds are guidelines, and exceptions may be made based on the merits of each individual mortgage loan, such as the types of tenants, reserves, letters of credit, guarantees and MSMCH’s assessment of the mortgaged property’s future performance. The debt service coverage ratio guidelines set forth above are calculated based on Underwritten Net Cash Flow at origination. The debt service coverage ratio for each mortgage loan as reported in this prospectus supplement and Appendix I hereto may differ from the amount calculated at the time of origination because updates to the information used to calculate such amounts may have become available during the period between origination and the date of this prospectus supplement.
Certain mortgaged properties may also be encumbered by subordinate debt (or the direct or indirect ownership interests in the related borrower may be encumbered by mezzanine debt). It is possible that MSMCH or an affiliate thereof will be a lender on such additional debt and may either sell such debt to an unaffiliated third party or hold it in inventory. When such subordinate or mezzanine debt is taken into account, the aggregate debt with respect to the related mortgaged property may not conform to the aforementioned DSCR and LTV parameters.
Amortization Requirements. MSMCH’s underwriting guidelines generally permit a maximum amortization period of 30 years. Certain mortgage loans may provide for interest-only payments through maturity or for a portion of the commercial mortgage loan term. If a mortgage loan has a partial interest-only period, the monthly debt service and the UW NCF DSCR set forth in this prospectus supplement and Appendix I to this prospectus supplement reflect a calculation of both the interest only payments and the future (larger) amortizing loan payment. See “Description of the Mortgage Pool” in this prospectus supplement.
Escrow Requirements. MSMCH may require borrowers to fund escrows for taxes, insurance, capital expenditures and replacement reserves. In addition, MSMCH may identify certain risks that warrant additional escrows or holdbacks for items to be released to the borrower upon the satisfaction of certain conditions. Such escrows or holdbacks may cover tenant improvements and leasing commissions, deferred maintenance, environmental remediation and unfunded obligations, among other things. Springing escrows may also be structured for identified risks such as specific rollover exposure, to be triggered upon the non-renewal of one or more key tenants. In some cases, in lieu of maintaining a cash reserve, the borrower may be allowed to post a letter of credit or guaranty or provide periodic evidence of timely payment of a typical escrow item. Escrows are evaluated on a case-by-case basis and are not required for all MSMCH commercial mortgage loans.
Generally, MSMCH requires escrows as follows:
· | Taxes.An initial deposit and monthly escrow deposits equal to 1/12 of the annual property taxes (based on the most recent property assessment and the current millage rate; however, if the actual tax amount owing in the upcoming year is not available, the required annual reserve amount will generally be between 100% and 105% of the preceding year’s tax amount) |
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are typically required to satisfy taxes and assessments, except that such escrows may not be required in certain circumstances, including, but not limited to, situations where (i) the sponsor is an institutional sponsor or a high net worth individual or (ii) the related mortgaged property is a single tenant property with respect to which the related tenant is required to pay taxes directly. |
· | Insurance. An initial deposit at origination (which may be equal to one or more months of the required monthly amount) and subsequent monthly escrow deposits equal to 1/12 of an amount generally between 100% and 105% of the annual property insurance premium are typically required to pay insurance premiums, except that such escrows may not be required in certain circumstances, including, but not limited to, situations where (i) the sponsor is an institutional sponsor or a high net worth individual, (ii) the related borrower maintains a blanket insurance policy or (iii) the related mortgaged property is a single tenant property with respect to which the related tenant self-insures. |
· | Replacement Reserves. Replacement reserves are generally calculated in accordance with the expected useful life of the components of the mortgaged property during the term of the mortgage loan. Annual replacement reserves are generally underwritten to the suggested replacement reserve amount from an independent, third-party property condition or engineering report, or to certain minimum requirements depending on the property type, except that such escrows may not be required in certain circumstances, including, but not limited to, situations where the related mortgaged property is a single tenant property with respect to which the related tenant is responsible for all repairs and maintenance, including those required with respect to the roof and structure of the improvements. |
· | Tenant Improvements and Leasing Commissions. A reserve for tenant improvements and leasing commissions may be required to be funded at loan origination and/or during the term of the mortgage loan to cover anticipated tenant improvements or leasing commissions costs that might be associated with re-leasing certain space, except that such escrows may not be required in certain circumstances, including, but not limited to, situations where (i) the related mortgaged property is a single tenant property and the tenant’s lease extends beyond the loan term or (ii) the rent at the related mortgaged property is considered below market. |
· | Deferred Maintenance. A reserve for deferred maintenance may be required to be funded at loan origination in an amount generally between 100% and 125% of the estimated cost of material immediate repairs or replacements identified in the physical condition report, except that such escrows may not be required in certain circumstances, including, but not limited to, situations where (i) the sponsor of the borrower delivers a guarantee to complete the immediate repairs in a specified amount of time, (ii) the deferred maintenance amount does not materially impact the related mortgaged property’s function, performance or value or isde minimisin relation to the loan amount or (iii) the related mortgaged property is a single tenant property and the tenant is responsible for the repairs. |
· | Furniture, Fixtures and Equipment. A reserve for furniture, fixtures and equipment expenses may be required to be funded during the term of the mortgage loan based on the suggested reserve amount from an independent, third-party property condition or engineering report, or based on certain minimum requirements depending on the property type. |
· | Environmental Remediation. A reserve for environmental remediation may be required to be funded at loan origination in an amount generally between 100% and 150% of the estimated remediation cost identified in the environmental report, except that such escrows may not be required in certain circumstances, including, but not limited to, situations where (i) the sponsor of the borrower delivers a guarantee whereby it agrees to take responsibility and pay for identified environmental issues or (ii) environmental insurance has been obtained or already in place. |
For a description of the escrows collected with respect to the mortgage loans, please see Appendix I to this prospectus supplement.
Zoning and Land Use. With respect to each mortgage loan, MSMCH and its origination counsel will generally examine whether the use and occupancy of the related mortgaged property is in material compliance with zoning, land-use, building rules, regulations and orders then applicable to that mortgaged property. Evidence of this compliance may be in the form of one or more of the following: legal opinions, surveys, recorded documents, temporary or permanent certificates of occupancy, letters from government officials or agencies, title insurance endorsements, engineering or consulting reports, zoning reports and representations by the related borrower. In some cases, a mortgaged property may constitute a legal non-conforming use or structure. In such cases, MSMCH may require an endorsement to the title insurance policy or the acquisition of law and ordinance insurance with respect to the particular non-conformity unless it determines that: (i) the non-conformity should not have a material adverse effect on the ability of the borrower to rebuild, (ii) if the improvements are rebuilt in accordance with currently applicable law, the value and performance of the mortgaged property would be acceptable, (iii) any major casualty that would prevent rebuilding has a sufficiently remote likelihood of occurring or (iv) a cash reserve, a letter of credit or an agreement imposing recourse liability from a principal of the borrower is provided to cover losses.
Title Insurance Policy. Each borrower is required to provide, and MSMCH or its counsel typically will review, a title insurance policy for the related mortgaged property. Such title insurance policies typically must (i) be written by a title insurer licensed to do business in the jurisdiction where the mortgaged property is located, (ii) be in an amount at least equal to the original principal balance of the mortgage loan, (iii) have protection and benefits run to the mortgagee and its successors and assigns, (iv) be written on an American Land Title Association form or equivalent policy promulgated in the jurisdiction where the mortgaged property is located and (v) if a survey was prepared, have a legal description of the mortgaged property in the title policy that conforms to that shown on the survey.
Property Insurance. MSMCH requires each borrower to provide evidence of a hazard insurance policy with a customary deductible and coverage in an amount at least equal to the greater of (i) the outstanding principal balance of the mortgage loan or (ii) the amount necessary to prevent the borrower from becoming a co-insurer. Such policies do not permit reduction in insurance proceeds for depreciation, except that a policy may permit a deduction for depreciation in connection with a cash settlement after a casualty if the insurance proceeds are not being applied to rebuild or repair the damaged improvements.
Third Party Reports. In addition to or as part of applicable origination guidelines or reviews described above, in the course of originating the applicable mortgage loans, MSMCH generally considered the results of third party reports as described below. New reports are generally ordered, although existing reports dated no more than twelve (12) months prior to closing may be used (subject, in certain cases, to
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updates). In many instances, however, one or more provisions of the guidelines were waived or modified in light of the circumstances of the relevant mortgage loan or mortgaged property.
· | Appraisal.MSMCH generally obtains an appraisal for each mortgaged property prepared by an appraisal firm approved by MSMCH to assess the value of the property. Each report is reviewed by MSMCH or its designated agent. The report may utilize one or more approaches to value: (i) cost approach; (ii) sale comparison approach and/or (iii) income approach (including both the direct cap and discount cash flow methods). Each appraisal also includes a statement by the appraiser that the Uniform Standards of Professional Appraisal Practice (USPAP) and the guidelines of Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), as amended, were followed in preparing the appraisal. There can be no assurance that another person would not have arrived at a different valuation, even if such person used the same general approach to, and same method of, valuing the property. Moreover, such appraisals sought to establish the amount a typically motivated buyer would pay a typically motivated seller. Such amount could be significantly higher than the amount obtained from the sale of a mortgaged property under a distress or liquidation sale. Information regarding the values of the mortgaged properties as of the date of the related appraisal is presented in this prospectus supplement for illustrative purposes only. |
· | Environmental Report. MSMCH generally obtains a Phase I site assessment or an update of a previously obtained site assessment for each mortgaged property generally within the twelve-month period preceding the origination of the related mortgage loan and in each case prepared by an environmental firm approved by MSMCH. MSMCH or its designated agent typically reviews the Phase I site assessment to verify the presence or absence of potential adverse environmental conditions. An environmental assessment conducted at any particular real property collateral will not necessarily cover all potential environmental issues. For example, an analysis for radon, lead-based paint, mold and lead in drinking water will usually be conducted only at multifamily rental properties and only when MSMCH or the environmental consultant believes that such an analysis is warranted under the circumstances. Upon the recommendation of the engineer conducting the Phase I assessment with respect to a mortgaged property, a Phase II assessment will be ordered and/or an operations and maintenance plan with respect to asbestos, mold or lead based paint will be implemented. In certain cases, environmental insurance may be acquired in lieu of further testing. In certain cases, the Phase I or Phase II assessment may have disclosed the existence of or potential for adverse environmental conditions, generally the result of the activities of identified tenants, adjacent property owners or previous owners of the mortgaged property. In certain of such cases, the related borrowers were required to establish operations and maintenance plans, monitor the mortgaged property, abate or remediate the condition and/or provide additional security such as letters of credit, reserves or stand-alone secured creditor impaired property policies. |
· | Physical Condition Report. MSMCH generally obtains a current physical condition report for each mortgaged property prepared by a structural engineering firm approved by MSMCH to assess the overall physical condition and engineering integrity of the improvements at the mortgaged property, including an inspection of representative property components, systems and elements, an evaluation of their general apparent physical condition and an identification of physical deficiencies associated with structural, fixture, equipment or mechanical building components. MSMCH, or an agent, typically reviews the report to determine the physical condition of the mortgaged property and to determine the anticipated costs of necessary repair, replacement and major maintenance or capital expenditure over the term of the mortgage loan. In cases in which the report identifies an immediate need for material repairs or replacements with an anticipated cost that is over a certain minimum threshold or percentage of loan balance, MSMCH often requires an escrow at the time of origination in an amount sufficient to complete such repairs or replacements or obtains a guarantee from a sponsor of the borrower in lieu of reserves. MSMCH also often requires the collection of ongoing escrows for the continued maintenance of the property based on the conclusions of the report. See“—Escrow Requirements” above. |
· | Seismic Report. MSMCH generally obtains a seismic report for all mortgaged properties located in seismic zones 3 or 4 to assess the estimated damage that may result from a seismic event that has a 10% chance of exceedance in a 50-year exposure period or a 475-year return period. Such reports utilize the ASTM Standard E2026-07 and E2557-07 definitions for Scenario Expected Loss. Generally, any of the mortgage loans as to which the property was estimated to have a scenario expected limit in excess of 20% would be conditioned on satisfactory earthquake insurance. |
Servicing. MSMCH currently contracts with third party servicers for servicing the mortgage loans that it originates or acquires. Such interim servicers are assessed based upon the credit quality of the servicing institution and may be reviewed for their systems and reporting capabilities, collection procedures and ability to provide loan-level data. In addition, MSMCH may meet with senior management to determine whether the servicer complies with industry standards or otherwise monitor the servicer on an ongoing basis.
Exceptions to Underwriting Standards. One or more of the mortgage loans originated by MSMCH may vary from the specific MSMCH underwriting guidelines described above when additional credit positive characteristics are present as discussed above. In addition, in the case of one or more of MSMCH’s mortgage loans, MSMCH or another originator may not have applied each of the specific underwriting guidelines described above as the result of case-by-case permitted flexibility based upon other compensating factors. None of the mortgage loans originated by MSMCH was originated with any material exceptions from MSMCH’s underwriting guidelines and procedures.
Review of Mortgage Loans
General. In connection with the preparation of this prospectus supplement, MSMCH conducted a review of the mortgage loans that it is selling to the depositor designed and effected to provide reasonable assurance that the disclosure related to the mortgage loans is accurate in all material respects. MSMCH determined the nature, extent and timing of the review and the level of assistance provided by any third party. The review was conducted by a deal team comprised of real estate and securitization professionals and third parties. MSMCH has ultimate authority and control over, and assumes all responsibility for and attributes to itself, the review and the findings and conclusions of the review of the mortgage loans that it is selling to the depositor. The review procedures described below were employed with respect to all of the mortgage loans, except that certain review procedures were only relevant to the large loan disclosures in this prospectus supplement, as further described below. No sampling procedures were used in the review process.
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Database. MSMCH created a database (the “MSMCH Securitization Database”) of information obtained in connection with the origination of the mortgage loans, including:
· | certain information from the mortgage loan documents; |
· | certain borrower-provided information, including certain rent rolls, certain operating statements and certain leases relating to certain mortgaged properties; |
· | insurance information for the related mortgaged properties; |
· | information from third party reports such as the appraisals, environmental and property condition reports; |
· | credit and background searches with respect to the related borrowers; and |
· | certain other information and other search results obtained by MSMCH for each of the mortgage loans during the underwriting process. |
MSMCH may have included in the MSMCH Securitization Database certain updates to such information received by MSMCH after origination, such as information from the interim servicer regarding loan payment status, current escrows, updated operating statements and rent rolls and certain other information otherwise brought to the attention of the MSMCH securitization team. Such updates were not intended to be, and do not serve as, a re-underwriting of any mortgage loan.
MSMCH created a data file (the “MSMCH Data File”) using the information in the MSMCH Securitization Database and provided that file to the depositor for use in compiling the numerical information regarding the mortgage loans in this prospectus supplement (particularly in Appendices I, II and III to this prospectus supplement).
Data Comparisons and Recalculation. Morgan Stanley & Co. LLC, on behalf of MSMCH, engaged a third party accounting firm to perform certain data comparison and recalculation procedures which were designed by MSMCH relating to mortgage loan information in this prospectus supplement. These procedures included:
· | comparing the information in the MSMCH Data File against various source documents provided by MSMCH; |
· | comparing numerical information regarding the mortgage loans and the related mortgaged properties disclosed in this prospectus supplement against the information contained in the MSMCH Data File; and |
· | recalculating certain percentages, ratios and other formulas relating to the mortgage loans disclosed in this prospectus supplement. |
Legal Review. For each mortgage loan originated by MSMCH or one of its affiliates (as applicable), MSMCH reviewed a legal loan and property information summary prepared by origination counsel, which summary includes important loan terms and certain property-level information obtained during the origination process. MSMCH also provided to each origination counsel the representations and warranties attached as Appendix V to this prospectus supplement and requested that origination counsel draft exceptions to such representations and warranties. MSMCH compiled and reviewed draft exceptions received from origination counsel, engaged separate counsel to review the exceptions, revised the exceptions and provided them to the depositor for inclusion in Appendix VI to this prospectus supplement.
For mortgage loans purchased by MSMCH or one of its affiliates, if any, from a third party originator, MSMCH reviewed the related purchase agreement, the representations and warranties made by the originator contained therein (together with the exceptions thereto) and certain provisions of the related loan documents and third party reports concerning the related mortgaged property that were provided by the originator of such mortgage loan. With respect to each such mortgage loan, MSMCH and its counsel prepared exceptions to the representations and warranties attached as Appendix V to this prospectus supplement and provided them to the depositor for inclusion in Appendix VI to this prospectus supplement.
In addition, with respect to each mortgage loan, MSMCH reviewed, and in certain cases, requested that its counsel review, certain loan document provisions in connection with the disclosure of such provisions in this prospectus supplement, such as property release provisions and other provisions specifically disclosed in this prospectus supplement.
Certain Updates. MSMCH requested that each borrower under a mortgage loan (or such borrower’s origination or litigation counsel, as applicable) provide updates on any material pending litigation that existed at origination. In addition, if MSMCH became aware of a significant natural disaster in the vicinity of a mortgaged property securing a mortgage loan, MSMCH requested information on the property status from the related borrower in order to confirm whether any material damage to the mortgaged property had occurred.
Large Loan Summaries. MSMCH prepared, and reviewed with origination counsel and securitization counsel, the loan summaries for those of the mortgage loans included in the ten (10) largest mortgage loans or groups of cross-collateralized mortgage loans in the mortgage pool and the abbreviated loan summaries for those of the mortgage loans included in the next five (5) largest mortgage loans or groups of cross-collateralized mortgage loans in the mortgage pool, which loan summaries and abbreviated loan summaries are incorporated in Appendix III to this prospectus supplement.
Underwriting Standards. MSMCH also consulted with origination counsel to confirm that the mortgage loans were originated in compliance with the origination and underwriting standards described above under “—MSMCH’s Underwriting Standards” or below under “—Morgan Stanley Bank’s Underwriting Standards,” as applicable, as well as to identify any material deviations from those origination and underwriting standards. See “—MSMCH’s Underwriting Standards” above and “—Morgan Stanley Bank’s Underwriting Standards” below.
Findings and Conclusions. MSMCH found and concluded with reasonable assurance that the disclosure regarding the mortgage loans in this prospectus supplement is accurate in all material respects. MSMCH also found and concluded with reasonable assurance that (i) the mortgage loans originated by MSMCH were originated in accordance with MSMCH’s origination procedures and underwriting standards, except to the extent described above under “—MSMCH’s Underwriting Standards—Exceptions to Underwriting Standards” and (ii) the mortgage loans originated by Morgan Stanley Bank, N.A. were originated(or, with respect to the Alderwood Mall Mortgage Loan, originated in
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conjunction with a third party) in accordance with Morgan Stanley Bank, N.A.’s origination procedures and underwriting standards, except to the extent described below under “—Morgan Stanley Bank’s Underwriting Standards—Exceptions to Underwriting Standards.”
Repurchases and Replacements
The transaction documents for certain prior transactions in which MSMCH securitized commercial mortgage loans or participation interests (“CRE Loans”) contain covenants requiring the repurchase or replacement of an underlying CRE Loan for the breach of a related representation or warranty under various circumstances if the breach is not cured. The following table sets forth, for the period commencing April 1, 2012 and ending March 31, 2015, the information required by Rule 15Ga-1 under the Exchange Act concerning all assets securitized by MSMCH that were the subject of a demand to repurchase or replace for breach of the representations and warranties concerning the pool assets for all asset-backed securities held by non-affiliates of MSMCH where the underlying transaction agreements included a covenant to repurchase or replace an underlying asset of the CRE Loan asset class. The information for MSMCH as a securitizer of CRE Loans required to be set forth in a Form ABS-15G for the reporting period from January 1, 2015 through March 31, 2015 was set forth in a Form ABS-15G filed by MSMCH on May 15, 2015. The Central Index Key Number of MSMCH is 0001541557.
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Repurchases and Replacements1
Asset Class: CMBS
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Name of Issuing Entity | Check if Registered | Name of Originator2 | Total Assets in ABS by Originator at time of securitization | Assets That Were Subject of Demand3 | Assets That Were Repurchased or Replaced4 | Assets Pending Repurchase or Replacement (within cure period)5 | Demand in Dispute6 | Demand Withdrawn7 | Demand Rejected8 | ||||||||||||||
# | $ | % | # | $9 | %10 | # | $9 | %10 | # | $9 | %10 | # | $9 | %10 | # | $9 | %10 | # | $9 | %10 | |||
Morgan Stanley Dean Witter Capital I Series 2001-TOP1 (0001133471)(11) | X | Morgan Stanley Dean Witter Mortgage Capital Inc. | 15 | 221,328,651 | 19.1% | 1 | - | 0.00% | 0 | - | 0.00% | 0 | - | 0.00% | 0 | - | 0.00% | 1 | - | 0.00% | 0 | - | 0.00% |
Morgan Stanley Capital I Series 2006-IQ11 (0001362475) | X | Morgan Stanley Mortgage Capital Inc. | 67 | 772,319,208 | 47.8% | 1 | 11,289,857 | 1.06% | 0 | - | 0.00% | 0 | - | 0.00% | 1 | 11,289,857 | 1.06% | 0 | - | 0.00% | 0 | - | 0.00% |
Morgan Stanley Capital I Series 2007-IQ14 (0001398854) | X | Morgan Stanley Mortgage Capital Inc. | 34 | 1,345,579,291 | 27.4% | 1 | 81,000,000 | 2.33% | 0 | - | 0.00% | 0 | - | 0.00% | 1 | 81,000,000 | 2.33% | 0 | - | 0.00% | 0 | - | 0.00% |
Aggregate Total | 116 | 2,339,227,150 | 2 | 92,289,857 | 0 | - | 0 | - | 2 | 92,289,857 | 1 | - | 0 | - |
1. | In connection with the preparation of this prospectus supplement, MSMCH undertook the following steps to gather the information required by Rule 15Ga-1 under the Exchange Act: (i) identifying all asset-backed securities transactions in which MSMCH acted as a securitizer that were not the subject of a filing on Form ABS-15G by an affiliated securitizer, (ii) performing a diligent search of MSMCH’s records and the records of affiliates of MSMCH that acted as securitizers in its transactions for all relevant information, (iii) reviewing appropriate documentation from all relevant transactions to determine the parties responsible for enforcing representations and warranties, and any other parties to the transaction who might have received repurchase requests (such parties, “Demand Entities”), and (iv) making written request of each Demand Entity to provide any information in its possession regarding requests or demands to repurchase any loans for a breach of a representation or warranty with respect to any relevant transaction that was not previously provided to MSMCH. MSMCH followed up written requests made of Demand Entities as it deemed appropriate. In addition, MSMCH requested information from trustees and other Demand Entities as to investor demands that occurred prior to July 22, 2010. It is possible that this disclosure does not contain information about all investor demands upon those parties made prior to July 22, 2010. |
2. | MSMCH identified the “originator” on the same basis that it would identify the originator for purposes of Regulation AB (Subpart 229.1100 – Asset-Backed Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1125) for registered transactions. |
3. | Reflects aggregate numbers for all demand activity shown in this table. |
4. | Includes loans for which the repurchase price or replacement asset was received during the reporting period from April 1, 2012 to March 31, 2015. The demand related to loans reported in this column may have been received prior to such reporting period. |
5. | Includes loans for which the securitizer is aware that the responsible party has agreed to repurchase or replace the loan but has not yet repurchased or replaced such loans. The demand related to loans reported in this column may have been received prior to the reporting period from April 1, 2012 to March 31, 2015. |
6. | Includes demands received during and prior to the reporting period from April 1, 2012 to March 31, 2015 unless the loan falls into one of the other categories reflected on this chart or the demand was received prior to such reporting period and was finally resolved prior to such reporting period. If the securitizer is not the party responsible for repurchasing a loan subject to a demand, the loan is reflected in this column until the securitizer has been informed by the related trustee that the loan has been repurchased or replaced. |
7. | Includes loans for which the buyback demand was withdrawn by the party submitting the demand during the reporting period from April 1, 2012 to March 31, 2015. The demand related to loans reported in this column may have been received prior to such reporting period. |
8. | Includes loans (i) for which a demand was received, a rebuttal was made and there was no response within 90 days of the rebuttal and (ii) for which the related obligor has repaid the loan in full, in each case during the reporting period from April 1, 2012 to March 31, 2015. The demand related to loans reported in this column may have been received prior to such reporting period. |
9. | Principal balance was determined as of the earlier of (i) the principal balance reported in the March 2015 distribution date report and (ii) the principal balance on the distribution date immediately preceding the period for which the distribution date report reflected that the loan was removed from the pool. Liquidated loans reflect amounts received as borrower payments, insurance proceeds and all other liquidation proceeds. |
10. | Percentage of principal balance was calculated by using the principal balance as described in footnote 9 divided by the aggregate principal balance of the pool assets reported in the March 2015 distribution date report. Because the aggregate principal balance of the remaining pool assets may be less than the principal balance of the repurchase demands calculated as described in footnote 9, the percentage shown in this column may exceed 100%. |
11. | With respect to the Morgan Stanley Dean Witter Capital I Series 2001-TOP1 securitization, the demand made with respect to one of the underlying loans was subsequently withdrawn. In addition, the March 2014 distribution date report showed that the current balance of such loan is $0. |
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Morgan Stanley Bank, N.A.
Morgan Stanley Bank, N.A., a national banking association (“Morgan Stanley Bank”), originated (or, with respect to the Alderwood Mall Mortgage Loan, originated in conjunction with a third party) all of the mortgage loans, which MSMCH will acquire on or prior to the closing date and contribute to this securitization. The headquarters of Morgan Stanley Bank are located at One Utah Center, 201 Main Street, Salt Lake City, Utah 84111, telephone number (801) 236-3600. Morgan Stanley Bank also has offices in New York, New York. Morgan Stanley Bank is also the initial holder of a portion of the 32 Old Slip Fee Non-Serviced Companion Loan. Morgan Stanley Bank is also an affiliate of Morgan Stanley Capital I Inc., the depositor, Morgan Stanley & Co. LLC, the underwriter and the entity that is expected to be the initial holder of 20.3% of the Notional Amount of the Class X-A Certificates and 100% of the Percentage Interests in the Class V Certificates on the Closing Date, and MSMCH, the sponsor and the mortgage loan seller, and is an indirect wholly owned subsidiary of Morgan Stanley (NYSE: MS).
Morgan Stanley Bank’s Commercial Mortgage Origination Program
Morgan Stanley Bank has been originating financial assets, including multifamily, commercial and manufactured housing community mortgage loans, both for purposes of holding those assets for investment and for resale, including through securitization since at least 2011. For the period from January 1, 2011 to December 31, 2014, Morgan Stanley Bank originated multifamily, commercial and manufactured housing community mortgage loans in the aggregate original principal amount of approximately $15,853,340,519.
Morgan Stanley Bank originates commercial mortgage loans secured by multifamily, office, retail, industrial, hotel, manufactured housing community and self storage properties, which it either holds for investment or sells or otherwise syndicates. The largest property concentrations of commercial mortgage loans originated by Morgan Stanley Bank are in retail and office properties, and the largest geographic concentrations are in California and New York. Commercial mortgage loans originated by Morgan Stanley Bank include both fixed rate and floating rate mortgage loans and both large mortgage loans and conduit mortgage loans, and such mortgage loans are expected to be included in both public and private securitizations. Morgan Stanley Bank also originates subordinate and mezzanine debt, which generally is not expected to be securitized. Morgan Stanley Bank’s large mortgage loan program originates mortgage loans larger than $50 million, although Morgan Stanley Bank’s conduit mortgage loan program also sometimes originates such large mortgage loans.
Morgan Stanley Bank’s Underwriting Standards
Overview. Commercial mortgage loans originated by Morgan Stanley Bank are primarily originated in accordance with the procedures and underwriting standards described below. However, given the unique nature of income-producing real properties, variations from these procedures and standards may be implemented as a result of various conditions, including a mortgage loan’s specific terms, the quality or location of the underlying real estate, the mortgaged property’s tenancy profile, the background or financial strength of the borrower or sponsor and any other pertinent information deemed material by Morgan Stanley Bank. Therefore, this general description of Morgan Stanley Bank’s origination procedures and underwriting standards is not intended as a representation that every commercial mortgage loan originated by it (or on its behalf) complies entirely with all standards set forth below. For important information about any circumstances that have affected the underwriting of a mortgage loan originated or purchased by Morgan Stanley Bank, see “—Exceptions to Underwriting Standards” below.
Process. The credit underwriting process for each Morgan Stanley Bank commercial mortgage loan is performed by a deal team comprised of real estate professionals that typically includes a commercial loan originator, underwriter and closer subject to the oversight and ultimate review and approval of Morgan Stanley Bank. This team conducts a review of the related mortgaged property, which typically includes an examination of the following information, to the extent both applicable and available: historical operating statements, rent rolls, certain tenant leases, current and historical real estate tax information, insurance policies and/or schedules and third party reports pertaining to appraisal, valuation, zoning, environmental status, physical condition and seismic and other engineering characteristics (see “—Escrow Requirements,” “—Zoning and Land Use,” “—Title Insurance Policy,” “— Property Insurance” and “—Third Party Reports” below). In some cases, certain of these documents may not be reviewed due to the nature of the related mortgaged property. For instance, historical operating statements may not be available with respect to a mortgaged property with a limited operating history or that has been recently acquired by its current owner. In addition, rent rolls would not be examined for certain property types (e.g., hospitality properties), and executed tenant leases would not be examined for certain property types (e.g., hospitality, self storage, multifamily and manufactured housing community properties) although forms of leases would typically be reviewed.
A member of the Morgan Stanley Bank deal team or one of its agents performs an inspection of the mortgaged property as well as a review of the surrounding market environment (including demand generators, competing properties (if any) and proximity to major thoroughfares and transportation centers) in order to confirm tenancy information, assess the physical quality and attributes (e.g., age, renovations, condition, parking, amenities, class, etc.) of the collateral, determine visibility and access characteristics and evaluate the mortgaged property’s competitiveness within its market.
The Morgan Stanley Bank deal team or one of its agents also performs a detailed review of the financial status, credit history, credit references and background of the borrower and certain key principals using financial statements, income tax returns, criminal and background investigations and searches in select jurisdictions for judgments, liens, bankruptcy and pending litigation. Circumstances may also warrant an examination of the financial strength and credit of key tenants as well as other factors that may impact the tenants’ ongoing occupancy or ability to pay rent.
After the compilation and review of all documentation and other relevant considerations, the deal team finalizes its detailed underwriting analysis of the mortgaged property’s cash flow in accordance with Morgan Stanley Bank’s property-specific, cash flow underwriting guidelines.
Determinations are also made regarding the implementation of appropriate loan terms to address certain risks, resulting in features such as ongoing escrows or up-front reserves, letters of credit, lockboxes, cash management agreements and guarantees. A complete credit committee package is prepared to summarize all of the above referenced information and circulated to credit committee for review.
Credit Approval. All commercial mortgage loans must be presented to one or more credit committees that include senior real estate professionals, among others. After a review of the credit committee package and a discussion of a mortgage loan, the committee may approve the mortgage loan as recommended, request additional due diligence, modify the terms or reject the mortgage loan entirely.
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Debt Service Coverage and Loan to Value Requirements. Morgan Stanley Bank’s underwriting standards generally require a minimum debt service coverage ratio of 1.20x and permit a maximum loan-to-value ratio of 80%; however, these thresholds are guidelines, and exceptions may be made based on the merits of each individual mortgage loan, such as the types of tenants, reserves, letters of credit, guarantees and Morgan Stanley Bank’s assessment of the mortgaged property’s future performance. The debt service coverage ratio guidelines set forth above are calculated based on Underwritten Net Cash Flow at origination. The debt service coverage ratio for each mortgage loan as reported in this prospectus supplement and Appendix I hereto may differ from the amount calculated at the time of origination because updates to the information used to calculate such amounts may have become available during the period between origination and the date of this prospectus supplement.
Certain mortgaged properties may also be encumbered by subordinate debt (or the direct or indirect ownership interests in the related borrower may be encumbered by mezzanine debt). It is possible that Morgan Stanley Bank or an affiliate thereof will be a lender on such additional debt and may either sell such debt to an unaffiliated third party or hold it in inventory. When such subordinate or mezzanine debt is taken into account, the aggregate debt with respect to the related mortgaged property may not conform to the aforementioned DSCR and LTV parameters.
Amortization Requirements. Morgan Stanley Bank’s underwriting guidelines generally permit a maximum amortization period of 30 years. Certain mortgage loans may provide for interest-only payments through maturity or for a portion of the commercial mortgage loan term. If a mortgage loan has a partial interest-only period, the monthly debt service and the UW NCF DSCR set forth in this prospectus supplement and Appendix I to this prospectus supplement reflect a calculation of both the interest only payments and the future (larger) amortizing loan payment. See “Description of the Mortgage Pool” in this prospectus supplement.
Escrow Requirements. Morgan Stanley Bank may require borrowers to fund escrows for taxes, insurance, capital expenditures and replacement reserves. In addition, Morgan Stanley Bank may identify certain risks that warrant additional escrows or holdbacks for items to be released to the borrower upon the satisfaction of certain conditions. Such escrows or holdbacks may cover tenant improvements and leasing commissions, deferred maintenance, environmental remediation and unfunded obligations, among other things. Springing escrows may also be structured for identified risks such as specific rollover exposure, to be triggered upon the non-renewal of one or more key tenants. In some cases, in lieu of maintaining a cash reserve, the borrower may be allowed to post a letter of credit or guaranty or provide periodic evidence of timely payment of a typical escrow item. Escrows are evaluated on a case-by-case basis and are not required for all Morgan Stanley Bank commercial mortgage loans.
Generally, Morgan Stanley Bank requires escrows as follows:
· | Taxes. An initial deposit and monthly escrow deposits equal to 1/12 of the annual property taxes (based on the most recent property assessment and the current millage rate; however, if the actual tax amount owing in the upcoming year is not available, the required annual reserve amount will generally be between 100% and 105% of the preceding year’s tax amount) are typically required to satisfy taxes and assessments, except that such escrows may not be required in certain circumstances, including, but not limited to, situations where (i) the sponsor is an institutional sponsor or a high net worth individual or (ii) the related mortgaged property is a single tenant property with respect to which the related tenant is required to pay taxes directly. |
· | Insurance. An initial deposit at origination (which may be equal to one or more months of the required monthly amount) and subsequent monthly escrow deposits equal to 1/12 of an amount generally between 100% and 105% of the annual property insurance premium are typically required to pay insurance premiums, except that such escrows may not be required in certain circumstances, including, but not limited to, situations where (i) the sponsor is an institutional sponsor or a high net worth individual, (ii) the related borrower maintains a blanket insurance policy or (iii) the related mortgaged property is a single tenant property with respect to which the related tenant self-insures. |
· | Replacement Reserves. Replacement reserves are generally calculated in accordance with the expected useful life of the components of the mortgaged property during the term of the mortgage loan. Annual replacement reserves are generally underwritten to the suggested replacement reserve amount from an independent, third-party property condition or engineering report, or to certain minimum requirements depending on the property type, except that such escrows may not be required in certain circumstances, including, but not limited to, situations where the related mortgaged property is a single tenant property with respect to which the related tenant is responsible for all repairs and maintenance, including those required with respect to the roof and structure of the improvements. |
· | Tenant Improvements and Leasing Commissions. A reserve for tenant improvements and leasing commissions may be required to be funded at loan origination and/or during the term of the mortgage loan to cover anticipated tenant improvements or leasing commissions costs that might be associated with re-leasing certain space, except that such escrows may not be required in certain circumstances, including, but not limited to, situations where (i) the related mortgaged property is a single tenant property and the tenant’s lease extends beyond the loan term or (ii) the rent at the related mortgaged property is considered below market. |
· | Deferred Maintenance. A reserve for deferred maintenance may be required to be funded at loan origination in an amount generally between 100% and 125% of the estimated cost of material immediate repairs or replacements identified in the physical condition report, except that such escrows may not be required in certain circumstances, including, but not limited to, situations where (i) the sponsor of the borrower delivers a guarantee to complete the immediate repairs in a specified amount of time, (ii) the deferred maintenance amount does not materially impact the related mortgaged property’s function, performance or value or isde minimisin relation to the loan amount or (iii) the related mortgaged property is a single tenant property and the tenant is responsible for the repairs. |
· | Furniture, Fixtures and Equipment. A reserve for furniture, fixtures and equipment expenses may be required to be funded during the term of the mortgage loan based on the suggested reserve amount from an independent, third-party property condition or engineering report, or based on certain minimum requirements depending on the property type. |
· | Environmental Remediation. A reserve for environmental remediation may be required to be funded at loan origination in an amount generally between 100% and 150% of the estimated remediation cost identified in the environmental report, except |
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that such escrows may not be required in certain circumstances, including, but not limited to, situations where (i) the sponsor of the borrower delivers a guarantee whereby it agrees to take responsibility and pay for identified environmental issues or (ii) environmental insurance has been obtained or already in place. |
For a description of the escrows collected with respect to the mortgage loans, please see Appendix I to this prospectus supplement.
Zoning and Land Use. With respect to each mortgage loan, Morgan Stanley Bank and its origination counsel will generally examine whether the use and occupancy of the related mortgaged property is in material compliance with zoning, land-use, building rules, regulations and orders then applicable to that mortgaged property. Evidence of this compliance may be in the form of one or more of the following: legal opinions, surveys, recorded documents, temporary or permanent certificates of occupancy, letters from government officials or agencies, title insurance endorsements, engineering or consulting reports, zoning reports and representations by the related borrower. In some cases, a mortgaged property may constitute a legal non-conforming use or structure. In such cases, Morgan Stanley Bank may require an endorsement to the title insurance policy or the acquisition of law and ordinance insurance with respect to the particular non-conformity unless it determines that: (i) the non-conformity should not have a material adverse effect on the ability of the borrower to rebuild, (ii) if the improvements are rebuilt in accordance with currently applicable law, the value and performance of the mortgaged property would be acceptable, (iii) any major casualty that would prevent rebuilding has a sufficiently remote likelihood of occurring or (iv) a cash reserve, a letter of credit or an agreement imposing recourse liability from a principal of the borrower is provided to cover losses.
Title Insurance Policy. Each borrower is required to provide, and Morgan Stanley Bank or its counsel typically will review, a title insurance policy for the related mortgaged property. Such title insurance policies typically must (i) be written by a title insurer licensed to do business in the jurisdiction where the mortgaged property is located, (ii) be in an amount at least equal to the original principal balance of the mortgage loan, (iii) have protection and benefits run to the mortgagee and its successors and assigns, (iv) be written on an American Land Title Association form or equivalent policy promulgated in the jurisdiction where the mortgaged property is located and (v) if a survey was prepared, have a legal description of the mortgaged property in the title policy that conforms to that shown on the survey.
Property Insurance. Morgan Stanley Bank requires each borrower to provide evidence of a hazard insurance policy with a customary deductible and coverage in an amount at least equal to the greater of (i) the outstanding principal balance of the mortgage loan or (ii) the amount necessary to prevent the borrower from becoming a co-insurer. Such policies do not permit reduction in insurance proceeds for depreciation, except that a policy may permit a deduction for depreciation in connection with a cash settlement after a casualty if the insurance proceeds are not being applied to rebuild or repair the damaged improvements.
Third Party Reports. In addition to or as part of applicable origination guidelines or reviews described above, in the course of originating the applicable mortgage loans, Morgan Stanley Bank generally considered the results of third party reports as described below. New reports are generally ordered, although existing reports dated no more than twelve (12) months prior to closing may be used (subject, in certain cases, to updates). In many instances, however, one or more provisions of the guidelines were waived or modified in light of the circumstances of the relevant mortgage loan or mortgaged property.
· | Appraisal.Morgan Stanley Bank generally obtains an appraisal for each mortgaged property prepared by an appraisal firm approved by Morgan Stanley Bank to assess the value of the property. Each report is reviewed by Morgan Stanley Bank or its designated agent. The report may utilize one or more approaches to value: (i) cost approach; (ii) sale comparison approach and/or (iii) income approach (including both the direct cap and discount cash flow methods). Each appraisal also includes a statement by the appraiser that the Uniform Standards of Professional Appraisal Practice (USPAP) and the guidelines of Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), as amended, were followed in preparing the appraisal. There can be no assurance that another person would not have arrived at a different valuation, even if such person used the same general approach to, and same method of, valuing the property. Moreover, such appraisals sought to establish the amount a typically motivated buyer would pay a typically motivated seller. Such amount could be significantly higher than the amount obtained from the sale of a mortgaged property under a distress or liquidation sale. Information regarding the values of the mortgaged properties as of the date of the related appraisal is presented in this prospectus supplement for illustrative purposes only. |
· | Environmental Report. Morgan Stanley Bank generally obtains a Phase I site assessment or an update of a previously obtained site assessment for each mortgaged property generally within the twelve-month period preceding the origination of the related mortgage loan and in each case prepared by an environmental firm approved by Morgan Stanley Bank. Morgan Stanley Bank or its designated agent typically reviews the Phase I site assessment to verify the presence or absence of potential adverse environmental conditions. An environmental assessment conducted at any particular real property collateral will not necessarily cover all potential environmental issues. For example, an analysis for radon, lead-based paint, mold and lead in drinking water will usually be conducted only at multifamily rental properties and only when Morgan Stanley Bank or the environmental consultant believes that such an analysis is warranted under the circumstances. Upon the recommendation of the engineer conducting the Phase I assessment with respect to a mortgaged property, a Phase II assessment will be ordered and/or an operations and maintenance plan with respect to asbestos, mold or lead based paint will be implemented. In certain cases, environmental insurance may be acquired in lieu of further testing. In certain cases, the Phase I or Phase II assessment may have disclosed the existence of or potential for adverse environmental conditions, generally the result of the activities of identified tenants, adjacent property owners or previous owners of the mortgaged property. In certain of such cases, the related borrowers were required to establish operations and maintenance plans, monitor the mortgaged property, abate or remediate the condition and/or provide additional security such as letters of credit, reserves or stand-alone secured creditor impaired property policies. |
· | Physical Condition Report. Morgan Stanley Bank generally obtains a current physical condition report for each mortgaged property prepared by a structural engineering firm approved by Morgan Stanley Bank to assess the overall physical condition and engineering integrity of the improvements at the mortgaged property, including an inspection of representative property components, systems and elements, an evaluation of their general apparent physical condition and an identification of physical deficiencies associated with structural, fixture, equipment or mechanical building components. Morgan Stanley Bank, or an agent, typically reviews the report to determine the physical condition of the mortgaged property and to determine the anticipated costs of necessary repair, replacement and major maintenance or capital expenditure over the term of the mortgage loan. In cases in which the report identifies an immediate need for material repairs or replacements with an anticipated cost that is over a certain minimum threshold or percentage of loan balance, Morgan Stanley Bank often requires |
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an escrow at the time of origination in an amount sufficient to complete such repairs or replacements or obtains a guarantee from a sponsor of the borrower in lieu of reserves. Morgan Stanley Bank also often requires the collection of ongoing escrows for the continued maintenance of the property based on the conclusions of the report. See“—Escrow Requirements” above. |
· | Seismic. Morgan Stanley Bank generally obtains a seismic report for all mortgaged properties located in seismic zones 3 or 4 to assess the estimated damage that may result from a seismic event that has a 10% chance of exceedance in a 50-year exposure period or a 475-year return period. Such reports utilize the ASTM Standard E2026-07 and E2557-07 definitions for Scenario Expected Loss. Generally, any of the mortgage loans as to which the property was estimated to have a scenario expected limit in excess of 20% would be conditioned on satisfactory earthquake insurance. |
Servicing. Morgan Stanley Bank currently contracts with third party servicers for servicing the mortgage loans that it originates or acquires. Such interim servicers are assessed based upon the credit quality of the servicing institution and may be reviewed for their systems and reporting capabilities, collection procedures and ability to provide loan-level data. In addition, Morgan Stanley Bank may meet with senior management to determine whether the servicer complies with industry standards or otherwise monitor the servicer on an ongoing basis.
Exceptions to Underwriting Standards. One or more of the mortgage loans originated by Morgan Stanley Bank may vary from the specific Morgan Stanley Bank underwriting guidelines described above when additional credit positive characteristics are present as discussed above. In addition, in the case of one or more of the mortgage loans originated by Morgan Stanley Bank, Morgan Stanley Bank may not have applied each of the specific underwriting guidelines described above as the result of case-by-case permitted flexibility based upon other compensating factors. Except as discussed in the next six paragraphs, none of the mortgage loans originated by Morgan Stanley Bank was originated with any material exceptions from Morgan Stanley Bank’s underwriting guidelines and procedures.
Morgan Stanley Bank’s underwriting guidelines generally require the establishment of reserves in respect of any unpaid but underwritten rent; however, with respect to the TKG 3 Retail Portfolio Mortgage Loan, representing approximately 9.0% of the Initial Pool Balance, Planet Fitness, the seventh largest tenant at the Riverside Center mortgaged property, is not required to commence paying full rent from the origination date through May 1, 2016 and no reserve was established at closing with respect to such period. The decision of Morgan Stanley Bank and MSMCH to include such mortgage loan in the transaction notwithstanding such exception was based on the fact that such free rent period is limited in duration and such tenant accounts for only approximately 1.6% of the net square footage and 1.0% of the underwritten rent of all of the mortgaged properties securing such mortgage loan.
Morgan Stanley Bank’s underwriting guidelines generally require the establishment of reserves in respect of any unpaid but underwritten rent. However, with respect to the mortgaged property identified on Appendix I to this prospectus supplement as 841-853 Broadway, securing a mortgage loan representing approximately 5.6% of the Initial Pool Balance, the largest tenant, identified on Appendix I to this prospectus supplement as “Centro, Inc.,” representing approximately 10.5% of the net square footage, has neither taken occupancy nor begun paying rent and no reserve has been established with respect to such tenant. The decision of Morgan Stanley Bank and MSMCH to include such mortgage loan in the transaction notwithstanding such exception was based on (a) the sufficiency of the mortgaged property’s underwritten income relative to any such income related to Centro, Inc. and (b) an LTV of 17.9% as of the Cut-Off Date.
Morgan Stanley Bank’s underwriting guidelines generally require underwritten income to be based on or supported by historical performance when such historical performance data is available; however, with respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as Hilton Garden Inn W 54th Street, representing approximately 4.5% of the Initial Pool Balance, the related mortgaged property is a newly constructed hotel and therefore underwritten income is based on the trailing twelve month occupancy rate and the estimated 2014 average competitive primary and secondary competitive hotel room rate of $254.56. The decision of Morgan Stanley Bank and MSMCH to include such mortgage loan in the transaction notwithstanding such exception was based on the location of the mortgaged property near Times Square in New York City and the strength of the related mortgage loan sponsor.
Morgan Stanley Bank’s underwriting guidelines generally require a minimum debt service coverage ratio of 1.20x. However, with respect to the mortgaged property identified on Appendix I to this prospectus supplement as Premier Apartments, securing a mortgage loan representing approximately 3.8% of the Initial Pool Balance, the underwritten debt service coverage ratio was 1.15x. The decision of Morgan Stanley Bank and MSMCH to include such mortgage loan in the transaction notwithstanding such exception was based on the debt service coverage ratio of 1.48x calculated for the initial five-year interest-only period, during which net income at the mortgaged property is expected to increase due to increased income attributable to parking, and the location of the mortgaged property in a core market in the Washington D.C. area.
Morgan Stanley Bank’s underwriting guidelines generally require a minimum debt service coverage ratio of 1.20x. However, with respect to the mortgaged property identified on Appendix I to this prospectus supplement as Signature Apartments, securing a mortgage loan representing approximately 1.8% of the Initial Pool Balance, the underwritten debt service coverage ratio was 1.17x. The decision of Morgan Stanley Bank and MSMCH to include such mortgage loan in the transaction notwithstanding such exception was based on the 15-year amortization schedule of the related mortgage loan.
Morgan Stanley Bank’s underwriting guidelines generally require a minimum debt service coverage ratio of 1.20x. However, with respect to the mortgaged property identified on Appendix I to this prospectus supplement as 58 E 56th Street, securing a mortgage loan representing approximately 0.6% of the Initial Pool Balance, the underwritten debt service coverage ratio is 1.17x. The decision of Morgan Stanley Bank and MSMCH to include such mortgage loan in the transaction notwithstanding such exception was based on the location of the mortgaged property in a strong and stable market near Madison Avenue in New York City and strong long-term tenancies at the mortgaged property.
The Depositor
Morgan Stanley Capital I Inc., the depositor, is a direct wholly owned subsidiary of Morgan Stanley and was incorporated in the State of Delaware on January 28, 1985. Our principal executive offices are located at 1585 Broadway, 37th Floor, New York, New York 10036. Our telephone number is (212) 761-4000. The depositor does not have, nor is it expected in the future that it will have, any significant assets and it is not engaged in any activities except those related to the securitization of assets.
The depositor was formed for the purpose of acting as a depositor in asset backed securities transactions. During the period commencing January 1, 2000 and terminating May 29, 2015, the depositor acted as depositor with respect to multifamily, commercial and
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manufactured housing community mortgage loan securitization transactions, in an aggregate amount of approximately $98,056,685,372. Generally, MSMCH (or its predecessor) has acted as a sponsor or co-sponsor of such transactions and contributed a substantial portion of the mortgage loans in such transactions, with the remainder having been contributed by numerous other mortgage loan sellers. The depositor has also acted as depositor with respect to numerous securitizations of residential mortgage loans.
The depositor will have minimal ongoing duties with respect to the Offered Certificates and the mortgage loans. These duties will include, without limitation, (i) appointing a successor trustee or custodian in the event of the resignation or removal of the trustee or custodian, as applicable, (ii) providing information in its possession with respect to the Certificates to the certificate administrator to the extent necessary to perform REMIC tax administration and preparing disclosure required under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (iii) indemnifying the trustee, the custodian, the certificate administrator and the issuing entity for any liability, assessment or costs arising from the depositor’s bad faith, negligence or malfeasance in providing such information, (iv) indemnifying the trustee, the custodian and the certificate administrator against certain securities laws liabilities and (v) signing any distribution report on Form 10-D, current report on Form 8-K or annual report on Form 10-K, including the required certification therein under the Sarbanes-Oxley Act, required to be filed by the issuing entity and reviewing filings pursuant to the Exchange Act prepared by the certificate administrator on behalf of the issuing entity. The depositor is also required under the Underwriting Agreement to indemnify the underwriter for, or to contribute to losses in respect of, certain securities law liabilities.
The Issuing Entity
The issuing entity with respect to the Offered Certificates will be Morgan Stanley Capital I Trust 2015-MS1 (the “Issuing Entity”). The Issuing Entity will be a New York common law trust that will be formed on the Closing Date pursuant to the Pooling and Servicing Agreement. The only activities that the Issuing Entity may perform are those set forth in the Pooling and Servicing Agreement, which are generally limited to owning and administering the mortgage loans and any REO Property, disposing of defaulted mortgage loans and REO Property, issuing the Certificates, making distributions, providing reports to Certificateholders and other activities described in this prospectus supplement. Accordingly, the Issuing Entity may not issue securities other than the Certificates, or invest in securities, other than investingfunds in the Collection Account and other accounts maintained under the Pooling and Servicing Agreement incertain short-term high-quality investments. The Issuing Entity may not lend or borrow money, except that the master servicer and the trustee may make Advances of delinquent monthly debt service payments and Servicing Advances to the Issuing Entity, but only to the extent the advancing party deems such Advances to be recoverable from the related mortgage loan; such Advances are intended to provide liquidity, rather than credit support. The Pooling and Servicing Agreement may be amended as described in this prospectus supplement under “Description of the Offered Certificates—Amendments to the Pooling and Servicing Agreement.” The Issuing Entity administers the mortgage loans through the trustee, the certificate administrator, the custodian, the master servicer and the special servicer. A discussion of the duties of the trustee, the certificate administrator, the custodian, the master servicer, the trust advisor and the special servicer, including any discretionary activities performed by each of them, is set forth in this prospectus supplement under “Transaction Parties,” “—The Trustee, Certificate Administrator andCustodian,” “—The Master Servicerandthe Special Servicer,” “—The Trust Advisor” and “Servicing of the Mortgage Loans.”
The only assets of the Issuing Entity other than the mortgage loans and any REO Properties are the Collection Account and other accounts maintained pursuant to the Pooling and Servicing Agreement and the short-term investments in which funds in the Collection Account and other accounts are invested. The Issuing Entity has no present liabilities, but has potential liability relating to ownership of the mortgage loans and any REO Properties, and the other activities described in this prospectus supplement, and indemnity obligations to the trustee, the certificate administrator, the custodian, the master servicer, the trust advisor and the special servicer. The fiscal year of the Issuing Entity is the calendar year. The Issuing Entity has no executive officers or board of directors and acts through the depositor, the trustee, the certificate administrator, the custodian, the master servicer and the special servicer.
The depositor is contributing the mortgage loans to the Issuing Entity. The depositor is purchasing the mortgage loans from the mortgage loan seller, as described in this prospectus supplement under “Description of the Mortgage Pool—Sale of the Mortgage Loans” and “—Representations and Warranties.”
Since the Issuing Entity is a common law trust, it may not be eligible for relief under the federal bankruptcy laws, unless it can be characterized as a “business trust” for purposes of the federal bankruptcy laws. Bankruptcy courts look at various considerations in making this determination, so it is not possible to predict with any certainty whether or not the Issuing Entity would be characterized as a “business trust.”
The depositor has been formed for the purpose of acting as a depositor in asset backed securities transactions. In connection with the sale of the mortgage loans from the mortgage loan seller to the depositor and from the depositor to the Issuing Entity, certain legal opinions are required. To the extent relating to an entity subject to Title 11 of the United States Code (the “Bankruptcy Code”), those opinions are generally to the effect that:
(1) if the mortgage loan seller were to become a debtor in a properly presented case under the Bankruptcy Code, a federal bankruptcy court would determine that (a) a transfer of the mortgage loans by the mortgage loan seller to the depositor (including collection thereon) in the form and manner set forth in the mortgage loan purchase agreement would constitute a true sale or absolute transfer of such mortgage loans (including the collections thereon), rather than a borrowing by the mortgage loan seller from the depositor secured by those mortgage loans, so that those mortgage loans (including the collections thereon) would not be property of the estate of the mortgage loan seller under Section 541(a) of the Bankruptcy Code, and thus (b) the depositor’s rights to the related mortgage loans (including the collections thereon) would not be impaired by the operation of Section 362(a) of the Bankruptcy Code; and
(2) if the depositor were to become a debtor in a properly presented case under the Bankruptcy Code, a federal bankruptcy court would determine that (a) a transfer of the related mortgage loans by the depositor to the Issuing Entity (including the collections thereon) in the form and manner set forth in the Pooling and Servicing Agreement would constitute a true sale or absolute transfer of those mortgage loans (including the collections thereon), rather than a borrowing by the depositor from the Issuing Entity secured by those mortgage loans, so that those mortgage loans (including the collections thereon) would not be property of the estate of the depositor under Section 541(a) of the Bankruptcy Code, and thus (b) the Issuing Entity’s rights to the related mortgage loans (including the collections thereon) would not be impaired by the operation of Section 362(a) of the Bankruptcy Code.
Such legal opinions are based on numerous assumptions, and there can be no assurance that all of such assumed facts are true, or will continue to be true. Moreover, there can be no assurance that a court would rule as anticipated in the foregoing legal opinions.
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Accordingly, although the transfer of the underlying mortgage loans from the mortgage loan seller to the depositor and from the depositor to the Issuing Entity has been structured as a sale, there can be no assurance that the sale of the underlying mortgage loans will not be recharacterized as a pledge, with the result that the depositor or Issuing Entity is deemed to be a creditor of the mortgage loan seller rather than an owner of the mortgage loans. See “Risk Factors—Risks Related to the Offered Certificates—The Mortgage Loan Seller, the Sponsor and the Depositor Are Subject to Bankruptcy or Insolvency Laws That May Affect the Issuing Entity’s Ownership of the Mortgage Loans.”
The Trustee, Certificate Administrator and Custodian
Wells Fargo Bank, National Association (“Wells Fargo Bank”) will act as trustee, custodian and certificate administrator under the Pooling and Servicing Agreement. Wells Fargo Bank, National Association is the master servicer under the MSBAM 2015-C22 PSA, pursuant to the 300 South Riverside Plaza Fee Non-Serviced Loan Combination, the Waterfront at Port Chester Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination are serviced, and is the master servicer under the MSBAM 2015-C23 PSA, pursuant to which the 32 Old Slip Fee Non-Serviced Loan Combination is serviced.
Wells Fargo Bank is a national banking association and a wholly-owned subsidiary of Wells Fargo & Company. A diversified financial services company, Wells Fargo & Company is a U.S. bank holding company with approximately $1.7 trillion in assets and approximately 265,000 employees as of December 31, 2014, which provides banking, insurance, trust, mortgage and consumer finance services throughout the United States and internationally. Wells Fargo Bank provides retail and commercial banking services and corporate trust, custody, securities lending, securities transfer, cash management, investment management and other financial and fiduciary services. The other transaction parties may maintain banking and other commercial relationships with Wells Fargo Bank and its affiliates. Wells Fargo Bank maintains principal corporate trust offices at 9062 Old Annapolis Road, Columbia, Maryland 21045 1951 (among other locations) and its office for certificate transfer services is located at Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479.
Wells Fargo Bank has provided corporate trust services since 1934. Wells Fargo Bank acts as a trustee for a variety of transactions and asset types, including corporate and municipal bonds, mortgage-backed and asset-backed securities and collateralized debt obligations. As of December 31, 2014, Wells Fargo Bank was acting as trustee on approximately 344 series of commercial mortgage-backed securities with an aggregate principal balance of approximately $157 billion.
In its capacity as trustee on commercial mortgage securitizations, Wells Fargo Bank is generally required to make an advance if the related master servicer or special servicer fails to make a required advance. In the past three years, Wells Fargo Bank has not been required to make an advance on a commercial mortgage-backed securities transaction.
Under the terms of the Pooling and Servicing Agreement, Wells Fargo Bank is responsible for securities administration, which includes pool performance calculations, distribution calculations and the preparation of monthly distribution reports. As certificate administrator, Wells Fargo Bank is responsible for the preparation and filing of all REMIC and grantor trust tax returns on behalf of the trust REMICs and to the extent required under the Pooling and Servicing Agreement, the preparation of monthly reports on Form 10-D, certain current reports on Form 8-K and annual reports on Form 10-K that are required to be filed with the SEC on behalf of the Issuing Entity. Wells Fargo Bank has been engaged in the business of securities administration since June 30, 1995, and in connection with commercial mortgage-backed securities since 1997. As of December 31, 2014, Wells Fargo Bank was acting as securities administrator with respect to more than $171 billion of outstanding commercial mortgage-backed securities.
Wells Fargo Bank is acting as custodian of the Mortgage Files pursuant to the Pooling and Servicing Agreement. In that capacity, Wells Fargo Bank is responsible to hold and safeguard the mortgage notes and other contents of the Mortgage Files on behalf of the trustee and the Certificateholders. Wells Fargo Bank maintains each Mortgage File in a separate file folder marked with a unique bar code to assure loan-level file integrity and to assist in inventory management. Files are segregated by transaction or investor. Wells Fargo Bank has been engaged in the mortgage document custody business for more than 25 years. Wells Fargo Bank maintains its commercial document custody facilities in Minneapolis, Minnesota. As of December 31, 2014, Wells Fargo Bank was acting as custodian of more than 116,000 commercial mortgage loan files.
Wells Fargo Bank serves or may have served within the past two years as loan file custodian for various mortgage loans owned by the sponsor or an affiliate of the sponsor, and one or more of those mortgage loans may be included in the Issuing Entity. The terms of any custodial agreement under which those services are provided by Wells Fargo Bank are customary for the mortgage-backed securitization industry and provide for the delivery, receipt, review and safekeeping of mortgage loan files.
On June 18, 2014, a group of institutional investors filed a civil complaint in the Supreme Court of the State of New York, New York County, against Wells Fargo Bank, in its capacity as trustee under 276 residential mortgage backed securities (“RMBS”) trusts, which was later amended on July 18, 2014, to increase the number of trusts to 284 RMBS trusts. On November 24, 2014, the plaintiffs filed a motion to voluntarily dismiss the state court action without prejudice. That same day, a group of institutional investors filed a civil complaint in the United States District Court for the Southern District of New York against Wells Fargo Bank, alleging claims against the bank in its capacity as trustee for 274 RMBS trusts (the “Complaint”). In December 2014, the plaintiffs’ motion to voluntarily dismiss their original state court action was granted. As with the prior state court action, the Complaint is one of six similar complaints filed contemporaneously against RMBS trustees (Deutsche Bank, Citibank, HSBC, Bank of New York Mellon and US Bank) by a group of institutional investor plaintiffs. The Complaint against Wells Fargo Bank alleges that the trustee caused losses to investors and asserts causes of action based upon, among other things, the trustee’s alleged failure to (i) enforce repurchase obligations of mortgage loan sellers for purported breaches of representations and warranties, (ii) notify investors of alleged events of default purportedly caused by breaches by mortgage loan servicers, and (iii) abide by appropriate standards of care following alleged events of default. Relief sought includes money damages in an unspecified amount, reimbursement of expenses, and equitable relief. Other cases alleging similar causes of action have been filed against Wells Fargo Bank and other trustees by RMBS investors in these and other transactions.
There can be no assurances as to the outcome of the litigation, or the possible impact of the litigation on Wells Fargo Bank or the RMBS trusts. However, Wells Fargo Bank denies liability and believes that it has performed its obligations under the RMBS trusts in good faith, that its actions were not the cause of any losses to investors, and that it has meritorious defenses, and it intends to contest the plaintiffs’ claims vigorously.
The information set forth in this subheading “—The Trustee, Certificate Administrator and Custodian” concerning Wells Fargo Bank has been provided by Wells Fargo Bank.
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The Trust Advisor
Park Bridge Lender Services LLC (“Park Bridge Lender Services”), a New York limited liability company and an indirect, wholly-owned subsidiary of Park Bridge Financial LLC (“Park Bridge Financial”), will act as trust advisor under the Pooling and Servicing Agreement (the “Trust Advisor”). The principal offices of Park Bridge Lender Services LLC are located at 560 Lexington Avenue, 17th floor, New York, New York 10022.
Park Bridge Financial is a privately held commercial real estate finance advisory firm headquartered in New York, New York. Since its founding in 2009, Park Bridge Financial and its affiliates have been engaged by commercial banks (community, regional and multi-national), opportunity funds, REITs, investment banks, insurance companies, entrepreneurs and hedge funds on a wide variety of advisory assignments. These engagements have included: mortgage brokerage, loan syndication, contract underwriting, valuations, risk assessments, surveillance, litigation support, expert testimony, loan restructures as well as the disposition of commercial mortgages and related collateral. Park Bridge Financial’s technology platform is server-based with back-up, disaster-recovery, encryption and archival services performed by vendors and data centers that comply with industry and regulatory standards.
As of March 31, 2015, Park Bridge Lender Services was acting as operating advisor or trust advisor for commercial mortgage-backed securities transactions with an approximate aggregate initial principal balance of $56.86 billion issued in 52 transactions.
There are no legal proceedings pending against Park Bridge Lender Services, or to which any property of Park Bridge Lender Services is subject, that are material to the Certificateholders, nor does Park Bridge Lender Services have actual knowledge of any proceedings of this type contemplated by governmental authorities. See “Servicing of the Mortgage Loans—The Trust Advisor” in this prospectus supplement.
The information set forth in this subheading “—The Trust Advisor” concerning the trust advisor has been provided by Park Bridge Lender Services.
The Master Servicer and the Special Servicer
Midland Loan Services, a Division of PNC Bank, National Association, a national banking association (“Midland”), will act as the master servicer and in such capacity will be responsible for the servicing and administration of the mortgage loans (other than any Non-Serviced Mortgage Loan) and any Serviced Companion Loan or Serviced B Note pursuant to the Pooling and Servicing Agreement. Certain servicing and administrative functions will also be performed by one or more primary servicers that previously serviced the mortgage loans for the mortgage loan seller. Midland will also act as the special servicer and in such capacity will be responsible for the servicing and administration of the Specially Serviced Mortgage Loans and REO Properties (other than REO Properties relating to Non-Serviced Mortgage Loans) and performing certain reviews of material actions with respect to mortgage loans (other than any Non-Serviced Mortgage Loan) when such mortgage loans are not Specially Serviced Mortgage Loans, in each case pursuant to the Pooling and Servicing Agreement.
Midland’s principal servicing office is located at 10851 Mastin Street, Building 82, Suite 300, Overland Park, Kansas 66210.
Midland is a real estate financial services company that provides loan servicing, asset management and technology solutions for large pools of commercial and multifamily real estate assets. Midland is approved as a master servicer, special servicer and primary servicer for investment-grade commercial and multifamily mortgage-backed securities (“CMBS”) by S&P, Moody’s, Fitch and Morningstar. Midland has received the highest rankings as a master, primary and special servicer of real estate assets under U.S. CMBS transactions from S&P, Fitch and Morningstar. For each category, S&P ranks Midland as “Strong,” Fitch ranks Midland as “1,” and Morningstar ranks Midland as “CS1.” Midland is also a HUD/FHA-approved mortgagee and a Fannie Mae approved multifamily loan servicer.
Midland has detailed operating procedures across the various servicing functions to maintain compliance with its servicing obligations and the servicing standards under Midland’s servicing agreements, including procedures for managing delinquent and specially serviced loans. The policies and procedures are reviewed annually and centrally managed. Furthermore Midland’s disaster recovery plan is reviewed annually.
Midland will not have primary responsibility for custody services of original documents evidencing the underlying mortgage loans. Midland may from time to time have custody of certain of such documents as necessary for enforcement actions involving particular mortgage loans or otherwise. To the extent that Midland has custody of any such documents for any such servicing purposes, such documents will be maintained in a manner consistent with the Servicing Standard.
No securitization transaction involving commercial or multifamily mortgage loans in which Midland was acting as master servicer, primary servicer or special servicer has experienced a servicer termination event as a result of any action or inaction of Midland as master servicer, primary servicer or special servicer, as applicable, including as a result of Midland’s failure to comply with the applicable servicing criteria in connection with any securitization transaction. Midland has made all advances required to be made by it under the servicing agreements on the commercial and multifamily mortgage loans serviced by Midland in securitization transactions.
From time to time Midland is a party to lawsuits and other legal proceedings as part of its duties as a loan servicer (e.g., enforcement of loan obligations) and/or arising in the ordinary course of business. Midland does not believe that any such lawsuits or legal proceedings would, individually or in the aggregate, have a material adverse effect on its business or its ability to service loans pursuant to the Pooling and Servicing Agreement.
Midland currently maintains an Internet-based investor reporting system, CMBS Investor Insight®, that contains performance information at the portfolio, loan and property levels on the various commercial mortgage-backed securities transactions that it services. Certificateholders, prospective transferees of the Certificates and other appropriate parties may obtain access to CMBS Investor Insight through Midland’s website at www.pnc.com/midland. Midland may require registration and execution of an access agreement in connection with providing access to CMBS Investor Insight.
As of March 31, 2015, Midland was servicing approximately 29,779 commercial and multifamily mortgage loans with a principal balance of approximately $325 billion. The collateral for such loans is located in all 50 states, the District of Columbia, Puerto Rico, Guam and Canada. Approximately 11,890 of such loans, with a total principal balance of approximately $159 billion, pertain to commercial and multifamily mortgage-backed securities. The related loan pools include multifamily, office, retail, hospitality and other income producing
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properties. As of March 31, 2015, Midland was named the special servicer in approximately 170 commercial mortgage-backed securities transactions with an aggregate outstanding principal balance of approximately $93 billion. With respect to such transactions as of such date, Midland was administering approximately 106 assets with an outstanding principal balance of approximately $754 million.
Midland has been servicing mortgage loans in CMBS transactions since 1992. The table below contains information on the size of the portfolio of commercial and multifamily mortgage loans in CMBS and other servicing transactions for which Midland has acted as master and/or primary servicer from 2012 to 2014.
Calendar Year-End (Approximate amounts in billions) | |||
Portfolio Size – Master/Primary | 2012 | 2013 | 2014 |
CMBS | $ 115 | $ 141 | $ 157 |
Other | $ 167 | $ 167 | $ 179 |
Total | $ 282 | $ 308 | $336 |
Midland has acted as a special servicer for commercial and multifamily mortgage loans in CMBS transactions since 1992. The table below contains information on the size of the portfolio of specially serviced commercial and multifamily mortgage loans and REO Properties that have been referred to Midland as special servicer in CMBS transactions from 2012 to 2014.
Calendar Year-End (Approximate amounts in billions) | |||
Portfolio Size – CMBS Special Servicing | 2012 | 2013 | 2014 |
Total | $ 82 | $ 70 | $ 85 |
Midland may enter into one or more arrangements with the directing holder, holders of controlling class certificates, holders of certain subordinate companion loans (including holders of trust subordinate companion loans) or any person with the right to appoint or remove and replace the special servicer to provide for a discount and/or revenue sharing with respect to certain of the special servicer compensation in consideration of, among other things, Midland’s appointment (or continuance) as special servicer under the Pooling and Servicing Agreement, any related co-lender agreement and the limitations on such person’s right to remove the special servicer.
Midland is also the current special servicer under the pooling and servicing agreement for the MSBAM 2015-C22 securitization, pursuant to which the 300 South Riverside Plaza Fee Non-Serviced Loan Combination, the Waterfront at Port Chester Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination are being serviced.
Midland will acquire the right to act as master servicer and/or primary servicer (and the related right to receive and retain the excess servicing strip) with respect to the mortgage loans sold to the depositor by the mortgage loan seller pursuant to one or more servicing rights appointment agreements entered into on the Closing Date. The “excess servicing strip” means a portion of the Master Servicing Fee payable to Midland that accrues at a per annum rate initially equal to the Master Servicing Fee Rate minus (i) any primary servicing fee rate payable to a third-party primary servicer and (ii) 0.0025%, but which may be reduced under certain circumstances as provided in the Pooling and Servicing Agreement.
DoubleLine Capital LP or an affiliate thereof is expected to serve as the initial controlling class representative and engaged Midland as an independent contractor to conduct due diligence with respect to the mortgage loans included in the mortgage pool.
The foregoing information set forth under this subheading “—The Master Servicer and the Special Servicer” concerning Midland has been provided by Midland.
The Outside Master Servicer
Wells Fargo Bank, National Association (“Wells Fargo”) is the master servicer under the MSBAM 2015-C22 PSA, pursuant to which the 300 South Riverside Plaza Fee Non-Serviced Loan Combination, the Waterfront at Port Chester Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination are serviced, and is the master servicer under the MSBAM 2015-C23 PSA, pursuant to which the 32 Old Slip Fee Non-Serviced Loan Combination is serviced (in such capacities, the “Outside Master Servicer”). Wells Fargo is a national banking association organized under the laws of the United States of America, and is a wholly-owned direct and indirect subsidiary of Wells Fargo & Company. Wells Fargo is also the trustee, certificate administrator and custodian under the Pooling and Servicing Agreement. On December 31, 2008, Wells Fargo & Company acquired Wachovia Corporation, the owner of Wachovia Bank, National Association (“Wachovia”), and Wachovia Corporation merged with and into Wells Fargo & Company. On March 20, 2010, Wachovia merged with and into Wells Fargo. Like Wells Fargo, Wachovia acted as master servicer of securitized commercial and multifamily mortgage loans and, following the merger of the holding companies, Wells Fargo and Wachovia integrated their two servicing platforms under a senior management team that is a combination of both legacy Wells Fargo managers and legacy Wachovia managers.
The principal west coast commercial mortgage master servicing offices of Wells Fargo are located at MAC A0227-020, 1901 Harrison Street, Oakland, California 94612. The principal east coast commercial mortgage master servicing offices of Wells Fargo are located at MAC D1086, 550 South Tryon Street, Charlotte, North Carolina 28202.
Wells Fargo has been master servicing securitized commercial and multifamily mortgage loans in excess of ten years. Wells Fargo’s primary servicing system runs on McCracken Financial Solutions software, Strategy CS. Wells Fargo reports to trustees and certificate administrators in the CREFC® format. The following table sets forth information about Wells Fargo’s portfolio of master or primary serviced commercial and multifamily mortgage loans (including loans in securitization transactions and loans owned by other investors) as of the dates indicated:
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Commercial and Multifamily Mortgage Loans | As of 12/31/2012 | As of 12/31/2013 | As of 12/31/2014 | As of 3/31/2015 |
By Approximate Number: | 35,189 | 33,354 | 33,590 | 33,399 |
By Approximate Aggregate Unpaid Principal Balance (in billions): | $ 428.52 | $ 434.37 | $ 474.38 | $ 480.33 |
Within this portfolio, as of March 31, 2015, are approximately 24,503 commercial and multifamily mortgage loans with an unpaid principal balance of approximately $395.6 billion related to commercial mortgage-backed securities or commercial real estate collateralized debt obligation securities. In addition to servicing loans related to commercial mortgage-backed securities and commercial real estate collateralized debt obligation securities, Wells Fargo also services whole loans for itself and a variety of investors. The properties securing loans in Wells Fargo’s servicing portfolio, as of March 31, 2015, were located in all 50 states, the District of Columbia, Guam, Mexico, the Bahamas, the Virgin Islands and Puerto Rico and include retail, office, multifamily, industrial, hotel and other types of income-producing properties.
In its master servicing and primary servicing activities, Wells Fargo utilizes a mortgage-servicing technology platform with multiple capabilities and reporting functions. This platform allows Wells Fargo to process mortgage servicing activities including, but not limited to: (i) performing account maintenance; (ii) tracking borrower communications; (iii) tracking real estate tax escrows and payments, insurance escrows and payments, replacement reserve escrows and operating statement data and rent rolls; (iv) entering and updating transaction data; and (v) generating various reports.
The following table sets forth information regarding principal and interest advances and servicing advances made by Wells Fargo, as master servicer, on commercial and multifamily mortgage loans included in commercial mortgage-backed securitizations. The information set forth below is the average amount of such advances outstanding over the periods indicated (expressed as a dollar amount and as a percentage of Wells Fargo’s portfolio, as of the end of each such period, of master serviced commercial and multifamily mortgage loans included in commercial mortgage-backed securitizations).
Period | Approximate Securitized Master-Serviced Portfolio (UPB)* | Approximate Outstanding Advances (P&I and PPA)* | Approximate Outstanding Advances as % of UPB |
Calendar Year 2012 | $ 331,765,453,800 | $ 2,133,375,220 | 0.64% |
Calendar Year 2013 | $ 346,011,017,466 | $ 2,158,219,403 | 0.62% |
Calendar Year 2014 | $ 377,947,659,331 | $ 1,750,352,607 | 0.46% |
YTD Q1 2015 | $ 382,854,235,509 | $ 1,782,705,503 | 0.47% |
* “UPB” means unpaid principal balance, “P&I” means principal and interest advances and “PPA” means property protection advances.
Wells Fargo is rated by Fitch, S&P and Morningstar as a primary servicer, a master servicer and a special servicer of commercial mortgage loans. Wells Fargo’s servicer ratings by each of these agencies are outlined below:
Fitch | S&P | Morningstar | |
Primary Servicer | CPS1- | Above Average | MOR CS1 |
Master Servicer | CMS1- | Above Average | MOR CS1 |
Special Servicer | CSS2 | Above Average | MOR CS2 |
The long-term deposits of Wells Fargo are rated “AA-” by S&P, “Aa3” by Moody’s and “AA-” by Fitch. The short-term deposits of Wells Fargo are rated “A-1+” by S&P, “P-1” by Moody’s and “F1+” by Fitch.
Wells Fargo has developed policies, procedures and controls relating to its servicing functions to maintain compliance with applicable servicing agreements and servicing standards, including procedures for handling delinquent loans during the period prior to the occurrence of a special servicing transfer event. Wells Fargo’s master servicing policies and procedures are updated periodically to keep pace with the changes in the commercial mortgage-backed securities industry and have been generally consistent for the last three years in all material respects. The only significant changes in Wells Fargo’s policies and procedures have come in response to changes in federal or state law or investor requirements, such as updates issued by the Federal National Mortgage Association or Federal Home Loan Mortgage Corporation.
Wells Fargo may perform any of its obligations under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement through one or more third-party vendors, affiliates or subsidiaries. Notwithstanding the foregoing, Wells Fargo, as Outside Master Servicer, will remain responsible for its duties thereunder. Wells Fargo may engage third-party vendors to provide technology or process efficiencies. Wells Fargo monitors its third-party vendors in compliance with its internal procedures and applicable law. Wells Fargo has entered into contracts with third-party vendors for the following functions:
· | provision of Strategy and Strategy CS software; |
· | tracking and reporting of flood zone changes; |
· | abstracting of leasing consent requirements contained in loan documents; |
· | legal representation; |
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· | assembly of data regarding buyer and seller (borrower) with respect to proposed loan assumptions and preparation of loan assumption package for review by Wells Fargo; |
· | performance of property inspections; |
· | performance of tax parcel searches based on property legal description, monitoring and reporting of delinquent taxes, and collection and payment of taxes; and |
· | Uniform Commercial Code searches and filings. |
Wells Fargo may also enter into agreements with certain firms to act as a primary servicer and to provide cashiering or non-cashiering sub-servicing on the applicable Non-Serviced Loan Combinations. Wells Fargo monitors and reviews the performance of sub-servicers appointed by it. Generally, all amounts received by Wells Fargo on the applicable Non-Serviced Loan Combinations will initially be deposited into a common clearing account with collections on other mortgage loans serviced by Wells Fargo and will then be allocated and transferred to the appropriate account(s) as provided in the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement. On the day any amount is to be disbursed by Wells Fargo, that amount is transferred to a common disbursement account prior to disbursement.
Wells Fargo (in its capacity as the Outside Master Servicer) will not have primary responsibility for custody services of original documents evidencing the applicable Non-Serviced Loan Combinations. On occasion, Wells Fargo may have custody of certain of such documents as are necessary for enforcement actions involving the applicable Non-Serviced Loan Combinations or otherwise. To the extent Wells Fargo performs custodial functions as a servicer, documents will be maintained in a manner consistent with the Servicing Standard.
A Wells Fargo proprietary website (www.wellsfargo.com/com/comintro) provides investors with access to investor reports for commercial mortgage-backed securitization transactions for which Wells Fargo is master servicer, and also provides borrowers with access to current and historical loan and property information for these transactions.
Wells Fargo & Company files reports with the SEC as required under the Exchange Act. Such reports include information regarding Wells Fargo and may be obtained at the website maintained by the SEC at www.sec.gov.
There are no legal proceedings pending against Wells Fargo, or to which any property of Wells Fargo is subject, that are material to the Certificateholders, nor does Wells Fargo have actual knowledge of any proceedings of this type contemplated by governmental authorities.
Pursuant to an interim servicing agreement between MSMCH and certain of its affiliates, on the one hand, and Wells Fargo, on the other hand, Wells Fargo acts as interim servicer with respect to certain of the mortgage loans owned from time to time by MSMCH and those affiliates thereof, which may include, prior to their inclusion in the Issuing Entity, some or all of the mortgage loans to be contributed by MSMCH to this securitization.
Wells Fargo is the master servicer under the MSBAM 2013-C23 PSA, pursuant to which the TKG 3 Retail Portfolio Mortgage Loan will be serviced prior to the closing date of this securitization.
The foregoing information set forth under this subheading “—The Outside Master Servicer” concerning the Outside Master Servicer and its affiliates has been provided by Wells Fargo.
Affiliations and Certain Relationships
The depositor is an affiliate of MSMCH, the mortgage loan seller and sponsor, Morgan Stanley Bank, the originator and the initial holder of a portion of the 32 Old Slip Fee Non-Serviced Companion Loan, and Morgan Stanley & Co. LLC, the underwriter and the entity that is expected to be the initial holder of 20.3% of the Notional Amount of the Class X-A Certificates and 100% of the Percentage interests in the Class V Certificates on the Closing Date.
Midland will acquire the right to act as master servicer and/or primary servicer (and the related right to receive and retain the excess servicing strip) with respect to the mortgage loans sold to the depositor by the mortgage loan seller pursuant to one or more servicing rights appointment agreements entered into on the Closing Date.
Midland, the master servicer, is also the special servicer with respect to this securitization and the current special servicer under the MSBAM 2015-C22 PSA, pursuant to which the 300 South Riverside Plaza Fee Non-Serviced Loan Combination, the Waterfront at Port Chester Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination are being serviced.
Midland, the special servicer, will be appointed by the entity that is expected to be the initial Controlling Class Representative and that is expected to purchase the Class E, Class F and Class G Certificates on the Closing Date: DoubleLine Capital LP or an affiliate thereof. An affiliate of the depositor may purchase less than 50% of each such Class upon the initial issuance thereof or thereafter; however, such affiliate will not be entitled to act as or appoint the Controlling Class Representative, and any Certificates held by such affiliate will not be considered to be outstanding for purposes of determining the identity of the Controlling Class Representative. DoubleLine Capital LP or an affiliate thereof engaged Midland as an independent contractor to conduct due diligence with respect to the mortgage loans included in the mortgage pool.
Wells Fargo Bank, National Association, the trustee, certificate administrator and custodian, is also (i) the current master servicer, certificate administrator and custodian under the MSBAM 2015-C22 PSA, pursuant to which the 300 South Riverside Plaza Fee Non-Serviced Loan Combination, the Waterfront at Port Chester Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination are being serviced, (ii) the current master servicer, certificate administrator, custodian and excluded mortgage loan special servicer under the MSBAM 2015-C23 PSA, pursuant to which the 32 Old Slip Fee Non-Serviced Loan Combination is being serviced and pursuant to which the TKG 3 Retail Portfolio Loan Pair is being serviced prior to the closing date and (iii) the current certificate administrator and trustee under the MSCCG 2015-ALDR TSA, pursuant to which the Alderwood Mall Non-Serviced Loan Combination is being serviced. Wells Fargo Bank, National Association is also an affiliate of Wells Fargo Securities, LLC, one of the initial purchasers of the non-offered certificates.
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Pursuant to an interim servicing agreement between MSMCH and certain of its affiliates, on the one hand, and Wells Fargo Bank, on the other hand, Wells Fargo Bank acts as interim servicer with respect to certain of the mortgage loans owned from time to time by MSMCH and those affiliates thereof, including, prior to their inclusion in the Issuing Entity, thirty (30) of the mortgage loans to be contributed by MSMCH to this securitization, representing approximately 75.3% of the Initial Pool Balance. MSMCH is also a party to a custodial agreement with Wells Fargo Bank, pursuant to which Wells Fargo Bank acts as interim custodian with respect to the mortgage loan files for the mortgage loans to be contributed by MSMCH to the Issuing Entity (other than any Non-Serviced Mortgage Loans).
These roles and other potential relationships may give rise to conflicts of interest as further described under “Risk Factors—Risks Related to Conflicts of Interest—Other Conflicts” in this prospectus supplement.
DESCRIPTION OF THE OFFERED CERTIFICATES
General
The Commercial Mortgage Pass-Through Certificates, Series 2015-MS1 (collectively, the “Certificates”), will be issued on the Closing Date pursuant to a Pooling and Servicing Agreement to be dated as of the Cut-off Date, between the depositor, the master servicer, the special servicer, the certificate administrator, the custodian, the trust advisor and the trustee.
The Certificates will represent in the aggregate the entire beneficial ownership interest in a trust consisting primarily of:
· | the mortgage loans and all payments thereunder and proceeds thereof received after the Cut-off Date, exclusive of Principal Prepayments received prior to the Cut-off Date and Scheduled Payments of principal and interest due on or before the Cut-off Date; |
· | any mortgaged property (or interest therein) acquired on behalf of the Certificateholders in respect of a defaulted mortgage loan through foreclosure, deed in lieu of foreclosure or otherwise; |
· | a security interest in any United States government obligations pledged in respect of the defeasance of a mortgage loan; and |
· | certain rights of the depositor under, or assigned to the depositor pursuant to, the Mortgage Loan Purchase Agreement relating to, among other things, mortgage loan document delivery requirements and the representations and warranties of the mortgage loan seller regarding its mortgage loans. |
The Certificates will be issued on the Closing Date and will only be entitled to Scheduled Payments on the mortgage loans that are due (and unscheduled payments that are received) after the Cut-off Date.
The Certificates will consist of various classes (each, a “Class”), to be designated as:
· | the Class A-1 Certificates, the Class A-2 Certificates, the Class A-SB Certificates, the Class A-3 Certificates and the Class A-4 Certificates (collectively, the “Class A Senior Certificates”) and the Class A-S Certificates; |
· | the Class X-A Certificates (the “Class X Certificates” or the “Interest Only Certificates,” and, together with the Class A Senior Certificates, the “Senior Certificates”); |
· | the Class B Certificates, the Class PST Certificates, the Class C Certificates, the Class D Certificates, the Class E Certificates, the Class F Certificates and the Class G Certificates (collectively with the Class A-S Certificates, the “Subordinate Certificates”; and the Subordinate Certificates together with the Class A Senior Certificates, the “Principal Balance Certificates”); and |
· | the Class V and Class R Certificates (together with the Class D, Class E, Class F and Class G Certificates, the “Privately Offered Certificates”). |
Only the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4, Class X-A, Class A-S, Class B, Class PST and Class C Certificates (collectively, the “Offered Certificates”) are being offered pursuant to this prospectus supplement. The Privately Offered Certificates will be offered pursuant to a private placement memorandum (the “Private Placement Memorandum”) dated the date hereof.
The Class A-S, Class B, Class PST and Class C Certificates are also referred to as the “Exchangeable Certificates.” See “Description of the Offered Certificates—Exchangeable Certificates” in this prospectus supplement.
“Scheduled Payment” means, in general, for any mortgage loan, B Note or Serviced Companion Loan on any Due Date, the amount of the scheduled payment of principal and interest, or interest only, due thereon on such date, taking into account any waiver, modification or amendment of the terms of such mortgage loan, B Note or Serviced Companion Loan subsequent to the Closing Date, whether agreed to by the special servicer or occurring in connection with a bankruptcy proceeding involving the related borrower.
“Due Date” means the date upon which the related Scheduled Payments are (or, in the case of a Balloon Loan past its maturity date or an REO Mortgage Loan, would otherwise have been) due under the terms of the related mortgage loan, B Note or Serviced Companion Loan.
The Offered Certificates (other than the Class X-A Certificates) will be issued in denominations of $10,000 and in any whole dollar denomination in excess of that amount. The Class X-A Certificates will be issued in denominations of $100,000 and in any whole dollar denomination in excess of that amount.
Each Class of 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”). We have been informed by DTC that DTC’s nominee initially will be Cede & Co. No person acquiring an interest in an Offered Certificate will be entitled to receive a fully registered physical certificate representing such interest, except as presented in the accompanying prospectus under “Description of the Certificates—Book-Entry Registration and Definitive Certificates.” Unless and until definitive certificates are issued in respect of any Class of Offered Certificates, all references to actions by
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Holders of the Offered Certificates will refer to actions taken by DTC upon instructions received from the related Certificate Owners through DTC’s participating organizations.
All references herein 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 the related Certificate Owners through DTC’s Participants in accordance with DTC procedures. Until definitive certificates are issued in respect of any Class of Offered Certificates, interests in such Certificates will be transferred on the book-entry records of DTC and its Participants. See “Description Of The Certificates—Book-Entry Registration and Definitive Certificates” in the accompanying prospectus.
Certificateholders must hold their Offered Certificates in book-entry form, and delivery of the Offered Certificates will be made through the facilities of DTC, in the United States, and may be made through the facilities of Clearstream Banking société anonyme (“Clearstream”) or the Euroclear system (“Euroclear”), in Europe. Transfers within DTC, Clearstream or Euroclear, as the case may be, will be in accordance with the usual rules and operating procedures of the relevant system. Cross market transfers between persons holding directly or indirectly through DTC, on the one hand, and counterparties holding directly or indirectly through Clearstream or Euroclear, on the other, will be effected in DTC through Citibank, N.A. or JPMorgan Chase, the relevant depositaries of Clearstream and Euroclear, respectively.
Because of time-zone differences, credits of securities received in Clearstream or Euroclear as a result of a transaction with a DTC participant will be made during subsequent securities settlement processing and dated the business day following the DTC settlement date. Such credits or any transactions in such securities settled during such processing will be reported to the relevant Euroclear participant or Clearstream customer on such business day. Cash received in Clearstream or Euroclear as a result of sales of securities by or through a Clearstream customer 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 Clearstream or Euroclear cash account only as of the business day following settlement in DTC.
“Certificate Owner” means the beneficial owner of an Offered Certificate.
“Participants” means participating organizations of DTC, together with Clearstream and Euroclear participating organizations.
Certificate Principal Balances and Notional Amounts
Upon initial issuance, the Offered Certificates will have the Certificate Principal Balances and Notional Amounts set forth under “Executive Summary,” which in each case may vary by up to 5%. Mortgage loans may be removed from or added to the Mortgage Pool prior to the Closing Date within such maximum permitted variance. Any reduction or increase in the aggregate principal balance of mortgage loans within these parameters will result in changes to the initial Certificate Principal Balance of each class of Principal Balance Certificates and the initial Notional Amount of each class of Class X Certificates and to the other statistical data contained in this prospectus supplement.
The initial Certificate Principal Balance of each Certificate with a principal balance will be presented on the face of the certificate. The “Certificate Principal Balance” of any class of Principal Balance Certificates, Class PST Component or Trust Component outstanding at any time represents the maximum amount that 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 Issuing Entity. On each Distribution Date, the Certificate Principal Balance of each class of Principal Balance Certificates, Class PST Component and Trust Component, will be reduced by (i) any distributions of principal actually made on such Certificates, Class PST Component or Trust Component, (ii) any Collateral Support Deficit allocated to such Certificates, Class PST Component or Trust Component, and (iii) with respect to (x) any class of Principal Balance Certificates (other than any class of Control Eligible Certificates), (y) any Class PST Component or (z) any Trust Component, any Excess Trust Advisor Expenses allocated to that class of Certificates, Class PST Component or Trust Component on that Distribution Date. On each Distribution Date, prior to any distributions being made on such Distribution Date, the Certificate Principal Balance of a class of Principal Balance Certificates, Class PST Component or Trust Component may be increased by the amount of any recoveries of Nonrecoverable Advances for which a deduction was made in the Principal Distribution Amount for a prior Distribution Date, up to the unreimbursed Collateral Support Deficit for such class of Certificates, Class PST Component or Trust Component, with the amount of such recoveries to be allocated for such purpose in accordance with the distribution priorities described under “—Distributions—Application of the Available Distribution Amount” below. In addition, on each Distribution Date, prior to any distributions being made on such Distribution Date, the Certificate Principal Balance of a class of Principal Balance Certificates (other than any class of Control Eligible Certificates), Class PST Component or Trust Component may be increased by the amount of any actual recoveries received by the Issuing Entity of amounts paid as Trust Advisor Expenses for which a deduction was made in the Principal Distribution Amount for a prior Distribution Date, up to the amount of any reduction to the Certificate Principal Balance of any such class of Certificates, Class PST Component or Trust Component as a result of such payment of Trust Advisor Expenses, with the amount of such recoveries to be allocated for such purpose in accordance with the distribution priorities described under “—Distributions—Application of the Available Distribution Amount” below. The recoveries of Nonrecoverable Advances and Trust Advisor Expenses referred to in the prior two sentences will result in an increase in the Principal Distribution Amount for the current Distribution Date.
The Interest Only Certificates will not have Certificate Principal Balances. Those classes of Certificates will represent the right to receive distributions of interest accrued as described in this prospectus supplement on a notional amount (a “Notional Amount”).
The Notional Amount of the Class X-A Certificates will, for purposes of distributions on each Distribution Date, be equal to the aggregate of the Certificate Principal Balances of the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates outstanding immediately prior to such Distribution Date.
Accordingly, the Notional Amount of the Class X Certificates will be reduced on each Distribution Date by any distributions of principal actually made on, and any Collateral Support Deficit and Excess Trust Advisor Expenses actually allocated to, the Certificate Principal Balance of any related class of Principal Balance Certificates. The Notional Amount of the Class X Certificates is used solely for the purpose of determining the amount of interest to be distributed on such Certificates and do not represent the right to receive any distributions of principal.
The Class V and Class R Certificates will not have Certificate Principal Balances or Notional Amounts.
The “Class A-S Percentage Interest” means the quotient of the Certificate Principal Balance of the Class A-S Certificates divided by the Certificate Principal Balance of the Class A-S Trust Component. As of the Closing Date, the Class A-S Percentage Interest will be 100.0%.
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“Class A-S Trust Component” means an interest issued as a regular interest in the Upper-Tier REMIC designated as “REMIC Regular Interest A-S,” with a Pass-Through Rate that is the same as the Pass-Through Rate for the Class A-S Certificates. The Class A-S Certificates will represent beneficial ownership of the Class A-S Percentage Interest of the Class A-S Trust Component, and the Class PST Component A-S will represent beneficial ownership of the Class A-S-PST Percentage Interest of the Class A-S Trust Component. The Class A-S Trust Component will be held in the EC Trust.
The “Class A-S-PST Percentage Interest” means 100.0% minus the Class A-S Percentage Interest. As of the Closing Date, the Class A-S-PST Percentage Interest will be 0%.
The “Class B Percentage Interest” means the quotient of the Certificate Principal Balance of the Class B Certificates divided by the Certificate Principal Balance of the Class B Trust Component. As of the Closing Date, the Class B Percentage Interest will be 100.0%.
“Class B Trust Component” means an interest issued as a regular interest in the Upper-Tier REMIC designated as “REMIC Regular Interest B,” with a Pass-Through Rate that is the same as the Pass-Through Rate for the Class B Certificates. The Class B Certificates will represent beneficial ownership of the Class B Percentage Interest of the Class B Trust Component, and the Class PST Component B will represent beneficial ownership of the Class B-PST Percentage Interest of the Class B Trust Component. The Class B Trust Component will be held in the EC Trust.
The “Class B-PST Percentage Interest” means 100.0% minus the Class B Percentage Interest. As of the Closing Date, the Class B-PST Percentage Interest will be 0%.
The “Class C Percentage Interest” means the quotient of the Certificate Principal Balance of the Class C Certificates divided by the Certificate Principal Balance of the Class C Trust Component. As of the Closing Date, the Class C Percentage Interest will be 100.0%.
“Class C Trust Component” means an interest issued as a regular interest in the Upper-Tier REMIC designated as “REMIC Regular Interest C,” with a Pass-Through Rate that is the same as the Pass-Through Rate for the Class C Certificates. The Class C Certificates will represent beneficial ownership of the Class C Percentage Interest of the Class C Trust Component, and the Class PST Component C will represent beneficial ownership of the Class C-PST Percentage Interest of the Class C Trust Component. The Class C Trust Component will be held in the EC Trust.
The “Class C-PST Percentage Interest” means 100.0% minus the Class C Percentage Interest. As of the Closing Date, the Class C-PST Percentage Interest will be 0%.
“Class PST Component” means any of the Class PST Component A-S, Class PST Component B or Class PST Component C.
“Class PST Component A-S” means the portion of the Class A-S Trust Component equal to the Class A-S-PST Percentage Interest of the Class A-S Trust Component.
“Class PST Component B” means the portion of the Class B Trust Component equal to the Class B-PST Percentage Interest of the Class B Trust Component.
“Class PST Component C” means the portion of the Class C Trust Component equal to the Class C-PST Percentage Interest of the Class C Trust Component.
“EC Trust” means the grantor trust formed on the Closing Date comprised of, among other things, the Class A-S Trust Component, Class B Trust Component or Class C Trust Component.
“Trust Component” means any of the Class A-S Trust Component, Class B Trust Component or Class C Trust Component.
Pass-Through Rates
The “Pass-Through Rate” is the rateper annum at which any class of Certificates (other than the Class PST, Class V or Class R Certificates), Class PST Component or Trust Component accrues interest. The approximate initial Pass-Through Rate for each class of Offered Certificates (other than the Class PST Certificates) is set forth on the cover to this prospectus supplement.
The Pass-Through Rates for the Class A-1, Class A-2, Class A-SB and Class A-3 Certificates will at all times be fixed at their respective initial Pass-Through Rates set forth on the cover of this prospectus supplement. The Pass-Through Rate for the Class A-4 Certificates will at all times be aper annum rate equal to the lesser of (i) the Weighted Average Net Mortgage Rate and (ii) 3.779%. The Pass-Through Rate for each Class of the Class A-S, Class B and Class C Certificates will at all times be aper annum rate equal to the Weighted Average Net Mortgage Rate. The Class PST Certificates will not have a Pass-Through Rate, but will be entitled to receive the sum of the interest distributable on the Class PST Components. The Pass-Through Rates for the Class A-S Certificates, the Class A-S Trust Component and the Class PST Component A-S will, at all times, be the same. The Pass-Through Rates for the Class B Certificates, the Class B Trust Component and the Class PST Component B will, at all times, be the same. The Pass-Through Rates for the Class C Certificates, the Class C Trust Component and the Class PST Component C will, at all times, be the same.
The Pass-Through Rate for each Class of the Class D, Class E, Class F and Class G Certificates will at all times be aper annum rate equal to the Weighted Average Net Mortgage Rate.
The Pass-Through Rate with respect to the Class X-A Certificates for any Distribution Date will equal the weighted average of the applicable Class X Strip Rates for the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates for such Distribution Date (weighted on the basis of the respective Certificate Principal Balances of such Classes of Principal Balance Certificates immediately prior to such Distribution Date).
The applicable “Class X Strip Rate” for each Class of the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates, for any Distribution Date will be aper annumrate equal to the excess, if any, of (i) the Weighted Average Net Mortgage Rate for such Distribution Date over (ii) the Pass-Through Rate for such Class of Certificates. Under no circumstances will any Class X Strip Rate be less than zero.
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“Weighted Average Net Mortgage Rate” or “WAC” means, for any Distribution Date, the weighted average of the Net Mortgage Rates for the mortgage loans (in the case of each mortgage loan that is a Non-30/360 Loan, adjusted as described under the definition of Net Mortgage Rate), weighted on the basis of their respective Stated Principal Balances, as of the close of business on the preceding Distribution Date.
“Net Mortgage Rate” means, in general, with respect to any mortgage loan, aper annum rate equal to the related mortgage rate (excluding any rate increase occurring in connection with a continuing default or after an Anticipated Repayment Date) minus the related Administrative Fee Rate;provided that, for purposes of calculating the Pass-Through Rate for any class of Certificates (other than the Class PST, Class V or Class R Certificates), Class PST Component or Trust Component from time to time, the Net Mortgage Rate for any mortgage loan will be calculated without regard to any modification, waiver or amendment of the terms thereof subsequent to the Closing Date. In addition, because the Certificates (other than the Class PST, Class V and Class R Certificates), Class PST Components and Trust Components accrue interest on the basis of a 360-day year consisting of twelve (12) 30-day months, when calculating the Pass-Through Rate for each class of Certificates (other than the Class PST, Class V or Class R Certificates), Class PST Component or Trust Component, for each Distribution Date, the Net Mortgage Rate on a Non-30/360 Loan will be the annualized rate at which interest would have to accrue on the basis of a 360-day year consisting of twelve (12) 30-day months in order to result in the accrual of the aggregate amount of net interest actually accrued (exclusive of default interest, Excess Interest and related Master Servicing Fees, Certificate Administrator Fees, Trust Advisor Fees, CREFC® License Fees and any fees payable with respect to a Non-Serviced Mortgage Loan at the applicable Pari Passu Loan Primary Servicing Fee Rate during the loan-level one-month interest accrual period for the due date in the month of such Distribution Date). However, with respect to each Non-30/360 Loan:
· | except with respect to the final Distribution Date, the Net Mortgage Rate that would otherwise be in effect for purposes of the Scheduled Payment due in January of each year (other than during a leap year and commencing in 2017) and February of each year (commencing in 2016) will be adjusted to take into account the applicable one (1) day’s interest included in the Interest Reserve Amount to be deposited in the Interest Reserve Account; and |
· | the Net Mortgage Rate that would otherwise be in effect for purposes of the Scheduled Payment due in March of each year (or February if the related Distribution Date is the final Distribution Date), commencing in 2016, will be adjusted to take into account the related withdrawal from the Interest Reserve Account of the Interest Reserve Amounts for the preceding January, if applicable, and February. |
The Administrative Fee Rate for each mortgage loan is presented in Appendix I to this prospectus supplement. The “Administrative Fee Rate” will equal the sum of the related Master Servicing Fee Rate, the Trust Advisor Fee Rate, the Certificate Administrator Fee Rate, the CREFC® License Fee Rate and the Pari Passu Loan Primary Servicing Fee Rate, if applicable, for any month (in each case, expressed as aper annum rate) for any mortgage loan in such month, and is set forth in Appendix I to this prospectus supplement. The Administrative Fee Rate will be payable on the unpaid principal balance of each mortgage loan outstanding from time to time. The Administrative Fee Rates with respect to the TKG 3 Retail Portfolio Mortgage Loan, the 300 South Riverside Plaza Fee Mortgage Loan, the 32 Old Slip Fee Mortgage Loan, the Waterfront at Port Chester Mortgage Loan, the Alderwood Mall Mortgage Loan and the Hilton Garden Inn W 54th Street Mortgage Loan will be 0.0214%, 0.0150%, 0.0150%, 0.0150%, 0.0150% and 0.0150%, respectively,per annum.
“Collection Period” means, with respect to any Distribution Date, the period beginning with the day after the Determination Date in the month preceding the month in which such Distribution Date occurs (or, in the case of the first Distribution Date, commencing immediately following the Cut-off Date) and ending with the Determination Date occurring in the month in which such Distribution Date occurs.
“CREFC®License Fee” means, with respect to each mortgage loan (including a mortgage loan that relates to an REO Property or is a defeasance loan) for any related mortgage loan interest accrual period, the amount of interest accrued during such related interest accrual period at the related CREFC® License Fee Rate on the same balance, in the same manner and for the same number of days as interest at the applicable Mortgage Rate accrued with respect to such mortgage loan during such related interest accrual period.
“CREFC®License Fee Rate” means 0.0005%per annum.
“Interest Accrual Period” means, with respect to each Distribution Date, for each class of Certificates (other than the Class V and Class R Certificates), Class PST Component and Trust Component, the calendar month immediately preceding the month in which such Distribution Date occurs.
“Stated Principal Balance” of any mortgage loan, Serviced Companion Loan, Non-Serviced Companion Loan or B Note will generally equal its unpaid principal balance as of the Cut-off Date or, in the case of a Qualifying Substitute Mortgage Loan, as of the date of substitution (less any scheduled principal amortization occurring during or prior to July 2015 or the month of substitution, as applicable), reduced, to not less than zero, on each subsequent Distribution Date by:
· | any payments or other collections of principal thereon that have been collected or received during the related Collection Period, other than any Scheduled Payments due in any subsequent Collection Period and , in the case of a mortgage loan, other than any late collections of principal for which an Advance was previously made; |
· | in the case of a mortgage loan, any Advance of principal made in respect thereof for the subject Distribution Date; and |
· | the principal portion of any realized loss incurred in respect thereof during the related Collection Period. |
An “REO Mortgage Loan” is any mortgage loan as to which the related mortgaged property has become an REO Property.
An “REO Serviced B Note” is any Serviced B Note as to which the related mortgaged property has become an REO Property.
An “REO Serviced Companion Loan” is any Serviced Companion Loan as to which the related mortgaged property has become an REO Property.
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Exchangeable Certificates
General
The Class A-S, Class B, Class PST and Class C Certificates are Exchangeable Certificates. Groups of Class A-S, Class B and Class C Certificates may be exchanged for Class PST Certificates and vice versa, in whole or in part, as described more fully below. This process may occur repeatedly. In no event, however, will exchanges be permitted after the Class A-S Trust Component (and therefore the Class A-S Certificates and the Class PST Component A-S of the Class PST Certificates) has been retired by the payment of all interest and its principal balance in full or any Class of Exchangeable Certificates is no longer maintained in book-entry form. Your ability to exchange your Exchangeable Certificates is subject to the limitations described under “Risk Factors—Risks Related to the Offered Certificates—The Exchangeable Certificates Are Subject to Additional Risks” above and “Exchange Examples and Limitations” below.
Following the Closing Date, Class A-S, Class B and Class C Certificates that collectively evidence an Exchange Proportion generally will be exchangeable on the books of DTC for Class PST Certificates with a like principal amount, and Class PST Certificates generally will be exchangeable on the books of DTC for Class A-S, Class B and Class C Certificates with a like principal amount and in an Exchange Proportion. An “Exchange Proportion” consists of Class A-S, Class B and Class C Certificates with original Certificate Principal Balances (regardless of current Certificate Principal Balance) that represent approximately 33.571%, 45.714% and 20.714%, respectively, of the aggregate original Certificate Principal Balances of all Class A-S, Class B and Class C Certificates involved in the exchange.
Each Holder of an Exchangeable Certificate will be the beneficial owner of the pool of mortgage loans backing the Offered Certificates. When Exchangeable Certificates are exchanged, the total amount of outstanding Exchangeable Certificates of the relevant class(es) surrendered will be reduced, and the total amount of outstanding Exchangeable Certificates of the relevant class(es) received will be increased by a proportionate amount, but the exchange will not result in an increase or decrease in (1) the total amount of outstanding Offered Certificates that represent beneficial ownership interests in the pool of mortgage loans backing the Offered Certificates, (2) the total amount of outstanding Exchangeable Certificates that collectively represent beneficial ownership interests in any individual Trust Component or (3) the principal balance of any Trust Component. Potential purchasers of Exchangeable Certificates should consider the tax characteristics of such certificates as further discussed under “Material Federal Income Tax Consequences—Taxation of the Exchangeable Certificates” in this prospectus supplement and “Federal Income Tax Consequences—Taxation of Classes of Exchangeable Certificates” in the accompanying prospectus. The Exchangeable Certificates will represent an interest in one or more Trust Components, and the Trust Components will not be withdrawn from the EC Trust in connection with any exchange.
Exchange Examples and Limitations
Exchange Limitations
At the time of the proposed exchange, a Certificateholder must own Certificates of the related Class or Classes of Exchangeable Certificates in the proportions of original Certificate Principal Balance necessary to make the desired exchange. Class A-S, Class B and Class C Certificates to be surrendered or received in an exchange must be in an Exchange Proportion. A Certificateholder that owns Exchangeable Certificates and desires to make an exchange, but does not own Exchangeable Certificates that collectively are in an Exchange Proportion necessary to make the desired exchange, may be unable to obtain other Exchangeable Certificates sufficient to compose such an Exchange Proportion or may be able only to exchange the portion (if any) of its Exchangeable Certificates that represents an Exchange Proportion. Other Certificateholders may be unwilling to sell their Certificates at reasonable prices (or at any price) or may be unable to sell their Certificates, or Certificates may have been purchased or placed into other financial structures and thus may be unavailable for purchase in any secondary market. Such circumstances may prevent you from obtaining Exchangeable Certificates in the proportions necessary to effect an exchange.
Exchangeable Examples
An example of an exchange of Class A-S, Class B and Class C Certificates for Class PST Certificates is set forth below. This example generally assumes ownership of 50% of the maximum certificate balance of the relevant classes.
Exchangeable Certificates
| Exchangeable Certificates
| ||
Classes of Exchangeable | Original Certificate | Classes of Exchangeable | Original Certificate |
Class A-S |
$ 26,009,500 |
Class PST |
$ 77,475,000 |
Class B | $ 35,417,000 | ||
Class C | $ 16,048,500 |
For example, if a Certificateholder owns Class A-S, Class B and Class C Certificates with original Certificate Principal Balances in the amounts set forth in the table, the Certificateholder has an Exchange Proportion. That is, the ratio of the original principal amount of Class A-S, Class B and Class C Certificates so owned to the aggregate original principal amount of all such Class A-S, Class B and Class C Certificates so owned is approximately 33.571%, 45.714% and 20.714%. The Certificateholder may exchange the entirety of those certificates for Class PST Certificates in an amount equal to $77,475,000 which is equal to 100% of the aggregate amount of its Class A-S, Class B and Class C Certificates. Conversely, if the Certificateholder instead owns only $77,475,000 of original Certificate Principal Balance of Class PST Certificates, the Certificateholder may exchange those Class PST Certificates for Class A-S, Class B and Class C Certificates in the amounts of $26,009,500, $35,417,000 and $16,048,500, respectively, of original Certificate Principal Balance.
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If the Certificateholder instead owned Class B and Class C Certificates with original Certificate Principal Balances in the amounts set forth in the table and $52,019,000 of Class A-S Certificates (that is, the maximum Certificate Principal Balance of Class A-S Certificates), the Certificateholder may conduct an exchange of its Class B and Class C Certificates and $26,009,500 of its Class A-S Certificates (which together represent an Exchange Proportion) for Class PST Certificates in an amount equal to $77,475,000. In this case, the Certificateholder would also continue to own $26,009,500 of original Certificate Principal Balance of Class A-S Certificates immediately after the exchange.
If the Certificateholder instead owns Class PST Certificates in an amount equal to $20,000, the Certificateholder will be unable to exchange those certificates for Class A-S, Class B and Class C Certificates because the amounts thereof to be received in the exchange would be, in one or more cases, less than the minimum denomination for the relevant class.
All certificate amounts described in the examples above are expressed in original Certificate Principal Balances.
The foregoing is provided only by way of example.
Procedures
If a holder of Exchangeable Certificates wishes to exchange its Exchangeable Certificates, the Certificateholder must notify the certificate administrator no later than three business days before the proposed exchange date via email to cts.cmbs.bond.admin@wellsfargo.com. The exchange date can generally be any business day other than the first or last business day of the month. The notice must (i) be on the Certificateholder’s letterhead, (ii) carry a medallion stamp guarantee and (iii) set forth the following information: the CUSIP number of both the Certificates to be exchanged and the Certificates to be received, the current Certificate Principal Balance and original Certificate Principal Balance of the Certificates to be exchanged, the Certificateholder’s DTC participant number and the proposed exchange date. A notice becomes irrevocable on the second business day before the proposed exchange date.
Subject to the satisfaction of the conditions to an exchange, including the procedures described above, upon the request of the holder of Exchangeable Certificates of the relevant class(es) and the surrender of such Exchangeable Certificates, the certificate administrator will be required to deliver the Exchangeable Certificates of the relevant class(es) to which that holder is entitled in the exchange. The certificate administrator will also reduce the outstanding amount of the surrendered Exchangeable Certificates, and increase the outstanding amount of the delivered Exchangeable Certificates, on the certificate register. The Certificateholder and the certificate administrator will utilize the Deposit and Withdrawal System at DTC to effect the exchange.
The first distribution on an Exchangeable Certificate received in an exchange transaction will be made on the first Distribution Date in the month following the month of the exchange to the Certificateholder of record as of the close of business on the last day of the month of the exchange.
Accounts
Pursuant to the Pooling and Servicing Agreement, the following accounts are required to be established:
· | the Collection Account; |
· | the Distribution Account; |
· | the Interest Reserve Account; |
· | the Excess Liquidation Proceeds Account; |
· | the TA Unused Fees Account; and |
· | the REO Account. |
The master servicer is required to establish and maintain, or cause to be established and maintained, one or more accounts (collectively, the “Collection Account”) as described in the Pooling and Servicing Agreement. The Collection Account may be maintained with the master servicer, the special servicer or the mortgage loan seller or with a depository institution that is an affiliate of any of the foregoing or of the depositor;provided that any such entity must comply with Rating Agency standards. The master servicer is required to deposit in the Collection Account on a daily basis (and in no event later than the Business Day following receipt of properly identified available funds;provided, that to the extent that any of the following amounts are received after 2:00 p.m. (Eastern time) on any given Business Day, the master servicer is required to use commercially reasonable efforts to deposit such amounts into the Collection Account within one (1) Business Day of receipt of such amounts but, in any event, the master servicer is required to deposit such amounts into the Collection Account within two (2) Business Days of receipt of such amounts) 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 Insurance Proceeds received under any hazard, title or other insurance policy that provides coverage with respect to a mortgaged property or the related mortgage loan and Condemnation Proceeds received in connection with the full or partial condemnation of a mortgaged property (other than proceeds applied to the restoration of the mortgaged property or released to the related borrower in accordance with the Servicing Standard and/or the terms and conditions of the related mortgage)) and all Liquidation Proceeds together with the net operating income (less reasonable reserves for future expenses) derived from the operation of any REO Properties, and will be permitted to make withdrawals therefrom as set forth in the Pooling and Servicing Agreement. Notwithstanding the foregoing, the collections on each A/B Whole Loan or Loan Pair to be deposited in the Collection Account will be limited to the portion of such amounts that are payable to the holder of the related mortgage loan pursuant to the related Intercreditor Agreement. In addition, with respect to any Non-Serviced Mortgage Loan, collections on the entire Non-Serviced Loan Combination may be deposited pursuant to the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement into the collection account (or a sub-account thereof) for such other securitization, and the portion of such collections allocable to such Non-Serviced Mortgage Loan pursuant to the related Intercreditor Agreement are expected to be thereafter forwarded to the master servicer for deposit into the Collection Account for this securitization. See “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” and “—The Non-Serviced Loan Combinations” in this prospectus supplement.
“Insurance Proceeds” means all amounts paid by an insurer under an insurance policy in connection with a mortgage loan, Serviced B Note or Serviced Companion Loan, other than amounts required to be paid to the related borrower pursuant to law and the related
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mortgage loan documents in accordance with the Servicing Standard. With respect to the mortgaged property or properties securing any A/B Whole Loan or Loan Pair, only an allocable portion of such Insurance Proceeds will be distributable to the Certificateholders. With respect to any mortgaged property securing a Non-Serviced Loan Combination, only the portion of such amounts payable to the holder of the related Non-Serviced Mortgage Loan will be included in Insurance Proceeds.
“Condemnation Proceeds” means any awards resulting from the full or partial condemnation or eminent domain proceedings or any conveyance in lieu or in anticipation of such proceedings with respect to a mortgaged property by or to any governmental, quasi-governmental authority or private entity with condemnation powers other than amounts to be applied to the restoration, preservation or repair of such mortgaged property or released to the related borrower in accordance with the terms of the mortgage loan and (if applicable) each related Serviced B Note or Serviced Companion Loan. With respect to the mortgaged property or properties securing any A/B Whole Loan or Loan Pair, only an allocable portion of such Condemnation Proceeds will be distributable to the Certificateholders. With respect to any mortgaged property securing a Non-Serviced Loan Combination, only the portion of such amounts payable to the holder of the related Non-Serviced Mortgage Loan will be included in Condemnation Proceeds.
“Liquidation Proceeds” means proceeds from the sale or liquidation of a mortgage loan, Serviced B Note or Serviced Companion Loan or related REO Property, net of liquidation expenses. With respect to the mortgaged property or properties securing an A/B Whole Loan or Loan Pair, only an allocable portion of such Liquidation Proceeds will be distributable to the Certificateholders. With respect to any mortgaged property securing a Non-Serviced Loan Combination, only the portion of such amounts payable to the holder of the related Non-Serviced Mortgage Loan will be included in Liquidation Proceeds.
The certificate administrator is required to establish and maintain one or more accounts (collectively, the “Distribution Account”), on behalf of the trustee and for the benefit of the Certificateholders. On each Distribution Date, the certificate administrator is required to apply amounts received in respect of the mortgage loans (which will include all funds that were remitted by the master servicer from the Collection Account plus, among other things, any P&I Advances remitted by the master servicer or the trustee, as the case may be) on deposit in a sub-account of the Distribution Account (the “Upper-Tier Distribution Account”) generally to make distributions of interest and principal from the Available Distribution Amount to the applicable Certificateholders as described in this prospectus supplement. Each of the Collection Account and the Distribution Account will be required to conform to certain eligibility requirements set forth in the Pooling and Servicing Agreement.
The certificate administrator is required to establish and maintain an “Interest Reserve Account,” which may be a sub-account of the Distribution Account, on behalf of the trustee for the benefit of the Certificateholders. Except with respect to the final Distribution Date, with respect to the Distribution Date occurring each January (other than during a leap year and commencing in 2017) and each February (commencing in 2016), the certificate administrator will be required to withdraw from the Distribution Account the Interest Reserve Amounts for deposit into the Interest Reserve Account in respect of each Interest Reserve Loan in an amount equal to one day’s interest at the related Net Mortgage Rate on its Stated Principal Balance as of the Due Date in the month in which such Distribution Date occurs, to the extent a Scheduled Payment or P&I Advance is timely made for such Due Date. For purposes of this calculation, the Net Mortgage Rate for those months will be calculated without regard to any adjustment for Interest Reserve Amounts or the interest accrual basis as described in the definition of “Net Mortgage Rate” in “Description of the Offered Certificates—Distributions—Application of the Available Distribution Amount.” Commencing in 2016, on the Master Servicer Remittance Date occurring in each March (and on any other Master Servicer Remittance Date related to the final Distribution Date), the certificate administrator will withdraw an amount from the Interest Reserve Account in respect of each Interest Reserve Loan equal to the related Interest Reserve Amount from the preceding January, if applicable, and February, and the withdrawn amount is to be included as part of the Available Distribution Amount for such Distribution Date.
“Interest Reserve Amount” means all amounts deposited in the Interest Reserve Account with respect to Scheduled Payments due in any applicable January and February.
“Interest Reserve Loan” or “Non-30/360 Loan” means a mortgage loan that accrues interest other than on the basis of a 360-day year consisting of twelve (12) 30-day months.
The certificate administrator is required to establish and maintain a reserve account, which may be a sub-account of the Distribution Account, on behalf of the trustee for the benefit of the Certificateholders (such account, the “Excess Liquidation Proceeds Account”) into which will be deposited Excess Liquidation Proceeds. “Excess Liquidation Proceeds” means the excess of (i) proceeds from the sale or liquidation of a mortgage loan (other than any Non-Serviced Mortgage Loan) or related REO Property, net of expenses, over (ii) the amount that would have been received if a prepayment in full had been made with respect to such mortgage loan (or, in the case of an REO Property related to an A/B Whole Loan or Loan Pair, a prepayment in full had been made with respect to both the related mortgage loan and the related Serviced B Note or Serviced Companion Loan, as applicable) on the date such proceeds were received plus accrued and unpaid interest with respect to that mortgage loan and any and all expenses with respect to that mortgage loan. In the case of any A/B Whole Loan or Loan Pair, “Excess Liquidation Proceeds” means only the portion of such proceeds that are allocable to the Issuing Entity pursuant to the related Intercreditor Agreement.
The certificate administrator is required to establish and maintain a “TA Unused Fees Account,” which may be a sub-account of the Distribution Account, on behalf of the trustee for the benefit of the Certificateholders for the deposit from time to time of TA Unused Fees. “TA Unused Fees” means any amounts in the nature of Trust Advisor Fees that were otherwise payable, as described in this prospectus supplement and as provided in the Pooling and Servicing Agreement, to a trust advisor that has been terminated or resigned, if and to the extent such amounts are not payable to a replacement trust advisor.
The special servicer is required to establish and maintain with respect to each REO Property (other than any REO Property related to any Non-Serviced Mortgage Loan) one or more accounts (collectively, the “REO Account”) for the benefit of the Certificateholders (and the holders of any related Serviced B Note or Serviced Companion Loan, as applicable, with respect to any A/B Whole Loan or Loan Pair), in which it deposits all funds collected and received in connection with the operation of such REO Property.
Funds in the Collection Account and the REO Account may be invested in investments permitted under the Pooling and Servicing Agreement selected by, and at the risk of, the master servicer and the special servicer, respectively. Investments related to amounts on deposit in the Collection Account are required to mature, unless payable on demand, not later than the Business Day immediately preceding the next Master Servicer Remittance Date, and any such investment cannot be sold or disposed of prior to its maturity unless payable on demand. Funds in the Distribution Account (including all sub-accounts thereof) are required to remain uninvested.
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Interest or other income earned on funds in the Collection Account will be paid to the master servicer as additional servicing compensation. Interest or other income earned on funds in any REO Account will be payable to the special servicer as additional compensation.
Distributions
General
Distributions on or with respect to the Certificates will be made by the certificate administrator, to the extent of available funds, and in accordance with the manner and priority presented in this prospectus supplement, on the 4th Business Day after the related Determination Date in each month (the “Distribution Date”), commencing in August 2015. The “Determination Date” with respect to any Distribution Date, will be the 11thcalendar day of each month, or, if such day is not a Business Day, the next succeeding Business Day. Except as otherwise described below, all such distributions will be made to the persons in whose names the Certificates are registered at the close of business on the last Business Day of the calendar month immediately preceding the month in which such Distribution Date occurs (the “Record Date”). Every distribution will 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 such Certificateholder will have provided the certificate administrator with wiring instructions five (5) days prior to the related Record Date, or otherwise by check mailed to such Certificateholder.
“Business Day” means any day other than (i) a Saturday or a Sunday, (ii) a day on which the Federal Reserve or the New York Stock Exchange is closed, (iii) a legal holiday in New York, New York or any principal city (or cities) in which any of the special servicer, the trust advisor, the trustee, the certificate administrator, the custodian or the master servicer conducts servicing or trust operations or in which any such party’s corporate office or corporate trust office is located, or (iv) a day on which banking institutions or savings associations in New York, New York or any principal city (or cities) in which any of the special servicer, the trust advisor, the trustee, the certificate administrator, the custodian or the master servicer conducts servicing or trust operations or in which any such party’s corporate office or corporate trust office is located, are authorized or obligated by law or executive order to be closed.
The final distribution on any Certificate will be determined without regard to any possible future reimbursement of any Collateral Support Deficit or Trust Advisor Expenses previously allocated to such Certificate. The likelihood of any such future distributions is remote. The final distribution will be made in the same manner as earlier distributions, but only upon presentation and surrender of a Certificate at the location that will be specified in a notice of the pendency of such final distribution. All distributions made on or with respect to a class of Certificates will be allocatedpro rata among those Certificates based on their respective Percentage Interests in such class. “Percentage Interest” means: (a) with respect to each Certificate (other than a Class V or Class R Certificate), the fraction of the applicable class evidenced by such Certificate, expressed as a percentage, the numerator of which is the principal balance or notional amount, as applicable, represented by such Certificate, and the denominator of which is the aggregate Certificate Principal Balance or Notional Amount, as applicable, of all of the Certificates of such class; provided, that if at any time the aggregate Certificate Principal Balance or Notional Amount of such class equals zero, the “Percentage Interest” with respect to each Certificate of such class will equal zero; and (b) with respect to each Class V or Class R Certificate, the percentage interest in distributions (if any) to be made with respect to the relevant class.
The Available Distribution Amount
With respect to any Distribution Date, distributions of interest on and principal of the Certificates will be made from the Available Distribution Amount for that Distribution Date.
The “Available Distribution Amount” will, in general, for any Distribution Date, be the aggregate (without duplication) of the following amounts payable with respect to the Certificates:
(1) | all amounts on deposit in the Distribution Account as of the commencement of business on such Distribution Date that represent payments and other collections on or in respect of the mortgage loans and any REO Properties that were received by the master servicer or the special servicer through the end of the related Collection Period (together with any amounts received in respect of payments or other collections relating to any Non-Serviced Mortgage Loan from the related Non-Serviced Mortgage Loan Master Servicer as part of the applicable monthly remittance), exclusive of any portion thereof that represents one or more of the following: |
· | Scheduled Payments collected but due on a Due Date subsequent to the related Collection Period; |
· | Prepayment Premiums or Yield Maintenance Charges (which are separately distributable on the Certificates as described in this prospectus supplement); |
· | amounts that are payable or reimbursable to any person other than the Certificateholders (including, without limitation, amounts payable (A) to the master servicer in respect of unpaid Master Servicing Fees, the special servicer in respect of unpaid Special Servicer Compensation, the trust advisor in respect of unpaid Trust Advisor Fees and Trust Advisor Consulting Fees (with respect to any Trust Advisor Consulting Fee, solely to the extent that such fee is actually received from the related borrower), the certificate administrator in respect of unpaid Certificate Administrator Fees, including any portion of the Certificate Administrator Fees payable to the trustee in respect of unpaid Trustee Fees or to the custodian in respect of Custodian Fees or CREFC® in respect of unpaid CREFC® License Fees, and (B) in reimbursement of outstanding Advances (with interest thereon)); |
· | amounts deposited in the Distribution Account in error; |
· | except with respect to the final Distribution Date, if such Distribution Date occurs during January, other than during a leap year, or February of any year, the Interest Reserve Amounts of one day’s interest with respect to the Interest Reserve Loans to be deposited into the Interest Reserve Account; and |
· | in the case of each REO Property related to an A/B Whole Loan or Loan Pair, all amounts received with respect to such A/B Whole Loan or Loan Pair, as applicable, that are required to be paid to the holder of the related Serviced B Note or Serviced Companion Loan pursuant to the terms of the related Intercreditor Agreement. |
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(2) | to the extent not already included in clause (1), any P&I Advances made and any Compensating Interest Payment paid with respect to such Distribution Date on the mortgage loans; |
(3) | if such Distribution Date occurs during March of any year (commencing in March 2016) or on the final Distribution Date, to the extent not already included in clause (1), the aggregate of the Interest Reserve Amounts then on deposit in the Interest Reserve Account with respect to the mortgage loans; and |
(4) | any Balloon Payments received during the period that begins two (2) Business Days immediately preceding the related Master Servicer Remittance Date and ends on such Master Servicer Remittance Date and remitted by the master servicer to the Distribution Account as described in “—Prepayment Interest Shortfalls and Prepayment Interest Excesses” below. |
“Additional Trust Fund Expense” means any of the following items: (i) Special Servicing Fees, Workout Fees and Liquidation Fees (in each case to the extent not collected from the related borrower); (ii) advance interest that is reimbursed to the trustee, the master servicer and/or the special servicer in accordance with the provisions of the Pooling and Servicing Agreement, but not from default interest, late fees, Allocable Modification Fees and Excess Liquidation Proceeds; (iii) amounts paid to indemnify the master servicer, the special servicer, any applicable Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Special Servicer, the trust advisor (subject to the final sentence of this definition), the trustee, the certificate administrator, the custodian (or any other person or entity) pursuant to the terms of the Pooling and Servicing Agreement; (iv) to the extent not otherwise paid, any federal, state, or local taxes imposed on the Issuing Entity or its assets and paid from amounts on deposit in the Collection Account or Distribution Account; and (v) subject to the final sentence of this definition, to the extent not otherwise covered by indemnification by one of the parties to the Pooling and Servicing Agreement or otherwise and not payable by the related borrower under any mortgage loan, any other unanticipated cost, liability, or expense (or portion thereof) of the Issuing Entity (including costs of collecting such amounts or other Additional Trust Fund Expenses) that the Issuing Entity has not recovered, and in the judgment of the master servicer (or special servicer) will not recover, from any other source;provided, that, in the case of an A/B Whole Loan or Loan Pair, “Additional Trust Fund Expense” shall not include any of the foregoing amounts to the extent that the payment of those expenses is allocated to the related Serviced B Note as a result of the subordination of the related Serviced B Note or to the related Serviced Companion Loan, in each case in accordance with the terms of the related Intercreditor Agreement. Notwithstanding anything in this prospectus supplement to the contrary, “Additional Trust Fund Expenses” shall not include (A) allocable overhead of the master servicer, the special servicer, any applicable Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Special Servicer, the trust advisor, the trustee, the certificate administrator, the certificate registrar or the custodian, such as costs for office space, office equipment, supplies and related expenses, employee salaries and related expenses, and similar costs and expenses related to allocable overhead, or (B) with respect to any Class of Control Eligible Certificates, Trust Advisor Expenses (including Excess Trust Advisor Expenses).
“Compensating Interest” means with respect to any Distribution Date, an amount equal to the lesser of (A) the excess of (i) Prepayment Interest Shortfalls incurred in respect of the mortgage loans (and not in respect of any B Note or any Serviced Companion Loan, Non-Serviced Companion Loan, Specially Serviced Mortgage Loan or any mortgage loan that was previously a Specially Serviced Mortgage Loan with respect to which the Special Servicer has waived or amended the prepayment restrictions), resulting from voluntary or involuntary Principal Prepayments made thereon during the related Collection Period, over (ii) the aggregate of Prepayment Interest Excesses collected in respect of such mortgage loans resulting from Principal Prepayments made thereon during the same Collection Period, and (B) the aggregate of the portion of the aggregate Master Servicing Fee accrued at a rateper annum equal to 0.0050% (0.5 basis points) for the related Collection Period calculated in respect of such mortgage loans (including any related REO Mortgage Loans), plus any investment income earned on the amount prepaid prior to such Distribution Date;provided that Compensating Interest will only include (without regard to clause (B) above), the amount of any Prepayment Interest Shortfall otherwise described in clause (A) above incurred in connection with any Principal Prepayment received in respect of any such mortgage loan during the related Collection Period to the extent such Prepayment Interest Shortfall occurs as a result of the master servicer deviating, or allowing the related borrower to deviate, from the terms of the related mortgage loan documents regarding Principal Prepayments (other than (v) subsequent to a default or imminent default under the related loan documents if the master servicer reasonably believes that acceptance of such prepayment is consistent with the Servicing Standard, (w) if the related loan is a specially serviced mortgage loan, (x) in connection with the payment of insurance proceeds or condemnation proceeds unless the master servicer did not apply the proceeds from involuntary principal prepayments in accordance with the terms of the related mortgage loan documents, (y) pursuant to applicable law or a court order or (z) at the request of or with the consent of the special servicer). The master servicer’s obligations to pay any Compensating Interest, and the rights of the Certificateholders to offset of the aggregate Prepayment Interest Shortfalls against those amounts, will not be cumulative.
The “Distributable Certificate Interest” will be, in respect of each class of Certificates (other than the Exchangeable Certificates and the Class V and Class R Certificates) and Trust Component for any Distribution Date, the sum of:
(i) | Accrued Certificate Interest in respect of such class of Certificates or Trust Component for such Distribution Date, reduced (to not less than zero) by: |
(A) | any Net Aggregate Prepayment Interest Shortfall allocated to any such class or Trust Component for such Distribution Date; |
(B) | with respect to each of the Class B Trust Component, the Class C Trust Component and the Class D Certificates, any Trust Advisor Expenses allocated to such class of Certificates or Trust Component in reduction of interest payable thereon; and |
(C) | with respect to each of the Class C Trust Component and the Class D Certificates, any amounts reimbursable to any more senior class of Certificates or Trust Component on such Distribution Date in respect of Trust Advisor Expenses allocated on prior Distribution Dates to such senior classes or Trust Components in accordance with clauses (iv) and (v) of this definition; plus |
(ii) | the portion of the Distributable Certificate Interest for such class or Trust Component remaining unpaid as of the close of business on the preceding Distribution Date; plus |
(iii) | if the aggregate Certificate Principal Balance is reduced because of a diversion of principal as a result of the reimbursement of Nonrecoverable Advances out of principal in accordance with the terms of the Pooling and Servicing Agreement, and there is a subsequent recovery of amounts applied by the master servicer as recoveries of principal, then an amount generally equal to interest at the applicable Pass-Through Rate that would have accrued and been distributable with respect to the amount that |
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the aggregate Certificate Principal Balance was so reduced, which interest will accrue from the end of the Interest Accrual Period for the Distribution Date on which the related Collateral Support Deficit is allocated through the end of the Interest Accrual Period related to the Distribution Date on which such amounts are subsequently recovered; plus |
(iv) | with respect to the Class B Trust Component and any Distribution Date, solely to the extent of amounts otherwise distributable in respect of interest to the Class D Certificates and Class C Trust Component (in that order) on such Distribution Date (in each case, without giving effect to any reduction in the Distributable Certificate Interest described in clause (i)(C) of this definition based on this clause (iv) or on clause (v) of this definition), the amount of any Trust Advisor Expenses allocated to reduce the Distributable Certificate Interest of the Class B Trust Component on any prior Distribution Date and which has not previously been reimbursed; plus |
(v) | with respect to the Class C Trust Component and any Distribution Date, solely to the extent of amounts otherwise distributable in respect of interest to the Class D Certificates on such Distribution Date (without giving effect to any reduction in Distributable Certificate Interest described in clause (i)(C) of this definition based on this clause (v)), the amount of any Trust Advisor Expenses allocated to reduce the Distributable Certificate Interest of the Class C Trust Component on any prior Distribution Date and which has not previously been reimbursed; plus |
(vi) | with respect to the Class B Trust Component, the Class C Trust Component and the Class D Certificates, solely from any actual recoveries received by the Issuing Entity of amounts paid as Trust Advisor Expenses on prior Distribution Dates that resulted in a reduction of the Distributable Certificate Interest of any class of Certificates, the amount of any reductions in the Distributable Certificate Interest for such class (including, for this purpose, any reduction pursuant to clause (i)(C) of this definition) for any prior Distribution Dates that have not previously been reimbursed pursuant to clause (iv) or (v) above, or pursuant to this clause (vi), which recoveries will be allocated to each such class and Trust Component in alphabetical order, in each case, in an amount up to the amount of unreimbursed Trust Advisor Expenses previously allocated to such class or Trust Component. |
The Class PST Certificates will be entitled to the sum of the Distributable Certificate Interest in respect of the Class PST Components. The amount of Distributable Certificate Interest with respect to each Class PST Component is equal to the product of the Distributable Certificate Interest with respect to the related Trust Component and the percentage interest in such Trust Component represented by such Class PST Component.
The “Accrued Certificate Interest” will be, in respect of each class of Certificates (other than the Exchangeable Certificates and the Class V and Class R Certificates) and Trust Component for each Distribution Date, the amount of interest for the applicable Interest Accrual Period accrued at the applicable Pass-Through Rate on the aggregate Certificate Principal Balance or Notional Amount, as the case may be, of such class of Certificates or Trust Component outstanding immediately prior to such Distribution Date. Accrued Certificate Interest will be calculated on the basis of a 360-day year consisting of twelve (12) 30-day months.
“Net Aggregate Prepayment Interest Shortfall” means, for the related Distribution Date, the aggregate of all Prepayment Interest Shortfalls incurred in respect of the mortgage loans other than Specially Serviced Mortgage Loans during any Collection Period that are neither offset by Prepayment Interest Excesses collected thereon during such Collection Period nor covered by a Compensating Interest Payment paid by the master servicer in respect thereof.
“Principal Distribution Amount” equals, in general, for any Distribution Date, the aggregate of the following:
(i) | the principal portions of all Scheduled Payments (other than the principal portion of Balloon Payments) and any Assumed Scheduled Payments, in each case, to the extent received or advanced, as the case may be, in respect of the mortgage loans and any REO Mortgage Loans (but not in respect of any Serviced B Note or Serviced Companion Loan or, in either case, its respective successor REO Serviced B Note or REO Serviced Companion Loan, as applicable) for their respective Due Dates occurring during the related Collection Period; |
(ii) | (x) all payments (including Principal Prepayments and the principal portion of Balloon Payments (but not in respect of any Serviced B Note or Serviced Companion Loan or, in either case, its respective successor REO Serviced B Note or REO Serviced Companion Loan, as applicable)) and any other collections (including Liquidation Proceeds (other than the portion, if any, constituting Excess Liquidation Proceeds), Condemnation Proceeds, Insurance Proceeds and REO Income and proceeds of mortgage loan repurchases) received (including, in the case of any Non-Serviced Mortgage Loan, by the related Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Special Servicer) on or in respect of the mortgage loans and any REO Mortgage Loans (but not in respect of any Serviced B Note or Serviced Companion Loan or any successor REO Serviced B Note or REO Serviced Companion Loan) during the related Collection Period that were identified and applied by the master servicer and/or special servicer as recoveries of principal (exclusive of any portion thereof included as part of the Principal Distribution Amount for the immediately preceding Distribution Date pursuant to clause (ii)(y) of this definition) and (y) the principal portion of any Balloon Payments received on or in respect of the mortgage loans and any REO Mortgage Loans (but not in respect of any Serviced Companion Loan or Serviced B Note or any successor REO Serviced Companion Loan or REO Serviced B Note) during the period that begins two (2) Business Days immediately preceding the related Master Servicer Remittance Date and ends on such Master Servicer Remittance Date and remitted by the master servicer to the Distribution Account as described in “—Prepayment Interest Shortfalls and Prepayment Interest Excesses” below that were identified and applied by the master servicer and/or special servicer as recoveries of principal; |
(iii) | the amount of any actual recoveries received by the Issuing Entity of amounts paid as Excess Trust Advisor Expenses for which a deduction was made in the Principal Distribution Amount for a prior Distribution Date; and |
(iv) | recoveries of any Workout-Delayed Reimbursement Amounts and Nonrecoverable Advances that were previously reimbursed out of principal collections and for which a deduction was made in the Principal Distribution Amount for a prior Distribution Date; |
as reduced by, to the extent applicable:
(a) | any Workout-Delayed Reimbursement Amounts that have been reimbursed from amounts allocable to principal received with respect to the mortgage loans and any REO Mortgage Loans during the Collection Period for the related Distribution Date; |
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(b) | any Nonrecoverable Advance (with advance interest thereon) previously made in respect of any mortgage loan or any REO Mortgage Loan that is reimbursed from amounts allocable to principal received with respect to the mortgage loans and any REO Mortgage Loans during the Collection Period for the related Distribution Date; and |
(c) | the amount of any Excess Trust Advisor Expenses for such Distribution Date allocated to reduce the Certificate Principal Balances of the Principal Balance Certificates (other than the Exchangeable Certificates and the Control Eligible Certificates) and/or the Trust Components. |
“REO Income” means the income received in connection with the operation of an REO Property, net of certain expenses specified in the Pooling and Servicing Agreement. With respect to any A/B Whole Loan or Loan Pair, or any Non-Serviced Mortgage Loan, only an allocable portion of such REO Income will be distributable to the Certificateholders.
In addition to the Trust Advisor Fee and any Trust Advisor Consulting Fees, the trust advisor will be entitled to reimbursement of Trust Advisor Expenses in accordance with the terms of the Pooling and Servicing Agreement;provided, that on any Distribution Date the amount reimbursable to the trust advisor from the Certificates in respect of Trust Advisor Expenses for such date will not exceed the sum of (i) the portion of the Principal Distribution Amount for such Distribution Date otherwise distributable to the Principal Balance Certificates (other than the Exchangeable Certificates and the Control Eligible Certificates) and the Trust Components and (ii) the aggregate amount of the Distributable Certificate Interest (for such purposes, calculated without regard to any reductions pursuant to clause (i)(C) of the definition of Distributable Certificate Interest as a result of Trust Advisor Expenses for such Distribution Date) that would otherwise be distributable to the Class B Trust Component (and correspondingly, the Class B Certificates and the Class PST Component B,pro rata, based on their respective percentage interests in the Class B Trust Component), the Class C Trust Component (and correspondingly, the Class C Certificates and the Class PST Component C,pro rata, based on their respective percentage interests in the Class C Trust Component) and the Class D Certificates for such Distribution Date. Any amount of Trust Advisor Expenses that are not reimbursed on a Distribution Date because of the limitations set forth in the immediately preceding sentence will be payable on the next Distribution Date to the extent funds are sufficient, in accordance with such limitations, to make such payments. If the only Principal Balance Certificates that remain outstanding at any time are the Control Eligible Certificates, the trust advisor will not be entitled to seek payment of Trust Advisor Expenses from the Issuing Entity or any Holder of a Control Eligible Certificate.
“Trust Advisor Expenses” for each Distribution Date will equal any unreimbursed indemnification amounts and other expenses payable to the trust advisor pursuant to the Pooling and Servicing Agreement (other than the Trust Advisor Fee);provided, that Trust Advisor Expenses shall not include any expenses paid from the TA Unused Fees Account.
“Excess Trust Advisor Expenses” for each Distribution Date will equal the Trust Advisor Expenses for such Distribution Date less the amount of any such Trust Advisor Expenses allocated to reduce the aggregate Distributable Certificate Interest of the Class B Trust Component (and correspondingly, the Class B Certificates and the Class PST Component B,pro rata, based on their respective percentage interests in the Class B Trust Component), the Class C Trust Component (and correspondingly, the Class C Certificates and the Class PST Component C,pro rata, based on their respective percentage interests in the Class C Trust Component) and the Class D Certificates for such Distribution Date.
Fees and Expenses
The amounts available for distribution on the Certificates on any Distribution Date will generally be net of the following amounts:
Recipient | Description | Rate or Amount | Frequency | Source of Payment | ||||
Certificate Administrator | Certificate Administrator Fee(1) | 0.0045% | monthly | General collections | ||||
Master Servicer | Master Servicing Fee(1) | varies(2) | monthly | General collections | ||||
Master Servicer | Prepayment Interest Excesses(1) | varies | from time to time | Any Prepayment Interest Excesses | ||||
Special Servicer | Special Servicing Fee(1) | 0.25% | monthly | General collections | ||||
Special Servicer | Workout Fee(1) | 1.0% | monthly | Related post-workout collections of principal and/or interest | ||||
Special Servicer | Liquidation Fee(1) | 1.0% | upon receipt | Liquidation Proceeds, Condemnation Proceeds and Insurance Proceeds from the liquidation or final disposition of the related mortgage loan (or REO Property) | ||||
Master Servicer and Special Servicer | Fees collected from borrowers(1) | varies | from time to time | Fees actually collected from borrowers | ||||
Certificate Administrator, Master Servicer and Special Servicer | Investment income(1) | varies | monthly | Investment income actually earned | ||||
Trust Advisor | Trust Advisor Fee(1) | 0.0027%(3) | monthly | General collections (other than with respect to any Non-Serviced Mortgage Loan) | ||||
Trust Advisor | Trust Advisor Consulting Fee(1) | $10,000(4) | from time to time | Paid by related borrower |
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Recipient | Description | Rate or Amount | Frequency | Source of Payment | ||||
Trust Advisor | Trust Advisor Expenses(1) | varies | from time to time | General collections (to the extent allocable to the Class A-1 through Class D and Class PST Certificates)(5) | ||||
Master Servicer, Special Servicer, Trustee, Non-Serviced Mortgage Loan Master Servicer, Non-Serviced Mortgage Loan Special Servicer, Non-Serviced Mortgage Loan Trustee | Servicing Advances(6) | varies | from time to time | Recoveries on the related mortgage loan, or to the extent that the party making an Advance or the special servicer determines it is nonrecoverable, from general collections, or with respect to recoveries of Workout-Delayed Reimbursement Amounts, from collections of principal | ||||
Master Servicer, Special Servicer, Trustee, Non-Serviced Mortgage Loan Master Servicer, Non-Serviced Mortgage Loan Special Servicer, Non-Serviced Mortgage Loan Trustee | Interest on Servicing Advances(6) | Advance Rate | when Advance is reimbursed | First from Penalty Charges, Allocable Modification Fees and Excess Liquidation Proceeds (or, in the case of a Servicing Advance on a Non-Serviced Mortgage Loan, any recoveries on such mortgage loan) and then from general collections | ||||
Master Servicer and Trustee | P&I Advances(6) | varies | from time to time | Recoveries on the related mortgage loan, or to the extent that the party making an Advance determines it is nonrecoverable, from general collections, or with respect to recoveries of Workout-Delayed Reimbursement Amounts, from collections of principal | ||||
Master Servicer and Trustee | Interest on P&I Advances(6) | Advance Rate | when Advance is reimbursed | First from Penalty Charges, Allocable Modification Fees and Excess Liquidation Proceeds and then from general collections | ||||
Depositor, Trustee, Certificate Administrator, Custodian, Certificate Registrar, Master Servicer, Special Servicer, Non-Serviced Mortgage Loan Service Providers | Indemnification expenses(7) | varies | from time to time | General collections | ||||
CREFC® | CREFC®License Fee | 0.0005% | monthly | General collections | ||||
Third Parties | Issuing Entity expenses not Advanced(8) | varies | from time to time | General collections |
1. | For additional information regarding the fees, entitlements to reimbursement and compensation of the certificate administrator, the trustee, the custodian, the master servicer, the special servicer and the trust advisor, see “Description of the Offered Certificates—Matters Regarding the Certificate Administrator,” “—The Trustee” and “—The Custodian” below and “Servicing of the Mortgage Loans—The Master Servicer—Master Servicer Compensation,” “—The Special Servicer—Special Servicer Compensation” and “—The Trust Advisor” in this prospectus supplement. Each of the 300 South Riverside Plaza Fee Mortgage Loan, the 32 Old Slip Fee Mortgage Loan, the Waterfront at Port Chester Mortgage Loan, the Alderwood Mall Mortgage Loan and the Hilton Garden Inn W 54th Street Mortgage Loan is serviced pursuant to the pooling and servicing agreement or trust and servicing agreement, as applicable, for another securitization and accordingly no Trust Advisor Fee will be applicable to such mortgage loans under the pooling and servicing agreement for this transaction. The applicable Non-Serviced Mortgage Loan Master Servicer and Non-Serviced Mortgage Loan Special Servicer with respect to each such non-serviced mortgage loan will be entitled to compensation under the related pooling and servicing agreement or trust and servicing agreement, as applicable, similar to that received by the master servicer and special servicer under the Pooling and Servicing Agreement, except that there may be a higher cap (or no cap) on workout fees and/or liquidation fees. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations” and “Servicing of the Mortgage Loans—Additional Matters Relating to the Servicing of the Non-Serviced Mortgage Loans.” |
2. | The master servicing fee rate will be (i) with respect to each mortgage loan (other than the 300 South Riverside Plaza Fee Mortgage Loan, the 32 Old Slip Fee Mortgage Loan, the Waterfront at Port Chester Mortgage Loan, the Alderwood Mall Mortgage Loan and the Hilton Garden Inn W 54th Street Mortgage Loan), 0.0050%per annum plus the primary servicing fee rate set forth next to such mortgage loan on Appendix I to this prospectus supplement, (ii) with respect to the TKG 3 Retail Portfolio Serviced Companion Loan, 0.0050%per annum,and (iii) with respect to the 300 South Riverside Plaza Fee Mortgage Loan, the 32 Old Slip Fee Mortgage Loan, the Waterfront at Port Chester Mortgage Loan, the Alderwood Mall Mortgage Loan and the Hilton Garden Inn W 54th Street Mortgage Loan, 0.0050%per annum. In addition, (i) the MSBAM 2015-C22 master servicer will also be entitled to apari passu primary servicing fee in respect of the 300 South Riverside Plaza Fee Mortgage Loan, the Waterfront at Port Chester Mortgage Loan and the Hilton Garden Inn W 54th Street Mortgage Loan, payable at a rateper annum with respect to each such mortgage loan equal to 0.0050%, (ii) the MSBAM 2015-C23 master servicer will also be entitled to apari passu primary servicing fee in respect of the 32 Old Slip Fee Mortgage Loan, payable at a rateper annum equal to 0.0050%, and (iii) the MSCCG 2015-ALDR master servicer will also be entitled to apari passu primary servicing fee in respect of the Alderwood Mall Mortgage Loan, payable at a rateper annum equal to 0.0050%. |
3. | Notwithstanding the table above, the trust advisor fee in respect of the TKG 3 Retail Portfolio mortgage loan will be equal to 0.0064%per annum. |
4. | The aggregate amount of any such Trust Advisor Consulting Fees with respect to any particular mortgage loan (or related A/B Whole Loan or Loan Pair, as applicable) may not exceed $10,000 in any calendar year. |
5. | No trust advisor expenses (other than the trust advisor fee) will be allocated to reduce interest payable on the Class A-1, Class A-2, Class A-SB, Class A-3 or Class A-4 Certificates or the Class A-S Trust Component. |
6. | For additional information regarding Advances, see “Description of the Offered Certificates—Advances” in this prospectus supplement. For information regarding advances with respect to any Loan Pair or any Non-Serviced Loan Combination, see “Description of the Offered Certificates—Advances—Matters Relating to A/B Whole Loans, Loan Pairs and Non-Serviced Loan Combinations” in this prospectus supplement. |
7. | See “Description of the Offered Certificates—Matters Regarding the Certificate Administrator” and “—The Trustee” and “Servicing of the Mortgage Loans—General,” “—The Trust Advisor” and “—Certain Matters Regarding the Parties to the Pooling and Servicing Agreement” in this prospectus supplement. |
8. | The Issuing Entity may incur additional expenses, including without limitation environmental remediation costs and costs incurred to operate REO Properties. |
The Pooling and Servicing Agreement does not provide for any successor master servicer, special servicer (unless, in the case of the special servicer only, a successor cannot be found for existing compensation), trustee, certificate administrator, custodian or trust advisor, as the case may be, to receive compensation in excess of that permitted its predecessor. Any change to the compensation of the master servicer, the special servicer, the certificate administrator, the trust advisor, the trustee or the custodian would require an amendment to the Pooling and Servicing Agreement.
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Application of the Available Distribution Amount
On each Distribution Date, except as described under “—Optional Termination” below, for so long as any Class of Offered Certificates remains outstanding, the certificate administrator will apply the Available Distribution Amount (other than Excess Interest and Excess Liquidation Proceeds), if any for such date, for the following purposes and in the following order of priority:
· | first,to the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4 and Class X-A Certificates, in respect of interest, up to an amount equal to, andpro rata in accordance with, the respective Distributable Certificate Interest for those classes; |
· | second, to the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates, in reduction of the Certificate Principal Balance of those classes, in the following priority: |
(i) | to the Class A-SB Certificates, in an amount equal to the Principal Distribution Amount for such Distribution Date, until the Certificate Principal Balance of the Class A-SB Certificates has been reduced to the Planned Principal Balance for such Distribution Date; |
(ii) | to the Class A-1 Certificates, in an amount equal to the Principal Distribution Amount (or the portion of it remaining after payments specified in clause (i) above) for such Distribution Date, until the Certificate Principal Balance of the Class A-1 Certificates is reduced to zero; |
(iii) | to the Class A-2 Certificates, in an amount equal to the Principal Distribution Amount (or the portion of it remaining after payments specified in clauses (i) and (ii) above) for such Distribution Date, until the Certificate Principal Balance of the Class A-2 Certificates is reduced to zero; |
(iv) | to the Class A-3 Certificates, in an amount equal to the Principal Distribution Amount (or the portion of it remaining after payments specified in clauses (i), (ii) and (iii) above) for such Distribution Date, until the Certificate Principal Balance of the Class A-3 Certificates is reduced to zero; |
(v) | to the Class A-4 Certificates, in an amount equal to the Principal Distribution Amount (or the portion of it remaining after payments specified in clauses (i) through (iv) above) for such Distribution Date, until the Certificate Principal Balance of the Class A-4 Certificates is reduced to zero; and |
(vi) | to the Class A-SB Certificates, in an amount equal to the Principal Distribution Amount (or the portion of it remaining after payments specified in clauses (i) through (v) above) for such Distribution Date, until the Certificate Principal Balance of the Class A-SB Certificates is reduced to zero; |
· | third, to the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates,first, up to an amount equal to, andpro rata based upon, the aggregate unreimbursed Collateral Support Deficit previously allocated to each such class, andsecond, up to an amount equal to, andpro ratabased upon, interest on unreimbursed Collateral Support Deficits previously allocated to each such class at the Pass-Through Rate for such class from the date the related Collateral Support Deficit was allocated to such class; |
· | fourth, concurrently, to the Class A-S Certificates, in respect of interest, up to an amount equal to the Class A-S Percentage Interest of the Distributable Certificate Interest of the Class A-S Trust Component for such Distribution Date, and to the Class PST Certificates, in respect of interest, up to an amount equal to the Class A-S-PST Percentage Interest of the Distributable Certificate Interest of the Class A-S Trust Component for such Distribution Date,pro rata, in proportion to their respective percentage interests in the Class A-S Trust Component; |
· | fifth, concurrently, to the Class A-S Certificates, in reduction of their Certificate Principal Balance, up to an amount equal to the Class A-S Percentage Interest of the Principal Distribution Amount for such Distribution Date (less the portion of such Principal Distribution Amount distributed pursuant to all prior clauses), and to the Class PST Certificates, in reduction of their Certificate Principal Balance, up to an amount equal to the Class A-S-PST Percentage Interest of the Principal Distribution Amount for such Distribution Date (less the portion of such Principal Distribution Amount distributed pursuant to all prior clauses),pro rata, in proportion to their respective percentage interests in the Class A-S Trust Component, until their Certificate Principal Balances are reduced to zero; |
· | sixth, concurrently, (A) to the Class A-S Certificates, up to an amount equal to the Class A-S Percentage Interest of,first,the aggregate unreimbursed Collateral Support Deficit previously allocated to the Class A-S Trust Component, andsecond, unpaid interest on that amount at the Pass-Through Rate for the Class A-S Certificates from the date the related Collateral Support Deficit was allocated to the Class A-S Trust Component, and (B) to the Class PST Certificates, up to an amount equal to the Class A-S-PST Percentage Interest of, first,the aggregate unreimbursed Collateral Support Deficit previously allocated to the Class A-S Trust Component, andsecond, unpaid interest on that amount at the Pass-Through Rate for the Class A-S Certificates from the date the related Collateral Support Deficit was allocated to the Class A-S Trust Component,pro rata, in proportion to their respective percentage interests in the Class A-S Trust Component; |
· | seventh, concurrently, to the Class B Certificates, in respect of interest, up to an amount equal to the Class B Percentage Interest of the Distributable Certificate Interest of the Class B Trust Component for such Distribution Date, and to the Class PST Certificates, in respect of interest, up to an amount equal to the Class B-PST Percentage Interest of the Distributable Certificate Interest of the Class B Trust Component for such Distribution Date,pro rata, in proportion to their respective percentage interests in the Class B Trust Component; |
· | eighth, concurrently, to the Class B Certificates, in reduction of their Certificate Principal Balance, up to an amount equal to the Class B Percentage Interest of the Principal Distribution Amount for such Distribution Date (less the portion of such Principal Distribution Amount distributed pursuant to all prior clauses), and to the Class PST Certificates, in reduction of their Certificate Principal Balance, up to an amount equal to the Class B-PST Percentage Interest of the Principal Distribution Amount for such Distribution Date (less the portion of such Principal Distribution Amount distributed pursuant to all prior clauses),pro rata, in |
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proportion to their respective percentage interests in the Class B Trust Component, until their Certificate Principal Balances are reduced to zero; |
· | ninth, concurrently, (A) to the Class B Certificates, up to an amount equal to the Class B Percentage Interest of,first,the aggregate unreimbursed Collateral Support Deficit previously allocated to the Class B Trust Component, andsecond, unpaid interest on that amount at the Pass-Through Rate for the Class B Certificates from the date the related Collateral Support Deficit was allocated to the Class B Trust Component, and (B) to the Class PST Certificates, up to an amount equal to the Class B-PST Percentage Interest of,first, the aggregate unreimbursed Collateral Support Deficit previously allocated to the Class B Trust Component, andsecond, unpaid interest on that amount at the Pass-Through Rate for the Class B Certificates from the date the related Collateral Support Deficit was allocated to the Class B Trust Component,pro rata, in proportion to their respective percentage interests in the Class B Trust Component; |
· | tenth, concurrently, to the Class C Certificates, in respect of interest, up to an amount equal to the Class C Percentage Interest of the Distributable Certificate Interest of the Class C Trust Component for such Distribution Date, and to the Class PST Certificates, in respect of interest, up to an amount equal to the Class C-PST Percentage Interest of the Distributable Certificate Interest of the Class C Trust Component for such Distribution Date,pro rata, in proportion to their respective percentage interests in the Class C Trust Component; |
· | eleventh, concurrently, to the Class C Certificates, in reduction of their Certificate Principal Balance, up to an amount equal to the Class C Percentage Interest of the Principal Distribution Amount for such Distribution Date (less the portion of such Principal Distribution Amount distributed pursuant to all prior clauses), and to the Class PST Certificates, in reduction of their Certificate Principal Balance, up to an amount equal to the Class C-PST Percentage Interest of the Principal Distribution Amount for such Distribution Date (less the portion of such Principal Distribution Amount distributed pursuant to all prior clauses),pro rata, in proportion to their respective percentage interests in the Class C Trust Component, until their Certificate Principal Balances are reduced to zero; |
· | twelfth, concurrently, (A) to the Class C Certificates, up to an amount equal to the Class C Percentage Interest of,first,the aggregate unreimbursed Collateral Support Deficit previously allocated to the Class C Trust Component, andsecond, unpaid interest on that amount at the Pass-Through Rate for the Class C Certificates from the date the related Collateral Support Deficit was allocated to the Class C Trust Component, and (B) to the Class PST Certificates, up to an amount equal to the Class C-PST Percentage Interest of,first, the aggregate unreimbursed Collateral Support Deficit previously allocated to the Class C Trust Component, andsecond, unpaid interest on that amount at the Pass-Through Rate for the Class C Certificates from the date the related Collateral Support Deficit was allocated to the Class C Trust Component,pro rata, in proportion to their respective percentage interests in the Class C Trust Component; and |
· | thirteenth, to make payments to the Holders of the Privately Offered Certificates (other than the Class V Certificates) as contemplated below. |
Notwithstanding the foregoing, on each Distribution Date occurring on and after the date the aggregate Certificate Principal Balance of all Principal Balance Certificates (other than the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates) has been reduced to zero (that date, the “Cross Over Date”), or the aggregate Appraisal Reduction allocable to the mortgage loans included in the Mortgage Pool is greater than or equal to the aggregate Certificate Principal Balance of all Principal Balance Certificates (other than the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates), regardless of the allocation of principal payments described in prioritysecond above, the Principal Distribution Amount for such Distribution Date is required to be distributed,pro rata (based on their respective outstanding Certificate Principal Balances), among the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates.
On each Distribution Date, following the above-described distributions on the Offered Certificates, the certificate administrator will apply the remaining portion, if any, of the Available Distribution Amount (other than Excess Interest and Excess Liquidation Proceeds) for such date to make payments to the Holders of each of the respective other Classes of Subordinate Certificates, in alphabetical order of Class designation, in each case for the following purposes and in the following order of priority, that is, payments under clausesfirst,second andthird below, in that order, to the Holders of the Class D Certificates, then payments under clausesfirst,second andthird below, in that order, to the Holders of the Class E, Class F and Class G Certificates, in that order:
· | first, to pay interest to the Holders of the particular Class of Certificates, up to an amount equal to the Distributable Certificate Interest in respect of such Class of Certificates for such Distribution Date; |
· | second, if the aggregate Certificate Principal Balance of each other Class of Subordinate Certificates, if any, with an earlier alphabetical Class designation has been reduced to zero, to pay principal to the Holders of the particular Class of Certificates, up to an amount equal to the lesser of (a) the then outstanding aggregate Certificate Principal Balance of such Class of Certificates and (b) the remaining Principal Distribution Amount for such Distribution Date; and |
· | third, to the Holders of the particular Class of Certificates, up to an amount equal to the aggregate of unreimbursed Collateral Support Deficit previously allocated to such Class, plus interest on that amount at the Pass-Through Rate for such Class from the date of the related Collateral Support Deficit was allocated to such Class. |
Any portion of the Available Distribution Amount for any Distribution Date that is not otherwise payable to the Holders of the Principal Balance Certificates and the Class X Certificates as contemplated above (or, with respect to the Principal Balance Certificates (other than the Control Eligible Certificates), as reimbursement for Trust Advisor Expenses and Excess Trust Advisor Expenses previously allocated to such Classes of Certificates), will be paid to the Holders of the Class R Certificates, and any amount of Excess Interest on deposit in the Excess Interest sub-account for the related Collection Period will be paid to the Holders of the Class V Certificates. Excess Interest will not be available to make distributions to any other class of Certificates or to provide credit support for other classes of Certificates or offset any interest shortfalls or to pay any other amounts to any other party under the Pooling and Servicing Agreement.
Distributions made on the Class A-S Certificates and, to the extent that they evidence the Class PST Component A-S, the Class PST Certificates as described above will be deemed to have been made on the Class A-S Trust Component. Distributions made on the Class B Certificates and, to the extent that they evidence the Class PST Component B, the Class PST Certificates as described above will be
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deemed to have been made on the Class B Trust Component. Distributions made on the Class C Certificates and, to the extent that they evidence the Class PST Component C, the Class PST Certificates as described above will be deemed to have been made on the Class C Trust Component.
Class A-SB Planned Principal Balance
On each Distribution Date prior to the Cross Over Date, the Class A-SB Certificates have priority with respect to receiving distributions of principal to reduce its Certificate Principal Balance to the Planned Principal Balance for such Distribution Date as described in “—Distributions—Application of the Available Distribution Amount” above. The “Planned Principal Balance” for any Distribution Date is the balance shown for such Distribution Date in the table set forth in Appendix VII to this prospectus supplement. These balances were calculated using, among other things, the Structuring Assumptions. Based on such assumptions, the Certificate Principal Balance of the Class A-SB Certificates on each Distribution Date would be reduced to the balance indicated for the related Distribution Date on Appendix VII. There is no assurance, however, that the mortgage loans will perform in conformity with the Structuring Assumptions. Therefore, there can be no assurance that the Certificate Principal Balance of the Class A-SB Certificates on any Distribution Date will be equal to the balance that is specified for such Distribution Date on Appendix VII. In general, once the Certificate Principal Balances of the Class A-1, Class A-2, Class A-3 and Class A-4 Certificates have been reduced to zero, any remaining portion on any Distribution Date of the Principal Distribution Amount will be distributed to the Class A-SB Certificates until the Certificate Principal Balance of the Class A-SB Certificates is reduced to zero.
Distributions of Prepayment Premiums and Yield Maintenance Charges
On any Distribution Date, Prepayment Premiums or Yield Maintenance Charges collected in respect of each mortgage loan included in the Issuing Entity during the related Collection Period will be distributed by the certificate administrator on the classes of Certificates or Trust Components as follows: to each class of Principal Balance Certificates (other than the Exchangeable Certificates and the Control Eligible Certificates) or Trust Component then entitled to distributions of principal on such Distribution Date, an amount equal to the product of (a) a fraction, the numerator of which is the amount distributed as principal to that class or Trust Component on that Distribution Date, and the denominator of which is the total amount distributed as principal to all such classes of Principal Balance Certificates and Trust Components on that Distribution Date, (b) the Base Interest Fraction for the related Principal Prepayment and that class or Trust Component and (c) the amount of the Prepayment Premium or Yield Maintenance Charge collected in respect of such Principal Prepayment during the related Collection Period. Any Prepayment Premiums or Yield Maintenance Charges relating to the mortgage loans in the Issuing Entity and collected during the related Collection Period remaining after those distributions described above (as to the applicable Distribution Date, the “Class X YM Distribution Amount”) will be distributed to the Holders of the Class X-A Certificates. Distributions of Prepayment Premiums and Yield Maintenance Charges made on the Class A-S Trust Component, the Class B Trust Component and the Class C Trust Component will be distributed to the Class A-S Certificates and Class PST Component A-S, the Class B Certificates and Class PST Component B, and the Class C Certificates and Class PST Component C, respectively, in each casepro rata in proportion to the respective percentage interests of the related Trust Component represented by such Class and such Class PST Component. Distributions of Prepayment Premiums and Yield Maintenance Charges made on the PST Components will correspondingly be made to the Class PST Certificates.
“Prepayment Premium” means, with respect to any mortgage loan, Serviced B Note or Serviced Companion Loan for any Distribution Date, prepayment premiums and charges, if any, calculated solely as a fixed percentage of the amount prepaid and received during the related Collection Period in connection with Principal Prepayments on such mortgage loan, Serviced B Note or Serviced Companion Loan.
“Yield Maintenance Charge” means, with respect to any mortgage loan, Serviced B Note or Serviced Companion Loan for any Distribution Date, yield maintenance premiums and charges, if any, received during the related Collection Period in connection with Principal Prepayments on such mortgage loan, Serviced B Note or Serviced Companion Loan. The method of calculation of any Prepayment Premium or Yield Maintenance Charge will vary for any mortgage loan as presented in Appendix I to this prospectus supplement.
The “Base Interest Fraction” with respect to any Principal Prepayment of any mortgage loan that provides for payment of a Prepayment Premium or Yield Maintenance Charge, and with respect to any class of Principal Balance Certificates (other than the Exchangeable Certificates and the Control Eligible Certificates) or Trust Component is a fraction (A) whose numerator is the greater of (x) zero and (y) the difference between (i) the Pass-Through Rate on that class of Certificates or Trust Component, as applicable, and (ii) the applicable Discount Rate and (B) whose denominator is the difference between (i) the mortgage rate on the related mortgage loan and (ii) the applicable Discount Rate;provided, that under no circumstances will the Base Interest Fraction be greater than one. If the Discount Rate referred to above is greater than or equal to the mortgage rate on the related mortgage loan, then the Base Interest Fraction will equal zero;provided,further, that if the Discount Rate referred to above is greater than or equal to the mortgage rate on the related mortgage loan, but is less than the Pass-Through Rate on the subject class or Trust Component, then the Base Interest Fraction will be equal to 1.0.
“Principal Prepayments” means any voluntary or involuntary payment or collection of principal on a mortgage loan, Serviced B Note or Serviced Companion Loan which is received or recovered in advance of its scheduled Due Date and applied to reduce the principal balance of the mortgage loan, Serviced B Note or Serviced Companion Loan in advance of its scheduled Due Date.
The “Discount Rate” means, for the purposes of the distribution of Prepayment Premiums or Yield Maintenance Charges (i) if a discount rate was used in the calculation of the applicable Yield Maintenance Charge or Prepayment Premium pursuant to the terms of the related mortgage loan, that discount rate, converted (if necessary) to a monthly equivalent yield, and (ii) if a discount rate was not used in the calculation of the applicable Yield Maintenance Charge or Prepayment Premium pursuant to the terms of the related mortgage loan, the rate which, when compounded monthly, is equivalent to the Treasury Rate when compounded semi-annually.
“Treasury Rate” is the yield calculated by the linear interpolation of the yields, as reported in Federal Reserve Statistical Release H.15–Selected Interest Rates under the heading “U.S. government securities/Treasury constant maturities” for the week ending prior to the date of the relevant Principal Prepayment, of U.S. Treasury constant maturities with a maturity date, one longer and one shorter, most nearly approximating the maturity date (or Anticipated Repayment Date, if applicable) of the mortgage loan prepaid. If Release H.15 is no longer published, the certificate administrator will select a comparable publication to determine the Treasury Rate.
No Prepayment Premiums or Yield Maintenance Charges will be distributed to Holders of the Control Eligible Certificates or the Class V or Class R Certificates. Any Prepayment Premiums or Yield Maintenance Charges distributed to Holders of a Class of Certificates may not be sufficient to compensate those Holders for any loss in yield attributable to the related Principal Prepayments.
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Treatment of REO Properties
Notwithstanding that any mortgaged property may be acquired by the Issuing Entity or its nominee through foreclosure, deed in lieu of foreclosure or otherwise, the related mortgage loan and any related Serviced B Note or Serviced Companion Loan will be treated as having remained outstanding until such REO Property is liquidated for purposes of, among other things, determining Pass-Through Rates of, distributions on and allocations of Collateral Support Deficit to the Certificates and Trust Components, as well as the amount of Master Servicing Fees, Trust Advisor Fees, Certificate Administrator Fees (which includes the Trustee Fee and the Custodian Fee), Special Servicing Fees and CREFC® License Fees payable under the Pooling and Servicing Agreement. In connection therewith, operating revenues and other proceeds derived from such REO Property, exclusive of related operating costs, will be “applied” by the master servicer as principal, interest and other amounts “due” on such mortgage loan (or related Serviced B Note or Serviced Companion Loan). Subject to the recoverability determination described under “—Advances” below and the effect of any Appraisal Reductions described under “—Appraisal Reductions” below, the master servicer will be required to make P&I Advances in respect of such mortgage loan and in all cases as if such mortgage loan had remained outstanding. References to mortgage loan and mortgage loans in the definitions of Weighted Average Net Mortgage Rate and Principal Distribution Amount are intended to include any mortgage loan or mortgage loans as to which the related mortgaged property has become an REO Property.
“REO Property” means any mortgaged property acquired on behalf of the Certificateholders in respect of a defaulted mortgage loan through foreclosure, deed in lieu of foreclosure or otherwise. The term “REO Property” also includes any mortgaged property acquired under any Non-Serviced Mortgage Loan Pooling and Servicing Agreement (however, the special servicer will not have any obligations with respect to any such REO Property).
Allocation Priority of Mortgage Loan Collections
All amounts collected by or on behalf of the Issuing Entity in respect of any mortgage loan in the form of payments from the related borrower, liquidation proceeds, condemnation proceeds or insurance proceeds (exclusive, if applicable, in the case of an A/B Whole Loan or Loan Pair, of any amounts payable to the holder of the related Serviced B Note or Serviced Companion Loan, as applicable, pursuant to the related Intercreditor Agreement), absent express provisions in the loan documents or related Intercreditor Agreement, or if and to the extent that such terms authorize the mortgagee to use its discretion, and in any event after an event of default under the related mortgage loan (to the extent not cured or waived), will be allocated for purposes of collecting amounts due under the mortgage loan, pursuant to the Pooling and Servicing Agreement, in the following order of priority:
First, | as a recovery of any unreimbursed Advances with respect to such mortgage loan and unpaid interest on all Advances and, if applicable, unreimbursed and unpaid Additional Trust Fund Expenses with respect to such mortgage loan; |
Second, | as a recovery of Nonrecoverable Advances with respect to such mortgage loan and any interest thereon to the extent previously reimbursed or paid, as the case may be, from collections with respect to other mortgage loans; |
Third, | to the extent not previously allocated pursuant to clauseFirst, as a recovery of accrued and unpaid interest on the related mortgage loan (exclusive of default interest and Excess Interest) to the extent of the excess of (A) accrued and unpaid interest on such mortgage loan at the related Mortgage Rate to, but not including, the date of receipt by or on behalf of the Issuing Entity (or, in the case of a full monthly payment from the related borrower, through the related Due Date), over (B) the cumulative amount of the reductions (if any) in the amount of related P&I Advances for such mortgage loan that have theretofore occurred in connection with Appraisal Reductions (to the extent that collections have not been allocated as a recovery of accrued and unpaid interest pursuant to clauseFifth below on earlier dates); |
Fourth, | to the extent not previously allocated pursuant to clauseFirst, as a recovery of principal of such mortgage loan then due and owing, including by reason of acceleration of such mortgage loan following a default thereunder (or, if such mortgage loan has been liquidated, as a recovery of principal to the extent of its entire remaining unpaid principal balance); |
Fifth, | as a recovery of accrued and unpaid interest on such mortgage loan to the extent of the cumulative amount of the reductions (if any) in the amount of related P&I Advances for such mortgage loan that have theretofore occurred in connection with related Appraisal Reductions (to the extent that collections have not been allocated as a recovery of accrued and unpaid interest pursuant to this clauseFifth on earlier dates); |
Sixth, | as a recovery of amounts to be currently allocated to the payment of, or escrowed for the future payment of, real estate taxes, assessments and insurance premiums and similar items relating to such mortgage loan; |
Seventh, | as a recovery of any other reserves to the extent then required to be held in escrow with respect to such mortgage loan; |
Eighth, | as a recovery of any Prepayment Premiums and/or Yield Maintenance Charges then due and owing under such mortgage loan; |
Ninth, | as a recovery of any default interest or late fees then due and owing under such mortgage loan; |
Tenth, | as a recovery of any Assumption Fees, assumption application fees and Modification Fees then due and owing under such mortgage loan; |
Eleventh, | as a recovery of any other amounts then due and owing under such mortgage loan other than remaining unpaid principal, and, if applicable, accrued and unpaid Excess Interest (if both consent fees and Trust Advisor Consulting Fees are due and owing,first, allocated to consent fees andthen, allocated to Trust Advisor Consulting Fees); |
Twelfth, | as a recovery of any remaining principal of such mortgage loan to the extent of its entire remaining unpaid principal balance; and |
Thirteenth, | in the case of an ARD Loan after the related Anticipated Repayment Date, any accrued but unpaid Excess Interest; |
provided that, to the extent required under the REMIC provisions of the Code, payments or proceeds received with respect to any partial release of a mortgaged property if, immediately following such release, the loan-to-value ratio of the related mortgage loan exceeds 125%
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(based solely on the value of real property and excluding personal property and going concern value, if any), must be allocated to reduce the principal balance of the mortgage loan in the manner permitted by such REMIC provisions.
Collections by or on behalf of the Issuing Entity in respect of any REO property (exclusive of amounts to be allocated to the payment of the costs of operating, managing, leasing, maintaining and disposing of such REO property and, if applicable, in the case of an A/B Whole Loan or Loan Pair, exclusive of any amounts payable to the holder of the related Serviced B Note or Serviced Companion Loan, as applicable, pursuant to the related Intercreditor Agreement) shall be deemed allocated for purposes of collecting amounts due under the related REO Mortgage Loan in the following order of priority:
First, | as a recovery of any unreimbursed Advances with respect to such REO Mortgage Loan and unpaid interest on all Advances and, if applicable, unreimbursed and unpaid Additional Trust Fund Expenses with respect to such REO Mortgage Loan; |
Second, | as a recovery of Nonrecoverable Advances with respect to such REO Mortgage Loan and any interest thereon to the extent previously reimbursed or paid, as the case may be, from collections with respect to other REO Mortgage Loans; |
Third, | to the extent not previously allocated pursuant to clauseFirst, as a recovery of accrued and unpaid interest on such REO Mortgage Loan (exclusive of default interest and Excess Interest) to the extent of the excess of (A) accrued and unpaid interest on such mortgage loan at the related Mortgage Rate to, but not including, the Due Date in the Collection Period in which such collections were received, over (B) the cumulative amount of the reductions (if any) in the amount of related P&I Advances for such REO Mortgage Loan that have theretofore occurred in connection with Appraisal Reductions (to the extent that collections have not been allocated as a recovery of accrued and unpaid interest pursuant to clauseFifth below and clauseFifthof the preceding paragraph on earlier dates); |
Fourth, | to the extent not previously allocated pursuant to clauseFirst, as a recovery of principal of such REO Mortgage Loan to the extent of its entire unpaid principal balance; |
Fifth, | as a recovery of accrued and unpaid interest on such REO Mortgage Loan to the extent of the cumulative amount of the reductions (if any) in the amount of related P&I Advances for such mortgage loan that have theretofore occurred in connection with related Appraisal Reductions (to the extent that collections have not theretofore been allocated as a recovery of accrued and unpaid interest pursuant to this clause Fifth and clause Fifth of the preceding paragraph on earlier dates); |
Sixth, | as a recovery of any Prepayment Premiums and/or Yield Maintenance Charges then due and owing under such REO Mortgage Loan; |
Seventh, | as a recovery of any default interest or late fees then due and owing under such REO Mortgage Loan; |
Eighth, | as a recovery of any Assumption Fees, assumption application fees and Modification Fees then due and owing under such REO Mortgage Loan; |
Ninth, | as a recovery of any other amounts then due and owing under such REO Mortgage Loan other than, if applicable, accrued and unpaid Excess Interest (if both consent fees and Trust Advisor Consulting Fees are due and owing,first, allocated to consent fees andthen, allocated to Trust Advisor Consulting Fees); and |
Tenth, | in the case of an ARD Loan after the related Anticipated Repayment Date, any accrued but unpaid Excess Interest. |
Subordination; Allocation of Collateral Support Deficit
As and to the extent described in this prospectus supplement, the rights of Holders of the Subordinate Certificates to receive distributions of amounts collected or advanced on the mortgage loans will be subordinated, to the extent described in this prospectus supplement, to the rights of Holders of the Senior Certificates, to the rights of the Holders of each other class of Subordinate Certificates with an earlier alphabetical class designation and to the rights of the Holders of the Class PST Certificates in respect of Class PST Components that have an earlier alphabetical designation (see “—Distributions—Application of the Available Distribution Amount” above and the Collateral Support Deficit allocation priority described below). 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 each class of Class A Senior Certificates of principal in an amount equal to the entire Certificate Principal Balance of the Class A Senior Certificates.
Similarly, but to decreasing degrees and generally in alphabetical order of class designation, this subordination is also intended to enhance the likelihood of timely receipt by the Holders of the Subordinate Certificates (other than the Class G Certificates, which do not have the benefit of effective subordination), and if applicable, by the Holders of the Class PST Certificates in respect of the respective Class PST Components that have the same distribution priority as the corresponding Subordinate Certificates, of the full amount of interest payable in respect of such classes of Certificates or Class PST Components on each Distribution Date, and the ultimate receipt by such Holders of principal equal to, in each case, the entire Certificate Principal Balance of such class of Certificates or Class PST Component. This subordination will be accomplished by the application of the Available Distribution Amount on each Distribution Date in accordance with the order of priority described above under “—Distributions—Application of the Available Distribution Amount” and by the allocation of a Collateral Support Deficit as described below. No other form of credit support will be available for the benefit of the Holders of the Certificates.
Allocation to the Class A Senior Certificates, for so long as they are outstanding, of the entire Principal Distribution Amount for each Distribution Date will generally have the effect of reducing the aggregate Certificate Principal Balance of those classes at a faster rate than would be the case if principal payments were allocatedpro rata to all classes of Principal Balance Certificates. Thus, as principal is distributed to the Holders of the Class A Senior Certificates, the percentage interest in the Issuing Entity evidenced by the Class A Senior Certificates will be decreased, with a corresponding increase in the percentage interest in the Issuing Entity evidenced by the Subordinate Certificates, thereby increasing, relative to their respective Certificate Principal Balances, the subordination afforded the Class A Senior Certificates by the Subordinate Certificates.
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Following retirement of the Class A Senior Certificates, the successive allocation to the Subordinate Certificates and to the various Class PST Components, all in alphabetical order of class or component designation, in each case until such class or component is paid in full, of the entire Principal Distribution Amount for each Distribution Date will generally provide a similar benefit to each such class of Certificates or the Class PST Certificates in respect of such Class PST Component as regards the relative amount of subordination afforded by the other classes of Subordinate Certificates and Class PST Components, with later alphabetical class or component designations.
On each Distribution Date, immediately following the distributions made to the Certificateholders on that date, the certificate administrator is required to calculate the amount, if any, by which (1) the aggregate Stated Principal Balance of the mortgage loans, including any REO Mortgage Loans, expected to be outstanding immediately following that Distribution Date, is less than (2) the aggregate Certificate Principal Balance of the Principal Balance Certificates after giving effect to distributions of principal on that Distribution Date and the allocation of any Excess Trust Advisor Expenses to reduce the Certificate Principal Balance of the Principal Balance Certificates that are not Control Eligible Certificates on that Distribution Date (any such deficit, a “Collateral Support Deficit”). For purposes of this calculation only, the aggregate Stated Principal Balance will not be reduced by the amount of principal payments received on the mortgage loans that were used to reimburse the master servicer, special servicer or the trustee from general collections of principal on the mortgage loans for Workout-Delayed Reimbursement Amounts, to the extent those amounts are not otherwise determined to be Nonrecoverable Advances.
On each Distribution Date, the certificate administrator will be required to allocate any Collateral Support Deficit to the classes of Principal Balance Certificates (other than the Exchangeable Certificates) and Trust Components in the following order: to the Class G, Class F, Class E and Class D Certificates, the Class C Trust Component (and correspondingly, the Class C Certificates and the Class PST Component C,pro rata, based on their respective percentage interests in the Class C Trust Component), the Class B Trust Component (and correspondingly, the Class B Certificates and the Class PST Component B,pro rata, based on their respective percentage interests in the Class B Trust Component) and the Class A-S Trust Component (and correspondingly, the Class A-S Certificates and the Class PST Component A-S,pro rata, based on their respective percentage interests in the Class A-S Trust Component), in each case in respect of and until the remaining Certificate Principal Balance of that class of Certificates or Trust Component has been reduced to zero. Following the reduction of the Certificate Principal Balances of all classes of Subordinate Certificates to zero, the certificate administrator will be required to allocate any remaining portion of such Collateral Support Deficit to the classes of Class A Senior Certificates,pro rata (based upon their respective Certificate Principal Balances), until the remaining Certificate Principal Balances of the Class A Senior Certificates have been reduced to zero. Trust Advisor Expenses will be allocated to the Principal Balance Certificates (other than the Exchangeable Certificates and the Control Eligible Certificates) and Trust Components as described under “—Distributions—Allocation of Trust Advisor Expenses” in this prospectus supplement. Collateral Support Deficits will be allocated to the Class PST Certificates in an amount equal to the aggregate amount of Collateral Support Deficits allocated to the Class PST Components. Any Collateral Support Deficit allocated to a class of Certificates will be allocated to the respective Certificates of such class in proportion to the Percentage Interests evidenced by the respective Certificates.
On each Distribution Date, following allocation of any Collateral Support Deficit as described in the preceding paragraph, amounts on deposit in the Excess Liquidation Proceeds Reserve Account will be used:first, to reimburse the Principal Balance Certificates (other than the Exchangeable Certificates), the Trust Components and the Class X Certificates (in the same order of priority that the Available Distribution Amount would be applied for this purpose) for any, and to the extent of, Unpaid Interest due and owing to such classes and Trust Components; andsecond, to reimburse the Principal Balance Certificates (other than the Exchangeable Certificates) and the Trust Components (in the same order of priority that the Available Distribution Amount would be applied for this purpose) for any, and to the extent of, unreimbursed Collateral Support Deficits previously allocated to such classes and Trust Components, together with interest on such Collateral Support Deficits at the applicable Pass-Through Rate, in each case from the date of allocation.
Further, on each Distribution Date, following application of amounts on deposit in the Excess Liquidation Proceeds Reserve Account as described in the preceding paragraph, amounts on deposit in the TA Unused Fees Account will be used:first, to pay any current unreimbursed Trust Advisor Expenses payable to the trust advisor pursuant to the Pooling and Servicing Agreement;second, to reimburse each class of Principal Balance Certificates (other than the Exchangeable Certificates) and each Trust Component to the extent of any Trust Advisor Expenses that were actually applied to reduce the Distributable Certificate Interest or Certificate Principal Balance of such class of Certificates or Trust Component on any Distribution Date, which amounts will be allocated first as a recovery of principal in the reverse order in which they were allocated to reduce the Certificate Principal Balances of the related classes of Certificates and Trust Components and then as recoveries of interest to the Class B Trust Component (and correspondingly, the Class B Certificates and the Class PST Component B,pro rata, based on their respective percentage interests in the Class B Trust Component), Class C Trust Component (and correspondingly, the Class C Certificates and the Class PST Component C,pro rata, based on their respective percentage interests in the Class C Trust Component) and Class D Certificates, in that order;third, if such Distribution Date coincides with or follows the earlier of (x) the final Distribution Date and (y) the date that the aggregate Certificate Principal Balance of the Principal Balance Certificates, other than the Control Eligible Certificates, has been reduced to zero, to reimburse the Principal Balance Certificates (other than the Exchangeable Certificates) and the Trust Components (in the same order of priority that the Available Distribution Amount would be applied for this purpose) for any, and to the extent of, unreimbursed Collateral Support Deficits previously allocated to such classes and Trust Components, together with interest on such Collateral Support Deficits at the applicable Pass-Through Rate, in each case from the date of allocation), in each case from the date of allocation; andfourth, if such Distribution Date coincides with or follows the earlier of (x) the final Distribution Date and (y) the date that the aggregate Certificate Principal Balance of the Principal Balance Certificates, other than the Control Eligible Certificates, has been reduced to zero, to reimburse the Principal Balance Certificates (other than the Exchangeable Certificates), the Trust Components and the Class X Certificates (in the same order of priority that the Available Distribution Amount would be applied for this purpose) for any, and to the extent of, Unpaid Interest due and owing to such classes and Trust Components.
Any reimbursements of Advances determined to be nonrecoverable (and interest on such Advances) that are made in any Collection Period from collections or advances of principal that (in the absence of the reductions that we describe under the definition of Principal Distribution Amount) would otherwise be included in the total amount of principal distributable to Certificateholders for the related Distribution Date, will create a Collateral Support Deficit for such Distribution Date. Such Collateral Support Deficit will be applied in accordance with the loss allocation rules described in the third preceding paragraph to reduce the Certificate Principal Balances of the Principal Balance Certificates (without accompanying principal distributions) on the Distribution Date for that Collection Period.
Mortgage loan losses, Collateral Support Deficits and Trust Advisor Expenses will not be allocated to the Class V or Class R Certificates and will not be directly allocated to the Class X Certificates or the Exchangeable Certificates. However, the Notional Amounts of the classes of Class X Certificates will be reduced if the Certificate Principal Balances of the related classes of Principal Balance Certificates
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and/or Trust Components are reduced by such loan losses, such Collateral Support Deficits or Excess Trust Advisor Expenses. Furthermore, the Certificate Principal Balances of the Exchangeable Certificates will be reduced if the related Trust Components are reduced by such losses, such Collateral Support Deficit or Excess Trust Advisor Expenses (in each case to the extent of their respective percentage interests of the related Trust Components).
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—The Special Servicer—Special Servicer Compensation” in this prospectus supplement, the payment of interest on Advances and certain servicing expenses and any other Additional Trust Fund Expenses; and (2) certain unanticipated, non-mortgage loan specific expenses of the Issuing Entity, including certain reimbursements to the certificate administrator as described under “Description of the Offered Certificates—Matters Regarding the Certificate Administrator,” “—The Trustee—Trustee Compensation” and “—The Custodian” in this prospectus supplement or any other party to the Pooling and Servicing Agreement, and certain federal, state and local taxes, and certain tax-related expenses, payable by the Issuing Entity as described under “Material Federal Income Tax Consequences—Taxes on a REMIC” in this prospectus supplement. Accordingly, the allocation of a Collateral Support Deficit as described above will constitute an allocation of losses and other shortfalls experienced by the Issuing Entity.
A class of Certificates will be considered outstanding until its Certificate Principal Balance or Notional Amount is reduced to zero;provided that in any event the Class V Certificates will be considered outstanding so long as Holders of such Certificates are entitled to receive Excess Interest.
Notwithstanding the foregoing, amounts that might otherwise be distributable in respect of a more senior class of Certificates or Trust Component may be used to reimburse Trust Advisor Expenses without an offsetting reduction to amounts payable to the Control Eligible Certificates as described below under “—Distributions—Allocation of Trust Advisor Expenses.” In addition, among the Principal Balance Certificates that are not Control Eligible Certificates, as a result of allocating Trust Advisor Expenses to reduce interest, a more senior class of Certificates or Trust Component may suffer a permanent reduction of interest even though the Certificate Principal Balance(s) of the more subordinate class or classes of Certificates has not been reduced to zero.
Any shortfall in the amount of the Distributable Certificate Interest paid with respect to any class of Certificates or Trust Component on any Distribution Date will result in Unpaid Interest for such class, which will be distributable in subsequent periods to the extent of funds available therefor. “Unpaid Interest” means, on any Distribution Date with respect to any class of Certificates or Trust Component, the portion of Distributable Certificate Interest for such class or Trust Component remaining unpaid as of the close of business on the preceding Distribution Date. Unpaid Interest for any class of Principal Balance Certificates (other than the Control Eligible Certificates) or Trust Component will not include any reductions in the Distributable Certificate Interest resulting from allocations of Trust Advisor Expenses, except to the extent such reductions are reimbursed in accordance with the definition of Distributable Certificate Interest.
Realized losses and Additional Trust Fund Expenses with respect to any mortgage loan that is part of a Loan Pair will equal apro rata share (based on the relative principal balance of such mortgage loan and the related Serviced Companion Loan, as applicable) of the amount of any loss calculated with respect to such Loan Pair. Realized losses with respect to any A/B Whole Loan are to be allocated first to the related Serviced B Note and then to the related mortgage loan, and expenses are to be paid first out of collections on, and other proceeds of, the related Serviced B Note and then out of collections on, and other proceeds of, the related mortgage loan. See “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs.”
Realized losses and additional trust fund expenses under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement with respect to any mortgage loan that is part of a Non-Serviced Loan Combination will equal aprorata share (based on the relative principal balance of such mortgage loan and the related Non-Serviced Companion Loan, as applicable) of the amount of any loss calculated with respect to such Non-Serviced Loan Combination;provided, that with respect to each of the Alderwood Mall Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, any such realized losses and additional trust fund expenses will first be applied to the Alderwood Mall B Note and the Hilton Garden Inn W 54th Street B Note, respectively. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations.”
Allocation of Trust Advisor Expenses
On each Distribution Date, immediately prior to the distributions to be made to the Certificateholders on that date, the certificate administrator is required to allocate Trust Advisor Expenses to reduce the Distributable Certificate Interest for such Distribution Date for the Class D Certificates, the Class C Trust Component (and correspondingly, the Class C Certificates and the Class PST Component C,pro rata, based on their respective percentage interests in the Class C Trust Component) and Class B Trust Component (and correspondingly, the Class B Certificates and the Class PST Component B,pro rata, based on their respective percentage interests in the Class B Trust Component), in that order, in each case, until the Distributable Certificate Interest of such class or Trust Component for such Distribution Date has been reduced to zero. Trust Advisor Expenses will not be allocated to reduce interest distributable to the Class A Senior Certificates, the Class A-S Trust Component (or, correspondingly, the Class A-S Certificates or the Class PST Component A-S), the Class X Certificates, the Class V Certificates (with respect to Excess Interest) or the Control Eligible Certificates, which interest shall be paid as if such Trust Advisor Expenses were not incurred.
To the extent that the amount of Trust Advisor Expenses with respect to a Distribution Date is greater than the aggregate amount of the Distributable Certificate Interest otherwise distributable to the Class B Trust Component (and correspondingly, the Class B Certificates and the Class PST Component B,pro rata, based on their respective percentage interests in the Class B Trust Component), the Class C Trust Component (and correspondingly, the Class C Certificates and the Class PST Component C,pro rata, based on their respective percentage interests in the Class C Trust Component) and the Class D Certificates for such Distribution Date, the resulting Excess Trust Advisor Expenses will be allocated to reduce the Principal Distribution Amount otherwise allocable to the Principal Balance Certificates that are not Control Eligible Certificates for such Distribution Date. The Excess Trust Advisor Expenses will reduce the Principal Distribution Amount for the Principal Balance Certificates that are not Control Eligible Certificates for such Distribution Date and, to the extent of such reduction, will be allocated to reduce the Certificate Principal Balances of the following Classes of Certificates and Trust Components in the following order: to the Class D Certificates, the Class C Trust Component (and correspondingly, the Class C Certificates and the Class PST Component C,pro rata, based on their respective percentage interests in the Class C Trust Component), the Class B Trust Component (and correspondingly, the Class B Certificates and the Class PST Component B,pro rata, based on their respective percentage interests in the Class B Trust
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Component) and the Class A-S Trust Component (and correspondingly, the Class A-S Certificates and the Class PST Component A-S,pro rata, based on their respective percentage interests in the Class A-S Trust Component), in each case, until the remaining Certificate Principal Balance of such class of Certificates or Trust Component has been reduced to zero. Following the reduction of the Certificate Principal Balances of the foregoing classes of Principal Balance Certificates and Trust Components to zero, the certificate administrator will be required to allocate the remaining Excess Trust Advisor Expenses among the classes of Class A Senior Certificates,pro rata (based upon their respective Certificate Principal Balances), until the remaining Certificate Principal Balances of the Class A Senior Certificates have been reduced to zero.
Any Trust Advisor Expenses (or Excess Trust Advisor Expenses) allocated to a Class PST Component will in turn be allocated to the Class PST Certificates. Any Trust Advisor Expenses (or Excess Trust Advisor Expenses) allocated to a class of Certificates will be allocated among the respective Certificates of such class in proportion to the Percentage Interests evidenced by the respective Certificates. In the event that amounts distributable in respect of the Distributable Certificate Interest to the Class B Trust Component (and correspondingly, the Class B Certificates and the Class PST Component B,pro rata, based on their respective percentage interests in the Class B Trust Component) and Class C Trust Component (and correspondingly, the Class C Certificates and the Class PST Component C,pro rata, based on their respective percentage interests in the Class C Trust Component) and Class D Certificates or otherwise available as the indicated portion of the Principal Distribution Amount are insufficient to reimburse any related Trust Advisor Expenses on a Distribution Date, any unreimbursed Trust Advisor Expenses will remain unreimbursed until the next Distribution Date that such applicable amounts are available. In no event will any Trust Advisor Expenses or Excess Trust Advisor Expenses reduce or delay in any manner any principal or interest payable in respect of the Class V Certificates (with respect to Excess Interest) or the Control Eligible Certificates, and such Certificates will continue to be paid their respective principal and interest entitlements as if such Trust Advisor Expenses and/or Excess Trust Advisor Expenses had not been incurred.
To the extent amounts are actually received by the Issuing Entity as reimbursements of Trust Advisor Expenses (which Trust Advisor Expenses were actually applied to reduce the Distributable Certificate Interest or Principal Distribution Amount of the Principal Balance Certificates (other than the Control Eligible Certificates) or related Trust Components), or amounts are on deposit in the TA Unused Fees Account at any time and are available to reimburse the holders of the Principal Balance Certificates (other than the Control Eligible Certificates) or Trust Components in accordance with “—Distributions—Subordination; Allocation of Collateral Support Deficit” in this prospectus supplement, those amounts will be allocated first as recoveries of principal in the reverse order in which they were allocated to reduce the Certificate Principal Balances of such respective classes of Principal Balance Certificates and Trust Components and then as recoveries of interest to the Class B Trust Component (and correspondingly, the Class B Certificates and the Class PST Component B,pro rata, based on their respective percentage interests in the Class B Trust Component), Class C Trust Component (and correspondingly, the Class C Certificates and the Class PST Component C,pro rata, based on their respective percentage interests in the Class C Trust Component) and Class D Certificates, in that order.
In addition, if Trust Advisor Expenses are allocated to reduce the Distributable Certificate Interest with respect to the Class B Trust Component (and correspondingly, the Class B Certificates and the Class PST Component B,pro rata, based on their respective percentage interests in the Class B Trust Component) or Class C Trust Component (and correspondingly, the Class C Certificates and the Class PST Component C,pro rata, based on their respective percentage interests in the Class C Trust Component) for any Distribution Date, then that allocation may be reimbursed out of amounts otherwise payable as interest to a more subordinate class of Certificates or Trust Component among the Class C Trust Component (and correspondingly, the Class C Certificates and the Class PST Component C,pro rata, based on their respective percentage interests in the Class C Trust Component) and the Class D Certificates on a subsequent Distribution Date by making corresponding adjustments to the Distributable Certificate Interest for the affected classes for that subsequent Distribution Date.
Prepayment Interest Shortfalls and Prepayment Interest Excesses
If the aggregate Prepayment Interest Shortfalls on all mortgage loans other than Specially Serviced Mortgage Loans exceed the aggregate Prepayment Interest Excesses for such mortgage loans for the Collection Period related to a Distribution Date, the Master Servicing Fee and certain other compensation payable to the master servicer will be reduced by the amount of any Compensating Interest, subject to certain limitations described in this prospectus supplement. See “Servicing of the Mortgage Loans—The Master Servicer—Master Servicer Compensation” in this prospectus supplement.
“Prepayment Interest Shortfall” means a shortfall in the collection of a full month’s interest for any Distribution Date with respect to any mortgage loan as to which the related borrower has made a full or partial Principal Prepayment (or a Balloon Payment) during the related Collection Period and as to which the date such payment was made occurred prior to the related Due Date in such Collection Period (including any shortfall resulting from such a payment during the grace period relating to such Due Date). Such a shortfall arises because the amount of interest (net of the Administrative Fee Rate) that accrues on the amount of such Principal Prepayment or Balloon Payment will be less than the corresponding amount of interest accruing on the Certificates (other than the Exchangeable Certificates) and the Trust Components. In such a case, the Prepayment Interest Shortfall will generally equal the excess of:
· | the aggregate amount of interest that would have accrued at the Net Mortgage Rate (net of the Master Servicing Fee, the Special Servicing Fee (if the related mortgage loan is a Specially Serviced Mortgage Loan), the Trust Advisor Fee, the Certificate Administrator Fee, the CREFC® License Fee and any servicing fee, certificate administrator fee, trust advisor fee or trustee fee payable in connection with any Non-Serviced Mortgage Loan (in the case of any Non-Serviced Mortgage Loan)) on the Stated Principal Balance of such mortgage loan if the mortgage loan had paid on its Due Date and such Principal Prepayment or Balloon Payment had not been made; over |
· | the aggregate interest that did so accrue through the date such payment was made (net of the fees described in the preceding bullet). |
“Prepayment Interest Excess” means, in the case of a mortgage loan as to which a full or partial Principal Prepayment or a Balloon Payment is made during any Collection Period after the related Due Date, the amount of interest which accrues on the amount of such Principal Prepayment or Balloon Payment that exceeds the corresponding amount of interest accruing on the Certificates (other than the Exchangeable Certificates) and the Trust Components. The amount of the Prepayment Interest Excess in any such case will generally equal the interest that accrues on the mortgage loan from such Due Date to the date such payment was made, net of the Certificate Administrator Fee, the Master Servicing Fee, the Trust Advisor Fee, the CREFC® License Fee and, if the related mortgage loan is a Specially Serviced Mortgage Loan, net of the Special Servicing Fee (and net of any servicing fee, certificate administrator fee, trust advisor fee or trustee fee payable in connection with any Non-Serviced Mortgage Loan).
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Prior to the allocation of any Trust Advisor Expenses to reduce the Distributable Certificate Interest payable with respect to any of the Class B Trust Component (and correspondingly, the Class B Certificates and the Class PST Component B,pro rata, based on their respective percentage interests in the Class B Trust Component), Class C Trust Component (and correspondingly, the Class C Certificates and the Class PST Component C,pro rata, based on their respective percentage interests in the Class C Trust Component), or the Class D Certificates on any Distribution Date, any Net Aggregate Prepayment Interest Shortfall for a Distribution Date will be allocated to each class of interest-bearing Certificates (other than the Exchangeable Certificates) and each Trust Component,pro rata, in proportion to the amount of Accrued Certificate Interest payable to such class or Trust Component on such Distribution Date, in each case reducing interest otherwise payable thereon. The Distributable Certificate Interest in respect of any class of interest-bearing Certificates (other than the Exchangeable Certificates) or Trust Component (and correspondingly, the Class A-S, Class B or Class C Certificates, as applicable, and the related Class PST Component,pro rata, based on their respective percentage interests in such Trust Component) will be reduced to the extent any Net Aggregate Prepayment Interest Shortfalls are allocated to such class of Certificates or Trust Component. See “Servicing of the Mortgage Loans—The Master Servicer—Master Servicer Compensation” in this prospectus supplement.
On any Distribution Date, to the extent that the aggregate Prepayment Interest Excesses on all mortgage loans (other than Specially Serviced Mortgage Loans) exceed the aggregate Prepayment Interest Shortfalls for such mortgage loans for such Distribution Date, the excess amount will be payable to the master servicer as additional servicing compensation. Likewise, to the extent that the aggregate Prepayment Interest Excesses on all Specially Serviced Mortgage Loans exceed the aggregate Prepayment Interest Shortfalls for such mortgage loans for such Distribution Date, the excess amount will be payable to the special servicer as additional servicing compensation.
With respect to any Master Servicer Remittance Date, Scheduled Payments due in a Collection Period succeeding the Collection Period relating to such Master Servicer Remittance Date, Principal Prepayments received after the related Collection Period or other amounts not distributable on the related Distribution Date are required to be held in the Collection Account (or a sub-account thereof) for remittance to the Distribution Account on the applicable successive Master Servicer Remittance Date or Dates. The master servicer will be required to use commercially reasonable efforts to remit to the Distribution Account on any Master Servicer Remittance Date for a Collection Period any Balloon Payments that are received by the master servicer during the period that begins two (2) Business Days immediately preceding the related Master Servicer Remittance Date and ends on such Master Servicer Remittance Date.
Optional Termination
The Holders of a majority of the most subordinate class of REMIC Regular Certificates or Exchangeable Certificates outstanding (for this purpose considering each of the Class A-S, Class B and Class C Certificates together with the portion of the Class PST Certificates representing an interest in the Trust Component bearing the same alphabetic designation), the special servicer, the master servicer and the Holder of the majority interest in the Class R Certificates, in that order, will have the option to purchase, in whole but not in part, the mortgage loans (in the case of any A/B Whole Loan or Loan Pair, subject to any purchase option rights of the holder of the related Serviced B Note or Serviced Companion Loan provided for in the related Intercreditor Agreement) and any other property remaining in the Issuing Entity on or after the date on which the aggregate principal balance of the mortgage loans is less than or equal to 1.0% of the Initial Pool Balance. See “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” in this prospectus supplement.
The purchase price for any such purchase will be 100% of the aggregate unpaid principal balances of the mortgage loans, other than REO Mortgage Loans and any mortgage loans as to which the master servicer has determined that all payments or recoveries with respect to such mortgage loans have been made, plus accrued and unpaid interest at the mortgage rate—or the mortgage rate less the Master Servicing Fee Rate if the master servicer is the purchaser—to the Due Date for each mortgage loan ending in the Collection Period with respect to which such purchase occurs, plus unreimbursed Advances, with interest thereon at the Advance Rate, and the fair market value of any other property remaining in the Issuing Entity. The optional termination of the Issuing Entity must be conducted so as to constitute a “qualified liquidation” of the underlying REMICs under Section 860F of the Code.
Upon any such termination, the purchase price for the mortgage loans and the other property in the Issuing Entity will be applied to pay accrued and unpaid interest on and reduce the Certificate Principal Balance of all outstanding classes to zero in the manner provided under “Description of the Offered Certificates—Distributions—Application of the Available Distribution Amount” in this prospectus supplement.
Any such termination will have an adverse effect on the yield of any outstanding Offered Certificates purchased at a premium. See “Yield, Prepayment and Maturity Considerations” in this prospectus supplement.
In addition, if at any time (i) the aggregate Certificate Principal Balances or Notional Amounts, as applicable, of the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4, Class A-S, Class X-A, Class B, Class PST, Class C and Class D Certificates have been reduced to zero and (ii) there is only one Holder (or a group of Holders acting in unanimity) of all the outstanding Certificates (excluding the Class V and Class R Certificates), such Certificateholder will have the right to exchange all of its Certificates (other than the Class V and Class R Certificates) for the mortgage loans and each REO Property remaining in the Issuing Entity if such Certificateholder or group of Certificateholders pays to the Master Servicer an amount equal to (i) the product of (a) the Advance Rate, (b) the aggregate Certificate Principal Balances of the then-outstanding Principal Balance Certificates as of the date of such exchange and (c) three, divided by (ii) 360.
Advances
P&I Advances
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, and are not credit support for the Certificates and will not act to guarantee or insure against losses on the mortgage loans or otherwise. On the Business Day prior to each Distribution Date (the “Master Servicer Remittance Date”), the master servicer will be obligated to make a P&I Advance in respect of each mortgage loan included in the Issuing Entity, subject to the following paragraph, but only to the extent that the master servicer or the special servicer has not determined, in its sole discretion, exercised in good faith, that the amount so advanced, plus interest expected to accrue thereon, would be nonrecoverable from subsequent payments or collections, including Insurance Proceeds and Liquidation Proceeds, in respect of the related mortgage loan, and only until such mortgage loan has been liquidated. Notwithstanding the foregoing if an Appraisal Reduction has been applied with respect to any mortgage loan, then the amount of any P&I Advance required to be advanced by the master servicer with respect to interest thereon (there will be no reduction in the principal portion, if any, of such P&I Advance) will be an amount equal to the product of:
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· | the amount of interest required to be advanced by the master servicer without giving effect to this sentence; and |
· | a fraction, the numerator of which is the Stated Principal Balance of such mortgage loan immediately prior to such Distribution Date less any Appraisal Reduction in effect with respect to such mortgage loan (or, in the case of a mortgage loan that is part of an A/B Whole Loan or Loan Pair, or that is a Non-Serviced Mortgage Loan, the portion of the Appraisal Reduction that is allocable to such mortgage loan), and the denominator of which is the Stated Principal Balance of the mortgage loan immediately prior to such Distribution Date. |
In addition, the master servicer will not in any event be required to (i) advance Prepayment Premiums or Yield Maintenance Charges, Excess Interest, default interest or late fees, if any, or (ii) make any P&I Advances on any B Note, Non-Serviced Companion Loan or Serviced Companion Loan.
“P&I Advance” means the amount of any Scheduled Payments or Assumed Scheduled Payment (net of the related Master Servicing Fees), other than any Balloon Payment, advanced or to be advanced, as the context may require, on the mortgage loans that are delinquent as of the close of business on the preceding Determination Date.
With respect to any mortgage loan included in the Issuing Entity that is delinquent in respect of its Balloon Payment and any REO Mortgage Loan, P&I Advances will be required in an amount equal to the Assumed Scheduled Payment, less the related Master Servicing Fee and any other servicing fees payable from such Assumed Scheduled Payment, subject to the same conditions and limitations, as described above, that apply to P&I Advances of other Scheduled Payments.
The Assumed Scheduled Payment will be an amount deemed due in respect of:
· | any Balloon Loan that is delinquent in respect of its Balloon Payment beyond the first Determination Date that follows its original stated maturity date; or |
· | any mortgage loan as to which the related mortgaged property has become an REO Property. |
The “Assumed Scheduled Payment” deemed due on any such Balloon Loan on its original stated maturity date and on each successive Due Date that such Balloon Loan remains or is deemed to remain outstanding will equal the Scheduled Payment that would have been due on such date if the related Balloon Payment had not come due, but rather such mortgage loan had continued to amortize in accordance with its amortization schedule in effect immediately prior to maturity. With respect to any mortgage loan as to which the related mortgaged property has become an REO Property, the “Assumed Scheduled Payment” deemed due on each Due Date for so long as the REO Property remains part of the Issuing Entity, equals the Scheduled Payment (or Assumed Scheduled Payment) due on the last Due Date prior to the acquisition of such REO Property.
“Balloon Loans”means mortgage loans that provide for Scheduled Payments based on amortization schedules significantly longer than their terms to maturity or Anticipated Repayment Date, and that are expected to have remaining principal balances equal to or greater than 5% of the outstanding principal balance as of the Cut-off Date of those mortgage loans as of their respective stated maturity date or anticipated to be paid on their Anticipated Repayment Dates, as the case may be, unless previously prepaid. ARD Loans are included in the definition of Balloon Loans.
“Balloon Payment” means, with respect to the Balloon Loans (and any related B Note or companion loan), the principal payments and scheduled interest due and payable on the relevant maturity dates.
The master servicer will be entitled to interest on P&I Advances, which interest will accrue at the Advance Rate. This interest and any interest on other Advances will result in a reduction in amounts payable on the Certificates, to the extent that interest is not otherwise offset in accordance with the Pooling and Servicing Agreement. Such interest will be payable from amounts set forth in the table under “Description of the Offered Certificates—Distributions—Fees and Expenses” above.
The “Advance Rate” will be a rate equal to the “Prime Rate” as reported inThe Wall Street Journalfrom time to time.
P&I Advances will be reimbursable or payable from recoveries on the related mortgage loans and, to the extent the master servicer or the special servicer determines in its sole discretion, exercised in good faith, that a P&I Advance will not be ultimately recoverable from related recoveries, from funds on deposit in the Collection Account and Distribution Account as described under “—Advances—Reimbursement of Advances” below. P&I Advances made in respect of mortgage loans that have a grace period that expires after the Master Servicer Remittance Date will not begin to accrue interest until the day succeeding the expiration date of any applicable grace period. In no event will the master servicer be required to make aggregate P&I Advances with respect to any mortgage loan which, when including the amount of interest accrued on such Advances at the Advance Rate, equals an amount greater than the Stated Principal Balance plus all overdue amounts on such mortgage loan.
The right of the master servicer to reimbursement or payment out of recoveries will be prior to the right of the Certificateholders to receive any amounts recovered with respect to any mortgage loan. If the master servicer fails to make a required P&I Advance, the trustee is, subject to a recoverability determination, required to make such P&I Advance, each subject to the same limitations, and with the same rights, including the right to receive interest on such P&I Advance, as described above for the master servicer.
Servicing Advances
In addition to P&I Advances, the master servicer will also be obligated, and the special servicer will have the option (on an emergency basis) (in each case, 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 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 be required to make the required Servicing Advance in accordance with the terms of the Pooling and Servicing Agreement.
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Servicing Advances, in all cases, will be reimbursable as described below. The master servicer will be permitted to pay, or to direct the payment of, certain servicing expenses directly out of the Collection Account or Distribution Account and under certain circumstances without regard to the relationship between the expense and the funds from which it is being paid.
Servicing Advances may be made by the master servicer, special servicer (on an emergency basis), or trustee, as applicable, in order to pay, among other things, delinquent real estate taxes, assessments and hazard insurance premiums (to the extent that insurance coverage is available at commercially reasonable rates and not paid by the related borrower), 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. With respect to REO Properties, Servicing Advances may be made by the master servicer, special servicer (on an emergency basis), or trustee, as applicable, if necessary and to the extent that funds from the operation of the related REO Property are unavailable to pay any amounts due and payable, for:
· | insurance premiums, to the extent that insurance coverage is available at commercially reasonable rates; |
· | items such as real estate taxes and assessments in respect of such REO Property that may result in the imposition of a lien; |
· | any ground rents in respect of such REO Property; and |
· | other costs and expenses necessary to maintain, operate, lease and sell such REO Property (other than capital improvements and, to the extent necessary to comply with the REMIC provisions, capital expenditures). |
The master servicer, special servicer and the trustee will each be entitled to interest on Servicing Advances made by it. This interest and any interest on other Advances will result in a reduction in amounts payable on the Certificates, to the extent that interest is not otherwise offset in accordance with the Pooling and Servicing Agreement. Such interest will be payable from amounts set forth in the table under “Description of the Offered Certificates—Distributions—Fees and Expenses” above.
The master servicer and the special servicer may incur certain costs and expenses in connection with the servicing of a mortgage loan, Serviced B Note or Serviced Companion Loan or the administration of REO Property. Servicing Advances will be reimbursable from recoveries or collections on the related mortgage loan (and, if applicable, the related Serviced B Note or Serviced Companion Loan) or REO Property. However, if the master servicer or the special servicer, as applicable, determines, as described below, that any Servicing Advance previously made will not be ultimately recoverable from such related recoveries, such advances will generally be reimbursable from amounts on deposit in the Collection Account or Distribution Account as described under “—Advances—Reimbursement of Advances” below.
Notwithstanding the prior paragraph, if the special servicer makes an emergency Servicing Advance, the master servicer must reimburse the special servicer for such emergency Servicing Advance, upon which the master servicer will be deemed to have made the Servicing Advance. Notwithstanding the foregoing, the master servicer need not so reimburse an emergency Servicing Advance that it determines to be a Nonrecoverable Advance in which event such Servicing Advance, like other Nonrecoverable Advances, will be reimbursed to the special servicer from amounts on deposit in the Collection Account or Distribution Account. Notwithstanding the foregoing, the master servicer will be obligated to make such Servicing Advances only to the extent that the master servicer or the special servicer has not determined, as described below, that the amount so advanced, plus interest expected to accrue thereon, would be nonrecoverable from subsequent payments or collections, including Insurance Proceeds, Condemnation Proceeds, Liquidation Proceeds or proceeds of mortgage loan repurchases (or from any other collections), in respect of the related mortgage loan (or, in the case of Servicing Advances made on any Loan Pair, out of collections on the related Loan Pair) or REO Property.
Notwithstanding the foregoing, the applicable Non-Serviced Mortgage Loan Master Servicer will be obligated to make servicing advances with respect to any related Non-Serviced Mortgage Loan, on substantially the same terms and conditions as described above, pursuant to the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, and none of the master servicer, the trustee or special servicer will have any obligation or authority to make Servicing Advances with respect to any Non-Serviced Mortgage Loan.
Reimbursement of Advances
Any P&I Advance or Servicing Advance, in either case, with interest, that has been determined to be nonrecoverable from collections on the particular mortgage loan (or, in the case of Servicing Advances made on any Loan Pair, the particular Loan Pair) to which it relates (a “Nonrecoverable Advance”) will be reimbursable from the Collection Account in the Collection Period in which the nonrecoverability determination is made. Any reimbursement of Nonrecoverable Advances will be made first from amounts in the Collection Account that are allocable to principal received with respect to the Mortgage Pool during the Collection Period in which the reimbursement is made, prior to reimbursement from other collections (including interest) received during that Collection Period (and similarly, in subsequent periods, from principal first and then from other collections).
If the funds in the Collection Account relating to the mortgage loans allocable to principal on the mortgage loans are insufficient to fully reimburse the party entitled to reimbursement of Nonrecoverable Advances, then such party as an accommodation may elect, on a monthly basis, at its sole option and discretion to defer reimbursement of the portion that exceeds such amount allocable to principal (in which case interest will continue to accrue on the unreimbursed portion of the Advance) for a time as required to reimburse the excess portion from principal for a consecutive period of up to twelve (12) months (providedthat any such deferral exceeding six (6) months will require, during any Subordinate Control Period and any Collective Consultation Period, the consent of the Controlling Class Representative), and any election to so defer shall be deemed to be in accordance with the Servicing Standard;provided, that no such deferral shall occur at any time to the extent that amounts otherwise distributable as principal are available for such reimbursement.
If a P&I Advance or Servicing Advance is made with respect to a mortgage loan after a default thereon and such mortgage loan is thereafter worked out under terms that do not provide for the repayment of those Advances (together with interest thereon) in full at the time of the workout, but such amounts become an obligation of the borrower to be paid in the future (such Advance, together with interest on that Advance, a “Workout-Delayed Reimbursement Amount”), then such Workout-Delayed Reimbursement Amount, unless determined to be nonrecoverable, will be reimbursable only from amounts in the Collection Account that represent principal on the mortgage loans (net of any principal used to reimburse any Nonrecoverable Advance (together with interest thereon)). To the extent that the reimbursement is made from principal, the Principal Distribution Amount otherwise payable on the Certificates on the related Distribution Date will be reduced and, in the case of reimbursement of Nonrecoverable Advances (or interest thereon), the resulting Collateral Support Deficit will be allocated (in accordance with the loss allocation rules described above under “—Distributions—Subordination; Allocation of Collateral Support Deficit”) to
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reduce the respective Certificate Principal Balances of the various classes of the Principal Balance Certificates and Trust Components on that Distribution Date. Any amount that constitutes all or a portion of any Workout-Delayed Reimbursement Amount may in the future be determined to constitute a Nonrecoverable Advance and thereafter shall be recoverable as any other Nonrecoverable Advance.
Any provision in the Pooling and Servicing Agreement requiring that a Servicing Advance or P&I Advance be made by the master servicer, the special servicer or the trustee is intended solely to provide liquidity for the benefit of the Certificateholders and not as credit support or otherwise to impose on any such person or entity the risk of loss with respect to one or more of the mortgage loans.
Each Distribution Date Statement furnished or made available by the certificate administrator to the Certificateholders will contain information relating to the amounts of Advances made with respect to the related Distribution Date. See “Description of the Offered Certificates—Reports to Certificateholders; Available Information” in this prospectus supplement.
To the extent set forth in the related intercreditor agreement and Non-Serviced Mortgage Loan Pooling and Servicing Agreement, any Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Trustee with respect to any Non-Serviced Mortgage Loan will be entitled to reimbursement for nonrecoverable servicing advances made with respect to such Non-Serviced Mortgage Loan (together with any accrued and unpaid interest thereon), as provided for under the Pooling and Servicing Agreement, including (if necessary) out of general collections on the mortgage loans.
Nonrecoverable Advances
The determination that any P&I Advance or Servicing Advance, previously made or proposed to be made, would not be recoverable will be made in the sole discretion of the trustee, master servicer or special servicer, as applicable, exercising good faith, and must be accompanied by an officer’s certificate delivered to the trustee, the special servicer or the master servicer (as applicable), the Controlling Class Representative (during any Subordinate Control Period and any Collective Consultation Period), the 17g-5 Information Provider, the Trust Advisor (other than during a Subordinate Control Period), the certificate administrator and the depositor (and the holder of the related Serviced B Note or Serviced Companion Loan if the Servicing Advance relates to an A/B Whole Loan or Loan Pair) and setting forth the reasons for such determination, together with, in the case of the master servicer or the special servicer, copies of appraisals or internal valuations, if any, or other information that supports such determination. The trustee, master servicer or special servicer, as applicable, will not be required to make any advance that it determines in its good faith business judgment (in the case of the trustee) or in accordance with the Servicing Standard (in the case of the master servicer or special servicer) would be nonrecoverable. In addition, the master servicer and the trustee may not make any advance if the special servicer determines in accordance with the Servicing Standard that such advance, if made, would be nonrecoverable. The master servicer’s or special servicer’s determination of nonrecoverability will be conclusive and binding upon the Certificateholders and the trustee. The trustee will be entitled to rely conclusively on any determination by the master servicer or special servicer of nonrecoverability, and the master servicer will be entitled to rely conclusively on any determination by the special servicer of nonrecoverability, with respect to such Advance.
In making such recoverability determination, the master servicer, special servicer or trustee, as applicable, will be entitled (a) to consider (among other things) (i) the obligations of the mortgagor under the terms of the related mortgage loan as it may have been modified and (ii) the related mortgaged properties in their “as is” or then-current conditions and occupancies as they actually are or may be modified by such party’s assumptions (consistent with the Servicing Standard in the case of the master servicer or the special servicer) regarding the possibility and effects of future adverse change with respect to such mortgaged properties and/or (b) to estimate and consider (consistent with the Servicing Standard in the case of the master servicer or the special servicer), among other things, future expenses and/or the timing of recoveries. In addition, any person, in considering whether any proposed P&I Advance or Servicing Advance is a Nonrecoverable Advance, will be entitled to give due regard to the existence of any outstanding Nonrecoverable Advances (including any interest thereon) or Workout-Delayed Reimbursement Amounts with respect to other mortgage loans, A/B Whole Loans or Loan Pairs where reimbursement is, at the time of such consideration, being deferred or delayed by the master servicer, the special servicer or the trustee because there is insufficient principal available for such reimbursement, in light of the fact that proceeds on the related mortgage loan, A/B Whole Loan or Loan Pair are not only a source of reimbursement for the P&I Advance or Servicing Advance under consideration, but also a potential source of reimbursement for such deferred or delayed Nonrecoverable Advance. In addition, the trustee, master servicer or special servicer may update or change its recoverability determinations at any time.
The Non-Serviced Mortgage Loan Master Servicer, Non-Serviced Mortgage Loan Special Servicer and Non-Serviced Mortgage Loan Trustee under any Non-Serviced Mortgage Loan Pooling and Servicing Agreement will be entitled to make similar determinations with respect to nonrecoverable advances pursuant to provisions substantially similar to those described above. With respect to P&I Advances on any Non-Serviced Mortgage Loan, the master servicer and the trustee will be entitled to conclusively rely on any nonrecoverability determination made by the Non-Serviced Mortgage Loan Master Servicer, Non-Serviced Mortgage Loan Special Servicer or Non-Serviced Mortgage Loan Trustee, as applicable, in respect of the related Non-Serviced Companion Loan.
Matters Relating to A/B Whole Loans, Loan Pairs and Non-Serviced Loan Combinations
With respect to any Mortgage Loan that is part of an A/B Whole Loan, Loan Pair or Non-Serviced Loan Combination, each of the master servicer and the special servicer will be permitted to make its own determination that the master servicer has made a nonrecoverable P&I Advance thereon or that any proposed P&I Advance, if made, would constitute a nonrecoverable P&I Advance with respect thereto independently of any determination made by any servicer of a related companion loan. If the master servicer or special servicer determines that a proposed P&I Advance with respect to any such mortgage loan, if made, would be, or any outstanding P&I Advance with respect thereto previously made is, as applicable, a nonrecoverable advance, the master servicer or special servicer, as applicable, will be required to provide each servicer of any related B note or companion loan written notice of such determination, promptly and in any event within the time permitted by the related Intercreditor Agreement. If the master servicer, special servicer or trustee receives written notice from any such servicer that it has determined, with respect to the related B note or companion loan, that any proposed advance of principal and/or interest would be, or any outstanding advance of principal and/or interest is, a nonrecoverable advance, such determination will not be binding on the Certificateholders, the master servicer, special servicer or the trustee; however, the master servicer, special servicer or trustee, as applicable, will be permitted to rely on such determination.
Any Servicing Advance (and interest thereon and certain costs and expenses) made by the master servicer, the special servicer or the trustee, as applicable, with respect to any A/B Whole Loan or Loan Pair will be reimbursable from recoveries or collections thereon pursuant to the terms of the related Intercreditor Agreement.
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Appraisal Reductions
With respect to any mortgage loan (other than any Non-Serviced Mortgage Loan), A/B Whole Loan or Loan Pair, the special servicer is required to obtain a Member of the Appraisal Institute (“MAI”) appraisal if the Stated Principal Balance of the mortgage loan, A/B Whole Loan or Loan Pair is greater than $2,000,000, or at its option, if the Stated Principal Balance of the mortgage loan, A/B Whole Loan or Loan Pair is equal to or less than $2,000,000, the special servicer may either obtain an MAI appraisal or perform an internal valuation of the related mortgaged property or REO Property, as the case may be. The special servicer is required to use reasonable efforts to order such MAI appraisal within fifteen (15) calendar days following the earliest Appraisal Event with respect to a mortgage loan and to use reasonable efforts to obtain such MAI appraisal or perform such internal valuation, as applicable, within sixty (60) days following such Appraisal Event. However, the special servicer, in accordance with the Servicing Standard, need not obtain either the MAI appraisal or the internal valuation if such an appraisal or valuation had been obtained within the prior nine (9) months.
Notwithstanding the foregoing, an updated appraisal will not be required with respect to any mortgage loan, A/B Whole Loan or Loan Pair, as applicable, and an Appraisal Reduction will not be required, so long as a debt service reserve, letter of credit, guaranty or surety bond is available and has the ability to pay off the then unpaid principal balance of such mortgage loan, A/B Whole Loan or Loan Pair in full except to the extent that the special servicer, in accordance with the Servicing Standard, determines that obtaining an appraisal is in the best interests of the Certificateholders.
As a result of such appraisal or internal valuation, an Appraisal Reduction may be created. An Appraisal Reduction will be reduced to zero as of the date the related mortgage loan, A/B Whole Loan or Loan Pair is brought current under the then current terms of such mortgage loan, A/B Whole Loan or Loan Pair and remains current for three consecutive Scheduled Payments. No Appraisal Reduction will exist as to any mortgage loan, A/B Whole Loan or Loan Pair after it has been paid in full, liquidated, repurchased or otherwise disposed of. An appraisal for any mortgage loan, A/B Whole Loan or Loan Pair that has not been brought current for at least three consecutive months (or paid in full, liquidated, repurchased or otherwise disposed of) will be updated annually for so long as an Appraisal Reduction exists (or under certain circumstances upon a recalculation of the Appraisal Reduction based on an appraisal presented by a Requesting Holder, as described below in this “—Appraisal Reductions” section), with a corresponding adjustment to the amount of the related Appraisal Reduction.
With respect to any Non-Serviced Mortgage Loan, the related Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Special Servicer, as applicable, will be required to obtain an appraisal and calculate appraisal reductions in respect of such Non-Serviced Mortgage Loan pursuant to provisions in the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement substantially similar to the provisions described above. Any such appraisal reduction will be applied to such Non-Serviced Mortgage Loan to the extent notice thereof has been delivered to the master servicer by the related Non-Serviced Mortgage Loan Master Servicer. Receipt by the master servicer of a distribution date statement from the related Non-Serviced Mortgage Loan Master Servicer will constitute notice of such appraisal reduction if such appraisal reduction information is contained therein.
If the master servicer receives notice of a related Appraisal Reduction, the existence of an Appraisal Reduction will proportionately reduce the master servicer’s or the trustee’s, as the case may be, obligation to make the interest portion of P&I Advances in respect of the related mortgage loan, which will generally result in a reduction in current distributions in respect of the then most subordinate class or classes of Principal Balance Certificates (subject to the payment allocation priority of the Class PST Certificates described above under “----Distributions—Application of the Available Distribution Amount”). See “—Advances—P&I Advances” above. If the master servicer or the trustee, as applicable, does not receive notice of an Appraisal Reduction, it will have no obligation to proportionately reduce the amount of any P&I Advance required to be made by the master servicer or the trustee, except to the extent an Appraisal Reduction is applied as described in the last sentence of the definition of “Appraisal Reduction.” The master servicer will be required to deliver to the special servicer notice of the occurrence of an Appraisal Event promptly following its knowledge of the occurrence thereof, and the special servicer will be required to deliver to the master servicer notice of the occurrence of an Appraisal Event promptly following its knowledge of the occurrence thereof. With respect to any Loan Pair, the master servicer will be required to deliver to any related master servicer, special servicer and trustee in respect of any securitization of the related Serviced Companion Loan (i) notice of the occurrence of any Appraisal Event in respect of such Loan Pair promptly following its knowledge, or receipt of notice from the special servicer, of the occurrence thereof and (ii) a statement of any Appraisal Reduction in respect of such Loan Pair promptly following its receipt from the special servicer of the calculation or recalculation thereof.
An “Appraisal Event”means not later than the earliest of the following:
· | the date on which a modification of the mortgage loan, A/B Whole Loan or Loan Pair becomes effective following the occurrence of a Servicing Transfer Event that, among other things, materially affects the amount or timing of any payment of principal or interest on such mortgage loan, A/B Whole Loan or Loan Pair or materially affects any other Money Term (other than an extension of the date that a Balloon Payment is due for a period of less than six months from the original due date of such Balloon Payment), or changes any other material economic term of the mortgage loan, A/B Whole Loan or Loan Pair, or impairs the security of such mortgage loan, A/B Whole Loan or Loan Pair; |
· | that date on which the mortgage loan, A/B Whole Loan or Loan Pair is sixty (60) days or more delinquent in respect of any scheduled monthly debt service payment (other than a Balloon Payment); |
· | solely in the case of a delinquent Balloon Payment, (i) the date occurring sixty (60) days beyond the date on which that Balloon Payment was due (except as described in clause (ii)) or (ii) if the related borrower has delivered a refinancing commitment acceptable to the special servicer prior to the date sixty (60) days after maturity, the date occurring one hundred twenty (120) days after the date on which that Balloon Payment was due (or for such shorter period beyond the date on which that Balloon Payment was due during which the refinancing is scheduled to occur); |
· | that date on which the related mortgaged property became an REO Property; |
· | the day on which the special servicer receives notice that a receiver or similar official has been appointed (and continues in that capacity) in respect of the related mortgaged property; |
· | the date the related borrower becomes subject to (i) a voluntary bankruptcy, insolvency or similar proceeding, or (ii) an involuntary bankruptcy, insolvency or similar proceeding that remains undismissed for sixty (60) days; and |
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· | the date on which the mortgage loan, A/B Whole Loan or Loan Pair remains outstanding five (5) years following any extension of its maturity date pursuant to the Pooling and Servicing Agreement. |
Notwithstanding any of the foregoing to the contrary, with respect to any Non-Serviced Mortgage Loan, an “Appraisal Event” will occur upon receipt of notice from the related Non-Serviced Mortgage Loan Master Servicer of an “Appraisal Event” pursuant to the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement.
An “Appraisal Reduction” will equal, for any mortgage loan, A/B Whole Loan or Loan Pair, including a mortgage loan, A/B Whole Loan or Loan Pair as to which the related mortgaged property has become an REO Property, an amount that is equal to the excess, if any, of:
· | the sum of: |
· | the Stated Principal Balance of such mortgage loan, A/B Whole Loan or Loan Pair or in the case of an REO Property, the related REO Mortgage Loan, less the principal amount of certain payment guarantees and surety bonds and any undrawn letter of credit or debt service reserve, if applicable, that is then securing such mortgage loan, A/B Whole Loan or Loan Pair; |
· | to the extent not previously advanced by the master servicer or the trustee or the master servicer or trustee in respect of any related Serviced Companion Loan, all accrued and unpaid interest on the mortgage loan, A/B Whole Loan or Loan Pair at aper annum rate equal to the applicable mortgage rate; |
· | all related unreimbursed Advances and interest on such Advances at the Advance Rate, and, to the extent applicable, all Advances that were made on a mortgage loan, A/B Whole Loan or Loan Pair (including any similar amounts made in respect of a Serviced Companion Loan by the master servicer or trustee, as applicable, under the related pooling and servicing agreement) on or before the date such mortgage loan, A/B Whole Loan or Loan Pair became a Rehabilitated Mortgage Loan that have since been reimbursed to the advancing party by the Issuing Entity out of principal collections but not by the related borrower; and |
· | to the extent funds on deposit in any applicable Escrow Accounts are not sufficient therefor, and to the extent not previously advanced by the master servicer, the special servicer or the trustee, all currently due and unpaid real estate taxes and assessments, insurance premiums and, if applicable, ground rents and other amounts which were required to be deposited in any Escrow Account (but were not deposited) in respect of the related mortgaged property or REO Property, as the case may be, |
· | over |
· | 90% of the value (net of any prior mortgage liens) of such mortgaged property or REO Property as determined by the applicable appraisal or internal valuation, plus the full amount of any escrows held by or on behalf of the trustee as security for the mortgage loan, A/B Whole Loan or Loan Pair (less the estimated amount of obligations anticipated to be payable in the next twelve months to which such escrows relate); |
provided, that if a mortgage loan, A/B Whole Loan or Loan Pair is secured by more than one mortgaged property (other than by cross-collateralization with another mortgage loan), and one or more of the related mortgaged properties has been defeased, the Stated Principal Balance of such mortgage loan, A/B Whole Loan or Loan Pair shall not include the portion of the principal balance of such mortgage loan, A/B Whole Loan or Loan Pair that has been defeased, and any defeasance collateral will not be included for purposes of determining the value of the mortgaged property or the REO Property that secures the related mortgage loan, A/B Whole Loan or Loan Pair;provided,further, that any Appraisal Reduction in respect of any Non-Serviced Mortgage Loan will be (x) calculated by the Non-Serviced Mortgage Loan Master Servicer or the Non-Serviced Mortgage Loan Special Servicer, as applicable, under and in accordance with the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement based upon the allocation of items similar to those set forth in the bullet points above with respect to the Non-Serviced Mortgage Loan and the related Non-Serviced Companion Loan collectively as if they were a Loan Pair and (y) applied to any Non-Serviced Mortgage Loan to the extent notice of such Appraisal Reduction has been delivered to the master servicer by the related Non-Serviced Mortgage Loan Master Servicer. Once calculated, notice of the Appraisal Reduction amount will be required to be delivered to any other master servicer, special servicer or trustee with respect to any Serviced Companion Loan. Notwithstanding the foregoing, (1) if an appraisal is required to be obtained in accordance with the Pooling and Servicing Agreement but is not obtained within one hundred twenty (120) days following the events described in the applicable clause of the definition “Appraisal Event” (without regard to the time periods stated therein), then, until such appraisal is obtained and solely for purposes of determining the amounts of P&I Advances, the Appraisal Reduction shall equal 25% of the Stated Principal Balance of the related mortgage loan, A/B Whole Loan or Loan Pair; provided that, upon receipt of an appraisal, the Appraisal Reduction for such mortgage loan, A/B Whole Loan or Loan Pair shall be recalculated in accordance with this definition without regard to this sentence and (2) with respect to any Non-Serviced Mortgage Loan, if the related Non-Serviced Mortgage Loan Master Servicer has not delivered notice of an Appraisal Reduction within one hundred twenty (120) days following its notification of an Appraisal Event, then, until such notice is received and solely for purposes of determining the amounts of P&I Advances, the Appraisal Reduction shall equal 25% of the Stated Principal Balance of such Non-Serviced Mortgage Loan; provided that, upon receipt of such notice, the Appraisal Reduction will be the amount determined by such Non-Serviced Mortgage Loan Master Servicer.
An “Escrow Account” is one or more custodial accounts established and maintained by the master servicer pursuant to the Pooling and Servicing Agreement.
“Money Term” means, with respect to any mortgage loan, Serviced B Note or Serviced Companion Loan, the stated maturity date, mortgage rate, principal balance, amortization term or payment frequency or any provision of such mortgage loan, Serviced B Note or Serviced Companion Loan requiring the payment of a Prepayment Premium or Yield Maintenance Charge (but does not include late fee or default interest provisions).
In the case of any A/B Whole Loan, any Appraisal Reduction will be calculated in respect of such A/B Whole Loan taken as a whole and any such Appraisal Reduction will be allocated first to the related Serviced B Note(s) and then allocated to the related mortgage loan. In the case of a mortgage loan that is part of a Loan Pair or Non-Serviced Loan Combination (other than the Alderwood Mall Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination), any Appraisal Reduction will be calculated in respect
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of such mortgage loan and the related companion loan and then allocatedpro rata between such mortgage loan and the related companion loan according to their respective principal balances. With respect to each of the Alderwood Mall Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, any Appraisal Reduction will be calculated in respect of such Non-Serviced Loan Combination by the Non-Serviced Mortgage Loan Master Servicer or the Non-Serviced Mortgage Loan Special Servicer, as applicable, under and in accordance with the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement and allocated first, to each related B note, and then to the related mortgage loan and Non-Serviced Companion Loan,pro rata according to their respective principal balances.
As a result of calculating one or more Appraisal Reductions (and, in the case of any A/B Whole Loan or Loan Pair, to the extent allocated to the related mortgage loan), the amount of any required P&I Advance will be reduced, which will have the effect of reducing the potential Available Distribution Amount.
With respect to each mortgage loan (other than a Non-Serviced Mortgage Loan), A/B Whole Loan or Loan Pair as to which an Appraisal Reduction has occurred (unless the related mortgage loan is a Rehabilitated Mortgage Loan, and with respect to which no other Appraisal Event has occurred with respect to that mortgage loan during the preceding three months), the special servicer is required, within thirty (30) days of each annual anniversary of the related Appraisal Event to order an appraisal (which may be an update of a prior appraisal), the cost of which will be a Servicing Advance, or to conduct an internal valuation, as applicable. Based upon the appraisal or valuation, the special servicer is required to redetermine and report to the master servicer, the trustee, the certificate administrator, the trust advisor and, during any Subordinate Control Period and any Collective Consultation Period, the Controlling Class Representative, the recalculated amount of the Appraisal Reduction with respect to the mortgage loan, A/B Whole Loan or Loan Pair. Notwithstanding the foregoing, the special servicer will not be required to obtain an appraisal or valuation with respect to a mortgage loan, A/B Whole Loan or Loan Pair that is the subject of an Appraisal Event to the extent the special servicer has obtained an appraisal or valuation with respect to the related mortgaged property within the 9-month period prior to the occurrence of the Appraisal Event. Instead, the special servicer may use the prior appraisal or valuation in calculating any Appraisal Reduction with respect to the mortgage loan, A/B Whole Loan or Loan Pair, as applicable,provided that the special servicer is not aware of any material change to the mortgaged property, its earnings potential or risk characteristics, or marketability, or market conditions that have occurred that would affect the validity of the appraisal or valuation.
Any mortgage loan, A/B Whole Loan or Loan Pair previously subject to an Appraisal Reduction that becomes current and remains current for three consecutive Periodic Payments, and with respect to which no other Appraisal Event has occurred and is continuing, will no longer be subject to an Appraisal Reduction.
For purposes of determining the identity of the Controlling Class, whether a Subordinate Control Period, a Collective Consultation Period or a Senior Consultation Period is then in effect and the allocation of voting rights for certain purposes, Appraisal Reductions (with respect to an A/B Whole Loan or Loan Pair, to the extent allocated to the mortgage loan held by the Issuing Entity) will be allocated to each class of Principal Balance Certificates (other than the Exchangeable Certificates) and each Trust Component in reverse sequential order to notionally reduce the related Certificate Principal Balance until the related Certificate Principal Balance of each such class or Trust Component is reduced to zero (i.e.,first 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 Trust Component (and correspondingly, the Class C Certificates and the Class PST Component C,pro rata, based on their respective percentage interests in the Class C Trust Component), then to the Class B Trust Component (and correspondingly, the Class B Certificates and the Class PST Component B,pro rata, based on their respective percentage interests in the Class B Trust Component), then to the Class A-S Trust Component (and correspondingly, the Class A-S Certificates and the Class PST Component A-S,pro rata, based on their respective percentage interests in the Class A-S Trust Component), andfinally,pro rata, to the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates). Appraisal Reductions allocated to a Class PST Component will, in turn, be allocated to the Class PST Certificates. With respect to any Appraisal Reduction calculated for purposes of determining the Controlling Class, the appraised value of the related mortgaged property will be determined on an “as-is” basis. Notwithstanding the foregoing, deemed Appraisal Reductions equal to 25% of the Stated Principal Balance of the related mortgage loan, A/B Whole Loan or Loan Pair that are calculated pursuant to the last sentence of the definition of “Appraisal Reduction” because the required appraisal is not obtained within the required time period will not be allocated to any class of Principal Balance Certificates for purposes of determining the identity of the Controlling Class, whether a Subordinate Control Period, a Collective Consultation Period or a Senior Consultation Period is then in effect or the allocation of voting rights for certain purposes.
Any class of Control Eligible Certificates, the Certificate Principal Balance of which (taking into account the application of any Appraisal Reductions to notionally reduce the Certificate Principal Balance of such class) has been reduced to less than 25% of its Initial Certificate Principal Balance, is referred to as an “Appraised-Out Class.” The Holders of the majority (by Certificate Principal Balance) of an Appraised-Out Class will have the right, at their sole expense, to present to the special servicer a second appraisal of any mortgage loan (other than any Non-Serviced Mortgage Loan) for which an Appraisal Event has occurred (such Holders, the “Requesting Holders”) prepared by an MAI appraiser on an “as-is” basis and acceptable to the special servicer in accordance with the Servicing Standard. Upon receipt of such second appraisal, the special servicer will be required to determine, in accordance with the Servicing Standard, whether, based on its assessment of such second appraisal, any recalculation of the applicable Appraisal Reduction is warranted, and if so warranted, shall recalculate such Appraisal Reduction based upon such second appraisal. If required by any such recalculation, any applicable Appraised-Out Class (together with any other classes of Control Eligible Certificates affected by such Appraisal Reduction) will have the related Certificate Principal Balance notionally restored to the extent required by such recalculation of the Appraisal Reduction, and there will be a redetermination of whether a Subordinate Control Period, a Collective Consultation Period or a Senior Consultation Period is then in effect. The right of any Appraised-Out Class to present a second appraisal of any mortgage loan for which an Appraisal Event has occurred is limited to one appraisal with respect to each mortgaged property relating to the affected mortgage loan.
In addition, if subsequent to a class of Control Eligible Certificates becoming an Appraised-Out Class there is a material change with respect to the mortgaged property related to the Appraisal Reduction that caused such class to become an Appraised-Out Class, the Requesting Holders will have the right (except in the case of any Non-Serviced Mortgage Loan), at their sole expense, to present to the special servicer an additional appraisal prepared by an MAI appraiser on an “as-is” basis and acceptable to the special servicer in accordance with the Servicing Standard. Subject to the special servicer’s confirmation, determined in accordance with the Servicing Standard, that there has been a change with respect to the related mortgaged property and such change was material, the special servicer will be required to determine, in accordance with the Servicing Standard, whether, based on its assessment of such additional appraisal, any recalculation of the applicable Appraisal Reduction is warranted and, if so warranted shall recalculate such Appraisal Reduction based upon such additional appraisal. If required by any such recalculation, any applicable Appraised-Out Class (together with any other classes of Control Eligible Certificates affected by such Appraisal Reduction) will have the related Certificate Principal Balance notionally restored to the extent required
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by such recalculation of the Appraisal Reduction, and there will be a redetermination of whether a Subordinate Control Period, a Collective Consultation Period or a Senior Consultation Period is then in effect. With respect to each class of Control Eligible Certificates, the right to present the special servicer with additional MAI appraisals as provided above at the sole cost and expense of the applicable Requesting Holders upon the occurrence of any material event that the special servicer confirms is a material event will be limited to no more frequently than once in any 12-month period.
Appraisals that are permitted to be presented by any Appraised-Out Class will be in addition to any appraisals that the special servicer may otherwise be required to obtain in accordance with the Servicing Standard upon the occurrence of such material change or that the special servicer is otherwise required or permitted to order under the Pooling and Servicing Agreement without regard to any appraisal requests made by any Requesting Holder.
Any Appraised-Out Class may not exercise any rights of the Controlling Class until such time, if any, as such class is reinstated as the Controlling Class; and the rights of the Controlling Class will be exercised by the next most senior class of Control Eligible Certificates that is not an Appraised-Out Class, if any.
Reports to Certificateholders; Available Information
Certificate Administrator Reports
Based in part on monthly reports prepared by the master servicer and the special servicer and delivered by the master servicer to the certificate administrator, the certificate administrator will be required to prepare and make available (i) to the general public electronically, (ii) upon written request from any Certificateholder or Certificate Owner, by first class mail to the requesting party and (iii) to the parties to the Pooling and Servicing Agreement, the underwriter and any other designee of the depositor, a report (a “Distribution Date Statement,” a form of which is attached as Appendix IV to this prospectus supplement) setting forth, among other things the following information:
1. | the amount of the distribution on the Distribution Date to the Holders of each class of Principal Balance Certificates in reduction of the Certificate Principal Balance of such Class of Certificates (with respect to the Class PST Certificates, also separately identifying the portion of such amount allocated to each Class PST Component); |
2. | the amount of the distribution on the Distribution Date to the Holders of each class of interest-bearing Certificates allocable to the interest distributable on that class of Certificates (with respect to the Class PST Certificates, also separately identifying the portion of such amount allocated to each Class PST Component); |
3. | the aggregate amount of P&I Advances made in respect of the Mortgage Pool for the Distribution Date; |
4. | the aggregate amount of compensation paid to the certificate administrator, the trust advisor, the trustee and the custodian and servicing compensation paid to the master servicer and the special servicer in respect of the related Distribution Date; |
5. | the aggregate Stated Principal Balance of the Mortgage Pool 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 Collection Period; |
7. | the number and aggregate principal balance of mortgage loans (i) (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 and (ii) the information described in Item 1100(b)(5) of Regulation AB to the extent material; |
8. | the value of any REO Property included in the Issuing Entity as of the end of the related Collection Period, 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 any class of interest-bearing Certificates allocable to Yield Maintenance Charges and/or Prepayment Premiums (with respect to the Class PST Certificates, also separately identifying the portion of such amount allocated to each Class PST Component); |
11. | the total interest distributable for each class of interest-bearing Certificates (other than the Exchangeable Certificates) and the Trust Components (and in the case of each Trust Component, also separately identifying the portions of such amount attributable to each corresponding Class of Exchangeable Certificates and the corresponding Class PST Component that has the same letter designation as such Trust Component) for such Distribution Date, whether or not paid; |
12. | the Pass-Through Rate in effect for each class of interest-bearing Certificates (other than the Class PST Certificates) and each Trust Component for the Interest Accrual Period related to the current Distribution Date; |
13. | the Principal Distribution Amount for the Distribution Date, separately setting forth the portion thereof that represents scheduled principal and the portion thereof representing prepayments and other unscheduled collections in respect of principal; |
14. | the total outstanding Certificate Principal Balance or Notional Amount, as the case may be, of each class of Certificates (and, in the case of the Class PST Certificates, the portion of such amount attributable to each Class PST Component) and each Trust Component immediately before and immediately after the Distribution Date, separately identifying any reduction in these amounts as a result of the allocation of Collateral Support Deficit (and, in the case of the Class PST Certificates, the portion of such amount attributable to each Class PST Component) and Excess Trust Advisor Expenses (and, in the case of the Class PST Certificates, the portion of such amount attributable to each Class PST Component); |
15. | the amount of any Appraisal Reductions in effect as of the Distribution Date on a loan-by-loan basis and the aggregate amount of Appraisal Reductions as of the Distribution Date; |
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16. | the number and related principal balances of any mortgage loans extended or modified during the related Collection Period on a loan-by-loan basis; |
17. | the amount of any remaining unpaid interest shortfalls for each class of interest-bearing Certificates and each Trust Component (and, in the case of the Class PST Certificates, the portion of such amount allocable to each Class PST Component), and, in the case of the Class B, Class PST, Class C and Class D Certificates, any unreimbursed interest shortfalls for such Class of Certificates resulting from the allocation of Trust Advisor Expenses (and, in the case of the Class PST Certificates, the portion of such amount allocable to each Class PST Component), as of the close of business on the Distribution Date; |
18. | a loan-by-loan listing of each mortgage loan which was the subject of a Principal Prepayment during the related Collection Period and the amount of Principal Prepayment occurring; |
19. | the amount of the distribution on the Distribution Date to the Holders of each class of Principal Balance Certificates in reimbursement of Collateral Support Deficit (and, in the case of the Class PST Certificates, the portion of such amount allocable to each Class PST Component) and Trust Advisor Expenses (with respect to the Class PST Certificates, separately identifying such amount allocated to each of the Class PST Components) previously allocated thereto; |
20. | the aggregate unpaid principal balance of the mortgage loans outstanding as of the close of business on the related Determination Date; |
21. | with respect to any mortgage loan as to which the special servicer determined that all payments or recoveries with respect to the mortgage loan have been ultimately recovered during the related Collection Period (other than through 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 the liquidation (separately identifying the portion thereof allocable to distributions on the Certificates), and (C) the amount of any loss attributable to the liquidation; |
22. | with respect to any REO Property included in the Issuing Entity as to which the special servicer determined that all payments or recoveries with respect to the mortgaged property have been ultimately recovered during the related Collection Period, (A) the loan number of the related mortgage loan, (B) the aggregate of all Liquidation Proceeds and other amounts received in connection with that determination (separately identifying the portion thereof allocable to distributions on the Certificates), and (C) the amount of any loss attributable to the related REO mortgage loan in connection with that determination; |
23. | the aggregate amount of interest on P&I Advances in respect of the mortgage loans paid to the master servicer and/or the trustee since the prior Distribution Date; |
24. | the aggregate amount of interest on Servicing Advances in respect of the mortgage loans paid to the master servicer, the special servicer and/or the trustee since the prior Distribution Date; |
25. | a loan-by-loan listing of any mortgage loan which was defeased during the related Collection Period; |
26. | a loan-by-loan listing of any material modification, extension or waiver of a mortgage loan during the related Collection Period; |
27. | a loan-by-loan listing of any mortgage loan that was the subject of a Material Breach of a representation or warranty given with respect to any such mortgage loan by the mortgage loan seller, as provided by the master servicer, the special servicer or the depositor; |
28. | the respective amounts of the distributions on the Distribution Date to the Holders of the Class V and Class R Certificates; |
29. | the Distribution Date, Record Date, Interest Accrual Period and Determination Date for the related Distribution Date; |
30. | an itemized listing of any Disclosable Special Servicer Fees received by the special servicer or any of its affiliates during the related Collection Period; |
31. | exchanges of Exchangeable Certificates that took place since the last Distribution Date and the designations of the applicable Classes that were exchanged or, if applicable, that no such exchanges have occurred; |
32. | the amount of any CREFC® License Fee payable on such Distribution Date; and |
33. | such other information and in such form as may be specified in the Pooling and Servicing Agreement. |
Each Distribution Date Statement will be substantially in the form of Appendix IV to this prospectus supplement.
If and for so long as the Issuing Entity is subject to the reporting requirements of the Exchange Act, the Distribution Date Statement will not be permitted to include references to the Rating Agencies or any ratings ascribed by any Rating Agency to any class of Certificates; provided, that the form of Distribution Date Statement posted on the certificate administrator’s website may include such information.
Certificateholders, Certificate Owners, prospective purchasers of Certificates and any holder of a Serviced B Note or Serviced Companion Loan who have provided the certificate administrator with an Investor Certification may also obtain access to any of the certificate administrator reports upon request and pursuant to the provisions of the Pooling and Servicing Agreement. Otherwise, until the time Definitive Certificates are issued to evidence the Certificates, the information described above will be available to the related Certificate Owners only if DTC and its participants provide the information to Certificate Owners. See “Risk Factors—Risks Related to the Offered Certificates—Book-Entry Registration” in this prospectus supplement.
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Information Available Electronically
The certificate administrator will be required to make available to any Privileged Person (provided that this prospectus supplement, the Pooling and Servicing Agreement, the Distribution Date Statements and the SEC filings referred to in clause (B) below will be made available to the general public) the following items via the certificate administrator’s website (provided that with respect to items not prepared by the certificate administrator, the certificate administrator will be required to make such items available only to the extent it has received such items):
(A) | the following “deal documents”: |
· | this prospectus supplement and the Private Placement Memorandum; |
· | the Pooling and Servicing Agreement, each sub-servicing agreement delivered to the certificate administrator from and after the Closing Date, if any, and the Mortgage Loan Purchase Agreement and any amendments and exhibits to that agreement; and |
· | the CREFC® loan setup file; |
(B) | the following “filings”: |
· | any reports on Forms 10-D, 10-K and 8-K that have been filed with respect to the Issuing Entity through the EDGAR system; |
(C) | the following “periodic reports”: |
· | the Distribution Date Statements; |
· | the CREFC® Reports prepared by, or delivered to, the certificate administrator (other than the CREFC® loan setup file referred to above); and |
· | the annual report prepared by the trust advisor; |
(D) | the following “additional documents”: |
· | summaries of Final Asset Status Reports; |
· | inspection reports; and |
· | appraisals; |
(E) | the following “special notices”: |
· | notice of any waiver, modification or amendment of any term of any mortgage loan; |
· | notice of final payment on the Certificates; |
· | notice of termination of the master servicer or the special servicer; |
· | notice of a servicer termination event with respect to the master servicer or the special servicer; |
· | notice of the resignation of any party to the Pooling and Servicing Agreement and notice of the acceptance of appointment of a successor to such party, to the extent such notice is prepared or received by the certificate administrator; |
· | officer’s certificates supporting the determination that any advance was (or, if made, would be) a Nonrecoverable Advance; |
· | any “special notice” by a Certificateholder that wishes to communicate with others, pursuant to the Pooling and Servicing Agreement; |
· | any Assessments of Compliance; |
· | any Attestation Reports; |
· | any reports delivered to the certificate administrator by the trust advisor in connection with its review of the special servicer’s Appraisal Reduction and net present value calculations as described under “Servicing of the Mortgage Loans—The Trust Advisor—Consultation Duties of the Trust Advisor;” |
· | any recommendation received by the certificate administrator from the trust advisor for the termination of the special servicer during any period when the trust advisor is entitled to make such a recommendation, and any direction of the holders of Certificates evidencing the requisite percentage of Voting Rights to terminate the special servicer in response to such recommendation; |
· | notice of any request by the Holders of Certificates evidencing at least 25% of the Voting Rights of the Certificates to terminate and replace the special servicer or notice of any request by the Holders of Certificates evidencing at least 25% of the Voting Rights of the Certificates to terminate and replace the trust advisor; and |
· | any notice of the commencement or cessation of a Subordinate Control Period, a Collective Consultation Period or a Senior Consultation Period; |
(F) | the “Investor Q&A Forum;” and |
(G) | solely to Certificateholders and Certificate Owners, the “Investor Registry.” |
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“Privileged Person” means the depositor, the underwriter, the initial purchasers, the mortgage loan seller, the master servicer, the special servicer, the Controlling Class Representative (but only during any Subordinate Control Period and any Collective Consultation Period), any Directing Holder (if and for so long as such party or its designee is the Directing Holder with respect to the related A/B Whole Loan or Loan Pair, as the case may be), the trustee, the certificate administrator, the custodian, the trust advisor, a designee of the depositor, any person who provides the certificate administrator with an Investor Certification, and any Rating Agency or other “nationally recognized statistical rating organization,” as such term is defined in Section 3(a)(62) of the Exchange Act (“NRSRO”), that provides the certificate administrator with a certification in the form attached to the Pooling and Servicing Agreement, which Investor Certification or rating agency certification may be submitted electronically via the certificate administrator’s website;provided that in no event will a borrower, a manager of a mortgaged property, an affiliate of a borrower, an affiliate of a manager of a mortgaged property or an agent, principal, partner, member, joint venturer, limited partner, employee, representative, director, trustee or advisor of, or any investor in, any of the foregoing be considered a Privileged Person. The holder of any Serviced Companion Loan, B Note or Non-Serviced Companion Loan (in each case, including any trustee, master servicer, special servicer, controlling class representative, certificate administrator or custodian with respect to any securitization thereof) will also be a Privileged Person to the extent such holder provides the certificate administrator a certification in the form attached to the Pooling and Servicing Agreement.
The certificate administrator will make the “Investor Q&A Forum” available to Privileged Persons via the certificate administrator’s website, where Certificateholders, Certificate Owners and prospective purchasers of Certificates may submit inquiries to the certificate administrator relating to the Distribution Date Statement, submit inquiries to the master servicer or the special servicer relating to servicing reports prepared by that party, the mortgage loans (or A/B Whole Loans or Loan Pairs) or the mortgaged properties, submit inquiries to the trust advisor relating to any trust advisor annual reports or actions by the special servicer referenced in any such report, and view previously submitted inquiries and related answers. The certificate administrator will forward such inquiries to the appropriate person. The certificate administrator, the trust advisor, the master servicer or the special servicer, as applicable, will be required to answer each inquiry, unless it determines that the inquiry is beyond the scope described above or that answering the inquiry would not be in the best interests of the Issuing Entity and/or the Certificateholders, would be in violation of applicable law, the Pooling and Servicing Agreement or the loan documents, would materially increase the duties of, or result in significant additional cost or expense to, the certificate administrator, the trust advisor, the master servicer or the special servicer, as applicable, or is otherwise not advisable. The certificate administrator will be required to post the inquiries and related answers on the Investor Q&A Forum, subject to and in accordance with the Pooling and Servicing Agreement. In addition, no party will post or otherwise disclose direct communications with the Controlling Class Representative as part of its response to any inquiries. The Investor Q&A Forum may not reflect questions, answers, and other communications which are not submitted through the certificate administrator’s website. Answers posted on the Investor Q&A Forum will be attributable only to the respondent, and will not be deemed to be answers from any other person, including the depositor and the underwriter, and no other party will have any responsibility or liability for the content of any such information. None of the underwriter, depositor, any of their respective affiliates or any other person will certify as to the accuracy of any of the information posted in the Investor Q&A Forum that was based, in whole or in part, on information received from third parties.
The certificate administrator will make the “Investor Registry” available to any Certificateholder and Certificate Owner (other than a borrower, a manager, an affiliate of a borrower or manager or any of their respective agents, principals, partners, members, joint venturers, limited partners, employees, representatives, directors, trustees, advisors or investors) via the certificate administrator’s website. Certificateholders and Certificate Owners may register on a voluntary basis for the Investor Registry and obtain contact information for any other Certificateholder or Certificate Owner that has also registered,provided that they comply with certain requirements as provided for in the Pooling and Servicing Agreement.
The certificate administrator’s website will initially be located at www.ctslink.com. Access to information that is not otherwise made available by the certificate administrator to the general public on the certificate administrator’s website will be provided by the certificate administrator to any investor or prospective investor (other than a borrower, a manager, an affiliate of a borrower or manager or any of their respective agents, principals, partners, members, joint venturers, limited partners, employees, representatives, directors, trustees, advisors or investors) upon receipt by the certificate administrator from such person of an Investor Certification in the form(s) attached to the Pooling and Servicing Agreement, which form(s) will also be located on and submitted electronically via the certificate administrator’s website. The parties to the Pooling and Servicing Agreement will not be required to provide that certification. In connection with providing access to the certificate administrator’s website, the certificate administrator may require registration and the acceptance of a disclaimer which may include, for example, that the certificate administrator will make no representations or warranties as to the accuracy or completeness of information provided by it that was based, in whole or in part, on information received from third parties, and will assume no responsibility for them. The certificate administrator will not be liable for the dissemination of information in accordance with the terms of the Pooling and Servicing Agreement. The certificate administrator will not be deemed to have knowledge of any information posted on its website solely by virtue of such posting. In addition, the certificate administrator may disclaim responsibility for any information for which it is not the original source. Assistance in using the certificate administrator’s website can be obtained by calling its customer service desk at (866) 846-4526.
“Investor Certification” means a certificate (which may be in electronic form) representing that the person executing the certificate (1) is a Certificateholder, a Certificate Owner or a prospective purchaser that, in the case of an Offered Certificate, has received a copy of this prospectus supplement and the accompanying prospectus, or a holder of a Serviced B Note or Serviced Companion Loan and (2) is not a borrower, a manager, an affiliate of a borrower or manager or an agent, principal, partner, member, joint venturer, limited partner, employee, representative, director, trustee or advisor of, or any investor in, any of the foregoing, substantially in the form provided for in the Pooling and Servicing Agreement. The certificate administrator may require that Investor Certifications are resubmitted from time to time in accordance with its policies and procedures.
“CREFC®” means the CRE Finance Council®.
“CREFC® Reports” collectively refer to the following electronic files prepared using the applicable CREFC®model document template: (i) bond level file, (ii) collateral summary file, (iii) property file, (iv) loan periodic update file, (v) loan setup file, (vi) financial file, (vii) special servicer loan file, (viii) comparative financial status report, (ix) delinquent loan status report, (x) historical loan modification and corrected mortgage loan report, (xi) operating statement analysis report, (xii) NOI adjustment worksheet, (xiii) REO status report, (xiv) servicer watch list, (xv) loan level reserve – LOC report, (xvi) advance recovery report, (xvii) total loan report and (xviii) reconciliation of funds report.
“Regulation AB” means Subpart 229.1100 – Asset Backed Securities (Regulation AB), 17 C.F.R. §§229.1100-229.1125, as such rules may be amended from time to time, and subject to such clarification and interpretation as have been provided by the Securities and
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Exchange Commission (the “SEC”) or by the staff of the SEC, or as may be provided by the SEC or its staff from time to time, in each case as effective from time to time as of the compliance dates specified therein.
“17g-5 Information Provider” means the certificate administrator acting in its capacity as the 17g-5 Information Provider under the Pooling and Servicing Agreement.
Other Information
The Pooling and Servicing Agreement will obligate the trustee, the certificate administrator or the custodian, as applicable, to make available or cause to be made available at its respective offices, during normal business hours, upon reasonable advance written notice, for review by any Privileged Persons, originals or copies, in paper or electronic form, of various documents related to the assets of the Issuing Entity and the administration of the Issuing Entity. Those documents include (among other things) the mortgage files for the mortgage loans, notices of any waiver, modification or amendment of any term of a mortgage loan and each of the documents made available by the certificate administrator via its website as described under “—Information Available Electronically” above. The trustee, the certificate administrator or any document custodian, as the case may be, will be permitted to require payment of a sum sufficient to cover the reasonable out-of-pocket costs and expenses of providing the copies. The certificate administrator may require a Privileged Person to execute a confidentiality agreement prior to granting access to the information described above.
The certificate administrator will make available on its website all Distribution Date Statements, CREFC® Reports and supplemental notices (provided they are received by the certificate administrator) to certain modeling financial services (i.e., BlackRock Financial Management, Inc., Bloomberg, L.P., Thomson Reuters, Trepp, LLC, Markit Group Limited, CMBS.com, Inc. and Intex Solutions, Inc.), subject to, and in accordance with, the terms of the Pooling and Servicing Agreement.
In connection with providing access to or copies of the items described above to Certificateholders, Certificate Owners and prospective purchasers of Certificates, the trustee, the master servicer, the special servicer, the certificate administrator, the trust advisor or the custodian, as the case may be, may be required to obtain an Investor Certification executed by the requesting person or entity.
The Issuing Entity will file distribution reports on Form 10-D, annual reports on Form 10-K and (if applicable) current reports on Form 8-K with the SEC regarding the Offered Certificates, to the extent, and for such time, as it shall be required to do so under the Exchange Act. Such reports will be filed under the name “Morgan Stanley Capital I Trust 2015-MS1” and as part of the registration statement on Form S-3 (File No. 333-180779). In addition, the depositor is subject to certain requirements with respect to making the findings and conclusions of third-party due diligence reports publicly available, which it will furnish to the SEC on Form ABS-15G in accordance with Rule 15Ga-2 under the Exchange Act. Members of the public may read and copy any materials filed with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. local time. Members of the public may obtain information regarding the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that internet site is http://www.sec.gov.
Book-Entry Certificates
The master servicer, the special servicer, the certificate administrator and the depositor are required to recognize as Certificateholders only those persons in whose names the Certificates are registered with the certificate registrar as of the related Record Date; however, any Certificate Owner that has delivered to the certificate registrar an Investor Certification will be recognized as a Certificateholder for purposes of obtaining the foregoing information and access.
Example of Distributions
The following chart sets forth an example of distributions on the Offered Certificates assuming the Offered Certificates are issued in July 2015:
The close of business on: | |||
July 1, 2015 | (A) | Cut-off Date | |
July 31, 2015 | (B) | Record Date for all Classes of Offered Certificates | |
July 2, 2015 – August 11, 2015 | (C) | The Collection Period. The master servicer receives Scheduled Payments due after the Cut-off Date and any Principal Prepayments made after the Cut-off Date and on or prior to August 11, 2015. | |
August 11, 2015 | (D) | Determination Date for mortgage loans | |
August 14, 2015 | (E) | Master Servicer Remittance Date (1 Business Day prior to the Distribution Date) | |
August 17, 2015 | (F) | Distribution Date |
Succeeding monthly periods follow the pattern of (B) through (F) above (except as described below).
(A) | The outstanding principal balance of the mortgage loans will be the aggregate outstanding principal balance of the mortgage loans at the close of business on the Cut-off Date, after deducting principal payments due on or before such date, whether or not received. Principal payments due on or before such date, and the accompanying interest payments, are not part of the Issuing Entity. |
(B) | Distributions on the next Distribution Date will be made to those persons that are the Certificateholders of record on this date. Each subsequent Record Date will be the last business day of the month preceding the related Distribution Date. |
(C) | Any Scheduled Payments due and collected, and Principal Prepayments collected, after the Cut-off Date and on or prior to August 11, 2015 will be deposited into the Collection Account. Each subsequent Collection Period will begin on the day after |
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the Determination Date in the month preceding the month of each Distribution Date and will end on the Determination Date in the month in which the Distribution Date occurs. |
(D) | Generally, as of the close of business on the Determination Date, the master servicer will have determined the amounts of principal and interest that will be remitted with respect to the related Collection Period. |
(E) | The master servicer will remit to the certificate administrator no later than the business day prior to the related Distribution Date all amounts held by the master servicer, and any P&I Advances required to be made by the master servicer, that together constitute the Available Distribution Amount for such Distribution Date. |
(F) | The certificate administrator will make distributions to the Certificateholders on the 4th Business Day after the related Determination Date in each month. |
Expected Final Distribution Date
The expected final Distribution Date for each class of Offered Certificates presented on the cover of this prospectus supplement (with respect to each such class, the “Expected Final Distribution Date”) is the date on which such class is expected to be paid in full (or, in the case of the Class X-A Certificates, the date on which the related Notional Amount is reduced to zero), assuming timely payments and no Principal Prepayments (other than payments with respect to ARD Loans on their Anticipated Repayment Dates) will be made on the mortgage loans in accordance with their terms and otherwise based on the Structuring Assumptions. The actual final Distribution Date for any class may be earlier or later (and could be substantially later) than the Expected Final Distribution Date.
The ratings assigned by the Rating Agencies to each Class of Offered Certificates reflect an assessment of the likelihood that the Certificateholders of such Class will receive timely payments of interest (if any) and, if such Class of Offered Certificates has a Certificate Principal Balance, ultimate payment of principal on or before the Distribution Date in May 2048.
Amendments to the Pooling and Servicing Agreement
The Pooling and Servicing Agreement may be amended from time to time by the parties to the Pooling and Servicing Agreement, without notice to or the consent of any of the Certificateholders, to do the following:
· | to cure any ambiguity or to correct any error; |
· | to cause the provisions in the Pooling and Servicing Agreement to conform to or be consistent with or in furtherance of the statements made with respect to the Certificates, the Issuing Entity or the Pooling and Servicing Agreement in the transaction free writing prospectus dated June 17, 2015, in this prospectus supplement, in the accompanying prospectus or in the Private Placement Memorandum, or to correct or supplement any provision which may be inconsistent with any other provisions; |
· | to amend any provision of the Pooling and Servicing Agreement to the extent necessary or desirable to maintain the status of each REMIC (or any grantor trust portion of the Issuing Entity) for the purposes of federal income tax law (or comparable provisions of state income tax law); |
· | to make any other provisions with respect to matters or questions arising under or with respect to the Pooling and Servicing Agreement not inconsistent with the provisions therein; |
· | to modify, add to or eliminate the provisions in the Pooling and Servicing Agreement relating to transfers of Class R Certificates; |
· | to amend any provision of the Pooling and Servicing Agreement to the extent necessary or desirable to list the Certificates on a stock exchange, including, without limitation, the appointment of one or more sub-certificate administrators and the requirement that certain information be delivered to such sub-certificate administrators; |
· | to modify the provisions relating to the timing of Advance reimbursements in order to conform them to the commercial mortgage-backed securities industry standard for such provisions if (w) the depositor, the trustee and the master servicer determine that that industry standard has changed, (x) such modification will not result in an adverse REMIC event or adverse grantor trust event, as evidenced by an opinion of counsel, (y) each Rating Agency shall have been provided with a Rating Agency Communication with respect to such modification, and (z) during any Subordinate Control Period and any Collective Consultation Period, the Controlling Class Representative consents to such modification; |
· | to modify the procedures in the Pooling and Servicing Agreement relating to Rule 17g-5 under the Exchange Act;provided that if such modification materially increases the obligations of the trustee, the certificate administrator, the custodian, the 17g-5 Information Provider, the trust advisor, the depositor, the master servicer or the special servicer, then the consent of such party will be required; |
· | to modify, alter, amend, add or to rescind any of the provisions contained in the Pooling and Servicing Agreement if and to the extent necessary to comply with any rules or regulations promulgated, or any guidance provided with respect to Rule 15Ga-1 under the Exchange Act, by the SEC from time to time; |
· | to amend the provisions of the Pooling and Servicing Agreement described under “Servicing of the Mortgage Loans—Rating Agency Confirmations” or the definition of “Rating Agency Confirmation”; |
· | if a TIA Applicability Determination is made, to modify, eliminate or add to the provisions of the Pooling and Servicing Agreement (and, if necessary, the Certificates) to the extent necessary to (A) effect the qualification of the Pooling and Servicing Agreement under the TIA or under any similar federal statute hereafter enacted and to add to the Pooling and Servicing Agreement (and, if necessary, the Certificates) such other provisions as may be expressly required by the TIA, and |
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(B) modify such other provisions of the Pooling and Servicing Agreement (and, if necessary, the Certificates) to the extent necessary to make those provisions consistent with, and conform to, the modifications made pursuant to clause (A); or |
· | any other amendment which does not adversely affect in any material respect the interests of any Certificateholder (unless such Certificateholder consents). |
In a number of cases that have been filed alleging certain violations of the Trust Indenture Act of 1939 (the “TIA”) certain federal district courts have held that the TIA was applicable to certain agreements similar to the Pooling and Servicing Agreement and that the mortgage-backed certificates issued pursuant to such agreements were not exempt under Section 304(a)(2) of the TIA. (See, for example, Retirement Bd. of the Policemen’s Annuity and Benefit Fund of the City of Chicago v. Bank of New York Mellon, 11 Civ. 5459 (WHP) (S.D.N.Y. Apr. 3, 2012), Policemen’s Annuity and Benefit Fund of the City of Chicago v. Bank of America, 12 Civ. 2865 (KBF) (S.D.N.Y. Dec. 7, 2012) and American Fidelity Assurance Co. v. Bank of New York Mellon, No. Civ-11-1284-D (W.D. Okla. Dec. 26, 2013)). These rulings are contrary to more than three decades of market practice. In addition, on December 23, 2014, the United States Court of Appeals for the Second Circuit reversed the lower court’s ruling in Retirement Bd. of the Policemen’s Annuity regarding the applicability of the TIA to trusts governed by pooling and servicing agreements under New York law, holding that the mortgage-backed securities at issue are exempt under Section 304(a)(2) of the TIA. On April 24, 2015, previous guidance regarding the TIA issued by the SEC staff as Division of Corporate Finance Interpretive Response 202.01 was withdrawn by the SEC staff without any indication of the reason for such withdrawal. If any of the other rulings by the federal district courts is affirmed on appeal, or if there is a change by the Division of Corporation Finance of its position that agreements similar to the Pooling and Servicing Agreement are exempt from the TIA under Section 304(a)(2), that would likely result in the Pooling and Servicing Agreement being required to be qualified under the TIA. Depending on the circumstances, rulings by lower courts similar to the foregoing cases, as well as litigation involving the Pooling and Servicing Agreement, could also result in its being required to be qualified under the TIA. It is expected that the depositor, in consultation with the trustee, will perform on an ongoing basis an analysis as to whether the TIA applies to the Pooling and Servicing Agreement.
If, subsequent to the date of this prospectus supplement, the depositor, upon consultation with the trustee, determines that the TIA does apply to the Pooling and Servicing Agreement or that qualification under the TIA or any similar federal statute hereafter enacted is required (a “TIA Applicability Determination”), the Pooling and Servicing Agreement will provide that it (and, if necessary, the Offered Certificates) will be amended at the sole expense of the depositor and without the consent of any Certificateholder to the extent necessary to comply with the TIA. In addition, if the TIA were to apply to the Pooling and Servicing Agreement, the TIA provides that certain provisions would automatically be deemed to be included in the Pooling and Servicing Agreement (and the Pooling and Servicing Agreement thus would be statutorily amended without any further action);provided, that it will be deemed that the parties to the Pooling and Servicing Agreement have agreed that, to the extent permitted under the TIA, the Pooling and Servicing Agreement will expressly exclude any non-mandatory provisions that (x) conflict with the provisions of the Pooling and Servicing Agreement or would otherwise alter the provisions of the Pooling and Servicing Agreement or (y) increase the obligations, liabilities or scope of responsibility of any party to the Pooling and Servicing Agreement. Generally, the TIA provisions include additional obligations of the trustee, certain additional reporting requirements and heightened conflict of interest rules which may require, for example, that the trustee resign if the interests of the holders of the various classes of Certificates differ from one another under certain circumstances and that one or more other trustees be appointed in its place. While investors should understand the potential for such amendments, investors should not purchase Certificates with any expectation that the TIA will be determined to apply or that any such amendments will be made.
No such amendment effected pursuant to the first, second or fourth bullet above may (A) adversely affect in any material respect the interests of any Certificateholder not consenting to such amendment without the consent of 100% of the Certificateholders (if adversely affected) or (B) adversely affect the status of any REMIC (or any grantor trust portion of the Issuing Entity). Prior to entering into any amendment without the consent of Certificateholders pursuant to this paragraph, the trustee may require an opinion of counsel.
The Pooling and Servicing Agreement may also be amended from time to time by the parties with the consent of the Certificateholders of not less than 51% of the aggregate voting rights of all the Certificates then outstanding (as calculated under the Pooling and Servicing Agreement), 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 Certificateholders or such Holders;provided that no such amendment may:
· | directly or indirectly reduce in any manner the amount of, or delay the timing of, the distributions required to be made on any Certificate without the consent of the Holder of such Certificate; |
· | modify the provisions of the Pooling and Servicing Agreement relating to amendments thereof without the consent of 100% of the Certificateholders; |
· | eliminate or reduce the master servicer’s or the trustee’s obligation to advance or alter the Servicing Standard except as may be necessary or desirable to comply with Sections 860A through 860G of the Code and related Treasury regulations and rulings promulgated under the Code; |
· | adversely affect the status of any REMIC created under the Pooling and Servicing Agreement for federal income tax purposes without the consent of 100% of the Certificateholders (including the Class R Certificateholders) or adversely affect the status of the grantor trust without the consent of 100% of the Holders of the Class V Certificates and the Exchangeable Certificates. The trustee may request, at its option, to receive an opinion of counsel that any amendment pursuant to this paragraph is permitted under the Pooling and Servicing Agreement; |
· | adversely affect the interests of any class of Certificates without the consent of at least 66-2/3% of the aggregate voting rights of such class of Certificates; or |
· | adversely affect the voting rights of any class of Certificates without the consent of all of the Holders of such class of Certificates. |
No amendment to the Pooling and Servicing Agreement that is materially adverse to the interests of the underwriter, or of the holder of any Serviced B Note or Serviced Companion Loan, may be effected unless the underwriter or the holder of such Serviced B Note or Serviced Companion Loan, as the case may be, provides written consent to such amendment. In addition, no amendment to the Pooling and
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Servicing Agreement that increases the obligations or impairs the rights of the mortgage loan seller may be effected unless the mortgage loan seller provides written consent to such amendment.
Evidence as to Compliance
See “Description of the Agreements—Evidence of Compliance” in the accompanying prospectus for a description of certain provisions of the Pooling and Servicing Agreement requiring the trustee (if it has made any advance in the related preceding year), the certificate administrator, the custodian, the master servicer, the special servicer and each servicing function participant to provide an annual certification regarding their compliance with the terms of the Pooling and Servicing Agreement, as well as an assessment of compliance with certain servicing criteria and an accountant’s attestation report with respect to such assessment. The (i) trustee, certificate administrator and custodian, and (ii) master servicer and special servicer that will be required to provide, as applicable, an annual certification and an assessment of compliance and accountant’s attestation report regarding their compliance with the terms of the Pooling and Servicing Agreement in this transaction initially are Wells Fargo Bank and Midland, respectively.
Voting Rights
The Certificates will be allocated voting rights (the “Voting Rights”) for purposes of certain actions that may be taken pursuant to the Pooling and Servicing Agreement. At any time that any Certificates are outstanding, the portion of the aggregate Voting Rights allocated among the respective classes of Certificateholders will be as follows: (a) 0% in the case of the Class V and Class R Certificates; (b) 1% in the case of the Class X Certificates, and (c) in the case of any class of Principal Balance Certificates, a percentage equal to the product of (i) 99% multiplied by (ii) a fraction, the numerator of which is equal to the aggregate outstanding Certificate Principal Balance of such class and the denominator of which is equal to the aggregate outstanding Certificate Principal Balances of all classes of the Principal Balance Certificates;provided that, (i) if the vote relates to the termination or replacement of the special servicer or the trust advisor, the allocation of Voting Rights among the respective classes of Principal Balance Certificates pursuant toclause (c) of this definition will be based on the aggregate Certificate Principal Balance of each class of Principal Balance Certificates as notionally reduced by any Appraisal Reductions allocated to such class and (ii) the Class A-S Certificates and the Class PST Component A-S will be considered as if they together constitute a single “class,” the Class B Certificates and the Class PST Component B will be considered as if they together constitute a single “class,” the Class C Certificates and the Class PST Component C will be considered as if they together constitute as single “class,” and the Holders of the Class PST Certificates will have the Voting Rights so allocated to the Class PST Components based on their respective Certificate Principal Balances and no other Voting Rights.The Voting Rights of any class of Certificates will be allocated among Holders of Certificates of such class in proportion to their respective Percentage Interests.
No Certificateholder, solely by virtue of its status as Certificateholder, will have any right by virtue or by availing of any provision of the Pooling and Servicing Agreement or the Certificates to institute any suit, action or proceeding in equity or at law upon or under or with respect to the Pooling and Servicing Agreement or the Certificates unless the Holders of Certificates evidencing not less than 50% of the aggregate Certificate Principal Balance of all Certificates then outstanding have made a written request to the trustee in compliance with the Pooling and Servicing Agreement to institute such action, suit or proceeding in its own name as trustee, and such trustee shall have neglected or refused to institute any such action, suit or proceeding.
A “Certificateholder” or “Holder” under the Pooling and Servicing Agreement is the person in whose name a Certificate is registered on the certificate register maintained pursuant to the Pooling and Servicing Agreement (including, solely for the purposes of distributing certain reports, statements or other information pursuant to the Pooling and Servicing Agreement, Certificate Owners or potential transferees of Certificates to the extent the person distributing such information has been provided with an Investor Certification). Solely for the purpose of giving any consent or taking any action pursuant to the Pooling and Servicing Agreement, any Certificate beneficially owned by the depositor, the master servicer, the special servicer, the trustee, the certificate administrator, the custodian, the trust advisor, a manager of a mortgaged property, a borrower or any of their respective affiliates will be deemed not to be outstanding and the Voting Rights to which they are entitled will not be taken into account in determining whether the requisite percentage of Voting Rights necessary to effect any such consent or take any such action has been obtained. Notwithstanding the foregoing, for purposes of obtaining the consent of Certificateholders to an amendment of the Pooling and Servicing Agreement, any Certificate beneficially owned by the depositor, the master servicer, the special servicer, the trustee, the trust advisor, the certificate administrator, the custodian or any of their affiliates will be deemed to be outstanding,provided that such amendment does not relate to the termination, increase in compensation or material reduction of obligations of the depositor, the master servicer, the special servicer, the trustee, the trust advisor, the certificate administrator or the custodian or any of their affiliates. Also notwithstanding the foregoing, subject to any restrictions set forth in the definition of “Controlling Class Representative” under “Servicing of the Mortgage Loans—The Controlling Class Representative,”the restrictions above will not apply to the exercise of the rights of the master servicer, the special servicer or an affiliate of the master servicer or the special servicer, if any, as a member of the Controlling Class.
No Certificateholder will be a “Party in Interest” as described under 11 U.S.C. Section 1109(b) solely by virtue of its ownership of a Certificate.
Matters Regarding the Certificate Administrator
The certificate administrator is at all times required to be, and will be required to resign if it fails to be, (i) an institution insured by the FDIC, (ii) a corporation, national bank or national banking association, organized and doing business under the laws of the United States of America or of any state thereof, authorized to exercise corporate trust powers, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by federal or state authority, (iii) an institution whose long-term senior unsecured debt is at all times ratedat least “AA (low)” by DBRS, Inc. (“DBRS”) (or “A” by DBRS if such institution has a short-term unsecured debt rating of at least “R-1 (middle)” from DBRS or, if such institution is not rated by DBRS, “A” or higher by any two other NRSROs), at least “A2” by Moody’s Investors Service, Inc. (“Moody’s”), and if rated by Kroll Bond Rating Agency, Inc. (“KBRA”), a rating by KBRA equivalent to “A2” by Moody’s, and that has a short-term unsecured debt rating from Moody’s of at least “P-1” (and, if rated by KBRA, at least an equivalent rating by KBRA) or, in the case of any Rating Agency with respect to either the long term or short term ratings specified herein, such lower rating or ratings as is the subject of a Rating Agency Confirmation from such Rating Agency and (iv) an entity that is not a Prohibited Party.
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The certificate administrator will be entitled to a monthly fee (the “Certificate Administrator Fee”) for its services. That fee will accrue with respect to each and every mortgage loan. In each case, that fee will accrue at 0.0045%per annum (the “Certificate Administrator Fee Rate”), based on the unpaid principal balance of the subject mortgage loan outstanding from time to time and will be calculated based on the same interest accrual basis as the subject mortgage loan. The Certificate Administrator Fee Rate will include the trustee fee rate and the custodian fee rate. The certificate administrator fee is payable out of general collections on the mortgage loans and any REO Properties in the Issuing Entity. In addition, the trustee, the custodianand the certificate administrator will be entitled to recover from the Issuing Entity all reasonable unanticipated expenses and disbursements incurred or made in connection with the exercise of its rights or duties under the Pooling and Servicing Agreement, but not including routine overhead expenses incurred in the ordinary course of performing its duties under the Pooling and Servicing Agreement, and not including any expense, disbursement or advance as may arise from its willful misfeasance, negligence or bad faith.
The certificate administrator and each of its directors, officers, employees, agents and controlling persons is entitled to indemnification from the Issuing Entity for any and all claims, losses, penalties, fines, forfeitures, legal fees and related costs, judgments and any other costs, liabilities, fees and expenses incurred in connection with any legal action incurred without negligence, willful misconduct or bad faith on their respective part, arising out of, or in connection with the Pooling and Servicing Agreement, the mortgage loans, the Certificates and the acceptance or administration of the trusts or duties created under the Pooling and Servicing Agreement (including, without limitation, any unanticipated loss, liability or expense incurred in connection with any action or inaction of any master servicer, any special servicer, the trust advisor or the depositor but only to the extent the certificate administrator is unable to recover within a reasonable period of time such amount from such third party pursuant to the Pooling and Servicing Agreement), including the costs and expenses of defending themselves against any claim in connection with the exercise or performance of any of their powers or duties under the Pooling and Servicing Agreement, and the certificate administrator and each of its directors, officers, employees, agents and controlling persons shall be entitled to indemnification from the Issuing Entity for any unanticipated loss, liability or expense incurred without negligence, bad faith or willful misconduct in connection with the provision by it of the reports required to be provided by it pursuant to the Pooling and Servicing Agreement.
The certificate administrator shall not be personally liable for any action reasonably taken, suffered or omitted by it in its reasonable business judgment and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by the Pooling and Servicing Agreement. The certificate administrator will not be required to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties under the Pooling and Servicing Agreement or in the exercise of any of its rights or powers if it has reasonable grounds for believing that repayment of those funds or adequate indemnity against that risk or liability is not reasonably assured to it.
Resignation and Removal of Certificate Administrator
The certificate administrator may at any time resign from its obligations and duties under the Pooling and Servicing Agreement by giving written notice to the depositor and the master servicer, among others. Upon receiving the notice of resignation, the depositor is required promptly to appoint a successor certificate administrator. If no successor certificate administrator shall have been so appointed and have accepted appointment within thirty (30) days after the giving of the notice of resignation, the resigning certificate administrator may petition any court of competent jurisdiction for the appointment of a successor certificate administrator.
The Holders of Certificates representing a majority of the Voting Rights of the Certificates may for cause remove the certificate administrator, upon written notice to the master servicer, the special servicer, us, the certificate administrator and the trustee.
If at any time (i) the certificate administrator shall cease to be eligible to continue as certificate administrator under the Pooling and Servicing Agreement, or (ii) the certificate administrator shall become incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the certificate administrator or of its property shall be appointed, or any public officer shall take charge or control of the certificate administrator or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, or (iii) a tax is imposed or threatened with respect to the Issuing Entity or any REMIC by any state in which the certificate administrator or the Issuing Entity is located solely because of the location of the certificate administrator in such state;provided, that, if the certificate administrator agrees to indemnify the Issuing Entity for such taxes, it shall not be removed pursuant to this clause (iii), or (iv) the continuation of the certificate administrator as such would result in a downgrade, qualification or withdrawal of the rating by any Rating Agency of any class of Certificates with a rating as evidenced in writing by any Rating Agency, then the depositor will be required to remove the certificate administrator and appoint a successor certificate administrator. In the case of removal under clauses (i), (ii), (iii) or (iv) above, the certificate administrator shall bear all such costs of transfer. If the Issuing Entity, or any securitization trust that holds a Serviced Companion Loan, is subject to the reporting requirements of the Exchange Act, and the certificate administrator or any Additional Servicer, sub-servicer or Servicing Function Participant engaged by it fails to perform (subject to any applicable grace periods set forth therein) any of its reporting obligations under the Pooling and Servicing Agreement (and such failure to perform is not the result of another party’s failure to deliver required information), the certificate administrator will be required, if so requested by the depositor, to resign from its obligations within sixty (60) calendar days of such request and, if it fails to resign within such time period, the depositor will have the right to remove and replace the certificate administrator in accordance with the procedure described above.
Upon any succession of the certificate administrator, the predecessor certificate administrator will be entitled to the payment of compensation and reimbursement agreed to under the Pooling and Servicing Agreement for services rendered and expenses incurred.
The Trustee
The trustee is at all times required to be, and will be required to resign if it fails to be, (i) an institution insured by the FDIC, (ii) a corporation, national bank or national banking association, organized and doing business under the laws of the United States of America or of any state thereof, authorized to exercise corporate trust powers, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by federal or state authority, (iii) an institution whose long-term senior unsecured debt is at all times rated at least “AA (low)” by DBRS (or “A” by DBRS if such institution has a short-term unsecured debt rating of at least “R-1 (middle)” from DBRS or, if such institution is not rated by DBRS, “A” or higher by any two other NRSROs), at least “A2” by Moody’s, and if rated by KBRA, a rating by KBRA equivalent to “A2” by Moody’s, and that has a short-term unsecured debt rating from Moody’s of at least “P-1” (and, if rated by KBRA, at least an equivalent rating by KBRA) or, in the case of any Rating Agency with respect to either the long term or short term ratings specified herein, such lower rating or ratings as is the subject of a Rating Agency Confirmation from such Rating Agency and (iv) an entity that is not a Prohibited Party.
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“Prohibited Party” means (i) an entity that is a proposed Servicing Function Participant that the master servicer, the certificate administrator, the special servicer, the trustee, the custodian, the trust advisor or any primary servicer, as applicable, seeks to retain as a Servicing Function Participant and that the master servicer, the certificate administrator, the special servicer, the trustee, the custodian, the trust advisor or any primary servicer, as applicable, has actual knowledge (obtained by written notice or through actual experience) has failed to comply (after any applicable cure period) with its Exchange Act or Regulation AB compliance obligations with respect to the Issuing Entity on any prior date or any other securitization transaction or (ii) any entity identified in writing (delivered prior to the date of retention) by the depositor to the master servicer, the certificate administrator, the special servicer, the trustee, the custodian, the trust advisor or any primary servicer, as applicable, as an entity that the depositor has knowledge has failed on any prior date to comply (after any applicable cure period) with its Exchange Act or Regulation AB obligations with respect to the Issuing Entity or any other securitization transaction.
Duties of the Trustee
The trustee will make no representations as to the validity or sufficiency of the Pooling and Servicing Agreement, the Certificates or any asset or related document and is not accountable for the use or application by the depositor or the master servicer or the special servicer of any of the Certificates or any of the proceeds of the Certificates, or for the use or application by the depositor or the master servicer or the special servicer of funds paid in consideration of the assignment of the mortgage loans to the Issuing Entity or deposited into any fund or account maintained with respect to the Certificates or any account maintained pursuant to the Pooling and Servicing Agreement or for investment of any such amounts. If no Master Servicer Termination Event has occurred and is continuing, the trustee is required to perform only those duties specifically required under the Pooling and Servicing Agreement. However, upon receipt of the various certificates, reports or other instruments required to be furnished to it, the trustee is required to examine the documents and to determine whether they conform on their face to the requirements of the Pooling and Servicing Agreement. The trustee is required to notify Certificateholders of any termination of a master servicer or special servicer or appointment of a successor to the master servicer or the special servicer. The trustee will be obligated to make any Advance required to be made, and not made, by the master servicer under the Pooling and Servicing Agreement,provided that the trustee will not be obligated to make any Advance that it deems to be a Nonrecoverable Advance. The trustee will be entitled, but not obligated, to rely conclusively on any determination by the master servicer or the special servicer (solely in the case of Servicing Advances), that such Advance, if made, would be a Nonrecoverable Advance. The trustee will be entitled to reimbursement for each Advance made by it in the same manner and to the same extent as, but prior to, the master servicer. See “Description of the Offered Certificates—Advances” in this prospectus supplement.
Matters Regarding the Trustee
The trustee and its directors, officers, employees, agents and controlling persons shall not have any liability to the Issuing Entity or the Certificateholders arising out of or in connection with the Pooling and Servicing Agreement, except for their respective negligent failure to act or their own negligence, willful misconduct or bad faith.
The trustee and each of its directors, officers, employees, agents and controlling persons is entitled to indemnification from the Issuing Entity for any and all claims, losses, penalties, fines, forfeitures, legal fees and related costs, judgments and any other costs, liabilities, fees and expenses incurred in connection with any legal action incurred without negligence, willful misconduct or bad faith on their respective part, arising out of, or in connection with the Pooling and Servicing Agreement, the mortgage loans, the Certificates and the acceptance or administration of the trusts or duties created under the Pooling and Servicing Agreement (including, without limitation, any unanticipated loss, liability or expense incurred in connection with any action or inaction of any master servicer, any special servicer, the trust advisor or the depositor but only to the extent the trustee is unable to recover within a reasonable period of time such amount from such third party pursuant to the Pooling and Servicing Agreement), including the costs and expenses of defending themselves against any claim in connection with the exercise or performance of any of their powers or duties under the Pooling and Servicing Agreement and the trustee and each of its directors, officers, employees, agents and controlling persons shall be entitled to indemnification from the Issuing Entity for any unanticipated loss, liability or expense incurred without negligence, bad faith or willful misconduct in connection with the provision by it of the reports required to be provided by it pursuant to the Pooling and Servicing Agreement.
The trustee shall not be personally liable for any action reasonably taken, suffered or omitted by it in its reasonable business judgment and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by the Pooling and Servicing Agreement. The trustee will not be required to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties under the Pooling and Servicing Agreement or in the exercise of any of its rights or powers if it has reasonable grounds for believing that repayment of those funds or adequate indemnity against that risk or liability is not reasonably assured to it.
Resignation and Removal of the Trustee
The trustee may at any time resign from its obligations and duties under the Pooling and Servicing Agreement by giving written notice to the depositor and the master servicer, among others. Upon receiving the notice of resignation, the depositor is required promptly to appoint a successor trustee meeting the requirements set forth above. If no successor trustee shall have been so appointed and have accepted appointment within thirty (30) days after the giving of the notice of resignation, the resigning trustee may petition any court of competent jurisdiction for the appointment of a successor trustee. The Pooling and Servicing Agreement provides that expenses relating to resignation of the trustee will be required to be paid by the trustee.
The Holders of Certificates representing a majority of the Voting Rights of the Certificates may for cause remove the trustee, upon written notice to the master servicer, the special servicer, us, the certificate administrator and the trustee.
If at any time (i) the trustee shall cease to be eligible to continue as trustee under the Pooling and Servicing Agreement, or (ii) the trustee shall become incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the trustee or of its property shall be appointed, or any public officer shall take charge or control of the trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, or (iii) a tax is imposed or threatened with respect to the Issuing Entity or any REMIC by any state in which the trustee or the Issuing Entity is located solely because of the location of the trustee in such state;provided, that, if the trustee agrees to indemnify the Issuing Entity for such taxes, it shall not be removed pursuant to this clause (iii), or (iv) the continuation of the trustee as such would result in a downgrade, qualification or withdrawal of the rating by any Rating Agency of any class of Certificates with a rating as evidenced in writing by any Rating Agency, then the depositor may remove the trustee and appoint a successor trustee meeting the eligibility requirements set forth above. In the case of removal under clauses (i), (ii), (iii) or (iv) above, the trustee shall bear all such costs of transfer. If the Issuing Entity, or any securitization trust that holds a Serviced Companion Loan, is subject to the reporting requirements of the Exchange Act, and the trustee or any Additional Servicer, sub-servicer or Servicing Function Participant engaged by it fails to perform (subject to any
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applicable grace periods set forth therein) any of its reporting obligations under the Pooling and Servicing Agreement (and such failure to perform is not the result of another party’s failure to deliver required information), the trustee will be required, if so requested by the depositor, to resign from its obligations within sixty (60) calendar days of such request and, if it fails to resign within such time period, the depositor will have the right to remove and replace the trustee in accordance with the procedure described above.
Any resignation or removal of the trustee and appointment of a successor trustee will not become effective until acceptance of appointment by the successor trustee meeting the eligibility requirements set forth above. Upon any succession of the trustee, the predecessor trustee will be entitled to the payment of compensation and reimbursement agreed to under the Pooling and Servicing Agreement for services rendered and expenses incurred.
Trustee Compensation
As compensation for the performance of its duties as trustee, the trustee will be paid the monthly trustee fee (the “Trustee Fee”). The Trustee Fee is to be paid from the Certificate Administrator Fee by the certificate administrator. In addition, the trustee will be entitled to recover from the Issuing Entity all reasonable unanticipated out-of-pocket expenses and disbursements incurred or made by the trustee in connection with the exercise of its rights or duties under the Pooling and Servicing Agreement, but not including expenses incurred in the ordinary course of performing its duties as trustee under the Pooling and Servicing Agreement, and not including any expense, disbursement or advance as may arise from its negligence, willful misconduct or bad faith.
The Custodian
The custodian is at all times required to be, and will be required to resign if it fails to be, (i) an institution insured by the FDIC, (ii) a corporation, national bank or national banking association, organized and doing business under the laws of the United States of America or of any state thereof, authorized to exercise corporate trust powers, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by federal or state authority, (iii) an institution whose long-term senior unsecured debt is at all times rated at least at leastat least “AA (low)” by DBRS (or “A” by DBRS if such institution has a short-term unsecured debt rating of at least “R-1 (middle)” from DBRS or, if such institution is not rated by DBRS, “A” or higher by any two other NRSROs), at least “A2” by Moody’s, and if rated by KBRA, a rating by KBRA equivalent to “A2” by Moody’s, and that has a short-term unsecured debt rating from Moody’s of at least “P-1” (and, if rated by KBRA, at least an equivalent rating by KBRA) or, in the case of any Rating Agency with respect to either the long term or short term ratings specified herein, such lower rating or ratings as is the subject of a Rating Agency Confirmation from such Rating Agency, and (iv) an entity that is not a Prohibited Party.
Duties of the Custodian
The custodian will make no representations as to the validity or sufficiency of the Pooling and Servicing Agreement, the Certificates or any asset or related document and is not accountable for the use or application by the depositor, the master servicer, the special servicer, the trustee or the certificate administrator of any of the Certificates or any of the proceeds of the Certificates, or for the use or application by any such party of funds paid in consideration of the assignment of the mortgage loans to the Issuing Entity or deposited into any fund or account maintained with respect to the Certificates or any account maintained pursuant to the Pooling and Servicing Agreement or for investment of any such amounts. Upon receipt of the various certificates, reports or other instruments required to be furnished to it, the custodian is required to examine the documents and to determine whether they conform on their face to the requirements of the Pooling and Servicing Agreement.
Matters Regarding the Custodian
The custodian and its directors, officers, employees, agents and controlling persons shall not have any liability to the Issuing Entity or the Certificateholders arising out of or in connection with the Pooling and Servicing Agreement, except for their respective negligent failure to act or their own negligence, willful misconduct or bad faith.
The custodian and each of its directors, officers, employees, agents and controlling persons is entitled to indemnification from the Issuing Entity for any and all claims, losses, penalties, fines, forfeitures, legal fees and related costs, judgments and any other costs, liabilities, fees and expenses incurred in connection with any legal action incurred without negligence, willful misconduct or bad faith on their respective part, arising out of, or in connection with the Pooling and Servicing Agreement, the mortgage loans, the Certificates and the acceptance or administration of the trusts or duties created under the Pooling and Servicing Agreement (including, without limitation, any unanticipated loss, liability or expense incurred in connection with any action or inaction of any master servicer, any special servicer, the trust advisor, the certificate administrator, the trustee, or the depositor but only to the extent the custodian is unable to recover within a reasonable period of time such amount from such third party pursuant to the Pooling and Servicing Agreement), including the costs and expenses of defending themselves against any claim in connection with the exercise or performance of any of their powers or duties under the Pooling and Servicing Agreement, and the custodian and each of its directors, officers, employees, agents and controlling persons shall be entitled to indemnification from the Issuing Entity for any unanticipated loss, liability or expense incurred without negligence, bad faith or willful misconduct in connection with the provision by it of the reports required to be provided by it pursuant to the Pooling and Servicing Agreement.
The custodian shall not be personally liable for any action reasonably taken, suffered or omitted by it in its reasonable business judgment and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by the Pooling and Servicing Agreement. The custodian will not be required to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties under the Pooling and Servicing Agreement or in the exercise of any of its rights or powers if it has reasonable grounds for believing that repayment of those funds or adequate indemnity against that risk or liability is not reasonably assured to it.
Resignation and Removal of the Custodian
The custodian may at any time resign from its obligations and duties under the Pooling and Servicing Agreement by giving written notice to the depositor, the trustee, and the master servicer, among others. Upon receiving the notice of resignation, the depositor is required promptly to appoint a successor custodian meeting the requirements set forth above. If no successor custodian shall have been so appointed and have accepted appointment within thirty (30) days after the giving of the notice of resignation, the resigning custodian may petition any court of competent jurisdiction for the appointment of a successor custodian. The Pooling and Servicing Agreement provides that expenses relating to resignation of the custodian will be required to be paid by the custodian.
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The Holders of Certificates representing a majority of the Voting Rights of the Certificates may for cause remove the custodian, upon written notice to the custodian, the master servicer, the special servicer, us, the certificate administrator and the trustee.
If at any time (i) the custodian shall cease to be eligible to continue as custodian under the Pooling and Servicing Agreement, or (ii) the custodian shall become incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the custodian or of its property shall be appointed, or any public officer shall take charge or control of the custodian or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, or (iii) a tax is imposed or threatened with respect to the Issuing Entity or any REMIC by any state in which the custodian or the Issuing Entity is located solely because of the location of the custodian in such state;provided, that, if the custodian agrees to indemnify the Issuing Entity for such taxes, it shall not be removed pursuant to this clause (iii), or (iv) the continuation of the custodian as such would result in a downgrade, qualification or withdrawal of the rating by any Rating Agency of any class of Certificates with a rating as evidenced in writing by any Rating Agency, then the depositor may remove the custodian and appoint a successor custodian meeting the eligibility requirements set forth above. In the case of removal under clauses (i), (ii), (iii) or (iv) above, the custodian shall bear all such costs of transfer. If the Issuing Entity, or any securitization trust that holds a Serviced Companion Loan, is subject to the reporting requirements of the Exchange Act, and the custodian or Additional Servicer, sub-servicer or Servicing Function Participant engaged by it fails to perform (subject to any applicable grace periods set forth therein) any of its reporting obligations under the Pooling and Servicing Agreement (and such default is not the result of another party’s failure to deliver required information), the custodian will be required, if so requested by the depositor, to resign from its obligations within sixty (60) calendar days of such request and, if it fails to resign within such time period, the depositor will have the right to remove and replace the custodian in accordance with the procedure described above.
Any resignation or removal of the custodian and appointment of a successor custodian will not become effective until acceptance of appointment by the successor custodian meeting the eligibility requirements set forth above. Upon any succession of the custodian, the predecessor custodian will be entitled to the payment of compensation and reimbursement agreed to under the Pooling and Servicing Agreement for services rendered and expenses incurred.
Custodian Compensation
As compensation for the performance of its duties as custodian, the custodian will be paid the monthly custodian fee (the “Custodian Fee”). The Custodian Fee is to be paid from the Certificate Administrator Fee by the certificate administrator. In addition, the custodian will be entitled to recover from the Issuing Entity all reasonable unanticipated out-of-pocket expenses and disbursements incurred or made by the custodian in connection with the exercise of its rights or duties under the Pooling and Servicing Agreement, but not including expenses incurred in the ordinary course of performing its duties as custodian under the Pooling and Servicing Agreement, and not including any expense, disbursement or advance as may arise from its negligence, bad faith or willful misconduct.
Certificateholder Communications
Special Notices
Upon the written request of any Certificateholder or Certificate Owner that has provided the certificate administrator with an executed Investor Certification, the certificate administrator will transmit a special notice to all Certificateholders at their respective addresses appearing on the certificate register and Certificate Owners through DTC’s Participants in accordance with DTC procedures stating that the requesting Certificateholder or Certificate Owner, as the case may be, wishes to be contacted by other Certificateholders or Certificate Owners, setting forth the relevant contact information and briefly stating the reason for the requested contact, at the expense of the requesting Certificateholder or Certificate Owner, as the case may be. The certificate administrator will be entitled to reimbursement from the requesting Certificateholder or Certificate Owner for the reasonable expenses of posting such special notices.
Retention of Certain Certificates by Affiliates of Transaction Parties
Affiliates of the mortgage loan seller, the depositor, the trustee, the certificate administrator, the custodian, the trust advisor, the master servicer and the special servicer may retain or own in the future certain classes of Certificates. Any such party will have the right to dispose of such Certificates at any time.
YIELD, PREPAYMENT AND MATURITY CONSIDERATIONS
General
The yield to maturity on the Offered Certificates will be affected by the price paid by the Certificateholder, the related Pass-Through Rates (or, with respect to the Class PST Certificates, the Pass-Through Rates of the related Class PST Components) and the rate, timing and amount of distributions on such Offered Certificates. The rate, timing and amount of distributions on any Offered Certificate will in turn depend on, among other things:
· | the Pass-Through Rate for such Certificate (or, with respect to the Class PST Certificates, the Pass-Through Rates of the related Class PST Components); |
· | the rate and timing of principal payments, including Principal Prepayments, and other principal collections on the mortgage loans (including payments of principal arising from purchases of mortgage loans in connection with Material Breaches of representations and warranties and Material Document Defects or the exercise of a purchase option by a holder of a subordinate note or a mezzanine loan) and the extent to which such amounts are to be applied in reduction of the Certificate Principal Balance or Notional Amount, as applicable, of such Certificate or in reduction of amounts distributable thereon; |
· | the rate, timing and severity of Collateral Support Deficits and Trust Advisor Expenses and the extent to which such items are allocable in reduction of the Certificate Principal Balance or Notional Amount, as applicable, of such Certificate; |
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· | the rate and timing of any reimbursement of the master servicer, the special servicer or the trustee, as applicable, out of the Collection Account of Nonrecoverable Advances or Advances remaining unreimbursed on a modified mortgage loan on the date of such modification; and |
· | 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 such Certificate. |
In addition, the effective yield to Holders of the Offered Certificates will differ from the yield otherwise produced by the applicable Pass-Through Rate and purchase prices of such Certificates because interest distributions will not be payable to such Holders until at least the 4th Business Day after the related Determination Date of the month following the month of accrual without any additional distribution of interest or earnings thereon in respect of such delay.
Pass-Through Rates
The Pass-Through Rates on one or more classes of Offered Certificates or Trust Components may be based on, limited by, or equal to, the Weighted Average Net Mortgage Rate from time to time, which is calculated based upon the respective Net Mortgage Rates and Stated Principal Balances of the mortgage loans as described in this prospectus supplement. Accordingly, the yield on those classes of Offered Certificates and Trust Components may (and in the case of a class with a Pass-Through Rate equal to or based on the Weighted Average Net Mortgage Rate, will) be sensitive to changes in the relative composition of the Mortgage Pool as a result of scheduled amortization, voluntary and involuntary prepayments and any unscheduled collections of principal and/or any realized losses as a result of liquidations of mortgage loans. In general, the effect of any such changes on such yields and Pass-Through Rates for such Certificates and Trust Components will be particularly adverse to the extent that mortgage loans with relatively higher mortgage rates experience faster rates of such scheduled amortization, voluntary prepayments and unscheduled collections or realized losses than mortgage loans with relatively lower mortgage rates.
The Class PST Certificates will not have a Pass-Through Rate, but will be entitled to receive the sum of the interest distributable on the Class PST Components. The Pass-Through Rates on each Class PST Component will, at all times, be the same as the Pass-Through Rate on the Class of Certificates bearing the same letter designation as such Class PST Component. Accordingly, the yield on the Class PST Certificates will be sensitive to changes in the relative principal balances of the Class PST Components as a result of scheduled amortization, voluntary and involuntary prepayments and any unscheduled collections of principal and/or any realized losses as a result of liquidations of mortgage loans.
Rate and Timing of Principal Payments
The yield to maturity on any Class of Offered Certificates purchased at a discount or premium will be affected by the rate and timing of principal payments made in reduction of the aggregate Certificate Principal Balance or Notional Amount, as applicable, of such Class of Certificates. As described in this prospectus supplement, the Principal Distribution Amount for each Distribution Date will be distributable entirely in respect of the Offered Certificates (other than the Class X-A Certificates) until their aggregate Certificate Principal Balance is reduced to zero. Consequently, the rate and timing of principal payments that are distributed or otherwise result in the reduction of the aggregate Certificate Principal Balance of each Class of Offered Certificates (other than the Class X-A Certificates) will be directly related to the rate and timing of principal payments on or in respect of the mortgage loans, which will in turn be affected by the amortization schedules of such mortgage loans, the dates on which Balloon Payments are due, any extension of maturity dates by the master servicer or the special servicer, the rate and timing of any reimbursement of the master servicer, the special servicer or the trustee, as applicable, out of the Collection Account of Nonrecoverable Advances or Advances remaining unreimbursed on a modified mortgage loan on the date of such modification (together with interest on such Advances), and the rate and timing of Principal Prepayments and other unscheduled collections thereon, including for this purpose, collections made in connection with liquidations of mortgage loans due to defaults, casualties or condemnations affecting the mortgaged properties, repurchases as a result of the mortgage loan seller’s breach of representations and warranties or material defects in a mortgage loan’s documentation and other purchases of mortgage loans out of the Issuing Entity.
Although the borrower under an ARD Loan may have incentives to prepay the ARD Loan on its Anticipated Repayment Date, there is no assurance that the borrower will choose to or will be able to prepay an ARD Loan on its Anticipated Repayment Date. The failure of the borrower to prepay an ARD Loan on its Anticipated Repayment Date will not be an event of default under the terms of that mortgage loan. However, the Pooling and Servicing Agreement will permit the master servicer or the special servicer, as the case may be, to take action to enforce the Issuing Entity’s right to apply excess cash flow generated by the mortgaged property to the payment of principal in accordance with the terms of the ARD Loan documents.
Prepayments and, assuming the respective maturity dates therefor have not occurred, liquidations 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 and will tend to shorten the weighted average lives of the Offered Certificates (other than the Class X-A Certificates). Any early termination of the Issuing Entity as described in this prospectus supplement under “Description of the Offered Certificates—Optional Termination” will also shorten the weighted average lives of those Certificates then outstanding. Defaults on the mortgage loans, particularly at or near their maturity dates, may result in significant delays in payments of principal on the mortgage loans, and, accordingly, on the Offered Certificates (other than the Class X-A Certificates), while work-outs are negotiated or foreclosures are completed, and such delays will tend to lengthen the weighted average lives of those Certificates. See “Servicing of the Mortgage Loans—Mortgage Loan Modifications” in this prospectus supplement.
The extent to which the yield to maturity of any Offered Certificate may vary from the anticipated yield will also depend upon the degree to which such Certificate is purchased at a discount or premium and when, and to what degree, payments of principal on the mortgage loans in turn are distributed or otherwise result in a reduction of the aggregate Certificate Principal Balance or Notional Amount of its class. An investor should consider, in the case of any such Certificate purchased at a discount, the risk that a slower than anticipated rate of principal payments on the mortgage loans could result in an actual yield to such investor that is lower than the anticipated yield and, in the case of any Certificate purchased at a premium, the risk that a faster than anticipated rate of principal payments on the mortgage loans could result in an actual yield to such investor that is lower than the anticipated yield.
With respect to the Class A-SB Certificates, the extent to which the Planned Principal Balances are achieved and the sensitivity of the Class A-SB Certificates to principal prepayments on the mortgage loans will depend in part on the period of time during which the Class A-1, Class A-2, Class A-3 and Class A-4 Certificates remain outstanding. As such, the Class A-SB Certificates will become more
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sensitive to the rate of prepayments on the mortgage loans if the Class A-1, Class A-2, Class A-3 and Class A-4 Certificates are not outstanding.
In general, if an Offered Certificate is purchased at a discount or premium, the earlier a payment of principal on the mortgage loans is distributed or otherwise results in a reduction of the Certificate Principal Balance or Notional Amount, as applicable, of the related class, the greater will be the effect on the yield to maturity of such Certificate. As a result, the effect on an investor’s yield of principal payments on the mortgage loans occurring at a rate higher (or lower) than the rate anticipated by the investor during any particular period may not be fully offset by a subsequent like reduction (or increase) in the rate of such principal payments. With respect to the Offered Certificates, any allocation of a portion of collected Prepayment Premiums or Yield Maintenance Charges to any Certificates as described in this prospectus supplement is intended to mitigate those risks; however, such allocation, if any, may be insufficient to offset fully the adverse effects on yield that such prepayments may have. The Prepayment Premium or Yield Maintenance Charge payable, if any, with respect to any mortgage loan, is required to be calculated as presented in Appendix I to this prospectus supplement.
Because the rate of principal payments on the mortgage loans will depend on future events and a variety of factors (as described more fully below), no assurance can be given as to such rate or the rate of Principal Prepayments in particular. 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.
Yield on the Class X-A Certificates
The yield to maturity of the Class X-A Certificates will be highly sensitive to the rate and timing of reductions made to the Certificate Principal Balances of the Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates, including by reason of prepayments and principal losses on the mortgage loans and other factors described above. Investors in the Class X-A Certificates should fully consider the associated risks, including the risk that an extremely rapid rate of prepayment or other liquidation of the mortgage loans could result in the failure of such investors to recoup fully their initial investments.
Any optional termination by the Holders of the most subordinate Class of Certificates outstanding (for this purpose considering each of the Class A-S, Class B and Class C Certificates together with the portion of the Class PST Certificates representing an interest in the Trust Component bearing the same alphabetic designation), the special servicer, the master servicer or the Holders of a majority in interest of the Class R Certificates would result in prepayment in full of the Certificates and would have an adverse effect on the yield of the Class X-A Certificates because a termination would have an effect similar to a principal prepayment in full of the mortgage loans and, as a result, investors in any Class X-A Certificates and any other Certificates purchased at premium might not fully recoup their initial investment. See “Description of the Offered Certificates—Optional Termination” above.
Unpaid Distributable Certificate Interest
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 the Available Distribution Amount. Any such shortfall (which would not include interest shortfalls in connection with a Principal Prepayment accompanied by less than a full month’s interest) may adversely affect the yield to maturity of that class of Certificates for as long as it is outstanding.
Losses and Shortfalls
The yield to Holders of the Offered Certificates will also depend on the extent to which such Holders are required to bear the effects of any losses or shortfalls on the mortgage loans. Collateral Support Deficits in respect of the mortgage pool and the Certificates will generally be applied in reverse sequential order, that is, first to the Class G Certificates, and then to the other respective classes of Principal Balance Certificates and Trust Components, in reverse alphabetical order of class designation — from the Class F Certificates to the Class D Certificates, to the Class C Trust Component (and correspondingly, the Class C Certificates and the Class PST Component C,pro rata, based on their respective percentage interests in the Class C Trust Component), to the Class B Trust Component (and correspondingly, the Class B Certificates and the Class PST Component B,pro rata, based on their respective percentage interests in the Class B Trust Component), to the Class A-S Trust Component (and correspondingly, the Class A-S Certificates and the Class PST Component A-S,pro rata, based on their respective percentage interests in the Class A-S Trust Component), and thenpro rata among Class A-1, Class A-2, Class A-SB, Class A-3 and Class A-4 Certificates, in each such case to reduce the Certificate Principal Balance of such class or Trust Component until such Certificate Principal Balance is reduced to zero. Net Aggregate Prepayment Interest Shortfalls will be borne by the Holders of each class of Offered Certificates, as described in this prospectus supplement, in each case reducing interest otherwise payable thereon. Shortfalls arising from delinquencies and defaults, to the extent the master servicer or the special servicer determines that P&I Advances would be nonrecoverable, Appraisal Reductions, and realized losses, in each case on the mortgage loans, generally will result in, among other things, a shortfall in current or ultimate distributions to the most subordinate class of Subordinate Certificates outstanding (subject to the payment allocation priority of the Class PST Certificates described above under “Description of the Offered Certificates—Distributions—Application of the Available Distribution Amount”).
The Principal Balance Certificates (other than the Control Eligible Certificates) may be required to bear the effects of Trust Advisor Expenses to the extent such amounts are allocated to such classes of Certificates. Such amounts will be allocated to reduce the Distributable Certificate Interest for the related Distribution Date to the Class D Certificates, the Class C Trust Component (and correspondingly, the Class C Certificates and the Class PST Component C,pro rata, based on their respective percentage interests in the Class C Trust Component) and the Class B Trust Component (and correspondingly, the Class B Certificates and the Class PST Component B,pro rata, based on their respective percentage interests in the Class B Trust Component), in that order, until the Distributable Certificate Interest of such classes or Trust Components for such Distribution Date has been reduced to zero and then, to the extent there are Excess Trust Advisor Expenses and such Excess Trust Advisor Expenses result in a reduction of the Principal Distribution Amount, to such classes of Certificates and Trust Components, in the order described above, and then to the Class A-S Trust Component (and correspondingly, the Class A-S Certificates and the Class PST Component A-S,pro rata, based on their respective percentage interests in the Class A-S Trust Component), and then to the respective classes of Class A Senior Certificates,pro rata, in each case, as a reduction of the Certificate Principal Balance of such class or Trust Component until such Certificate Principal Balance is reduced to zero.
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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, payments of principal arising from repurchases of mortgage loans (including payments of principal arising from purchases of mortgage loans in connection with breaches of representations and warranties and otherwise), prevailing interest rates, the terms of the mortgage loans—for example, provisions prohibiting Principal Prepayments for certain periods and/or requiring the payment of Prepayment Premiums or Yield Maintenance Charges, due-on-sale and due-on-encumbrance provisions, provisions requiring that upon occurrence of certain events funds held in escrow or proceeds from letters of credit be applied to principal, incentives for a borrower under an ARD Loan to repay such ARD Loan by its Anticipated Repayment Date and amortization terms that require Balloon Payments—the demographics and relative economic vitality of the areas in which the mortgaged properties are located and the general supply and demand for rental units or comparable commercial space, as applicable, in such areas, the quality of management of the mortgaged properties, the servicing of the mortgage loans, possible changes in tax laws and other opportunities for investment. See “Risk Factors” in this prospectus supplement and in the accompanying prospectus.
The rate of prepayment on the Mortgage Pool is likely to be affected by prevailing market interest rates for mortgage loans of a comparable type, term and risk level. When the prevailing market interest rate is below a mortgage interest rate, the related borrower has an incentive to refinance its mortgage loan. A requirement that a prepayment be accompanied by a Prepayment Premium or Yield Maintenance Charge may not provide a sufficient economic disincentive to deter a borrower from refinancing at a more favorable interest rate. Conversely, to the extent the prevailing market interest rate exceeds a mortgage interest rate, the related borrower may be less likely to refinance its mortgage loan.
Depending on prevailing market interest rates, the outlook for market interest rates and economic conditions generally, some borrowers may sell or refinance mortgaged properties in order to realize their equity therein, to meet cash flow needs or to make other investments. In addition, some borrowers may be motivated by federal and state tax laws, which are subject to change, to sell mortgaged properties prior to the exhaustion of tax depreciation benefits.
We make no representation as to the particular factors that will affect the rate and timing of prepayments and defaults on the mortgage loans, as to the relative importance of such factors, as to the percentage of the principal balance of the mortgage loans that will be prepaid or as to whether a default will have occurred as of any date or as to the overall rate of prepayment or default on the mortgage loans.
Weighted Average Life
Weighted average life refers to the average amount of time from the date of issuance of a security until each dollar of principal of such security will be repaid to the investor. The weighted average life of any Principal Balance Certificate will be influenced by, among other things, the rate at which principal on the mortgage loans is paid or otherwise collected or advanced and applied to reduce the Certificate Principal Balance of such Certificate.
Prepayments on mortgage loans are commonly measured relative to a prepayment standard or model. The prepayment model used in this prospectus supplement is the “Constant Prepayment Rate” or “CPR” model. The CPR model represents an assumed constant rate of prepayment each month expressed as a percentageper annum of the then outstanding principal balance of all of the mortgage loans that are past their lock-out, defeasance and yield maintenance periods. We make no representation as to the appropriateness of using the CPR model for purposes of analyzing an investment in the Offered Certificates. Further, CPR does not purport to be either an historical description of the prepayment experience of any pool of mortgage loans or a prediction of the anticipated rate of prepayment of any mortgage loans, including the mortgage loans underlying the Offered Certificates.
The tables below indicate the percentage of the initial Certificate Principal Balance of each Class of Offered Certificates (other than the Class X-A Certificates) at each of the dates shown and the corresponding weighted average life of each such Class of Offered Certificates, if the Mortgage Pool were to prepay at the indicated levels of CPR. The tables below have also been prepared generally on the basis of the following structuring assumptions (the “Structuring Assumptions”):
· | the mortgage rate as of the Closing Date on each mortgage loan remains in effect until maturity or its Anticipated Repayment Date; |
· | the Scheduled Monthly Payments for each mortgage loan are based on the respective Cut-off Date Balances thereof, stated monthly principal and interest payments, and the Mortgage Rate in effect as of the Cut-off Date for such mortgage loan; |
· | the initial Certificate Principal Balances, initial Notional Amounts and initial Pass-Through Rates of the Offered Certificates (and, in the case of the Class PST Certificates, the Pass-Through Rates of the underlying Class PST Components) are as presented in this prospectus supplement; |
· | the Closing Date for the sale of the Certificates is July 8, 2015; |
· | distributions on the Certificates are made on the 15th day of each month, commencing in August 2015; |
· | there are no delinquencies or losses in respect of the mortgage loans, there are no extensions of maturity in respect of the mortgage loans, there are no Appraisal Reductions applied to the mortgage loans, there are no casualties or condemnations affecting the mortgaged properties and no holdback amounts are applied to reduce the principal balance of any mortgage loan; |
· | Scheduled Payments (including Balloon Payments) on the mortgage loans are timely received on the first day of each month; |
· | no Additional Trust Fund Expenses or Trust Advisor Expenses are incurred and there are no additional expenses of the Issuing Entity; |
· | no Principal Prepayment on any mortgage loan is made during its Lock-out Period, if any, including during any yield maintenance lock-out period, defeasance lock-out period or prepayment consideration lock-out period, and otherwise Principal Prepayments are made on the mortgage loans at the indicated levels of CPR, notwithstanding any limitations in the mortgage loans on partial prepayments; |
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· | no Prepayment Interest Shortfalls occur and no Prepayment Premiums or Yield Maintenance Charges are collected; |
· | no borrower under a mortgage loan exercises its partial release option; |
· | no amounts that would otherwise be payable to Certificateholders as principal are paid to the master servicer, the special servicer or the trustee as reimbursements of any Nonrecoverable Advances, unreimbursed Advances outstanding as of the date of modification of any mortgage loan and any related interest on those Advances; |
· | no mortgage loan is the subject of a repurchase or substitution by any party and no optional termination of the Issuing Entity occurs; |
· | no purchase option holder permitted to purchase a mortgage loan under the related co-lender agreement or intercreditor agreement will exercise its option to purchase such mortgage loan; |
· | each ARD Loan, if any, pays in full on its Anticipated Repayment Date; |
· | any mortgage loan with the ability to choose defeasance or yield maintenance chooses yield maintenance; |
· | no Exchangeable Certificates have been exchanged, except with respect to the decrement table and price/yield table below and the Expected Final Distribution Date relating to the Class PST Certificates, in which case we assume that the maximum Certificate Principal Balance of the Class PST Certificates was delivered on the Closing Date; and |
· | the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as Alderwood Mall, representing approximately 5.7% of the Initial Pool Balance, amortizes based on the amortization schedule attached to this prospectus supplement as Appendix VIII. |
The mortgage loans do not have all of the characteristics of the Structuring Assumptions. To the extent that the mortgage loans have characteristics that differ from those assumed in preparing the tables, the Classes of Offered Certificates analyzed in the tables may mature earlier or later than indicated by the tables and therefore will have a corresponding decrease or increase in weighted average life. Additionally, mortgage loans generally do not prepay at any constant rate. Accordingly, it is highly unlikely that the mortgage loans will prepay in a manner consistent with the Structuring Assumptions. Furthermore, it is unlikely that the mortgage loans will experience no defaults or losses. 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 Principal Balances, and shorten or extend the 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.
For the purposes of each table, the weighted average life of a Principal Balance Certificate is determined by:
· | multiplying the amount of each reduction in the Certificate Principal Balance thereof by the number of years from the date of issuance of the Certificate to the related Distribution Date; |
· | summing the results; and |
· | dividing the sum by the aggregate amount of the reductions in the Certificate Principal Balance of such Certificate. |
Initial Certificate Principal Balance Outstanding for the Class A-1 Certificates at the Respective Percentages of CPR | |||||
Distribution Date | 0% | 25% | 50% | 75% | 100% |
Closing Date | 100% | 100% | 100% | 100% | 100% |
July 2016 | 84% | 84% | 84% | 84% | 84% |
July 2017 | 67% | 67% | 67% | 67% | 67% |
July 2018 | 47% | 47% | 47% | 47% | 47% |
July 2019 | 24% | 24% | 24% | 24% | 24% |
July 2020 and thereafter | 0% | 0% | 0% | 0% | 0% |
Weighted average life (years) | 2.79 | 2.79 | 2.79 | 2.79 | 2.79 |
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Initial Certificate Principal Balance Outstanding for the Class A-2 Certificates at the Respective Percentages of CPR | |||||
Distribution Date | 0% | 25% | 50% | 75% | 100% |
Closing Date | 100% | 100% | 100% | 100% | 100% |
July 2016 | 100% | 100% | 100% | 100% | 100% |
July 2017 | 100% | 100% | 100% | 100% | 100% |
July 2018 | 100% | 100% | 100% | 100% | 100% |
July 2019 | 100% | 100% | 100% | 100% | 100% |
July 2020 | 100% | 100% | 100% | 100% | 100% |
July 2021 | 100% | 100% | 100% | 100% | 100% |
July 2022 and thereafter | 0% | 0% | 0% | 0% | 0% |
Weighted average life (years) | 6.94 | 6.92 | 6.91 | 6.89 | 6.69 |
Initial Certificate Principal Balance Outstanding for the Class A-SB Certificates at the Respective Percentages of CPR | |||||
Distribution Date | 0% | 25% | 50% | 75% | 100% |
Closing Date | 100% | 100% | 100% | 100% | 100% |
July 2016 | 100% | 100% | 100% | 100% | 100% |
July 2017 | 100% | 100% | 100% | 100% | 100% |
July 2018 | 100% | 100% | 100% | 100% | 100% |
July 2019 | 100% | 100% | 100% | 100% | 100% |
July 2020 | 100% | 100% | 100% | 100% | 100% |
July 2021 | 80% | 80% | 80% | 80% | 80% |
July 2022 | 59% | 59% | 59% | 59% | 59% |
July 2023 | 37% | 37% | 37% | 37% | 37% |
July 2024 | 15% | 15% | 15% | 15% | 15% |
July 2025 and thereafter | 0% | 0% | 0% | 0% | 0% |
Weighted average life (years) | 7.45 | 7.45 | 7.45 | 7.45 | 7.45 |
Initial Certificate Principal Balance Outstanding for the Class A-3 Certificates at the Respective Percentages of CPR | |||||
Distribution Date | 0% | 25% | 50% | 75% | 100% |
Closing Date | 100% | 100% | 100% | 100% | 100% |
July 2016 | 100% | 100% | 100% | 100% | 100% |
July 2017 | 100% | 100% | 100% | 100% | 100% |
July 2018 | 100% | 100% | 100% | 100% | 100% |
July 2019 | 100% | 100% | 100% | 100% | 100% |
July 2020 | 100% | 100% | 100% | 100% | 100% |
July 2021 | 100% | 100% | 100% | 100% | 100% |
July 2022 | 100% | 100% | 100% | 100% | 100% |
July 2023 | 100% | 100% | 100% | 100% | 100% |
July 2024 | 100% | 100% | 99% | 99% | 96% |
July 2025 and thereafter | 0% | 0% | 0% | 0% | 0% |
Weighted average life (years) | 9.71 | 9.64 | 9.58 | 9.50 | 9.29 |
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Initial Certificate Principal Balance Outstanding for the Class A-4 Certificates at the Respective Percentages of CPR | |||||
Distribution Date | 0% | 25% | 50% | 75% | 100% |
Closing Date | 100% | 100% | 100% | 100% | 100% |
July 2016 | 100% | 100% | 100% | 100% | 100% |
July 2017 | 100% | 100% | 100% | 100% | 100% |
July 2018 | 100% | 100% | 100% | 100% | 100% |
July 2019 | 100% | 100% | 100% | 100% | 100% |
July 2020 | 100% | 100% | 100% | 100% | 100% |
July 2021 | 100% | 100% | 100% | 100% | 100% |
July 2022 | 100% | 100% | 100% | 100% | 100% |
July 2023 | 100% | 100% | 100% | 100% | 100% |
July 2024 | 100% | 100% | 100% | 100% | 100% |
July 2025 and thereafter | 0% | 0% | 0% | 0% | 0% |
Weighted average life (years) | 9.81 | 9.80 | 9.78 | 9.74 | 9.47 |
Initial Certificate Principal Balance Outstanding for the Class A-S Certificates at the Respective Percentages of CPR | |||||
Distribution Date | 0% | 25% | 50% | 75% | 100% |
Closing Date | 100% | 100% | 100% | 100% | 100% |
July 2016 | 100% | 100% | 100% | 100% | 100% |
July 2017 | 100% | 100% | 100% | 100% | 100% |
July 2018 | 100% | 100% | 100% | 100% | 100% |
July 2019 | 100% | 100% | 100% | 100% | 100% |
July 2020 | 100% | 100% | 100% | 100% | 100% |
July 2021 | 100% | 100% | 100% | 100% | 100% |
July 2022 | 100% | 100% | 100% | 100% | 100% |
July 2023 | 100% | 100% | 100% | 100% | 100% |
July 2024 | 100% | 100% | 100% | 100% | 100% |
July 2025 and thereafter | 0% | 0% | 0% | 0% | 0% |
Weighted average life (years) | 9.86 | 9.85 | 9.85 | 9.85 | 9.60 |
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Initial Certificate Principal Balance Outstanding for the Class B Certificates at the Respective Percentages of CPR | |||||
Distribution Date | 0% | 25% | 50% | 75% | 100% |
Closing Date | 100% | 100% | 100% | 100% | 100% |
July 2016 | 100% | 100% | 100% | 100% | 100% |
July 2017 | 100% | 100% | 100% | 100% | 100% |
July 2018 | 100% | 100% | 100% | 100% | 100% |
July 2019 | 100% | 100% | 100% | 100% | 100% |
July 2020 | 100% | 100% | 100% | 100% | 100% |
July 2021 | 100% | 100% | 100% | 100% | 100% |
July 2022 | 100% | 100% | 100% | 100% | 100% |
July 2023 | 100% | 100% | 100% | 100% | 100% |
July 2024 | 100% | 100% | 100% | 100% | 100% |
July 2025 and thereafter | 0% | 0% | 0% | 0% | 0% |
Weighted average life (years) | 9.94 | 9.91 | 9.88 | 9.85 | 9.62 |
Initial Certificate Principal Balance Outstanding for the Class PST Certificates at the Respective Percentages of CPR | |||||
Distribution Date | 0% | 25% | 50% | 75% | 100% |
Closing Date | 100% | 100% | 100% | 100% | 100% |
July 2016 | 100% | 100% | 100% | 100% | 100% |
July 2017 | 100% | 100% | 100% | 100% | 100% |
July 2018 | 100% | 100% | 100% | 100% | 100% |
July 2019 | 100% | 100% | 100% | 100% | 100% |
July 2020 | 100% | 100% | 100% | 100% | 100% |
July 2021 | 100% | 100% | 100% | 100% | 100% |
July 2022 | 100% | 100% | 100% | 100% | 100% |
July 2023 | 100% | 100% | 100% | 100% | 100% |
July 2024 | 100% | 100% | 100% | 100% | 100% |
July 2025 and thereafter | 0% | 0% | 0% | 0% | 0% |
Weighted average life (years) | 9.91 | 9.90 | 9.88 | 9.86 | 9.63 |
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Initial Certificate Principal Balance Outstanding for the Class C Certificates at the Respective Percentages of CPR | |||||
Distribution Date | 0% | 25% | 50% | 75% | 100% |
Closing Date | 100% | 100% | 100% | 100% | 100% |
July 2016 | 100% | 100% | 100% | 100% | 100% |
July 2017 | 100% | 100% | 100% | 100% | 100% |
July 2018 | 100% | 100% | 100% | 100% | 100% |
July 2019 | 100% | 100% | 100% | 100% | 100% |
July 2020 | 100% | 100% | 100% | 100% | 100% |
July 2021 | 100% | 100% | 100% | 100% | 100% |
July 2022 | 100% | 100% | 100% | 100% | 100% |
July 2023 | 100% | 100% | 100% | 100% | 100% |
July 2024 | 100% | 100% | 100% | 100% | 100% |
July 2025 and thereafter | 0% | 0% | 0% | 0% | 0% |
Weighted average life (years) | 9.94 | 9.94 | 9.94 | 9.91 | 9.69 |
Price/Yield Tables
The tables set forth below show the corporate bond equivalent (“CBE”) yield with respect to each Class of Offered Certificates under the Structuring Assumptions. Purchase prices set forth below for each Class of Offered Certificates are expressed as a percentage of the initial Certificate Principal Balance or Notional Amount, as applicable, of such Class of Offered Certificates, before adding accrued interest.
The yields set forth in the following tables were calculated by determining the monthly discount rates which, when applied to the assumed stream of cash flows to be paid on each Class of Offered Certificates, would cause the discounted present value of such assumed stream of cash flows as of the Closing Date to equal the assumed purchase prices, plus accrued interest at the applicable Pass-Through Rate (or, in the case of the Class PST Certificates, the Pass-Through Rates applicable to the related Class PST Components) as described in the Structuring Assumptions, from and including July 1, 2015 to but excluding the Closing Date, and converting such monthly rates to semi-annual corporate bond equivalent rates. Such calculation does not take into account variations that may occur in the interest rates at which investors may be able to reinvest funds received by them as reductions of the Certificate Principal Balances of the respective Classes of Offered Certificates (other than the Class X-A Certificates) and consequently does not purport to reflect the return on any investment in such Classes of Offered Certificates when such reinvestment rates are considered.
Pre-Tax Yield to Maturity (CBE) for the Class A-1 Certificates at the Specified CPRs | |||||
0% CPR During Lock-out Periods (Including Yield Maintenance, Defeasance and Prepayment Consideration Lock-out Periods) — otherwise at indicated CPR | |||||
Assumed Price | 0% CPR | 25% CPR | 50% CPR | 75% CPR | 100% CPR |
95.00000% | 3.546% | 3.546% | 3.546% | 3.546% | 3.546% |
96.00000% | 3.149% | 3.149% | 3.149% | 3.149% | 3.149% |
97.00000% | 2.758% | 2.758% | 2.758% | 2.758% | 2.758% |
98.00000% | 2.373% | 2.373% | 2.373% | 2.373% | 2.373% |
99.00000% | 1.994% | 1.994% | 1.994% | 1.994% | 1.994% |
100.00000% | 1.620% | 1.620% | 1.620% | 1.620% | 1.620% |
101.00000% | 1.252% | 1.252% | 1.252% | 1.252% | 1.252% |
102.00000% | 0.889% | 0.889% | 0.889% | 0.889% | 0.889% |
103.00000% | 0.531% | 0.531% | 0.531% | 0.531% | 0.531% |
104.00000% | 0.178% | 0.178% | 0.178% | 0.178% | 0.178% |
105.00000% | -0.170% | -0.170% | -0.170% | -0.170% | -0.170% |
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Pre-Tax Yield to Maturity (CBE) for the Class A-2 Certificates at the Specified CPRs | |||||
0% CPR During Lock-out Periods (Including Yield Maintenance, Defeasance and Prepayment Consideration Lock-out Periods) — otherwise at indicated CPR | |||||
Assumed Price | 0% CPR | 25% CPR | 50% CPR | 75% CPR | 100% CPR |
96.00000% | 3.931% | 3.932% | 3.933% | 3.935% | 3.953% |
97.00000% | 3.761% | 3.762% | 3.763% | 3.764% | 3.777% |
98.00000% | 3.593% | 3.593% | 3.594% | 3.595% | 3.603% |
99.00000% | 3.427% | 3.427% | 3.427% | 3.428% | 3.432% |
100.00000% | 3.263% | 3.263% | 3.262% | 3.262% | 3.262% |
101.00000% | 3.100% | 3.100% | 3.100% | 3.099% | 3.094% |
102.00000% | 2.940% | 2.939% | 2.939% | 2.937% | 2.928% |
103.00000% | 2.781% | 2.780% | 2.779% | 2.778% | 2.764% |
104.00000% | 2.624% | 2.623% | 2.622% | 2.620% | 2.602% |
105.00000% | 2.469% | 2.468% | 2.466% | 2.464% | 2.442% |
106.00000% | 2.315% | 2.314% | 2.312% | 2.309% | 2.283% |
Pre-Tax Yield to Maturity (CBE) for the Class A-SB Certificates at the Specified CPRs | |||||
0% CPR During Lock-out Periods (Including Yield Maintenance, Defeasance and Prepayment Consideration Lock-out Periods) — otherwise at indicated CPR | |||||
Assumed Price | 0% CPR | 25% CPR | 50% CPR | 75% CPR | 100% CPR |
98.00000% | 3.776% | 3.776% | 3.776% | 3.776% | 3.776% |
99.00000% | 3.618% | 3.618% | 3.618% | 3.618% | 3.618% |
100.00000% | 3.462% | 3.462% | 3.462% | 3.462% | 3.462% |
101.00000% | 3.308% | 3.308% | 3.308% | 3.308% | 3.308% |
102.00000% | 3.156% | 3.156% | 3.156% | 3.156% | 3.156% |
103.00000% | 3.005% | 3.005% | 3.005% | 3.005% | 3.005% |
104.00000% | 2.856% | 2.856% | 2.856% | 2.856% | 2.856% |
105.00000% | 2.709% | 2.709% | 2.709% | 2.709% | 2.709% |
106.00000% | 2.564% | 2.564% | 2.564% | 2.564% | 2.564% |
107.00000% | 2.420% | 2.420% | 2.420% | 2.420% | 2.420% |
108.00000% | 2.278% | 2.278% | 2.278% | 2.278% | 2.277% |
Pre-Tax Yield to Maturity (CBE) for the Class A-3 Certificates at the Specified CPRs | ||||||||||
0% CPR During Lock-out Periods (Including Yield Maintenance, Defeasance and Prepayment Consideration Lock-out Periods) — otherwise at indicated CPR | ||||||||||
Assumed Price | 0% CPR | 25% CPR | 50% CPR | 75% CPR | 100% CPR | |||||
96.00000% | 4.024% | 4.027% | 4.029% | 4.033% | 4.043% | |||||
97.00000% | 3.896% | 3.897% | 3.899% | 3.902% | 3.909% | |||||
98.00000% | 3.768% | 3.770% | 3.771% | 3.773% | 3.777% | |||||
99.00000% | 3.643% | 3.644% | 3.644% | 3.645% | 3.647% | |||||
100.00000% | 3.519% | 3.519% | 3.519% | 3.519% | 3.518% | |||||
101.00000% | 3.396% | 3.396% | 3.395% | 3.394% | 3.391% | |||||
102.00000% | 3.275% | 3.274% | 3.272% | 3.270% | 3.265% | |||||
103.00000% | 3.155% | 3.153% | 3.151% | 3.148% | 3.141% | |||||
104.00000% | 3.037% | 3.034% | 3.032% | 3.028% | 3.018% | |||||
105.00000% | 2.920% | 2.916% | 2.913% | 2.908% | 2.896% | |||||
106.00000% | 2.804% | 2.800% | 2.796% | 2.791% | 2.776% | |||||
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Pre-Tax Yield to Maturity (CBE) for the Class A-4 Certificates at the Specified CPRs | ||||||||||
0% CPR During Lock-out Periods (Including Yield Maintenance, Defeasance and Prepayment Consideration Lock-out Periods) — otherwise at indicated CPR | ||||||||||
Assumed Price | 0% CPR | 25% CPR | 50% CPR | 75% CPR | 100% CPR | |||||
98.00000% | 4.041% | 4.042% | 4.042% | 4.043% | 4.048% | |||||
99.00000% | 3.915% | 3.915% | 3.916% | 3.916% | 3.918% | |||||
100.00000% | 3.791% | 3.791% | 3.791% | 3.791% | 3.790% | |||||
101.00000% | 3.668% | 3.667% | 3.667% | 3.667% | 3.663% | |||||
102.00000% | 3.546% | 3.546% | 3.545% | 3.544% | 3.538% | |||||
103.00000% | 3.426% | 3.425% | 3.424% | 3.423% | 3.414% | |||||
104.00000% | 3.307% | 3.306% | 3.305% | 3.303% | 3.291% | |||||
105.00000% | 3.189% | 3.188% | 3.187% | 3.185% | 3.170% | |||||
106.00000% | 3.073% | 3.072% | 3.071% | 3.068% | 3.051% | |||||
107.00000% | 2.958% | 2.957% | 2.955% | 2.952% | 2.932% | |||||
108.00000% | 2.844% | 2.843% | 2.841% | 2.838% | 2.815% | |||||
Pre-Tax Yield to Maturity (CBE) for the Class X-A Certificates at the Specified CPRs | |||||
0% CPR During Lock-out Periods (Including Yield Maintenance, Defeasance and Prepayment Consideration Lock-out Periods) — otherwise at indicated CPR | |||||
Assumed Price | 0% CPR | 25% CPR | 50% CPR | 75% CPR | 100% CPR |
3.00000% | 8.695% | 8.649% | 8.596% | 8.514% | 8.157% |
3.10000% | 7.823% | 7.776% | 7.721% | 7.637% | 7.270% |
3.20000% | 6.994% | 6.946% | 6.890% | 6.804% | 6.428% |
3.30000% | 6.206% | 6.156% | 6.099% | 6.010% | 5.625% |
3.40000% | 5.454% | 5.403% | 5.344% | 5.254% | 4.860% |
3.50000% | 4.736% | 4.684% | 4.624% | 4.532% | 4.130% |
3.60000% | 4.049% | 3.996% | 3.935% | 3.841% | 3.430% |
3.70000% | 3.391% | 3.337% | 3.275% | 3.179% | 2.760% |
3.80000% | 2.760% | 2.705% | 2.641% | 2.543% | 2.118% |
3.90000% | 2.154% | 2.098% | 2.033% | 1.933% | 1.500% |
4.00000% | 1.571% | 1.514% | 1.447% | 1.346% | 0.906% |
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Pre-Tax Yield to Maturity (CBE) for the Class A-S Certificates at the Specified CPRs | |||||
0% CPR During Lock-out Periods (Including Yield Maintenance, Defeasance and Prepayment Consideration Lock-out Periods) — otherwise at indicated CPR | |||||
Assumed Price | 0% CPR | 25% CPR | 50% CPR | 75% CPR | 100% CPR |
98.00000% | 4.357% | 4.357% | 4.358% | 4.359% | 4.365% |
99.00000% | 4.229% | 4.229% | 4.230% | 4.231% | 4.234% |
100.00000% | 4.103% | 4.103% | 4.104% | 4.105% | 4.106% |
101.00000% | 3.978% | 3.979% | 3.979% | 3.980% | 3.978% |
102.00000% | 3.855% | 3.856% | 3.856% | 3.857% | 3.852% |
103.00000% | 3.734% | 3.734% | 3.734% | 3.735% | 3.728% |
104.00000% | 3.613% | 3.613% | 3.614% | 3.615% | 3.605% |
105.00000% | 3.494% | 3.494% | 3.495% | 3.496% | 3.484% |
106.00000% | 3.377% | 3.377% | 3.377% | 3.378% | 3.364% |
107.00000% | 3.260% | 3.260% | 3.261% | 3.262% | 3.245% |
108.00000% | 3.145% | 3.145% | 3.146% | 3.147% | 3.127% |
Pre-Tax Yield to Maturity (CBE) for the Class B Certificates at the Specified CPRs | |||||
0% CPR During Lock-out Periods (Including Yield Maintenance, Defeasance and Prepayment Consideration Lock-out Periods) — otherwise at indicated CPR | |||||
Assumed Price | 0% CPR | 25% CPR | 50% CPR | 75% CPR | 100% CPR |
95.00000% | 4.747% | 4.748% | 4.749% | 4.751% | 4.765% |
96.00000% | 4.615% | 4.616% | 4.617% | 4.619% | 4.630% |
97.00000% | 4.485% | 4.486% | 4.487% | 4.488% | 4.497% |
98.00000% | 4.357% | 4.357% | 4.358% | 4.359% | 4.365% |
99.00000% | 4.230% | 4.230% | 4.230% | 4.231% | 4.235% |
100.00000% | 4.105% | 4.105% | 4.105% | 4.105% | 4.106% |
101.00000% | 3.981% | 3.981% | 3.980% | 3.980% | 3.979% |
102.00000% | 3.859% | 3.858% | 3.857% | 3.857% | 3.854% |
103.00000% | 3.738% | 3.737% | 3.736% | 3.735% | 3.730% |
104.00000% | 3.618% | 3.617% | 3.616% | 3.615% | 3.607% |
105.00000% | 3.500% | 3.499% | 3.497% | 3.496% | 3.486% |
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Pre-Tax Yield to Maturity (CBE) for the Class PST Certificates at the Specified CPRs | |||||
0% CPR During Lock-out Periods (Including Yield Maintenance, Defeasance and Prepayment Consideration Lock-out Periods) — otherwise at indicated CPR | |||||
Assumed Price | 0% CPR | 25% CPR | 50% CPR | 75% CPR | 100% CPR |
95.00000% | 4.747% | 4.748% | 4.749% | 4.751% | 4.765% |
96.00000% | 4.616% | 4.616% | 4.617% | 4.618% | 4.630% |
97.00000% | 4.485% | 4.486% | 4.487% | 4.488% | 4.497% |
98.00000% | 4.357% | 4.357% | 4.358% | 4.359% | 4.365% |
99.00000% | 4.230% | 4.230% | 4.230% | 4.231% | 4.235% |
100.00000% | 4.104% | 4.104% | 4.105% | 4.105% | 4.107% |
101.00000% | 3.980% | 3.980% | 3.980% | 3.981% | 3.980% |
102.00000% | 3.857% | 3.857% | 3.858% | 3.858% | 3.854% |
103.00000% | 3.736% | 3.736% | 3.736% | 3.736% | 3.730% |
104.00000% | 3.617% | 3.616% | 3.616% | 3.616% | 3.608% |
105.00000% | 3.498% | 3.498% | 3.497% | 3.497% | 3.486% |
Pre-Tax Yield to Maturity (CBE) for the Class C Certificates at the Specified CPRs | |||||
0% CPR During Lock-out Periods (Including Yield Maintenance, Defeasance and Prepayment Consideration Lock-out Periods) — otherwise at indicated CPR | |||||
Assumed Price | 0% CPR | 25% CPR | 50% CPR | 75% CPR | 100% CPR |
90.00000% | 5.430% | 5.431% | 5.432% | 5.435% | 5.462% |
91.00000% | 5.290% | 5.290% | 5.291% | 5.294% | 5.319% |
92.00000% | 5.151% | 5.152% | 5.153% | 5.155% | 5.178% |
93.00000% | 5.015% | 5.015% | 5.016% | 5.018% | 5.038% |
94.00000% | 4.880% | 4.880% | 4.881% | 4.883% | 4.901% |
95.00000% | 4.747% | 4.747% | 4.748% | 4.750% | 4.765% |
96.00000% | 4.615% | 4.616% | 4.616% | 4.618% | 4.630% |
97.00000% | 4.485% | 4.486% | 4.486% | 4.488% | 4.498% |
98.00000% | 4.357% | 4.357% | 4.358% | 4.359% | 4.367% |
99.00000% | 4.230% | 4.230% | 4.231% | 4.232% | 4.237% |
100.00000% | 4.105% | 4.105% | 4.106% | 4.107% | 4.109% |
We cannot assure you that the mortgage loans will prepay at any particular rate. Moreover, the various remaining terms to maturity of the mortgage loans could produce slower or faster principal distributions than indicated in the preceding tables at the various percentages of CPR specified, even if the weighted average remaining term to maturity of the mortgage loans is as assumed. Investors are urged to make their investment decisions based on their determinations as to anticipated rates of prepayment under a variety of scenarios.
DESCRIPTION OF THE MORTGAGE POOL
General
The issuing entity with respect to the Certificates will be Morgan Stanley Capital I Trust 2015-MS1 (the “Issuing Entity”). The assets of the Issuing Entity will consist primarily of fifty-four (54) fixed-rate, first mortgage loans (collectively, the “Mortgage Pool”) with an aggregate principal balance as of July 1, 2015 (the “Cut-off Date”), after application of all payments of principal due on or before such date, whether or not received, of $885,426,724 (with respect to each mortgage loan, the “Cut-off Date Balance” and, in the aggregate, the “Initial Pool Balance”), subject to a permitted variance of plus or minus 5%. For purposes of the information contained in this prospectus supplement (including the appendices to this prospectus supplement), scheduled payments due in July 2015 with respect to mortgage loans not having payment dates on the first day of each month have been deemed received on July 1, 2015, not the actual day or days on which such scheduled payments were due. The Cut-off Date Balances of the mortgage loans range from approximately $1,900,000 to approximately $80,000,000, and the mortgage loans have an average Cut-off Date Balance of $16,396,791.
All of the mortgage loans to be included in the Issuing Entity were originated by Morgan Stanley Bank (or, with respect to the Alderwood Mall Mortgage Loan, representing approximately 5.7% of the Initial Pool Balance, originated by Morgan Stanley Bank in conjunction with a third party).
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Descriptions of the underwriting standards for the mortgage loan seller and Morgan Stanley Bank are set forth in this prospectus supplement under “Transaction Parties—The Sponsor, Mortgage Loan Seller and Originator.”
The mortgage loans included in this transaction were selected for this transaction from mortgage loans generally originated for securitizations generally of this type by the sponsor taking into account Rating Agency criteria and feedback, subordinate investor feedback, property type and geographic location.
The mortgage loans were originated between February 2015 and June 2015. As of the Cut-off Date, none of the mortgage loans were thirty (30) days or more delinquent, or had been thirty (30) days or more delinquent during the twelve (12) calendar months preceding the Cut-off Date. Brief summaries of the material terms of the fifteen (15) largest mortgage loans or groups of cross-collateralized mortgage loans in the Mortgage Pool are contained in Appendix III to this prospectus supplement.
Fifty-eight (58) mortgaged properties, representing approximately 98.9% of the Initial Pool Balance by allocated loan amount, are each subject to a mortgage, deed of trust or similar security instrument that creates a first mortgage lien on a fee simple estate in the entire related mortgaged property. Two (2) of such fifty-eight (58) mortgaged properties, representing approximately 14.3% of the Initial Pool Balance by allocated loan amount, are each comprised of a fee interest in land subject to a ground lease. In each case, the related leasehold estate is not collateral for the mortgage loan included in the Issuing Entity and is operated as an office property. See “Risk Factors—Risks Related to the Mortgage Loans—Leased Fee Properties Entail Risks That May Adversely Affect Payments on Your Certificates” in this prospectus supplement. One (1) of such fifty-eight (58) mortgaged properties, representing approximately 6.0% of the Initial Pool Balance by allocated loan amount, is subject to a mortgage, deed of trust or similar security instrument that creates a first mortgage lien on both the borrower’s leasehold interest in the entire related mortgaged property and on the corresponding fee interest of the ground lessor in such mortgaged property, which we have treated as simply an encumbered fee interest. One (1) mortgaged property, representing approximately 1.1% of the Initial Pool Balance by allocated loan amount, is subject to a mortgage, deed of trust or similar security instrument that creates a first mortgage lien solely on a leasehold interest in the entire mortgaged property.
On the Closing Date, we will acquire the mortgage loans from the mortgage loan seller pursuant to the mortgage loan purchase agreement (the “Mortgage Loan Purchase Agreement”) to be entered into between us and the mortgage loan seller. We will then transfer the mortgage loans, without recourse, to the trustee for the benefit of the Certificateholders. See “Description of the Mortgage Pool—Sale of the Mortgage Loans” below.
Material Terms and Characteristics of the Mortgage Loans
Mortgage Rates; Calculations of Interest
The mortgage loans bear interest at mortgage rates that will remain fixed for their entire terms. Other than ARD Loans, no mortgage loan permits negative amortization or the deferral of accrued interest. 100% of the mortgage loans accrue interest on the basis of the actual number of days elapsed each month in a 360-day year.
Property Types
The mortgage loans consist of the following property types:
Type | Number of Mortgaged Properties | Percentage of Initial Pool Balance(1) |
Retail | 29 | 41.9% |
Multifamily | 12 | 16.7% |
Leased Fee(2) | 2 | 14.3% |
Hospitality | 5 | 8.7% |
Mixed Use | 4 | 8.0% |
Office | 4 | 6.4% |
Industrial | 1 | 2.2% |
Self Storage | 2 | 1.7% |
(1) | Because this table presents information relating to the mortgaged properties and not the mortgage loans, the information for any mortgaged property that relates to a mortgage loan secured by more than one mortgaged property (other than by cross-collateralization with another mortgage loan) is based on allocated loan amounts (which amounts, if not specified in the related mortgage loan documents, are based on the appraised values and/or square footage of each mortgaged property and/or each mortgaged property’s underwritten net cash flow). |
(2) | One (1) of such mortgaged properties, representing approximately 7.6% of the Initial Pool Balance by allocated loan amount, is comprised of a fee interest in air rights subject to an air rights lease granted by the borrower to another party, which party owns the improvements. The related leasehold estate is not collateral for the mortgage loan included in the issuing entity and is operated as an office property. The other such mortgaged property, representing approximately 6.8% of the Initial Pool Balance by allocated loan amount, is comprised of a fee interest in land rights subject to a ground lease granted by the borrower to another party, which party owns the improvements. The related leasehold estate is not collateral for the mortgage loan included in the issuing entity and is operated as an office property. |
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Property Location
The following geographic areas contain 5% or greater concentrations of mortgaged properties (by allocated loan amount):
State | Number of Mortgaged Properties | Percentage of Initial Pool Balance(1) |
New York | 6 | 26.4% |
California | 13 | 20.9% |
Illinois | 3 | 8.9% |
Washington | 3 | 8.4% |
Texas | 8 | 6.7% |
Florida | 6 | 6.2% |
(1) | Because this table presents information relating to the mortgaged properties and not the mortgage loans, the information for any mortgaged property that relates to a mortgage loan secured by more than one mortgaged property (other than by cross-collateralization with another mortgage loan) is based on allocated loan amounts (which amounts, if not specified in the related mortgage loan documents, are based on the appraised values and/or square footage of each mortgaged property and/or each mortgaged property’s underwritten net cash flow). |
Due Dates
The mortgage loans have various due dates as follows:
Due date | Number of Mortgage Loans | Percentage of Initial Pool Balance |
First day of each calendar month | 52 | 85.7% |
Fifth day of each calendar month | 2 | 14.3% |
Grace Periods
The mortgage loans have various grace periods prior to the occurrence of an event of default as follows:
Grace periodprior to the occurrence of an event of default | Number of Mortgage Loans | Percentage of Initial Pool Balance |
No grace period(1) | 2 | 12.5% |
1 business day | 1 | 7.6% |
5 calendar days | 49 | 69.8% |
5 business days | 2 | 10.2% |
(1) | With respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as Alderwood Mall, representing approximately 5.7% of the Initial Pool Balance, the related borrower generally is not entitled to a grace period, but is entitled to one (1) two-day grace period every twelve (12) months. |
The mortgage loans also have various grace periods prior to the imposition of late payment charges and/or default interest as follows:
Grace periodprior to the imposition of late payment charges and/or default interest | Number of Mortgage Loans | Percentage of Initial Pool Balance |
No grace period(1) | 21 | 65.5% |
5 calendar days | 32 | 28.9% |
5 business days | 1 | 5.6% |
(1) | With respect to the mortgage loan secured by the portfolio of mortgaged properties identified on Appendix I to this prospectus supplement as TKG 3 Retail Portfolio, representing approximately 9.0% of the Initial Pool Balance, the related borrower generally is not entitled to a grace period, but is entitled to one (1) five-day grace period every twelve (12) months. |
Certain states may have provisions under applicable law that permit longer grace periods than the grace periods shown in this prospectus supplement, which are based on the related mortgage loan documents.
Amortization
The mortgage loans have the following amortization features:
· | Fifty-three (53) of the mortgage loans, representing approximately 98.2% of the Initial Pool Balance, are Balloon Loans. For purposes of this prospectus supplement, we consider a mortgage loan to be a Balloon Loan if its principal balance is not scheduled to be fully or substantially amortized by the loan’s stated maturity date or Anticipated Repayment Date, as applicable. Two of these mortgage loans, representing approximately 14.3% of the Initial Pool Balance, are ARD Loans and provide for an increase in the mortgage rate and/or principal amortization at a specified date prior to stated maturity. |
· | Included in the Balloon Loans are fourteen (14) mortgage loans, representing approximately 54.9% of the Initial Pool Balance, that currently provide for monthly payments of interest only for their entire terms to maturity or anticipated repayment date, as applicable, and twenty (20) mortgage loans, representing approximately 19.8% of the Initial Pool Balance, that provide for monthly payments of interest only for a portion of their respective original terms ranging from twelve (12) months to sixty (60) months and then provide for the monthly payment of principal and interest over their respective remaining terms. |
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· | One (1) mortgage loan, representing approximately 1.8% of the Initial Pool Balance, is fully amortizing and is expected to have less than 1.0% of the original principal balance outstanding as of its related stated maturity date. |
Prepayment Provisions
All of the mortgage loans that we intend to include in the Issuing Entity provide for one or more of the following:
· | a “prepayment lock-out period,” during which the principal balance of a mortgage loan may not be voluntarily prepaid in whole or in part; |
· | a “defeasance lock-out period,” during which voluntary principal prepayments are still prohibited, but the related borrower may obtain a release of the related mortgaged property through defeasance; |
· | a “prepayment consideration lock-out period,” during which voluntary prepayments are permitted, subject to the payment of a specified prepayment consideration, which may equal a percentage of the amount prepaid; |
· | a “yield maintenance lock-out period,” during which voluntary prepayments are permitted, subject to the payment of a yield maintenance premium; and/or |
· | an “open period,” during which voluntarily prepayments are permitted without payment of any prepayment consideration. |
The prepayment lock-out periods, defeasance lock-out periods, prepayment consideration lock-out periods and yield maintenance lock-out periods are collectively referred to in this prospectus supplement as the “Lock-Out Periods.” Notwithstanding any Lock-Out Period, a mortgage loan may nevertheless permit prepayments in connection with certain releases of portions of the related mortgaged property. See “—Partial Releases Other Than In Connection with Defeasance” and “—Defeasance Loans” below.
As of the Cut-off Date, each of the mortgage loans restricted voluntary principal prepayments in one of the following ways:
· | Forty-three (43) mortgage loans, representing approximately 80.8% of the Initial Pool Balance,prohibit voluntary principal prepayments but permit the related borrower, after an initial period of at least two (2) years following the Closing Date, to defease the mortgage loan prior to the commencement of an open period by pledging to the Issuing Entity Government Securities, which may be subject to rating agency approval, and to thereby obtain the release of the mortgaged property (or, in some cases involving a portfolio of mortgaged properties, one or more of those mortgaged properties) from the lien of the mortgage. |
· | Seven (7) mortgage loans, representing approximately 15.2% of the Initial Pool Balance, prohibit voluntary principal prepayments during a prepayment lock-out period, and following such period, permit for a specified period prior to the commencement of an open period voluntary principal prepayments if accompanied by aPrepayment Premium calculated as the greater of a yield maintenance formula and a specified percentage of the amount prepaid as set forth on Appendix I to this prospectus supplement. |
· | One (1) mortgage loan, representing approximately 2.0% of the Initial Pool Balance, prohibits voluntary principal prepayments during a prepayment lock-out period and, following such period, permits for a specified period prior to the commencement of an open period both (i) voluntary principal prepayments if accompanied by a Prepayment Premium calculated as the greater of a yield maintenance formula and a specified percentage of the amount prepaid as set forth on Appendix I to this prospectus supplement and (ii) the related borrower to defease the related mortgage loan by pledging to the Issuing Entity Government Securities, which may be subject to rating agency approval, and to thereby obtain the release of the mortgaged property from the lien of the mortgage. |
· | Three (3) mortgage loans, representing approximately 1.9% of the Initial Pool Balance, prohibit voluntary principal prepayments during a prepayment lock-out period and, following such period, permit voluntary principal prepayments for a specified period if accompanied by a Prepayment Premium calculated as the greater of a yield maintenance formula and a specified percentage of the amount prepaid as set forth on Appendix I to this prospectus supplement, and after such period, permit for a specified period prior to the commencement of an open period both (i) voluntary principal prepayments if accompanied by a Prepayment Premium calculated as the greater of a yield maintenance formula and a specified percentage of the amount prepaid as set forth on Appendix I to this prospectus supplement and (ii) the related borrower to defease the related mortgage loan by pledging to the Issuing Entity Government Securities, which may be subject to rating agency approval, and to thereby obtain the release of the mortgaged property from the lien of the mortgage. |
Set forth below is information as of the Cut-off Date regarding the original terms of the prepayment lock-out periods and defeasance lock-out periods, as applicable, for all of the underlying mortgage loans, with respect to each of which a prepayment lock-out period or defeasance lock-out period is currently in effect:
· | the minimum original prepayment lock-out period or defeasance lock-out period is twenty-three (23) payment periods; |
· | the maximum original prepayment lock-out period or defeasance lock-out period is one hundred sixteen (116) payment periods; and |
· | the weighted average original prepayment lock-out period or defeasance lock-out period is ninety-seven (97) payment periods. |
Prepayment Premiums and Yield Maintenance Charges received on the underlying mortgage loans, whether in connection with voluntary or involuntary prepayments, will be distributed in the amounts and in accordance with the priorities described under “Description of the Offered Certificates—Distributions—Distributions of Prepayment Premiums and Yield Maintenance Charges” in this prospectus supplement. However, limitations may exist under applicable state law on the enforceability of the provisions of the underlying mortgage loans that require payment of Prepayment Premiums or Yield Maintenance Charges. In addition, in the event of a liquidation of a defaulted mortgage loan in the Issuing Entity, prepayment consideration will be one of the last items to which the related liquidation proceeds will be applied. Neither we nor the underwriter makes any representation or warranty as to the collectability of any Prepayment Premium or Yield Maintenance Charge with respect to any of the mortgage loans included in the Issuing Entity. See “Risk Factors—Risks Related to the
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Offered Certificates—The Yield on Your Certificates Will Be Affected By the Price at Which the Certificates Were Purchased and the Rate, Timing and Amount of Distributions on Your Certificates” in this prospectus supplement.
Open periods generally begin within a certain number of months prior to stated maturity as follows:
Beginning of open period (number of months prior to stated maturity) | Number of Mortgage Loans | Percentage of Initial Pool Balance |
3 months | 41 | 57.9% |
4 months | 5 | 13.1% |
5 months | 1 | 3.0% |
6 months | 6 | 24.9% |
12 months | 1 | 1.1% |
Generally, the mortgage loans provide that insurance and condemnation proceeds may be applied to reduce the mortgage loan’s principal balance, to the extent such funds will not be used to repair the improvements on the mortgaged property or given to the related borrower. Some of the mortgage loans also permit the related borrower, in connection with the application of insurance or condemnation proceeds to the principal balance of the mortgage loan, to prepay the entire remaining principal balance of the mortgage loan. With respect to such mortgage loans, prepayment consideration may not be required in connection with any such prepayment. In addition, with respect to certain mortgage loans, particularly those secured in whole or in part by a ground lease, and single tenant mortgage loans, insurance and condemnation proceeds may be required to be used to repair or restore the mortgaged property rather than to prepay that mortgage loan or, where a ground lease is involved, may be payable in whole or in part to the ground lessor.
Further, with respect to certain underlying mortgage loans, the related borrower is required to make prepayments to the lender upon the release of certain portions of the related mortgaged property or properties, as described under “—Partial Releases Other Than in Connection with Defeasance” below.
The prepayment terms of each of the mortgage loans that we intend to include in the Issuing Entity are more particularly described in Appendix I to this prospectus supplement. Also, see Appendix I to this prospectus supplement for more details concerning certain of the foregoing provisions including the method of calculation of any Prepayment Premium or Yield Maintenance Charge, which will vary for any mortgage loan.
Multi-Property Mortgage Loans and Cross-Collateralized Mortgage Loans
The mortgage pool will include one (1) underlying mortgage loan, collectively representing approximately 9.0% of the Initial Pool Balance, that are, in each case, individually secured by two or more real properties (other than through cross-collateralization of a mortgage loan with other mortgage loans). The mortgage pool will include one (1) group of mortgage loans, collectively representing approximately 1.7% of the Initial Pool Balance, which mortgage loans are cross-collateralized with each other mortgage loan in the related group. The amount of the mortgage lien encumbering any particular one of those properties may be less than the full amount of the related mortgage loan or group of cross-collateralized mortgage loans, generally to minimize the amount of mortgage recording tax due in connection with the transaction. The mortgage amount may equal the appraised value or allocated loan amount for the particular real property. This would limit the extent to which proceeds from that property would be available to offset declines in value of the other mortgaged properties securing the same mortgage loan or group of cross-collateralized mortgage loans.
The table below identifies, by property or portfolio name set forth on Appendix I to this prospectus supplement, each individual multi-property mortgage loan and any group of cross-collateralized mortgage loans included in the Issuing Entity.
Property/Portfolio Names | Number of Properties | % of Initial Pool Balance | |
1. | TKG 3 Retail Portfolio | 6 | 9.0% |
2. | XL Self Storage Portfolio - Rancho Cucamonga; XL Self Storage Portfolio - Salt Lake City | 2 | 1.7% |
Some or all of the multi-property mortgage loans that we intend to include in the Issuing Entity entitle the related borrowers to release one or more of the corresponding mortgaged properties through partial defeasance. See “—Defeasance Loans” below.
In addition, some or all of the multi-property mortgage loans that we intend to include in the Issuing Entity may entitle the related borrowers to release one or more of the corresponding mortgaged properties, other than through defeasance, as further described under “—Partial Releases Other Than in Connection with Defeasance” below.
Partial Releases Other Than in Connection with Defeasance
With respect to partial releases other than those permitted in connection with a defeasance (which are described below under “—Defeasance Loans”),
· | With respect to the portfolio of mortgaged properties identified on Appendix I to this prospectus supplement as TKG 3 Retail Portfolio, representing approximately 9.0% of the Initial Pool Balance, after June 1, 2017, as long as no default or event of default has occurred and is continuing, the related mortgage loan documents permit the release of any of the individual properties comprising the mortgaged portfolio, provided that, among other conditions, (i) the borrower pays down the mortgage loan in an amount equal to 115% of the allocated loan amount for such released property, (ii) after giving effect to such release, the loan to value ratio is less than the lesser of (x) the loan to value ratio immediately prior to the release and (y) 75%, (iii) after giving effect to such release, the DSCR is greater than the greater of (x) the DSCR immediately prior to the release and (y) 1.25x, and (iv) after giving effect to such release, the debt yield is greater than the greater of (x) the debt yield immediately prior to the release and (y) 8.17%. |
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In addition, three (3) mortgage loans, representing approximately 12.1% of the Initial Pool Balance, permit the release of one or more undeveloped or non-income producing parcels or outparcels that, in each such case, do not represent a significant portion of the appraised value of the related mortgaged property, or have been excluded from the appraised value of the related mortgaged property, shown on Appendix I to this prospectus supplement. Certain mortgage loans may also permit the release of immaterial portions of the related mortgaged property in connection with the granting of easements and other rights of way in the ordinary course of business for utility lines or other similar purposes.
With respect to additions or substitutions of collateral with respect to the mortgage loans:
· | With respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as Alderwood Mall, representing approximately 5.7% of the Initial Pool Balance, the related borrower has the right to add additional parcels of property that are adjacent to or relate to the related mortgaged property to the collateral for the Alderwood Mall Non-Serviced Loan Combination and subject such additional parcels to the lien of the related loan documents, which, at the related borrower’s option, may be in connection with the release of vacant, non-income producing land. The addition of any new parcels to the Alderwood Mall mortgaged property shall be subject to the satisfaction of certain conditions pursuant to the related loan documents which include, among other things, the receipt by the lender of materials generally required by the lender upon the origination of a new loan (for example, title insurance and an environmental report). See “Description of the Alderwood Mall Non-Serviced Loan Combination—Release/Substitution of Vacant, Non-Income Producing Parcels” in Exhibit A attached to this prospectus supplement. See also“Mortgage Loan No. 5—Alderwood Mall” in Appendix III to this prospectus supplement. |
Defeasance Loans
Forty-three (43) of the mortgage loans, representing approximately 80.8% of the Initial Pool Balance, permit the respective borrowers (no earlier than the second anniversary of the Closing Date, and subject to the satisfaction of various conditions) to defease the subject mortgage loan in whole or, in some cases, in part, during a period that voluntary prepayments are prohibited, by pledging to the holder of the mortgage loan the requisite amount of Government Securities, and to thereby obtain a release of the related mortgaged property or, if applicable, one or more of the related mortgaged properties. As to any such mortgage loan, the permitted defeasance period does not begin prior to the second anniversary of the Closing Date. The mortgage loans referred to in this paragraph do not include any mortgage loan that grants the related borrower the option to either defease or prepay the loan with a Prepayment Premium or Yield Maintenance Charge but does not provide for a period that is solely a defeasance period.
“Government Securities” means government securities within the meaning of section 2(a)(16) of the Investment Company Act.
In general, the Government Securities that are to be delivered in connection with the defeasance of all or any portion of any underlying mortgage loan, must provide for a series of payments that:
· | will be made prior, but as closely as possible, to all successive due dates through and including the maturity date or, in some instances, the expiration of the prepayment lock-out period; and |
· | will, in the case of each due date during the period contemplated by the prior bullet, be in a total amount equal to or greater than the scheduled debt service payment scheduled to be due or deemed due with respect to the defeased debt on that date and, in the case of the maturity date or last day of the prepayment lock-out period referred to in the prior bullet, be in an amount at least sufficient to pay off the defeased debt, with any excess to be returned to the related borrower or a successor borrower. |
Each multi-property mortgage loan that allows for partial defeasance of the aggregate debt, and that we intend to include in the Issuing Entity, provides that in the event of a defeasance of less than the entire aggregate debt, one or more of the related mortgaged properties or parcels would be released upon, among other things, delivery of defeasance collateral in an amount equal to a specified percentage (generally 115% to 125%) of the allocated loan amount allocable to such properties or parcels.
In connection with any delivery of defeasance collateral, the related borrower will be required to pay any reasonable costs and expenses incurred in connection with the defeasance and deliver a security agreement granting the trust a first priority security interest in the collateral, together with an opinion of counsel confirming the first priority status of the security interest. Also, a borrower will generally be required to deliver a certification from an independent accounting firm to the effect that the defeasance collateral is sufficient to make all scheduled debt service payments under the defeased debt through, and to pay off the defeased debt on, the date contemplated above.
In general, the defeasance collateral will consist of Government Securities. However, subject to obtaining ratings confirmations from the related rating agencies, some borrowers may be entitled to defease their respective mortgage loans with other types of obligations that constitute Government Securities. Certificateholders will not be entitled to any defeasance fees or any additional amounts payable to the lender in respect of successor borrowers established for defeasance purposes.
Leasehold Mortgages
With respect to the mortgaged property identified on Appendix I to this prospectus supplement as San Marcos Civic Center, representing approximately 1.1% of the Initial Pool Balance by allocated loan amount, the related mortgage loan is secured in whole or in part by the related borrower’s leasehold interest in a material portion of the related mortgaged property;however, the related ground lease (or space lease or air rights lease, as applicable), taking into account all exercised extension options and all options that may be exercised by the lender (if not already exercised by the borrower), expires more than ten (10) years after the stated maturity of the related mortgage loan. Except as noted in “Risk Factors—Leasehold Interests Entail Certain Risks Which May Adversely Affect Payments on Your Certificates,” in the case of the foregoing mortgage loans, the related lessor has agreed to give the holder of that mortgage loan notice of, and the right to cure, defaults or breaches by the lessee. The mortgage loans referred to in this paragraph do not include those secured by a mortgage, deed of trust or similar security instrument that creates a first mortgage lien on both the borrower’s leasehold interest in the entire related mortgaged property and on the corresponding fee interest of the ground lessor in such mortgaged property, which we have in each case treated as simply an encumbered fee interest.
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Mortgage Loans with Affiliated Borrowers
With respect to six (6) separate groups of mortgage loans that we intend to include in the Issuing Entity, consisting of a total of twelve (12) mortgage loans, collectively representing approximately 10.9% of the Initial Pool Balance, the borrowers under the mortgage loans contained within each such group are related by virtue of having at least one controlling project sponsor or principal in common.
The table below identifies, by property or portfolio name set forth on Appendix I to this prospectus supplement, each group of mortgaged properties that are owned by the same or affiliated borrowers.
Loan/Portfolio Name(s) | Aggregate Cut-off Date Principal Balance | Aggregate % of Initial Pool Balance | |||
1. | West Valley Medical Center; Chino Hills Shopping Center | $32,000,000 | 3.6% | ||
2. | Homewood Suites Chester; Holiday Inn Express & Suites Richmond | $21,640,578 | 2.4% | ||
3. | Ashleye Village Apartments; Club at Springlake Apartments | $16,929,500 | 1.9% | ||
4. | XL Self Storage Portfolio - Rancho Cucamonga; XL Self Storage Portfolio - Salt Lake City | $15,241,611 | 1.7% | ||
5. | Vintage Pads; Zen Apartments | $5,676,000 | 0.6% | ||
6. | Walgreens - Panama City Beach; CVS - West Columbia, SC | $5,375,000 | 0.6% |
Significant Obligors
There are no significant obligors related to the Issuing Entity.
Non-Recourse Obligations
The mortgage loans are generally non-recourse obligations of the related borrowers and, upon any such borrower’s default in the payment of any amount due under the related mortgage loan, the holder of a non-recourse mortgage loan may look only to the related mortgaged property for satisfaction of the borrower’s obligations. In those cases where the loan documents permit recourse to the borrower or a guarantor for some or all of the amounts due under such mortgage loan, we have not evaluated the financial condition of any such person, and prospective investors should thus consider all of the mortgage loans to be non-recourse. None of the mortgage loans is insured or guaranteed by the mortgage loan seller or any of its affiliates, the United States, any government entity or instrumentality, mortgage insurer or any other person.
“Due-on-Sale” and “Due-on-Encumbrance” Provisions
The mortgages generally contain due-on-sale and due-on-encumbrance clauses that permit the holder of the mortgage to accelerate the maturity of the related mortgage loan, Serviced B Note or Serviced Companion Loan if the borrower sells or otherwise transfers or encumbers the related mortgaged property or that prohibit the borrower from doing so without the consent of the holder of the mortgage. However, the mortgage loan, Serviced B Note or Serviced Companion Loan generally permit transfers of the related mortgaged property, subject to reasonable approval of the proposed transferee by the holder of the mortgage, payment of an assumption fee, which may be waived by the master servicer or the special servicer, as the case may be, or, if collected, will be paid to the master servicer or the special servicer as additional servicing compensation, and certain other conditions.
In addition, some of the mortgage loans permit the borrower to transfer the related mortgaged property or interests in the borrower to an affiliate or subsidiary of the borrower, or an entity of which the borrower is the controlling beneficial owner, or other unrelated parties, upon the satisfaction of certain limited conditions set forth in the applicable mortgage loan documents and/or as determined by the master servicer. The master servicer or the special servicer, as applicable, will be required to determine, in a manner consistent with the Servicing Standard, whether to exercise any right it may have under any such clause to accelerate payment of the related mortgage loan upon, or to withhold its consent to, any transfer or further encumbrance of the related mortgaged property in accordance with the Pooling and Servicing Agreement.
See “Risk Factors—Risks Related to the Mortgage Loans—The Performance of a Mortgage Loan and Its Related Mortgaged Property Depends in Part on Who Controls the Borrower and Mortgaged Property” in this prospectus supplement.
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Subordinate and Other Financing
The table below identifies the mortgage loans that have corresponding B Notes, Serviced Companion Loans or Non-Serviced Companion Loans.
Mortgage Loan | Cut-off Date Mortgage Loan Principal Balance | Cut-off Date Pari Passu Companion Loan Principal Balance | Pari Passu Companion Loan Interest Rate | Mortgage Loan UW NCF DSCR | Loan Pair or Non-Serviced Loan Combination UW NCF DSCR | Mortgage Loan Cut-off Date LTV | Loan Pair or Non-Serviced Loan Combination Cut-off Date LTV | |||||||
TKG 3 Retail Portfolio | $80,000,000 | $79,708,750 | 4.24000000% | 1.90x | 1.90x | 75.0% | 75.0% | |||||||
300 South Riverside Plaza Fee | $67,000,000 | $100,000,000 | 3.95000000% | 1.48x | 1.48x | 72.9% | 72.9% | |||||||
32 Old Slip Fee | $60,000,000 | $116,000,000 | 3.70750000% | 1.28x | 1.28x | 78.2% | 78.2% | |||||||
Waterfront at Port Chester | $53,500,000 | $80,000,000 | 4.13000000% | 1.66x | 1.66x | 75.0% | 75.0% | |||||||
Alderwood Mall(1) | $50,275,604 | $176,363,626 | 3.47875000% | 2.24x | 2.24x | 32.7% | 32.7% | |||||||
Hilton Garden Inn W 54th Street(2) | $40,000,000 | $115,000,000 | 4.01290323% | 2.64x | 2.64x | 61.8% | 61.8% |
(1) | For purposes of the information presented in this table with respect to the Alderwood Mall Mortgage Loan, the debt service coverage ratio and loan-to-value ratio for such mortgage loan have been calculated based on the subject mortgage loan together with the related non-serviced companion loan and without regard to any related subordinate B note. As of the Cut-off Date the principal balance of the Alderwood Mall B Note is $127,800,000, and the annual interest rate payable on such B note is 3.47875000%. The UW NCF DSCR and Cut-off Date LTV for the Alderwood Mall Non-Serviced Loan Combination, taking into account the Alderwood Mall B Note, are equal to 1.71x and 51.1%, respectively. |
(2) | For purposes of the information presented in this table with respect to the Hilton Garden Inn W 54th Street Mortgage Loan, the debt service coverage ratio and loan-to-value ratio for such mortgage loan have been calculated based on the subject mortgage loan together with the related non-serviced companion loan and without regard to the related subordinate B note. As of the Cut-off Date the principal balance of the Hilton Garden Inn W 54th Street B Note is $20,000,000, and the annual interest rate payable on such B note is 7.00000000%. The UW NCF DSCR and Cut-off Date LTV for the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, taking into account the Hilton Garden Inn W 54th Street B Note, are equal to 2.16x and 69.7%, respectively. |
With respect to the following mortgage loans, the related loan sponsors or their affiliates have entered into mezzanine financing that is secured by pledges of the equity interests in the related mortgage borrower and, in certain cases, indirectly by other interests owned by the related loan sponsor, which other interests do not represent ownership interests in the related mortgaged property:
· | With respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as Hilton Garden Inn W 54th Street, representing approximately 4.5% of the Initial Pool Balance, the related loan sponsors or their affiliates have entered into mezzanine financing in the original amount of $25,000,000 that is secured by pledges of the equity interests in the related mortgage borrower. |
· | With respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as Premier Apartments, representing approximately 3.8% of the Initial Pool Balance, the related loan sponsors or their affiliates have entered into mezzanine financing in the original amount of $5,250,000 that is secured by pledges of the equity interests in the related mortgage borrower. |
In each of the foregoing cases, the holders of the related mortgage loan and mezzanine loan have entered into a related intercreditor agreement that governs the rights and duties of such parties.
In the case of any mortgage loans with existing mezzanine debt, the related intercreditor agreement will generally provide, among other things, that (a) the related mezzanine loan lender will have certain rights to receive notice of and cure defaults under the related mortgage loan prior to any acceleration or enforcement of the related mortgage loan, (b) upon the occurrence of an event of default under the related mortgage loan beyond any applicable notice and cure period provided for in the applicable intercreditor agreement, the related mortgage loan lender will be entitled to receive all payments that are due or that will become due under the related mortgage loan from funds that are derived from the mortgaged property before the related mezzanine loan lender will be permitted to receive payments under the related mezzanine loan from such funds (however, in some cases, the mezzanine loan may be prepaid while the subject mortgage loan remains outstanding), (c) the related mezzanine loan lender may amend or modify the related mezzanine loan in certain respects without the consent of the related mortgage loan lender, (d) upon the occurrence of an event of default under the related mezzanine loan documents, subject to certain conditions, the related mezzanine loan lender may foreclose upon the pledged equity interests in the related mortgage loan borrower, which could result in a change of control with respect to the related mortgage loan borrower and a change in the management of the related mortgaged properties, (e) if the related mortgage loan is accelerated, an enforcement action has been commenced and is continuing under the related mortgage loan, a bankruptcy proceeding has been commenced against the mortgage loan borrower, or the related mortgage loan becomes a specially serviced loan, then the related mezzanine loan lender has the right to purchase the related mortgage loan, in whole but not in part, for a price generally equal to the outstanding principal balance thereof, together with all accrued interest and other amounts due thereon, plus any protective advances made by the related mortgage loan lender or its servicer and any interest thereon or on any monthly debt service advances, but generally excluding any late charges, default interest, exit fees, spread maintenance or yield maintenance charges and prepayment premiums and (f) an event of default under the mortgage loan will trigger an event of default under the mezzanine loan. The holder of each mezzanine loan also generally has consent rights over modifications of the related mortgage loan that adversely affect the mezzanine lender prior to an event of default under the related mortgage loan and certain limited consent rights over modifications of the related mortgage loan entered into in connection with a workout following an event of default under the related mortgage loan. The holder of each mezzanine loan may also have certain consent rights with respect to annual budgets, expenses, leases, alterations and insurance settlements with respect to the related mortgaged property, the replacement of the property manager for the mortgaged property, transfers or pledges of direct or indirect interests in the related mortgage loan borrower or mortgaged property and transfers and pledges of the mortgage loan to non-qualified entities. In addition, the mortgage loan lender may be prohibited under the intercreditor agreement from accepting a deed in lieu of foreclosure from the borrower until it has provided the mezzanine lender with prior written notice of such intention and given the mezzanine lender the opportunity to purchase the mortgage loan for a specified period of time prior to acceptance of such deed at the
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purchase price set forth in the immediately preceding clause (e). Upon the completion of a foreclosure of a mezzanine loan, the non-recourse carve-out guarantor for the related mortgage loan may be released from liability under its related guaranty.
With respect to the mortgage loans listed below, the related loan sponsors are permitted to enter into future mezzanine financing that is secured by a pledge of some or all of the equity interests in the related borrower;provided that, among other things, certain debt service coverage ratio, loan-to-value ratio and/or debt yield tests, as indicated in the table below, are satisfied.
Mortgage Loan | Cut-off Date Mortgage Loan Principal Balance | Percentage of Initial Pool Balance | Intercreditor Agreement Required | Combined Minimum DSCR | Combined Maximum LTV | Combined Minimum Debt Yield | ||||||
Alderwood Mall | $50,275,604 | 5.7% | Yes | 1.79x | 48.63% | N/A | ||||||
West Valley Medical Center | $27,000,000 | 3.0% | Yes | 1.35x | 60% | N/A | ||||||
Campus Quarters | $18,000,000 | 2.0% | Yes | 1.15x | 85% | 7.5% | ||||||
Holiday Inn Express – Santa Barbara | $10,500,000 | 1.2% | Yes | 1.70x | 65% | N/A | ||||||
Chino Hills Shopping Center | $5,000,000 | 0.6% | Yes | 1.35x | 70% | N/A | ||||||
Bixby Point, Long Beach | $4,500,000 | 0.5% | Yes | 1.25x | 65% | N/A |
We make no representation as to whether any other secured subordinate financing currently encumbers any mortgaged property or whether a third-party holds debt secured by a pledge of equity ownership interests in a related borrower.
See “Risk Factors—Risks Related to the Mortgage Loans—A Borrower’s Other Loans May Reduce the Cash Flow Available to the Mortgaged Property Which May Adversely Affect Payment on Your Certificates” in and Appendix I to this prospectus supplement.
Further, a third party may have, or may be permitted in the future to have, a preferred equity interest in the related borrower, entitling it to a specified rate of return on its equity investment. For example, with respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as Hilton Garden Inn W 54th Street, representing approximately 4.5% of the Initial Pool Balance, a preferred equity (or other similar) investment is permitted subject to various conditions, including among other conditions: (i) no event of default is continuing, (ii) the investment is in the direct or indirect owner of the borrower of the mezzanine loan related to the Hilton Garden Inn W 54th Street mortgage loan in an amount not to exceed $20,000,000, (iii) the investment is not secured by the related mortgaged property (or any direct or indirect equity interests in the related borrower or the related mezzanine borrower) or evidenced by a promissory note, (iv) the investment does not require the lender under the Hilton Garden Inn W 54th Street Mortgage Loan or the related mezzanine loan to enter into an intercreditor agreement (or other recognition agreement) with the investor in the preferred equity investment or provide any rights or remedies to such investor arising out of any defaults that would lead to a change in control of the related borrower, the related mezzanine borrower or the related mortgaged property, (v) the permitted preferred equity requires fixed payment obligations only and is payable only from excess cash flow on the related mortgaged property and (vi) the preferred equity documents and payments to the investor in the permitted preferred equity are subordinate to the loan documents, and payments required pursuant to the loan documents, for the mortgage loan and the related mezzanine loan. Preferred equity investors are typically also entitled to consent with respect to certain major decisions relating to the management of the related borrower and may be permitted to cause the managing member of the borrower to enter into a sale of the related mortgaged property. Such preferred equity interests may subject the borrower to the same risks and difficulties associated with other types of additional financing on or related to the mortgaged property.
Generally, all of the mortgage loans also permit the related borrower to incur other unsecured indebtedness, including but not limited to trade payables, in the ordinary course of business and to incur indebtedness secured by equipment or other personal property located at the mortgaged property.
Borrowers that have not agreed to certain special purpose covenants in the related mortgage loan documents may also be permitted to incur additional financing that is not secured by the mortgaged property.
Modified and Refinanced Mortgage Loans
Forty-one (41) mortgage loans, representing approximately 76.1% of the Initial Pool Balance, were originated in connection with the related borrower’s refinancing of a previous mortgage loan, and thirteen (13) mortgage loans, representing approximately 23.9% of the Initial Pool Balance, were originated in connection with the related borrower’s acquisition of the related mortgaged property.
Mortgaged Properties with Limited or No Operating History
Thirteen (13) of the mortgaged properties, representing approximately 12.0% of the Initial Pool Balance by allocated loan amount, were recently acquired by the related borrower within thirty-six (36) calendar months prior to the Cut-off Date, and consequently such mortgaged properties do not have, or have limited, historical financial information.
Four (4) of the mortgaged properties, representing approximately 14.3% of the Initial Pool Balance by allocated loan amount, were recently constructed or renovated within thirty (30) calendar months prior to the Cut-off Date and either have no prior operating history or do not have historical financial information
Certain Mortgage Loans with Material Lease Termination Options
At least three (3) of the ten (10) largest mortgage loans or groups of cross-collateralized mortgage loans by principal balance, representing approximately 20.0% of the Initial Pool Balance, is secured by mortgaged properties that have leases with material early termination options. For example, with respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as 300 South Riverside Plaza Fee, representing approximately 7.6% of the Initial Pool Balance, the largest tenant, identified on Appendix I to this prospectus supplement as “JP Morgan Chase” and representing approximately 46.1% of the net square footage, has a lease termination option effective September 30, 2016 upon notice to the related ground lessee no later than nine months prior to such date. If such termination notice is given, such ground lessee is required to deposit $333,333 per month with the lender or a designee
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during the notice period until a $3,000,000 balance is on deposit. Such balance is to be applied (and released) as payment of the last $3,000,000 of JP Morgan Chase base rent payable during the calendar year 2017. With respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as 32 Old Slip Fee, representing approximately 6.8% of the Initial Pool Balance, the United States Department of Education, the fourth largest tenant, representing approximately 5.8% of net square footage of the non-collateral improvements, may terminate its lease at any time upon not less than 180 days’ prior written notice. With respect to the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as 841-853 Broadway, representing approximately 5.6% of the Initial Pool Balance, (i) the largest tenant, identified on Appendix I to this prospectus supplement as “Centro, Inc.” and representing approximately 10.5% of the net square footage, has the one-time right to cancel the lease effective beginning on or about July 1, 2022, upon nine months’ written notice with the payment of a termination fee equal to $1,860,325, (ii) the second largest tenant, identified on Appendix I to this prospectus supplement as “Capital One” and representing approximately 6.4% of the net square footage, has the right, upon ten days’ written notice, to terminate the lease if the leased space is not delivered within 210 days of the related estimated delivery date of May 1, 2015, and (iii) the third largest tenant, identified on Appendix I to this prospectus supplement as “Chelsea Hotels Management” and representing approximately 5.3% of the net square footage, has the one-time right to cancel the lease effective beginning on or about February 1, 2020, upon six months’ written notice with the payment of a termination fee equal to $1,172,184.
See“Risk Factors—Risks Related to the Mortgage Loans—Risks of Lease Early Termination Options” in this prospectus supplement. See also “Mortgage Loan No. 2—300 South Riverside Plaza Fee,” “Mortgage Loan No. 3—32 Old Slip Fee”and “Mortgage Loan No. 6—841-853 Broadway”in Appendix III to this prospectus supplement.
Additional Collateral
Certain of the mortgage loans may have additional collateral in the form of reserves or letters of credit that remain in place for a specified period of time during the term of the subject mortgage loan and are to be released only upon the satisfaction by the borrower of certain conditions. If the related borrower does not satisfy the conditions for release of such reserves or letters of credit by the applicable release date set forth in the related mortgage loan documents, such reserves or letters of credit may be applied to partially repay the mortgage loan, or may be held by the lender as additional security for the applicable mortgage loan. Certain of these reserves are used for items such as deferred maintenance, environmental remediation, debt service, tenant improvements and leasing commissions and capital improvements. See “Risk Factors—Risks Related to the Mortgage Loans—Certain of the Mortgage Loans Lack Customary Provisions, Which May Entail Risks That Could Adversely Affect Payments on Your Certificates” and “—Reserves to Fund Certain Necessary Expenditures Under the Mortgage Loans May Be Insufficient for the Purpose for Which They Were Established” in this prospectus supplement.
The ARD Loans
Two (2) mortgage loans, representing approximately 14.3% of the Initial Pool Balance, are ARD Loans. An “ARD Loan” is a mortgage loan that provides that if the related borrower has not prepaid such mortgage loan in full on or before its Anticipated Repayment Date, any principal outstanding on that date will thereafter amortize more rapidly and accrue interest at the Revised Rate for that mortgage loan rather than at the Initial Rate. In addition, following the related Anticipated Repayment Date, funds on deposit in lockbox accounts relating to an ARD Loan in excess of amounts needed to pay property operating expenses and reserves will be applied to repayment of the applicable mortgage loan resulting in a more rapid amortization (or, in certain cases, such excess amounts are instead held as additional collateral securing the mortgage loan). While interest at the Initial Rate continues to accrue and be payable on a current basis on each ARD Loan after its respective Anticipated Repayment Date, the payment of Excess Interest, to the extent actually collected, will be deferred and will be required to be paid, with interest (to the extent permitted under applicable law and the related mortgage loan documents), only after the outstanding principal balance of the related ARD Loan has been paid in full, at which time the Excess Interest will be paid to the Holders of the Class V Certificates.
“Anticipated Repayment Date” or “ARD” means, in respect of any ARD Loan, the date on which a substantial principal payment on an ARD Loan is anticipated to be made (which is prior to stated maturity).
“Initial Rate” means, with respect to any mortgage loan, the mortgage rate in effect as of the Cut-off Date for such mortgage loan.
“Revised Rate” means, with respect to any mortgage loan, a fixed rateper annum equal to the Initial Rate plus a specified percentage.
Cash Management Agreements/Lockboxes
The following is a summary of the lockbox arrangements in place with respect to the mortgage loans:
Lockbox Type | Number of Mortgage Loans | Percentage of Initial Pool Balance |
Hard Lockbox | 6 | 28.8% |
Soft Lockbox | 4 | 6.9% |
Springing Lockbox | 39 | 58.4% |
No Lockbox | 5 | 5.9% |
Appendix I and Appendix II to this prospectus supplement set forth (among other things) the type of lockbox (if any) established under the terms of each mortgage loan. The following paragraphs generally describe each type of provision:
“Hard Lockbox” means the related borrower is required to direct tenants to pay rents directly to a lockbox account controlled by the lender. Hospitality and manufactured housing properties are considered to have a hard lockbox if credit card receivables are required to be deposited directly into a lockbox account controlled by the lender even though cash or “over the counter” receipts are deposited by the manager of the related mortgaged property into the lockbox account.
“Springing Lockbox” means a lockbox that is not currently in place, but the related mortgage loan documents require the imposition of a hard lockbox upon the occurrence of an event of default under the mortgage loan documents or one or more specified trigger events (e.g., thresholds relating to tenant vacancy or debt service coverage ratio).
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“Soft Lockbox” means the related borrower is required to deposit, or cause the property manager to deposit, all rents collected into a lockbox account controlled by the lender. Hospitality properties are considered to have a soft lockbox if credit card receivables and cash or “over the counter” receipts are deposited by the borrower or property manager into the lockbox account.
“In-Place Cash Management” means funds deposited into a lockbox account controlled by the lender are generally not made immediately available to the related borrower, but instead are forwarded to a cash management account controlled by the lender. Funds in such cash management account are disbursed according to the related mortgage loan documents, with any excess remitted to the related borrower (unless an event of default under the mortgage loan documents or one or more specified trigger events have occurred and are continuing).
“Springing Cash Management” means, until the occurrence of an event of default under the mortgage loan documents or one or more specified trigger events (e.g., thresholds relating to tenant vacancy or debt service coverage ratio), funds deposited into a lockbox account controlled by the lender are forwarded to an account controlled by the related borrower or are otherwise made available to the related borrower, in each case, generally on a daily basis. Upon the occurrence of an event of default or such a trigger event, the related mortgage loan documents require funds in the lockbox account to be forwarded to a cash management account controlled by the lender, and such funds are disbursed according to the mortgage loan documents. Generally, upon the cure of such event of default or the cessation of such trigger event, the forwarding of such funds to the borrower resumes.
“None” means revenue from the related mortgaged property is paid to the related borrower and is not subject to a lockbox as of the origination date, and no lockbox is contemplated to be established during the mortgage loan term.
In connection with any hard lockbox, income deposited directly into the related lockbox account may not include amounts paid in cash that are paid directly to the related property manager, notwithstanding requirements to the contrary. Furthermore, with respect to certain multifamily and hospitality properties, cash or “over-the-counter” receipts may be deposited into the lockbox account by the property manager. Mortgage loans whose terms call for the establishment of a lockbox account require that the amounts paid to the property manager will be deposited into the applicable lockbox account on a regular basis. Lockbox accounts will not be assets of the Issuing Entity.
The A/B Whole Loans and the Loan Pairs
The Loan Pair related to the Issuing Entity as of the Closing Date is the TKG 3 Retail Portfolio Loan Pair. There is no A/B Whole Loan related to the Issuing Entity as of the Closing Date.
The TKG 3 Retail Portfolio Loan Pair
The portfolio of mortgaged properties identified on Appendix I to this prospectus supplement as TKG 3 Retail Portfolio (the “TKG 3 Retail Portfolio Mortgaged Property”) secures a mortgage loan evidenced by four (4) promissory notes, as follows: (1) promissory note A-1 and promissory note A-4 in the original principal amounts of $55,000,000 and $25,000,000, respectively (collectively, such promissory notes, the “TKG 3 Retail Portfolio Mortgage Loan”) and (2) promissory note A-2 and promissory note A-3, in the original principal amounts of $33,708,750 and $46,000,000, respectively (collectively, such promissory notes, the “TKG 3 Retail Portfolio Serviced Companion Loan” and, together with the TKG 3 Retail Portfolio Mortgage Loan, the “TKG 3 Retail Portfolio Loan Pair”). The TKG 3 Retail Portfolio Mortgage Loan, with an outstanding principal balance as of the Cut-off Date of $80,000,000, and the TKG 3 Retail Portfolio Serviced Companion Loan, with an outstanding principal balance as of the Cut-off Date of $79,708,750, are cross-defaulted and have the same borrower, maturity date, amortization schedule and prepayment structure. The TKG 3 Retail Portfolio Serviced Companion Loan ispari passu in right of payment with the TKG 3 Retail Portfolio Mortgage Loan. The TKG 3 Retail Portfolio Mortgage Loan is included in the Issuing Entity, and the TKG 3 Retail Portfolio Serviced Companion Loan is not included in the Issuing Entity. The TKG 3 Retail Portfolio Serviced Companion Loan is currently held by the MSBAM 2015-C23 securitization trust. Prior to the Closing Date, the TKG 3 Retail Portfolio Loan Pair will be serviced pursuant to the MSBAM 2015-C23 PSA.
Unless otherwise indicated, for purposes of the information presented in prospectus supplement with respect to the TKG 3 Retail Portfolio Mortgage Loan, the loan-to-value ratio, debt yield, debt service coverage ratio and loan per unit information includes the TKG 3 Retail Portfolio Serviced Companion Loan.
The TKG 3 Retail Portfolio Loan Pair will be serviced pursuant to the Pooling and Servicing Agreement. The terms of the TKG 3 Retail Portfolio Intercreditor Agreement (as defined below) provide that, for so long as the TKG 3 Retail Portfolio Mortgage Loan is included in this securitization, the applicable master servicer or special servicer will be obligated to administer the TKG 3 Retail Portfolio Loan Pair consistently with the terms of such Intercreditor Agreement and the Pooling and Servicing Agreement. None of the master servicer, the special servicer or the trustee, as applicable, will be required to make P&I Advances on the TKG 3 Retail Portfolio Serviced Companion Loan, but the master servicer or the trustee, as applicable, will be required to make servicing advances on the TKG 3 Retail Portfolio Loan Pair, unless such party determines that such a Servicing Advance would be a Nonrecoverable Advance.
The TKG 3 Retail Portfolio Intercreditor Agreement
Pursuant to the intercreditor agreement entered into between the holders of the TKG 3 Retail Portfolio Mortgage Loan and the TKG 3 Retail Portfolio Serviced Companion Loan (the “TKG 3 Retail Portfolio Intercreditor Agreement”), the TKG 3 Retail Portfolio Mortgage Loan ispari passu in right of payment with the TKG 3 Retail Portfolio Serviced Companion Loan. The TKG 3 Retail Portfolio Intercreditor Agreement provides, in general, that:
· | The TKG 3 Retail Portfolio Mortgage Loan and the TKG 3 Retail Portfolio Serviced Companion Loan are of equal priority with each other and neither will have priority or preference over the other; |
· | All payments, proceeds and other recoveries on the TKG 3 Retail Portfolio Loan Pair will be applied to the TKG 3 Retail Portfolio Mortgage Loan and the TKG 3 Retail Portfolio Serviced Companion Loan on apro rataandpari passu basis (subject, in each case, to certain payment and reimbursement rights of the master servicer, the special servicer, the trustee, the certificate administrator and the trust advisor, in accordance with the terms of the Pooling and Servicing Agreement and the pooling and servicing agreement, if any, entered into in connection with a securitization of the TKG 3 Retail Portfolio Serviced Companion Loan); and |
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· | The controlling class representative under the Pooling and Servicing Agreement will be entitled to act as controlling note holder with respect to the TKG 3 Retail Portfolio Loan Pair during a Subordinate Control Period and will have all rights with respect to the TKG 3 Retail Portfolio Loan Pair set forth in the Pooling and Servicing Agreement. |
Certain Rights of the TKG 3 Retail Portfolio Non-Controlling Note Holder. The special servicer will be required (i) to provide to the TKG 3 Retail Portfolio Non-Controlling Note Holder (as defined below) copies of any notice, information and report that it is required to provide to the controlling class representative with respect to the implementation of any recommended actions outlined in an Asset Status Report relating to the TKG 3 Retail Portfolio Loan Pair or any proposed action to be taken in respect of a TKG 3 Retail Portfolio Major Decision (for this purpose, without regard to whether such items are actually required to be provided to the controlling class representative due to the expiration of the Subordinate Control Period or the Collective Consultation Period) and (ii) to use reasonable efforts to consult the TKG 3 Retail Portfolio Non-Controlling Note Holder on a strictly non-binding basis (to the extent such party requests consultation after having received the aforementioned notices, information and reports) with respect to any such recommended actions by the special servicer or any proposed action to be taken by the special servicer in respect of Major Decisions with respect to the TKG 3 Retail Portfolio Loan Pair (each, a “TKG 3 Retail Portfolio Major Decision”).
Such consultation right will expire ten (10) business days after the delivery to the TKG 3 Retail Portfolio Non-Controlling Note Holder of written notice of a proposed action (together with copies of the notices, information and reports required to be delivered thereto), whether or not the TKG 3 Retail Portfolio Non-Controlling Note Holder has responded within such period (unless the special servicer proposes a new course of action that is materially different from the action previously proposed, in which case such ten (10) business day period will be deemed to begin anew). In no event will the special servicer be obligated to follow or take any alternative actions recommended by the TKG 3 Retail Portfolio Non-Controlling Note Holder (or the related TKG 3 Retail Portfolio Non-Controlling Note Holder representative).
If the special servicer determines that immediate action is necessary to protect the interests of the holders of the TKG 3 Retail Portfolio Mortgage Loan and the TKG 3 Retail Portfolio Serviced Companion Loan, it may take, in accordance with the Servicing Standard, any action constituting a TKG 3 Retail Portfolio Major Decision with respect to the TKG 3 Retail Portfolio Loan Pair or any action set forth in any applicable Asset Status Report before the expiration of the aforementioned ten (10) business day period.
In addition to the aforementioned consultation right, the TKG 3 Retail Portfolio Non-Controlling Note Holder will have the right to annual meetings (which may be held telephonically) with the master servicer or special servicer, as applicable, upon reasonable notice and at times reasonably acceptable to the master servicer or special servicer, as applicable, in which servicing issues related to the TKG 3 Retail Portfolio Loan Pair are discussed.
If a Special Servicer Termination Event has occurred that affects the holder of the TKG 3 Retail Portfolio Serviced Companion Loan, such holder will have the right to direct the trustee to terminate the special servicer under the Pooling and Servicing Agreement solely with respect to the TKG 3 Retail Portfolio Loan Pair, other than with respect to any rights such special servicer may have as a Certificateholder, entitlements to amounts payable to the special servicer at the time of termination, entitlements to indemnification amounts and any other entitlements of the terminated party that survive the termination.
The “TKG 3 Retail Portfolio Non-Controlling Note Holder” will be the “controlling class representative” or other designated party under, and as and to the extent provided for in, the MSBAM 2015-C23 PSA.
Sale of Defaulted Mortgage Loan. Under the TKG 3 Retail Portfolio Intercreditor Agreement and the Pooling and Servicing Agreement, upon the TKG 3 Retail Portfolio Loan Pair becoming a defaulted mortgage loan, and if the special servicer decides to sell the TKG 3 Retail Portfolio Mortgage Loan, the special servicer will be required to sell the TKG 3 Retail Portfolio Mortgage Loan and the TKG 3 Retail Portfolio Serviced Companion Loan together as notes evidencing one whole loan. Notwithstanding the foregoing, the special servicer will not be permitted to sell the TKG 3 Retail Portfolio Loan Pair without the consent of the TKG 3 Retail Portfolio Non-Controlling Note Holder unless it has delivered to such holder (a) at least fifteen (15) business days prior written notice of any decision to attempt to sell the TKG 3 Retail Portfolio Loan Pair, (b) at least ten (10) days prior to the proposed sale date, a copy of each bid package (together with any amendments to such bid packages) received by the special servicer, a copy of the most recent appraisal and certain other supplementary documents (if requested by such holder), and (c) until the sale is completed, and a reasonable period (but no less time than is afforded to other offerors and the Controlling Class Representative) prior to the proposed sale date, all information and documents being provided to offerors or otherwise approved by the master servicer or special servicer in connection with the proposed sale.
The Non-Serviced Loan Combinations
The Non-Serviced Loan Combinations related to the Issuing Entity as of the Closing Date are the 300 South Riverside Plaza Fee Non-Serviced Loan Combination, the 32 Old Slip Fee Non-Serviced Loan Combination, the Waterfront at Port Chester Non-Serviced Loan Combination, the Alderwood Mall Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination. See “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs—The 32 Old Slip Fee Loan Pair” above.
The 300 South Riverside Plaza Fee Non-Serviced Loan Combination
The mortgaged property identified on Appendix I to this prospectus supplement as 300 South Riverside Plaza Fee (the “300 South Riverside Plaza Fee Mortgaged Property”) secures a mortgage loan evidenced by two (2) promissory notes, each dated as of February 10, 2015 and bearing the same rate of interest, as follows: (1) promissory note A-2 in the original principal amount of $67,000,000.00 (such promissory note, the “300 South Riverside Plaza Fee Mortgage Loan”) and (2) promissory note A-1 in the original principal amount of $100,000,000.00 (such promissory note, the “300 South Riverside Plaza Fee Non-Serviced Companion Loan” and, together with the 300 South Riverside Plaza Fee Mortgage Loan, the “300 South Riverside Plaza Fee Non-Serviced Loan Combination”). The 300 South Riverside Plaza Fee Mortgage Loan, with an outstanding principal balance as of the Cut-off Date of $67,000,000, and the 300 South Riverside Plaza Fee Non-Serviced Companion Loan, with an outstanding principal balance as of the Cut-off Date of $100,000,000, are cross-defaulted and have the same borrower, maturity date, amortization schedule and prepayment structure. The 300 South Riverside Plaza Fee Non-Serviced Companion Loan ispari passu in right of payment with the 300 South Riverside Plaza Fee Mortgage Loan. The 300 South Riverside Plaza Fee Mortgage Loan is included in the Issuing Entity, and the 300 South Riverside Plaza Fee Non-Serviced Companion Loan is currently held by the MSBAM 2015-C22 securitization trust and is not included in the Issuing Entity.
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Unless otherwise indicated, for purposes of the information presented in this prospectus supplement with respect to the 300 South Riverside Plaza Fee Mortgage Loan, the loan-to-value ratio, debt yield, debt service coverage ratio and loan per unit information includes the 300 South Riverside Plaza Fee Non-Serviced Companion Loan.
Servicing of the 300 South Riverside Plaza Fee Non-Serviced Loan Combination
The 300 South Riverside Plaza Fee Non-Serviced Loan Combination is currently being serviced pursuant to the pooling and servicing agreement for the MSBAM 2015-C22 securitization, dated as of April 1, 2015 (the “MSBAM 2015-C22 PSA”), between Morgan Stanley Capital I Inc., as depositor, Wells Fargo Bank, National Association, as master servicer, Midland Loan Services, a Division of PNC Bank, National Association, as special servicer, Park Bridge Lender Services LLC, as trust advisor, Wilmington Trust, National Association, as trustee, and Wells Fargo Bank, National Association, certificate administrator, certificate registrar, authenticating agent and custodian. The MSBAM 2015-C22 PSA constitutes the “Non-Serviced Mortgage Loan Pooling and Servicing Agreement” with respect to the 300 South Riverside Plaza Fee Non-Serviced Loan Combination. The servicing terms of such Non-Serviced Mortgage Loan Pooling and Servicing Agreement are substantially similar to the servicing terms of the Pooling and Servicing Agreement. See “Servicing of the Mortgage Loans—Additional Matters Relating to the Servicing of the Non-Serviced Mortgage Loans—The 300 South Riverside Plaza Fee Mortgage Loan, the Waterfront at Port Chester Mortgage Loan and the Hilton Garden Inn W 54th Street Mortgage Loan” in this prospectus supplement.
The 300 South Riverside Plaza Fee Intercreditor Agreement provides that the Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Special Servicer will be obligated to administer the 300 South Riverside Plaza Fee Non-Serviced Loan Combination consistently with the terms of such intercreditor agreement and the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement. None of the related Non-Serviced Mortgage Loan Master Servicer, Non-Serviced Mortgage Loan Special Servicer or Non-Serviced Mortgage Loan Trustee, as applicable, under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement will be required to make P&I Advances on the 300 South Riverside Plaza Fee Mortgage Loan, but the related Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Trustee, as applicable, will be required to make servicing advances on the 300 South Riverside Plaza Fee Non-Serviced Loan Combination unless the applicable party determines that such a servicing advance would be a nonrecoverable advance, all in accordance with the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement (P&I Advances on the 300 South Riverside Plaza Fee Mortgage Loan will be made by the master servicer or the trustee, as applicable, to the extent provided under the Pooling and Servicing Agreement; none of the master servicer, the special servicer or the trustee will be obligated to make Servicing Advances with respect to the 300 South Riverside Plaza Fee Non-Serviced Loan Combination under the Pooling and Servicing Agreement).
Any losses, liabilities, claims, costs and expenses incurred in connection with the 300 South Riverside Plaza Fee Non-Serviced Loan Combination that are not otherwise paid out of collections on such Non-Serviced Loan Combination may, to the extent allocable to the 300 South Riverside Plaza Fee Mortgage Loan, be payable or reimbursable out of general collections on the mortgage pool for this securitization.
The 300 South Riverside Plaza Fee Intercreditor Agreement
Pursuant to the intercreditor agreement entered into between the holders of the 300 South Riverside Plaza Fee Mortgage Loan and the 300 South Riverside Plaza Fee Non-Serviced Companion Loan (the “300 South Riverside Plaza Fee Intercreditor Agreement”), the 300 South Riverside Plaza Fee Mortgage Loan ispari passu in right of payment with the 300 South Riverside Plaza Fee Non-Serviced Companion Loan. The 300 South Riverside Plaza Fee Intercreditor Agreement provides, in general, that:
· | The 300 South Riverside Plaza Fee Mortgage Loan and the 300 South Riverside Plaza Fee Non-Serviced Companion Loan are of equal priority with each other and neither will have priority or preference over the other; |
· | All payments, proceeds and other recoveries on the 300 South Riverside Plaza Fee Non-Serviced Loan Combination will be applied to the 300 South Riverside Plaza Fee Mortgage Loan and the 300 South Riverside Plaza Fee Non-Serviced Companion Loan on apro rataandpari passu basis (subject, in each case, to (a) certain amounts for reserves or escrows required by the mortgage loan documents and (b) certain payment and reimbursement rights of the applicable master servicer, special servicer, trustee, certificate administrator and trust advisor, in accordance with the terms of the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement); and |
· | The controlling class representative under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement (or such other designee specified thereunder) will act as the controlling note holder with respect to the 300 South Riverside Plaza Fee Non-Serviced Loan Combination and will have all rights with respect to the 300 South Riverside Plaza Fee Non-Serviced Loan Combination set forth in such Non-Serviced Mortgage Loan Pooling and Servicing Agreement (such rights are substantially similar to the rights that the Controlling Class Representative has with respect to the mortgage loans (other than the Non-Serviced Mortgage Loans) under the Pooling and Servicing Agreement). |
Certain Rights of the 300 South Riverside Plaza Fee Non-Controlling Note Holder. The related Non-Serviced Mortgage Loan Special Servicer will be required (i) to provide to the 300 South Riverside Plaza Fee Non-Controlling Note Holder (as defined below) copies of any notice, information and report that it is required to provide to the controlling class representative under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement with respect to the implementation of any recommended actions outlined in an Asset Status Report relating to the 300 South Riverside Plaza Fee Non-Serviced Loan Combination or any proposed action to be taken in respect of a 300 South Riverside Plaza Fee Major Decision (for this purpose, without regard to whether such items are actually required to be provided to the controlling class representative due to the expiration of the “subordinate control period” or the “collective consultation period” under such Non-Serviced Mortgage Loan Pooling and Servicing Agreement) and (ii) to use reasonable efforts to consult the 300 South Riverside Plaza Fee Non-Controlling Note Holder on a strictly non-binding basis (to the extent such party requests consultation after having received the aforementioned notices, information and reports) with respect to any such recommended actions by such Non-Serviced Mortgage Loan Special Servicer or any proposed action to be taken by such Non-Serviced Mortgage Loan Special Servicer in respect of “major decisions” (as defined in the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, and which major decisions are substantially similar to “Major Decisions” as defined in the Pooling and Servicing Agreement) with respect to the 300 South Riverside Plaza Fee Non-Serviced Loan Combination (each, a “300 South Riverside Plaza Fee Major Decision”).
Such consultation right will expire ten (10) business days after the delivery to the 300 South Riverside Plaza Fee Non-Controlling Note Holder of written notice of a proposed action (together with copies of the notices, information and reports required to be delivered
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thereto), whether or not the 300 South Riverside Plaza Fee Non-Controlling Note Holder has responded within such period (unless the related Non-Serviced Mortgage Loan Special Servicer proposes a new course of action that is materially different from the action previously proposed, in which case such ten (10) business day period will be deemed to begin anew). In no event will the related Non-Serviced Mortgage Loan Special Servicer be obligated to follow or take any alternative actions recommended by the 300 South Riverside Plaza Fee Non-Controlling Note Holder (or the related 300 South Riverside Plaza Fee Non-Controlling Note Holder representative).
If the related Non-Serviced Mortgage Loan Special Servicer determines that immediate action is necessary to protect the interests of the holders of the 300 South Riverside Plaza Fee Mortgage Loan and the 300 South Riverside Plaza Fee Non-Serviced Companion Loan, it may take, in accordance with the applicable servicing standard under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, any action constituting a 300 South Riverside Plaza Fee Major Decision with respect to the 300 South Riverside Plaza Fee Non-Serviced Loan Combination or any action set forth in any applicable Asset Status Report before the expiration of the aforementioned ten (10) business day period.
In addition to the aforementioned consultation right, the 300 South Riverside Plaza Fee Non-Controlling Note Holder will have the right to annual meetings (which may be held telephonically) with the Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Special Servicer, as applicable, upon reasonable notice and at times reasonably acceptable to the Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Special Servicer, as applicable, in which servicing issues related to the 300 South Riverside Plaza Fee Non-Serviced Loan Combination are discussed.
If a special servicer termination event under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement has occurred that affects the 300 South Riverside Plaza Fee Non-Controlling Note Holder, such holder will have the right to direct the related Non-Serviced Mortgage Loan Trustee to terminate the related Non-Serviced Mortgage Loan Special Servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement solely with respect to the 300 South Riverside Plaza Fee Non-Serviced Loan Combination, other than with respect to any rights such Non-Serviced Mortgage Loan Special Servicer may have as a certificateholder under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, entitlements to amounts payable to the Non-Serviced Mortgage Loan Special Servicer at the time of termination, entitlements to indemnification amounts and any other entitlements of the terminated party that survive the termination.
The “300 South Riverside Plaza Fee Non-Controlling Note Holder” will be the holder of the 300 South Riverside Plaza Fee Mortgage Loan and its rights described above will initially be exercisable by the Controlling Class Representative under the Pooling and Servicing Agreement during any Subordinate Control Period or Collective Consultation Period.
Sale of Defaulted Mortgage Loan. Under the 300 South Riverside Plaza Fee Intercreditor Agreement and the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, upon the 300 South Riverside Plaza Fee Non-Serviced Loan Combination becoming a defaulted mortgage loan, if the Non-Serviced Mortgage Loan Special Servicer decides to sell the 300 South Riverside Plaza Fee Mortgage Loan, such Non-Serviced Mortgage Loan Special Servicer will be required to sell the 300 South Riverside Plaza Fee Mortgage Loan and the 300 South Riverside Plaza Fee Non-Serviced Companion Loan together as notes evidencing one whole loan in accordance with the terms of the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement. Notwithstanding the foregoing, the related Non-Serviced Mortgage Loan Special Servicer will not be permitted to sell the 300 South Riverside Plaza Fee Non-Serviced Loan Combination without the consent of the 300 South Riverside Plaza Fee Non-Controlling Note Holder unless it has delivered to such holder (a) at least fifteen (15) business days prior written notice of any decision to attempt to sell the 300 South Riverside Plaza Fee Non-Serviced Loan Combination, (b) at least ten (10) days prior to the proposed sale date, a copy of each bid package (together with any amendments to such bid packages) received by the related Non-Serviced Mortgage Loan Special Servicer and a copy of the most recent appraisal and certain other supplementary documents (if requested by such holder), and (c) until the sale is completed, and a reasonable period (but no less time than is afforded to other offerors and the controlling class representative under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement) prior to the proposed sale date, all information and documents being provided to offerors or otherwise approved by the related Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Special Servicer in connection with the proposed sale.
The 32 Old Slip Fee Non-Serviced Loan Combination
The mortgaged property identified on Appendix I to this prospectus supplement as 32 Old Slip Fee (the “32 Old Slip Fee Mortgaged Property”) secures a mortgage loan evidenced by five (5) promissory notes, each dated as of April 14, 2015 and bearing the same rate of interest, as follows: (1) promissory notes A-2 and A-5, in the original principal amount of $40,000,000 and $20,000,000, respectively (collectively, such promissory notes, the “32 Old Slip Fee Mortgage Loan”), and (2) promissory notes A-1, A-3 and A-4, in the original principal amounts of $50,000,000, $36,000,000 and $30,000,000, respectively (collectively, such promissory notes, the “32 Old Slip Fee Non-Serviced Companion Loan” and, together with the 32 Old Slip Fee Mortgage Loan, the “32 Old Slip Fee Non-Serviced Loan Combination”). The 32 Old Slip Fee Mortgage Loan, with an outstanding principal balance as of the Cut-off Date of $60,000,000, and the 32 Old Slip Fee Non-Serviced Companion Loan, with an outstanding principal balance as of the Cut-off Date of $116,000,000, are cross-defaulted and have the same borrower, maturity date, amortization schedule and prepayment structure. The 32 Old Slip Fee Non-Serviced Companion Loan ispari passu in right of payment with the 32 Old Slip Fee Mortgage Loan. The 32 Old Slip Fee Mortgage Loan is included in the Issuing Entity. A portion of the 32 Old Slip Fee Non-Serviced Companion Loan (represented by promissory note A-1) is not included in the Issuing Entity and is currently held by Morgan Stanley Bank. A portion of the 32 Old Slip Fee Non-Serviced Companion Loan (represented by promissory notes A-3 and A-4) is currently held by the MSBAM 2015-C23 securitization trust.
Unless otherwise indicated, for purposes of the information presented in this prospectus supplement with respect to the 32 Old Slip Fee Mortgage Loan, the loan-to-value ratio, debt yield, debt service coverage ratio and loan per unit information includes the 32 Old Slip Fee Non-Serviced Companion Loan.
Servicing of the 32 Old Slip Fee Non-Serviced Loan Combination
The 32 Old Slip Fee Non-Serviced Loan Combination will be serviced pursuant to the pooling and servicing agreement for the MSBAM 2015-C23 securitization, dated as of June 1, 2015 (the “MSBAM 2015-C23 PSA”), between Morgan Stanley Capital I Inc., as depositor, Wells Fargo Bank, National Association, as master servicer, LNR Partners, LLC, as special servicer, Wilmington Trust, National Association, as trustee, Wells Fargo Bank, National Association, as certificate administrator, certificate registrar, authenticating agent and custodian, Pentalpha Surveillance LLC, as trust advisor, and Wells Fargo Bank, National Association, as excluded mortgage loan special servicer. The MSBAM 2015-C23 PSA constitutes the “Non-Serviced Mortgage Loan Pooling and Servicing Agreement” with respect to the 32
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Old Slip Fee Non-Serviced Loan Combination. The servicing terms of such Non-Serviced Mortgage Loan Pooling and Servicing Agreement are substantially similar to the servicing terms of the Pooling and Servicing Agreement. See “Servicing of the Mortgage Loans—Additional Matters Relating to the Servicing of the Non-Serviced Mortgage Loans—The 32 Old Slip Fee Mortgage Loan” in this prospectus supplement.
The 32 Old Slip Fee Intercreditor Agreement provides that the Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Special Servicer will be obligated to administer the 32 Old Slip Fee Non-Serviced Loan Combination consistently with the terms of such intercreditor agreement and the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement. None of the related Non-Serviced Mortgage Loan Master Servicer, Non-Serviced Mortgage Loan Special Servicer or Non-Serviced Mortgage Loan Trustee, as applicable, under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement will be required to make P&I Advances on the 32 Old Slip Fee Mortgage Loan, but the related Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Trustee, as applicable, will be required to make servicing advances on the 32 Old Slip Fee Non-Serviced Loan Combination unless the applicable party determines that such a servicing advance would be a nonrecoverable advance, all in accordance with the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement (P&I Advances on the 32 Old Slip Fee Mortgage Loan will be made by the master servicer or the trustee, as applicable, to the extent provided under the Pooling and Servicing Agreement; none of the master servicer, the special servicer or the trustee will be obligated to make Servicing Advances with respect to the 32 Old Slip Fee Non-Serviced Loan Combination under the Pooling and Servicing Agreement).
Any losses, liabilities, claims, costs and expenses incurred in connection with the 32 Old Slip Fee Fee Non-Serviced Loan Combination that are not otherwise paid out of collections on such Non-Serviced Loan Combination may, to the extent allocable to the 32 Old Slip Fee Mortgage Loan, be payable or reimbursable out of general collections on the mortgage pool for this securitization.
The 32 Old Slip Fee Intercreditor Agreement
Pursuant to the intercreditor agreement entered into between the holders of the 32 Old Slip Fee Mortgage Loan and the 32 Old Slip Fee Non-Serviced Companion Loan (the “32 Old Slip Fee Intercreditor Agreement”), the 32 Old Slip Fee Mortgage Loan ispari passu in right of payment with the 32 Old Slip Fee Non-Serviced Companion Loan. The 32 Old Slip Fee Intercreditor Agreement provides, in general, that:
· | The 32 Old Slip Fee Mortgage Loan and the 32 Old Slip Fee Non-Serviced Companion Loan are of equal priority with each other and neither will have priority or preference over the other; |
· | All payments, proceeds and other recoveries on the 32 Old Slip Fee Non-Serviced Loan Combination will be applied to the 32 Old Slip Fee Mortgage Loan and the 32 Old Slip Fee Non-Serviced Companion Loan on apro rataandpari passu basis (subject, in each case, to (a) certain amounts for reserves or escrows required by the mortgage loan documents and (b) certain payment and reimbursement rights of the applicable master servicer, special servicer, trustee, certificate administrator and trust advisor, in accordance with the terms of the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement); and |
· | The controlling class representative under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement (or such other designee specified thereunder) will act as the controlling note holder with respect to the 32 Old Slip Fee Non-Serviced Loan Combination and will have all rights with respect to the 32 Old Slip Fee Non-Serviced Loan Combination set forth in such Non-Serviced Mortgage Loan Pooling and Servicing Agreement (such rights are substantially similar to the rights that the Controlling Class Representative has with respect to the mortgage loans (other than the Non-Serviced Mortgage Loans) under the Pooling and Servicing Agreement). |
Certain Rights of the 32 Old Slip Fee Non-Controlling Note Holder. The related Non-Serviced Mortgage Loan Special Servicer will be required (i) to provide to the 32 Old Slip Fee Non-Controlling Note Holder (as defined below) copies of any notice, information and report that it is required to provide to the controlling class representative under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement with respect to the implementation of any recommended actions outlined in an Asset Status Report relating to the 32 Old Slip Fee Non-Serviced Loan Combination or any proposed action to be taken in respect of a 32 Old Slip Fee Major Decision (for this purpose, without regard to whether such items are actually required to be provided to the controlling class representative due to the expiration of the “subordinate control period” or the “collective consultation period” under such Non-Serviced Mortgage Loan Pooling and Servicing Agreement) and (ii) to use reasonable efforts to consult the 32 Old Slip Fee Non-Controlling Note Holder on a strictly non-binding basis (to the extent such party requests consultation after having received the aforementioned notices, information and reports) with respect to any such recommended actions by such Non-Serviced Mortgage Loan Special Servicer or any proposed action to be taken by such Non-Serviced Mortgage Loan Special Servicer in respect of “major decisions” (as defined in the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, and which major decisions are substantially similar to “Major Decisions” as defined in the Pooling and Servicing Agreement) with respect to the 32 Old Slip Fee Non-Serviced Loan Combination (each, a “32 Old Slip Fee Major Decision”).
Such consultation right will expire ten (10) business days after the delivery to the 32 Old Slip Fee Non-Controlling Note Holder of written notice of a proposed action (together with copies of the notices, information and reports required to be delivered thereto), whether or not the 32 Old Slip Fee Non-Controlling Note Holder has responded within such period (unless the related Non-Serviced Mortgage Loan Special Servicer proposes a new course of action that is materially different from the action previously proposed, in which case such ten (10) business day period will be deemed to begin anew). In no event will the related Non-Serviced Mortgage Loan Special Servicer be obligated to follow or take any alternative actions recommended by the 32 Old Slip Fee Non-Controlling Note Holder (or the related 32 Old Slip Fee Non-Controlling Note Holder representative).
If the related Non-Serviced Mortgage Loan Special Servicer determines that immediate action is necessary to protect the interests of the holders of the 32 Old Slip Fee Mortgage Loan and the 32 Old Slip Fee Non-Serviced Companion Loan, it may take, in accordance with the servicing standard, any action constituting a 32 Old Slip Fee Major Decision with respect to the 32 Old Slip Fee Non-Serviced Loan Combination or any action set forth in any applicable Asset Status Report before the expiration of the aforementioned ten (10) business day period.
In addition to the aforementioned consultation right, the 32 Old Slip Fee Non-Controlling Note Holder will have the right to annual meetings (which may be held telephonically) with the Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Special Servicer, as applicable, upon reasonable notice and at times reasonably acceptable to the Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Special Servicer, as applicable, in which servicing issues related to the 32 Old Slip Fee Non-Serviced Loan Combination are discussed.
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If a special servicer termination event under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement has occurred that affects the 32 Old Slip Fee Non-Controlling Note Holder, such holder will have the right to direct the related Non-Serviced Mortgage Loan Trustee to terminate the related Non-Serviced Mortgage Loan Special Servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement solely with respect to the 32 Old Slip Fee Non-Serviced Loan Combination, other than with respect to any rights such Non-Serviced Mortgage Loan Special Servicer may have as a certificateholder under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, entitlements to amounts payable to the Non-Serviced Mortgage Loan Special Servicer at the time of termination, entitlements to indemnification amounts and any other entitlements of the terminated party that survive the termination.
The “32 Old Slip Fee Non-Controlling Note Holder” will be the holder of the 32 Old Slip Fee Mortgage Loan and its rights described above will initially be exercisable by the Controlling Class Representative under the Pooling and Servicing Agreement during any Subordinate Control Period or Collective Consultation Period.
Sale of Defaulted Mortgage Loan. Under the 32 Old Slip Fee Intercreditor Agreement and the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, upon the 32 Old Slip Fee Non-Serviced Loan Combination becoming a defaulted mortgage loan, if the Non-Serviced Mortgage Loan Special Servicer decides to sell the 32 Old Slip Fee Mortgage Loan, such Non-Serviced Mortgage Loan Special Servicer will be required to sell the 32 Old Slip Fee Mortgage Loan and the 32 Old Slip Fee Non-Serviced Companion Loan together as notes evidencing one whole loan in accordance with the terms of the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement. Notwithstanding the foregoing, the related Non-Serviced Mortgage Loan Special Servicer will not be permitted to sell the 32 Old Slip Fee Non-Serviced Loan Combination without the consent of the 32 Old Slip Fee Non-Controlling Note Holder unless it has delivered to such holder (a) at least fifteen (15) business days prior written notice of any decision to attempt to sell the 32 Old Slip Fee Non-Serviced Loan Combination, (b) at least ten (10) days prior to the proposed sale date, a copy of each bid package (together with any amendments to such bid packages) received by the related Non-Serviced Mortgage Loan Special Servicer and a copy of the most recent appraisal and certain other supplementary documents (if requested by such holder), and (c) until the sale is completed, and a reasonable period (but no less time than is afforded to other offerors and the controlling class representative under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement) prior to the proposed sale date, all information and documents being provided to offerors or otherwise approved by the related Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Special Servicer in connection with the proposed sale.
The Waterfront at Port Chester Non-Serviced Loan Combination
The mortgaged property identified on Appendix I to this prospectus supplement as Waterfront at Port Chester (the “Waterfront at Port Chester Mortgaged Property”) secures a mortgage loan evidenced by two (2) promissory notes, each dated as of March 24, 2015 and bearing the same rate of interest, as follows: (1) promissory note A-2 in the original principal amount of $53,500,000.00 (such promissory note, the “Waterfront at Port Chester Mortgage Loan”) and (2) promissory note A-1 in the original principal amount of $80,000,000.00 (such promissory note, the “Waterfront at Port Chester Non-Serviced Companion Loan” and, together with the Waterfront at Port Chester Mortgage Loan, the “Waterfront at Port Chester Non-Serviced Loan Combination”). The Waterfront at Port Chester Mortgage Loan, with an outstanding principal balance as of the Cut-off Date of $53,500,000, and the Waterfront at Port Chester Non-Serviced Companion Loan, with an outstanding principal balance as of the Cut-off Date of $80,000,000, are cross-defaulted and have the same borrower, maturity date, amortization schedule and prepayment structure. The Waterfront at Port Chester Non-Serviced Companion Loan ispari passu in right of payment with the Waterfront at Port Chester Mortgage Loan. The Waterfront at Port Chester Mortgage Loan is included in the Issuing Entity, and the Waterfront at Port Chester Non-Serviced Companion Loan is currently held by the MSBAM 2015-C22 securitization trust and is not included in the Issuing Entity.
Unless otherwise indicated, for purposes of the information presented in this prospectus supplement with respect to the Waterfront at Port Chester Mortgage Loan, the loan-to-value ratio, debt yield, debt service coverage ratio and loan per unit information includes the Waterfront at Port Chester Non-Serviced Companion Loan.
Servicing of the Waterfront at Port Chester Non-Serviced Loan Combination
The Waterfront at Port Chester Non-Serviced Loan Combination is currently being serviced pursuant to MSBAM 2015-C22 PSA. The MSBAM 2015-C22 PSA constitutes the “Non-Serviced Mortgage Loan Pooling and Servicing Agreement” with respect to the Waterfront at Port Chester Non-Serviced Loan Combination. The servicing terms of such Non-Serviced Mortgage Loan Pooling and Servicing Agreement are substantially similar to the servicing terms of the Pooling and Servicing Agreement. See “Servicing of the Mortgage Loans—Additional Matters Relating to the Servicing of the Non-Serviced Mortgage Loans—The 300 South Riverside Plaza Fee Mortgage Loan, the Waterfront at Port Chester Mortgage Loan and the Hilton Garden Inn W 54th Street Mortgage Loan” in this prospectus supplement.
The Waterfront at Port Chester Intercreditor Agreement provides that the Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Special Servicer will be obligated to administer the Waterfront at Port Chester Non-Serviced Loan Combination consistently with the terms of such intercreditor agreement and the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement. None of the related Non-Serviced Mortgage Loan Master Servicer, Non-Serviced Mortgage Loan Special Servicer or Non-Serviced Mortgage Loan Trustee, as applicable, under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement will be required to make P&I Advances on the Waterfront at Port Chester Mortgage Loan, but the related Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Trustee, as applicable, will be required to make servicing advances on the Waterfront at Port Chester Non-Serviced Loan Combination unless the applicable party determines that such a servicing advance would be a nonrecoverable advance, all in accordance with the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement (P&I Advances on the Waterfront at Port Chester Mortgage Loan will be made by the master servicer or the trustee, as applicable, to the extent provided under the Pooling and Servicing Agreement; none of the master servicer, the special servicer or the trustee will be obligated to make Servicing Advances with respect to the Waterfront at Port Chester Non-Serviced Loan Combination under the Pooling and Servicing Agreement).
Any losses, liabilities, claims, costs and expenses incurred in connection with the Waterfront at Port Chester Non-Serviced Loan Combination that are not otherwise paid out of collections on such Non-Serviced Loan Combination may, to the extent allocable to the Waterfront at Port Chester Mortgage Loan, be payable or reimbursable out of general collections on the mortgage pool for this securitization.
The Waterfront at Port Chester Intercreditor Agreement
Pursuant to the intercreditor agreement entered into between the holders of the Waterfront at Port Chester Mortgage Loan and the Waterfront at Port Chester Non-Serviced Companion Loan (the “Waterfront at Port Chester Intercreditor Agreement”), the Waterfront at Port
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Chester Mortgage Loan ispari passu in right of payment with the Waterfront at Port Chester Non-Serviced Companion Loan. The Waterfront at Port Chester Intercreditor Agreement provides, in general, that:
· | The Waterfront at Port Chester Mortgage Loan and the Waterfront at Port Chester Non-Serviced Companion Loan are of equal priority with each other and neither will have priority or preference over the other; |
· | All payments, proceeds and other recoveries on the Waterfront at Port Chester Non-Serviced Loan Combination will be applied to the Waterfront at Port Chester Mortgage Loan and the Waterfront at Port Chester Non-Serviced Companion Loan on apro rataandpari passu basis (subject, in each case, to (a) certain amounts for reserves or escrows required by the mortgage loan documents and (b) certain payment and reimbursement rights of the applicable master servicer, special servicer, trustee, certificate administrator and trust advisor, in accordance with the terms of the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement); and |
· | The controlling class representative under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement (or such other designee specified thereunder) will act as the controlling note holder with respect to the Waterfront at Port Chester Non-Serviced Loan Combination and will have all rights with respect to the Waterfront at Port Chester Non-Serviced Loan Combination set forth in such Non-Serviced Mortgage Loan Pooling and Servicing Agreement (such rights are substantially similar to the rights that the Controlling Class Representative has with respect to the mortgage loans (other than the Non-Serviced Mortgage Loans) under the Pooling and Servicing Agreement). |
Certain Rights of the Waterfront at Port Chester Non-Controlling Note Holder. The related Non-Serviced Mortgage Loan Special Servicer will be required (i) to provide to the Waterfront at Port Chester Non-Controlling Note Holder (as defined below) copies of any notice, information and report that it is required to provide to the controlling class representative under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement with respect to the implementation of any recommended actions outlined in an Asset Status Report relating to the Waterfront at Port Chester Non-Serviced Loan Combination or any proposed action to be taken in respect of a Waterfront at Port Chester Major Decision (for this purpose, without regard to whether such items are actually required to be provided to the controlling class representative due to the expiration of the “subordinate control period” or the “collective consultation period” under such Non-Serviced Mortgage Loan Pooling and Servicing Agreement) and (ii) to use reasonable efforts to consult the Waterfront at Port Chester Non-Controlling Note Holder on a strictly non-binding basis (to the extent such party requests consultation after having received the aforementioned notices, information and reports) with respect to any such recommended actions by such Non-Serviced Mortgage Loan Special Servicer or any proposed action to be taken by such Non-Serviced Mortgage Loan Special Servicer in respect of “major decisions” (as defined in the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, and which major decisions are substantially similar to “Major Decisions” as defined in the Pooling and Servicing Agreement) with respect to the Waterfront at Port Chester Non-Serviced Loan Combination (each, a “Waterfront at Port Chester Major Decision”).
Such consultation right will expire ten (10) business days after the delivery to the Waterfront at Port Chester Non-Controlling Note Holder of written notice of a proposed action (together with copies of the notices, information and reports required to be delivered thereto), whether or not the Waterfront at Port Chester Non-Controlling Note Holder has responded within such period (unless the related Non-Serviced Mortgage Loan Special Servicer proposes a new course of action that is materially different from the action previously proposed, in which case such ten (10) business day period will be deemed to begin anew). In no event will the related Non-Serviced Mortgage Loan Special Servicer be obligated to follow or take any alternative actions recommended by the Waterfront at Port Chester Non-Controlling Note Holder (or the related Waterfront at Port Chester Non-Controlling Note Holder representative).
If the related Non-Serviced Mortgage Loan Special Servicer determines that immediate action is necessary to protect the interests of the holders of the Waterfront at Port Chester Mortgage Loan and the Waterfront at Port Chester Non-Serviced Companion Loan, it may take, in accordance with the servicing standard, any action constituting a Waterfront at Port Chester Major Decision with respect to the Waterfront at Port Chester Non-Serviced Loan Combination or any action set forth in any applicable Asset Status Report before the expiration of the aforementioned ten (10) business day period.
In addition to the aforementioned consultation right, the Waterfront at Port Chester Non-Controlling Note Holder will have the right to annual meetings (which may be held telephonically) with the Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Special Servicer, as applicable, upon reasonable notice and at times reasonably acceptable to the Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Special Servicer, as applicable, in which servicing issues related to the Waterfront at Port Chester Non-Serviced Loan Combination are discussed.
If a special servicer termination event under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement has occurred that affects the Waterfront at Port Chester Non-Controlling Note Holder, such holder will have the right to direct the related Non-Serviced Mortgage Loan Trustee to terminate the related Non-Serviced Mortgage Loan Special Servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement solely with respect to the Waterfront at Port Chester Non-Serviced Loan Combination, other than with respect to any rights such Non-Serviced Mortgage Loan Special Servicer may have as a certificateholder under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, entitlements to amounts payable to the Non-Serviced Mortgage Loan Special Servicer at the time of termination, entitlements to indemnification amounts and any other entitlements of the terminated party that survive the termination.
The “Waterfront at Port Chester Non-Controlling Note Holder” will be the holder of the Waterfront at Port Chester Mortgage Loan and its rights described above will initially be exercisable by the Controlling Class Representative under the Pooling and Servicing Agreement during any Subordinate Control Period or Collective Consultation Period.
Sale of Defaulted Mortgage Loan. Under the Waterfront at Port Chester Intercreditor Agreement and the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, upon the Waterfront at Port Chester Non-Serviced Loan Combination becoming a defaulted mortgage loan, if the Non-Serviced Mortgage Loan Special Servicer decides to sell the Waterfront at Port Chester Mortgage Loan, such Non-Serviced Mortgage Loan Special Servicer will be required to sell the Waterfront at Port Chester Mortgage Loan and the Waterfront at Port Chester Non-Serviced Companion Loan together as notes evidencing one whole loan in accordance with the terms of the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement. Notwithstanding the foregoing, the related Non-Serviced Mortgage Loan Special Servicer will not be permitted to sell the Waterfront at Port Chester Non-Serviced Loan Combination without the consent of the Waterfront at Port Chester Non-Controlling Note Holder unless it has delivered to such holder (a) at least fifteen (15) business days prior written notice of
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any decision to attempt to sell the Waterfront at Port Chester Non-Serviced Loan Combination, (b) at least ten (10) days prior to the proposed sale date, a copy of each bid package (together with any amendments to such bid packages) received by the related Non-Serviced Mortgage Loan Special Servicer and a copy of the most recent appraisal and certain other supplementary documents (if requested by such holder), and (c) until the sale is completed, and a reasonable period (but no less time than is afforded to other offerors and the controlling class representative under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement) prior to the proposed sale date, all information and documents being provided to offerors or otherwise approved by the related Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Special Servicer in connection with the proposed sale.
The Alderwood Mall Non-Serviced Loan Combination
The mortgaged property identified on Appendix I to this prospectus supplement as Alderwood Mall (the “Alderwood Mall Mortgaged Property”) secures (i) promissory note A-1-3, which had an outstanding principal balance as of the Cut-off Date of $50,275,604 (the “Alderwood Mall Mortgage Loan”), (ii) promissory notes A-1-1, A-1-2 and A-1-4, which had outstanding principal balances as of the Cut-off Date of $64,640,062, $62,844,505 and $48,879,059, respectively (collectively, the “Alderwood Mall Non-Serviced Companion Loan” and, together with the Alderwood Mall Mortgage Loan, the “Alderwood Mall Senior Notes”), which arepari passu in right of payment with the Alderwood Mall Mortgage Loan, and (iii) promissory notes A-2-1 and A-2-2, which had an aggregate outstanding principal balance as of the Cut-off Date of $127,800,000, respectively (each such promissory note, an “Alderwood Mall B Note”), and are subordinate in right of payment to the Alderwood Mall Senior Notes to the extent described in “—The Alderwood Mall Intercreditor Agreement—Distributions; Cost and Expense Allocations and Reimbursements.” The Alderwood Mall Mortgage Loan, the Alderwood Mall Non-Serviced Companion Loan and the Alderwood Mall B Notes are collectively referred to herein as the “Alderwood Mall Non-Serviced Loan Combination.”
The initial holders of the Alderwood Mall Senior Notes and the Alderwood Mall B Notes have entered into an intercreditor agreement (the “Alderwood Mall Intercreditor Agreement”). The Alderwood Mall B Notes and a portion of the Alderwood Mall Non-Serviced Companion Loan (represented by promissory notes A-1-1 and A-1-2) are currently included in the MSCCG 2015-ALDR securitization trust, and the remaining portion of the Alderwood Mall Non-Serviced Companion Loan (represented by promissory note A-1-4) is currently held by Citigroup Global Markets Realty Corp.
The Alderwood Mall Mortgage Loan, the Alderwood Mall Non-Serviced Companion Loan and the Alderwood Mall B Notes are cross-defaulted and have the same borrower, maturity date, amortization schedule and prepayment structure. Interest is payable on the Alderwood Mall Non-Serviced Loan Combination at a rate equal to 3.47875%per annum. Payments made in respect of the Alderwood Mall Non-Serviced Loan Combination will be applied in accordance with the Alderwood Mall Intercreditor Agreement.
Servicing of the Alderwood Mall Non-Serviced Loan Combination
The Alderwood Mall Non-Serviced Loan Combination is currently being serviced pursuant to the trust and servicing agreement for the MSCCG 2015-ALDR securitization, dated as of May 5, 2015 (the “MSCCG 2015-ALDR TSA”), between Morgan Stanley Capital I Inc., as depositor, KeyBank National Association, as servicer and special servicer, and Wells Fargo Bank, National Association, as certificate administrator and trustee. The MSCCG 2015-ALDR TSA constitutes the “Non-Serviced Mortgage Loan Pooling and Servicing Agreement” with respect to the Alderwood Mall Non-Serviced Loan Combination. The servicing terms of the MSCCG 2015-ALDR TSA are similar to the servicing terms of the Pooling and Servicing Agreement for this transaction. See “Servicing of the Mortgage Loans—Additional Matters Relating to the Servicing of the Non-Serviced Mortgage Loans—The Alderwood Mall Mortgage Loan” in this prospectus supplement.
The Alderwood Mall Intercreditor Agreement provides that the servicer or the special servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement will be obligated to administer the Alderwood Mall Non-Serviced Loan Combination in accordance with the accepted servicing practices and consistently with the terms of such Intercreditor Agreement and the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement. None of the servicer, special servicer or trustee, as applicable, under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, will be required to make monthly payment advances on the Alderwood Mall Mortgage Loan, but such servicer or trustee, as applicable, will be required to make property protection advances on the Alderwood Mall Non-Serviced Loan Combination in accordance with the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement and the Alderwood Mall Intercreditor Agreement. None of the servicer, the special servicer or the trustee under the Pooling and Servicing Agreement for this transaction will be obligated to make servicing advances with respect to the Alderwood Mall Non-Serviced Loan Combination. P&I Advances on the Alderwood Mall Mortgage Loan are required to be made by the servicer or the trustee, as applicable, to the extent provided under the Pooling and Servicing Agreement for this transaction, and each such party will be entitled to make its own nonrecoverability determination with respect to such P&I Advances.
Each of the servicer and trustee, as applicable, under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, is entitled to reimbursement for a servicing advance or administrative advance,first, from amounts on deposit in the collection account established under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement that represent amounts received or in respect of the Alderwood Mall Non-Serviced Loan Combination, andthen, if such servicing advance or administrative advance is a nonrecoverable advance, if funds on deposit in such collection account allocable to the Alderwood Mall B Notes are insufficient to reimburse such servicing advance, then any deficiency will be paid from amounts on deposit in such collection account allocable to the Alderwood Mall Senior Notes on a Pro Rata and Pari Passu Basis (based on the outstanding principal balances of each Alderwood Mall Senior Note) pursuant to the terms of the Alderwood Mall Intercreditor Agreement and subject to the right of the servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement to seek reimbursement from the Issuing Entity (including out of general collections on the other mortgage loans) and the holder of the remaining portion of the Alderwood Mall Non-Serviced Companion Loan (represented by promissory note A-1-4) for their allocable shares of nonrecoverable servicing advances. In addition, each of the parties to the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement will be entitled to indemnification, to the extent of the pro rata share of any such indemnification amounts allocable to the Alderwood Mall Mortgage Loan, out of proceeds of the mortgage loans in the Issuing Entity to the same extent to which the parties to the Pooling and Servicing Agreement are entitled to indemnification out of proceeds on the mortgage loans held by the Issuing Entity.
The obligation of the master servicer to provide information and collections and make P&I Advances to the certificate administrator for the benefit of the Certificateholders with respect to the Alderwood Mall Mortgage Loan is dependent on its receipt of the corresponding information and/or collections from the applicable servicer or special servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement. The master servicer or the trustee, as applicable, will not be entitled to reimbursement for any P&I Advance (and advance interest thereon) from amounts allocable to the Alderwood Mall Non-Serviced Companion Loan or the Alderwood Mall B Note.
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The Alderwood Mall Intercreditor Agreement
Distributions; Cost and Expense Allocations and Reimbursements. Generally, as long as no Alderwood Mall Triggering Event of Default (as defined below) has occurred and is continuing, all amounts available for payment on the Alderwood Mall Non-Serviced Loan Combination (other than (i) any amounts for required reserves or escrows required by the related mortgage loan documents and proceeds, awards or settlements to be applied to the restoration or repair of the Alderwood Mall Mortgaged Property or released to the related borrower in accordance with the related mortgage loan documents, (ii) all amounts received as reimbursements on account of recoveries in respect of property protection advances then due and payable or reimbursable to the trustee, servicer or special servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, and (iii) certain amounts payable to the servicer or special servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement), will be allocated, subject to any deduction, reimbursement, recovery or other payment required or permitted under the Alderwood Mall Intercreditor Agreement, as follows:
· | first, to the Alderwood Mall Senior Note holders on a Pro Rata and Pari Passu Basis up to the amount of any unreimbursed costs and expenses paid by such Alderwood Mall Senior Note holders (or paid or advanced by the servicer, special servicer or trustee under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, as applicable) with respect to the Alderwood Mall Non-Serviced Loan Combination pursuant to the terms of the Alderwood Mall Intercreditor Agreement or the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement; |
· | second,pro rata, based on their respective interest entitlements, to the holders of the Alderwood Mall Senior Notes and the Alderwood Mall B Notes in an amount equal to the accrued and unpaid interest on the principal balance of its respective promissory note at the related interest rate, net of any applicable primary servicing fees under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement; |
· | third,pro rata, based on the principal balances of their respective Alderwood Mall Senior Notes, to the Alderwood Mall Senior Note holders in an amount equal to its respective principal entitlement for the related Due Date, to be applied in reduction of the principal balance of each such note; |
· | fourth,if the proceeds of any foreclosure sale or any liquidation of the Alderwood Mall Non-Serviced Loan Combination or the Alderwood Mall Mortgaged Property exceed the amounts required to be applied in accordance with the foregoing clausesfirst throughthird and, as a result of a workout the principal balances of the Alderwood Mall Senior Notes have been reduced (to the extent such reductions were made in accordance with the terms of the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement notwithstanding the discussion and allocations set forth under “—Workout” below by reason of the insufficiency of the Alderwood Mall B Notes to bear the full economic effect of the workout), such excess amount will be paid to the Alderwood Mall Senior Note holders on a Pro Rata and Pari Passu Basis in an amount up to the reduction of the aggregate principal balance of the Alderwood Mall Senior Notes as a result of such workout, plus interest on such amount at the related interest rate for the Alderwood Mall Non-Serviced Loan Combination; |
· | fifth, to the Alderwood Mall B Note holders, on a Pro Rata and Pari PassuBasis, up to the amount of any unreimbursed costs and expenses paid by such Alderwood Mall B Note holders (or paid or advanced by the related servicer, special servicer or trustee, as applicable, under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement) with respect to the Alderwood Mall Non-Serviced Loan Combination pursuant to the terms of the Alderwood Mall Intercreditor Agreement or the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement; |
· | sixth,pro rata, based on the principal balance of their respective Alderwood Mall B Notes, to each Alderwood Mall B Note holder in an amount equal to its respective principal entitlement with respect to the related Due Date, which amount will be applied in reduction of the principal balance of such Alderwood Mall B Note; |
· | seventh, if the proceeds of any foreclosure sale or any liquidation of the Alderwood Mall Non-Serviced Loan Combination or the Alderwood Mall Mortgaged Property exceed the amounts required to be applied in accordance with the foregoing clausesfirst throughsixth and, as a result of a workout the principal balances of the Alderwood Mall B Notes has been reduced, such excess amount will be paid to the Alderwood Mall B Note holders on a Pro Rata and Pari Passu Basis in an amount up to the reduction of the aggregate principal balance of the Alderwood Mall B Notes as a result of such workout,plus interest on such amount at the related interest rate for the Alderwood Mall Non-Serviced Loan Combination; |
· | eighth, to the Alderwood Mall Senior Note holders and the Alderwood Mall B Note holders,pro rata, based on their respective percentage interest in the Alderwood Mall Non-Serviced Loan Combination, any yield maintenance premium or other prepayment premium, to the extent paid by the related borrower; |
· | ninth, to the extent assumption fees, transfer fees, late payment fees or charges (other than any yield maintenance premium or other prepayment premium) actually paid by the related borrower are not required to be otherwise applied under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, including, without limitation, to provide reimbursement for any interest on any advance (calculated at the applicable advance rate), to pay any additional servicing expenses or to compensate the servicer or special servicer, as applicable, under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, as applicable (in each case provided that such reimbursements or payments relate to the Alderwood Mall Non-Serviced Loan Combination), any such fees or expenses, to the extent actually paid by the related borrower, will be paid to the Alderwood Mall Senior Note holders and the Alderwood Mall B Note holders,pro rata, based on their respective percentage interest in the Alderwood Mall Non-Serviced Loan Combination; and |
· | tenth, if any excess amount is available to be distributed in respect of the Alderwood Mall Non-Serviced Loan Combination, and not otherwise applied in accordance with the foregoing clausefirstthroughninth, any remaining amounts will be paidpro rata to the Alderwood Mall Senior Note holders and the Alderwood Mall B Note holders in accordance with their respective percentage interest in the Alderwood Mall Non-Serviced Loan Combination, |
provided, that to the extent required under the REMIC provisions of the Code, payments or proceeds received with respect to any partial release of any portion of the Alderwood Mall Mortgaged Property (including pursuant to a condemnation) at a time when the loan-to-value ratio of the Alderwood Mall Non-Serviced Loan Combination (as determined in accordance with applicable REMIC requirements) exceeds 125% (based solely upon the value of the remaining real property and excluding any personal property or going concern value) must
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be allocated to reduce the principal balance of the Alderwood Mall Non-Serviced Loan Combination in the manner permitted by such REMIC provisions.
Generally, for so long as an Alderwood Mall Triggering Event of Default (as defined below) has occurred and is continuing, all amounts available for payment on the Alderwood Mall Non-Serviced Loan Combination (other than (i) any amounts for required reserves or escrows required by the related mortgage loan documents and proceeds, awards or settlements to be applied to the restoration or repair of the Alderwood Mall Mortgaged Property or released to the related borrower in accordance with the related mortgage loan documents, (ii) all amounts received as reimbursements on account of recoveries in respect of servicing advances then due and payable or reimbursable to the trustee, servicer or special servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, and (iii) certain amounts payable to the servicer or special servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement), will be allocated, subject to any deduction, reimbursement, recovery or other payment required or permitted under the Alderwood Mall Intercreditor Agreement, as follows:
· | first, to the Alderwood Mall Senior Note holders on a Pro Rata and Pari Passu Basis up to the amount of any unreimbursed costs and expenses paid by such Alderwood Mall Senior Note holders (or paid or advanced by the servicer, special servicer or trustee under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, as applicable) with respect to the Alderwood Mall Non-Serviced Loan Combination pursuant to the terms of the Alderwood Mall Intercreditor Agreement or the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement; |
· | second,pro rata, based on their respective interest entitlements, to the holders of the Alderwood Mall Senior Notes and the Alderwood Mall B Notes in an amount equal to the accrued and unpaid interest on the principal balance of its respective promissory note at the related interest rate, net of any applicable primary servicing fees under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement; |
· | third, to the Alderwood Mall Senior Note holders on a Pro Rata and Pari Passu Basis, until the principal balances of the Alderwood Mall Senior Notes have been reduced to zero; |
· | fourth,if the proceeds of any foreclosure sale or any liquidation of the Alderwood Mall Non-Serviced Loan Combination or the Alderwood Mall Mortgaged Property exceed the amounts required to be applied in accordance with the foregoing clauses first through third and, as a result of a workout the principal balances of the Alderwood Mall Senior Notes have been reduced (to the extent such reductions were made in accordance with the terms of the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement notwithstanding the discussion and allocations set forth under “—Workout” below by reason of the insufficiency of the Alderwood Mall B Notes to bear the full economic effect of the workout), such excess amount will be paid to the Alderwood Mall Senior Note holders on a Pro Rata and Pari Passu Basis in an amount up to the reduction of the aggregate principal balance of the Alderwood Mall Senior Notes as a result of such workout, plus interest on such amount at the related interest rate for the Alderwood Mall Non-Serviced Loan Combination; |
· | fifth, to the Alderwood Mall B Note holders, on a Pro Rata and Pari Passu Basis, up to the amount of any unreimbursed costs and expenses paid by such Alderwood Mall B Note holders (or paid or advanced by the related servicer, special servicer, certificate administrator or trustee, as applicable, under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement) with respect to the Alderwood Mall Non-Serviced Loan Combination pursuant to the terms of the Alderwood Mall Intercreditor Agreement or the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement; |
· | sixth, to the Alderwood Mall B Note holders, on a Pro Rata and Pari Passu Basis, until the principal balances of the Alderwood Mall B Notes have been reduced to zero; |
· | seventh, if the proceeds of any foreclosure sale or any liquidation of the Alderwood Mall Non-Serviced Loan Combination or the Alderwood Mall Mortgaged Property exceed the amounts required to be applied in accordance with the foregoing clausesfirst throughsixth and, as a result of a workout the principal balances of the Alderwood Mall B Notes have been reduced, such excess amount will be paid to the Alderwood Mall B Note holders on a Pro Rata and Pari Passu Basis in an amount up to the reduction of the aggregate principal balance of the Alderwood Mall B Notes as a result of such workout,plus interest on such amount at the related interest rate for the Alderwood Mall Non-Serviced Loan Combination; |
· | eighth, to the Alderwood Mall Senior Note holders and the Alderwood Mall B Note holders,pro rata, based on their respective percentage interest in the Alderwood Mall Non-Serviced Loan Combination, any yield maintenance premium or other prepayment premium, to the extent paid by the related borrower; |
· | ninth, to the extent assumption fees, transfer fees, late payment fees or charges (other than any yield maintenance premium or other prepayment premium) actually paid by the related borrower are not required to be otherwise applied under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, including, without limitation, to provide reimbursement for any interest on any advance (calculated at the applicable advance rate), to pay any additional servicing expenses or to compensate the servicer or special servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, as applicable (in each case provided that such reimbursements or payments relate to the Alderwood Mall Non-Serviced Loan Combination), any such fees or expenses, to the extent actually paid by the related borrower, will be paid to the Alderwood Mall Senior Note holders and the Alderwood Mall B Note holders,pro rata, based on their respective percentage interest in the Alderwood Mall Non-Serviced Loan Combination; and |
· | tenth, if any excess amount is available to be distributed in respect of the Alderwood Mall Non-Serviced Loan Combination, and not otherwise applied in accordance with the foregoing clausefirstthroughninth, any remaining amounts will be paidpro rata to the Alderwood Mall Senior Note holders and the Alderwood Mall B Note holders in accordance with their respective percentage interest in the Alderwood Mall Non-Serviced Loan Combination, |
provided, that to the extent required under the REMIC provisions of the Code, payments or proceeds received with respect to any partial release of any portion of the Alderwood Mall Mortgaged Property (including pursuant to a condemnation) at a time when the loan-to-value ratio of the Alderwood Mall Non-Serviced Loan Combination (as determined in accordance with applicable REMIC requirements) exceeds 125% (based solely upon the value of the remaining real property and excluding any personal property or going concern value) must
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be allocated to reduce the principal balance of the Alderwood Mall Non-Serviced Loan Combination in the manner permitted by such REMIC provisions.
“Alderwood Mall Triggering Event of Default” means (i) any event of default under the related loan documents with respect to an obligation of the related borrower to pay money due under the Alderwood Mall Non-Serviced Loan Combination or (ii) any non-monetary event of default under the related loan documents that causes the Alderwood Mall Non-Serviced Loan Combination to become a specially serviced mortgage loan under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement (which, for clarification, will not include any imminent event of default).
“Pro Rata and Pari Passu Basis” means (i) with respect to the Alderwood Mall Senior Notes and the related Alderwood Mall Senior Note holders, the allocation of any particular payment, reimbursement, collection, cost, expense or liability or other amount among such Alderwood Mall Senior Notes or such Alderwood Mall Senior Note holders, as the case may be, without any priority of any such Alderwood Mall Senior Note or any such Alderwood Mall Senior Note holder over another such Alderwood Mall Senior Note or Alderwood Mall Senior Note holder, as the case may be, and in any event such that each Alderwood Mall Senior Note or Alderwood Mall Senior Note holder, as the case may be, is allocated its respectivepro rata share based on their respective principal balances (or, in the case of the reimbursement of a cost, expense or loss, based on the respective reimbursable amounts) (as among the Alderwood Mall Senior Notes) of such particular payment, reimbursement, collection, cost, expense liability or other amount, and (ii) with respect to the Alderwood Mall B Notes and the related Alderwood Mall B Note holders, the allocation of any particular payment, reimbursement, collection, cost, expense, liability or other amount among such Alderwood Mall B Notes or such Alderwood B Note holders, as the case may be, without any priority of any such Alderwood Mall B Note or any such Alderwood Mall B Note holder over another such Alderwood Mall B Note or Alderwood Mall B Note holder, as the case may be, and in any event such that each Alderwood Mall B Note or Alderwood Mall B Note holder, as the case may be, is allocated its respectivepro rata share based on their respective principal balances (or, in the case of the reimbursement of a cost, expense or loss, based on the respective reimbursable amounts) (as among Alderwood Mall B Notes) of such particular payment, reimbursement, collection, cost, expense liability or other amount.
For clarification purposes, penalty charges paid on each note will be applied:first, to pay the servicer or the trustee under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement for any interest accrued on any property protection advances in accordance with the terms of the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement;second, to pay the master servicer, the trustee, or the servicer or trustee under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, as applicable, for any interest accrued on any advance of a delinquent monthly debt service payment made with respect to an Alderwood Mall promissory note by such party (as specified in the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement or the Pooling and Servicing Agreement, as applicable);third, to pay any trust fund expenses under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement (other than special servicing fees, unpaid work-out fees and liquidation fees) incurred with respect to the Alderwood Mall Non-Serviced Loan Combination; andfinally, to pay,pro rata, the servicer and the special servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement (in each case, as additional servicing compensation) and each Alderwood Mall Senior Note holder (or, following the securitization of any Alderwood Mall Senior Note, the servicer and the special servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement as additional servicing compensation).
All expenses and losses relating to the Alderwood Mall Non-Serviced Loan Combination and the Alderwood Mall Mortgaged Property, including without limitation, losses of principal or interest, servicing advances, interest on any advance (calculated at the applicable advance rate), special servicing fees, liquidation fees, work-out fees and certain other trust expenses, as well as appraisal reduction amounts, will be allocated in Note Reverse Sequential Order.
“Note Reverse Sequential Order” means (a)first, to the reduction of the principal balance of each of the Alderwood Mall B Notes, on a Pro Rata and Pari Passu Basis, until the principal balance of each such Alderwood Mall B Note is reduced to zero; and (b)second, to the reduction of the principal balance of each of the Alderwood Mall Senior Notes, on a Pro Rata and Pari Passu Basis, until the principal balances of each such Alderwood Mall Senior Note is reduced to zero.
Workout.If the servicer or the special servicer, as applicable, under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, in connection with a workout of the Alderwood Mall Non-Serviced Loan Combination, modifies the terms thereof such that (i) the outstanding principal balance thereof is decreased, (ii) the interest rate on the Alderwood Mall Non-Serviced Loan Combination or scheduled amortization payments thereon are reduced, (iii) payments of interest or principal thereon are waived, reduced or deferred, or (iv) any other adjustment is made to any of the payment terms of the Alderwood Mall Non-Serviced Loan Combination (other than an increase in the interest rate on the Alderwood Mall Non-Serviced Loan Combination or increase in scheduled amortization payments on the Alderwood Mall Non-Serviced Loan Combination), all payments to the Alderwood Mall Senior Note holders as described under “—Distributions; Cost and Expense Allocations and Reimbursements” above, will be made as though such workout did not occur, with the payment terms of the Alderwood Mall Senior Notes remaining the same as they were prior to any such workout, and the Alderwood Mall B Notes will bear the full economic effect of all waivers, reductions or deferrals of amounts due on the Alderwood Mall Non-Serviced Loan Combination attributable to such workout (such economic effect to be borne by the Alderwood Mall B Notes on a Pro Rata and Pari Passu Basis and in each case up to the amount otherwise due on such note including in connection with the final liquidation or repayment of the Alderwood Mall Non-Serviced Loan Combination). Prior to any allocation of collections in connection with a final liquidation or repayment of the Alderwood Mall Non-Serviced Loan Combination, any loss or shortfall will be allocatedfirst, to reduce the principal balances of the Alderwood Mall B Notes on a Pro Rata and Pari Passu Basis, andsecond, to reduce the principal balances of the Alderwood Mall Senior Notes on a Pro Rata and Pari Passu Basis, with such reduced principal balances to be used in calculating percentage interests in the Alderwood Mall Non-Serviced Loan Combination and Pro Rata and Pari Passu Basis for remittances of principal on the promissory notes evidencing the Alderwood Mall Non-Serviced Loan Combination. Subject to the terms of the MSCCG 2015-TSA and the Alderwood Mall Intercreditor Agreement, in the case of any modification or amendment described above, the special servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement (on behalf of the Alderwood Mall Senior Note holders and the Alderwood Mall B Note holders) will have the sole authority and ability to revise the payment provisions described under “—Distributions; Cost and Expense Allocations and Reimbursements” above in a manner that reflects the subordination of the Alderwood Mall B Notes to the Alderwood Mall Senior Notes with respect to the loss that is the result of such amendment or modification including: (i) the ability to increase the percentage interest in the Alderwood Mall Non-Serviced Loan Combination evidenced by any promissory note in a manner that reflects a loss in principal as a result of such amendment or modification, and (ii) the ability to change the interest rate on the Alderwood Mall Non-Serviced Loan Combination, but will not be permitted to change the payment priorities described in “—Distributions; Cost and Expense Allocations and Reimbursements” above.
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Consultation Rights of the Alderwood Mall Non-Controlling Senior Note Holders. Pursuant to the Alderwood Mall Intercreditor Agreement and subject to certain conditions and limitations, the servicer or special servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, as applicable, will be required to consult, on a strictly non-binding basis, with each Alderwood Mall Non-Controlling Senior Note Holder (to the extent that such Alderwood Mall Non-Controlling Senior Note Holder requests consultation) with respect to (i) any recommended actions outlined in an asset status report related to the Alderwood Mall Non-Serviced Loan Combination and (ii) certain actions to be taken with respect to the Alderwood Mall Non-Serviced Loan Combination (collectively, the “Alderwood Mall Major Decisions”), including, without limitation:
· | any proposed or actual foreclosure upon or comparable conversion (which may include acquisitions of an REO Property) of the ownership of the Alderwood Mall Mortgaged Property if the Alderwood Mall Non-Serviced Loan Combination comes into and continues in default; |
· | any modification, consent to a modification or waiver of a monetary term (other than penalty charges, but including the timing of payments and acceptance of discounted payoffs) or material non-monetary term of the Alderwood Mall Non-Serviced Loan Combination or any extension of the maturity date thereof; |
· | following a default or an event of default with respect to the Alderwood Mall Non-Serviced Loan Combination, any exercise of remedies, including any acceleration thereof or initiation of judicial, bankruptcy or similar proceedings under the related mortgage loan documents; |
· | any sale of the Alderwood Mall Non-Serviced Loan Combination if it is a defaulted loan or related REO Property for less than the applicable purchase price set forth in the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement; |
· | any determination to bring the Alderwood Mall Mortgaged Property or a related REO Property into compliance with applicable environmental laws or to otherwise address hazardous material located at the Alderwood Mall Mortgaged Property or at a related REO Property; |
· | any release of collateral or any acceptance of substitute or additional collateral for the Alderwood Mall Non-Serviced Loan Combination or any consent to either of the foregoing, unless required or permitted pursuant to the specific terms of the related mortgage loan documents and for which there is no material lender discretion; |
· | any waiver of a “due-on-sale” or “due-on-encumbrance” clause with respect to the Alderwood Mall Non-Serviced Loan Combination or, if lender consent is required, any consent to such a waiver or consent to a transfer of the Alderwood Mall Mortgaged Property or interests in the related borrower, other than any such transfer or incurrence of debt as may be effected without the consent of the lender under the related mortgage loan documents; |
· | any incurrence of additional debt by the related borrower or of any mezzanine financing by any beneficial owner of the related borrower (to the extent that the lender has consent rights pursuant to the related mortgage loan documents (for purposes of the determination whether a lender has such consent rights pursuant to the related mortgage loan documents, any mortgage loan document provision that requires that an intercreditor agreement be reasonably or otherwise acceptable to the lender will constitute such consent rights)); |
· | any material modification, waiver or amendment of an intercreditor agreement, co-lender agreement, participation agreement or similar agreement with any mezzanine lender or subordinate debt holder related to the Alderwood Mall Non-Serviced Loan Combination or an action to enforce rights with respect thereto or decision not to enforce such rights; |
· | any material property management company changes, including approval of the termination of a manager and appointment of a new property manager; |
· | releases of any escrow accounts, reserve accounts or letters of credit held as performance escrows or reserves, other than those required pursuant to the specific terms of the related mortgage loan documents and for which there is no material lender discretion; |
· | any requests for the funding or disbursement of “performance,” “earn-out,” holdback or similar escrows and reserves (including those evidenced by letters of credit) if, with respect to the Alderwood Mall Non-Serviced Loan Combination, escrows and reserves (i) exceed, at the related origination date, in the aggregate, 10% of the initial principal balance of the Alderwood Mall Non-Serviced Loan Combination (regardless of whether such funding or disbursement may be characterized as routine and/or customary and regardless of whether the Alderwood Mall Non-Serviced Loan Combination has a primary servicer other than the related servicer) or (ii) are not routine and/or customary escrow and reserve fundings or disbursements; |
· | any acceptance of an assumption agreement or any other agreement permitting a transfer of interests in the related borrower, guarantor or other obligor, or releasing the related borrower, guarantor or other obligor from liability under the Alderwood Mall Non-Serviced Loan Combination, other than pursuant to the specific terms thereof and for which there is no lender discretion; |
· | any determination of an acceptable insurance default under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement; |
· | the modification, waiver, amendment, execution, termination or renewal of any lease, to the extent lender approval is required under the related mortgage loan documents (including entering into any related subordination, non-disturbance and attornment agreement) and if such lease (a) involves a ground lease or lease of an outparcel or affects an area greater than or equal to the greater of (i) 10% of leasable space or (ii) 20,000 square feet, (b) is for over 50,000 square feet, or (c) otherwise constitutes a “major lease” or “material lease,” if applicable, under the related mortgage loan documents, subject to any deemed approval expressly set forth in the related lease; |
· | any adoption or implementation of a budget submitted by the related borrower with respect to the Alderwood Mall Non-Serviced Loan Combination (to the extent lender approval is required under the related mortgage loan documents), if (a) the Alderwood Mall Non-Serviced Loan Combination is on the CREFC® servicer watch list or (b) such budget includes material (more than 25%) increases in operating expenses or payments to entities actually known by the related servicer to be affiliates |
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of the related borrower (excluding affiliated managers paid at fee rates agreed to at the origination of the Alderwood Mall Non-Serviced Loan Combination), subject in each case to any deemed approval expressly set forth in the related mortgage loan documents; |
· | the voting on any plan of reorganization, restructuring or similar plan in the bankruptcy of the related borrower; and |
· | the exercise of the rights and powers granted under the Alderwood Mall Intercreditor Agreement or any related mezzanine loan intercreditor agreement to the holder of a portion of the Alderwood Mall Senior Note (represented by promissory note A-1-1), the “Senior Lender” or such other similar term as may be set forth in any such agreement, as applicable, and/or the “Servicer” referred to therein, if and to the extent such rights or powers affect the priority, payments, consent rights, or security interest with respect to the holder of a portion of the Alderwood Mall Senior Note (represented by promissory note A-1-1), the “Senior Lender” or such other similar term. |
Notwithstanding the foregoing, neither the servicer nor the special servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement will be required to consult with any Alderwood Mall Non-Controlling Senior Note Holder if such Alderwood Mall Non-Controlling Senior Note Holder has failed to respond to any written notice of a pending Alderwood Mall Major Decision from such party within ten (10) business days of delivery of such notice. Furthermore, if the related servicer and special servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, as applicable, determines, in accordance with the servicing standard, that immediate action is necessary to protect the interests of the note holders (as a collective whole), the related servicer or special servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement may take any such action without waiting for the expiration of the aforementioned ten (10) business day period.
In addition to the consultation rights provided above, each Alderwood Mall Non-Controlling Senior Note Holder will have the right to an annual meeting (which may be held telephonically) with the related Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Special Servicer, as applicable, upon reasonable notice and at times reasonably acceptable to the related Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Special Servicer, as applicable, in which servicing issues related to the Alderwood Mall Non-Serviced-Loan Combination are discussed.
The “Alderwood Mall Non-Controlling Senior Note Holders” will be (i) the holder of the Alderwood Mall Mortgage Loan, whose rights will be exercised by the Controlling Class Representative (during any Subordinate Control Period or Collective Consultation Period) as and to the extent set forth in the Pooling and Servicing Agreement and (ii) the holder of the portion of the Alderwood Mall Non-Serviced Companion Loan represented by promissory note A-1-4.
Custody of the Mortgage File. Wells Fargo Bank, National Association, as custodian under the MSCCG 2015-ALDR TSA is the current custodian of the mortgage file related to the Alderwood Mall Non-Serviced Loan Combination (other than the promissory note evidencing the Alderwood Mall Mortgage Loan and promissory note A-1-4 held by Citigroup Global Markets Realty Corp.).
Sale of Defaulted Mortgage Loan. Pursuant to the terms of the Alderwood Mall Intercreditor Agreement, if the Alderwood Mall Non-Serviced Loan Combination becomes a defaulted loan, and if the related Non-Serviced Mortgage Loan Special Servicer has made the decision to sell the Alderwood Mall Non-Serviced Loan Combination, the related Non-Serviced Mortgage Loan Special Servicer will be required to sell the Alderwood Mall Mortgage Loan, the Alderwood Mall Non-Serviced Companion Loan and the Alderwood Mall B Notes together as notes evidencing one whole loan in accordance with terms of the MSCCG 2015-ALDR TSA. Notwithstanding the foregoing, the related Non-Serviced Mortgage Loan Special Servicer will not be permitted to sell the Alderwood Mall Non-Serviced Loan Combination without the written consent of each Alderwood Mall Non-Controlling Senior Note Holder unless the related Non-Serviced Mortgage Loan Special Servicer has delivered to each Alderwood Mall Non-Controlling Senior Note Holder (i) at least fifteen (15) business days prior written notice of any decision to attempt to sell the Alderwood Mall Non-Serviced Loan Combination, (ii) at least ten (10) days prior to the proposed sale date, a copy of each bid package received by the related Non-Serviced Mortgage Loan Special Servicer in connection with any such proposed sale and a copy of the most recent appraisal and any documents in the servicer mortgage file requested by each Alderwood Mall Non-Controlling Senior Note Holder, and (iii) until the sale is completed, and a reasonable period of time prior to the proposed sale date, all information and documents being provided to offerors that are otherwise approved by the master servicer or the special servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement in connection with the proposed sale. Each Alderwood Mall Non-Controlling Senior Note Holder (or its representative) will be permitted to submit an offer at any sale of the Alderwood Mall Non-Serviced Loan Combination.
Removal and Replacement of the Special Servicer. The MSCCG 2015-ALDR certificateholders evidencing (i) at least 75% of a certificateholder quorum under the MSCCG 2015-ALDR TSA or (ii) more than 50% of the voting rights allocable to each class of certificates issued in connection with the MSCCG 2015-ALDR securitization transaction,may remove the existing special servicer for the Alderwood Mall Non-Serviced Loan Combination, with or without cause, and appoint a successor to such special servicer that satisfies the requirements, including certain ratings requirements, and makes the representations, warranties and covenants, set forth in the MSCCG 2015-ALDR TSA.
The Hilton Garden Inn W 54th Street Non-Serviced Loan Combination
The mortgaged property identified on Appendix I to this prospectus supplement as Hilton Garden Inn W 54th Street (the “Hilton Garden Inn W 54th Street Mortgaged Property”) secures (i) promissory note A-1, which had an outstanding principal balance as of the Cut-off Date of $40,000,000 (the “Hilton Garden Inn W 54th Street Mortgage Loan”), (ii) promissory notes A-2 and A-3, which had outstanding principal balances as of the Cut-off Date of $75,000,000 and $40,000,000, respectively (collectively, the “Hilton Garden Inn W 54th Street Non-Serviced Companion Loan” and, together with the Hilton Garden Inn W 54th Street Mortgage Loan, the “Hilton Garden Inn W 54th Street Senior Note”), which arepari passu in right of payment with the Hilton Garden Inn W 54th Street Mortgage Loan, and (iii) promissory note B, which had an outstanding principal balance as of the Cut-off Date of $20,000,000 and is generally subordinate in right of payment to the Hilton Garden Inn W 54th Street Senior Note (the “Hilton Garden Inn W 54th Street B Note”). The Hilton Garden Inn W 54th Street Mortgage Loan, the Hilton Garden Inn W 54th Street Non-Serviced Companion Loan and the Hilton Garden Inn W 54th Street B Note are collectively referred to herein as the “Hilton Garden Inn W 54th Street Non-Serviced Loan Combination.”
The initial holders of the Hilton Garden Inn W 54th Street Senior Note and the Hilton Garden Inn W 54th Street B Note have entered into an intercreditor agreement (the “Hilton Garden Inn W 54th Street A/B Intercreditor Agreement”), and the initial holders of the promissory notes comprising the Hilton Garden Inn W 54th Street Senior Note have entered into an intercreditor agreement (the “Hilton Garden Inn W 54th Street Pari Passu Intercreditor Agreement”). The Hilton Garden Inn W 54th Street A/B Intercreditor Agreement and the Hilton Garden Inn
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W 54th Street Pari Passu Intercreditor Agreement are collectively referred to herein as the “Intercreditor Agreement” with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination. A portion of the Hilton Garden Inn W 54th Street Non-Serviced Companion Loan (represented by promissory note A-2) is currently held by the MSBAM 2015-C22 securitization trust (and is referred to herein as the “Hilton Garden Inn W 54th Street Lead Note”), and the remaining portion (represented by promissory note A-3) is currently held by the MSBAM 2015-C23 securitization trust. The Hilton Garden Inn W 54th Street B Note is currently held by Aareal Capital Corporation, which may sell or transfer its note at any time, subject to compliance with the requirements of the Hilton Garden Inn W 54th Street A/B Intercreditor Agreement.
The Hilton Garden Inn W 54th Street Mortgage Loan, the Hilton Garden Inn W 54th Street Non-Serviced Companion Loan and the Hilton Garden Inn W 54th Street B Note are cross-defaulted and have the same borrower, maturity date, amortization schedule and prepayment structure. Interest is payable on the Hilton Garden Inn W 54th Street Mortgage Loan and the Hilton Garden Inn W 54th Street Non-Serviced Companion Loan at a rate equal to 4.01290323%per annum, and interest is payable on the Hilton Garden Inn W 54th Street B Note at a rate equal to 7.00000000%per annum. For purposes of the information presented in this prospectus supplement with respect to the Hilton Garden Inn W 54th Street Mortgage Loan, unless otherwise specifically indicated, the loan-to-value ratio, debt yield and debt service coverage ratio information reflects the Hilton Garden Inn W 54th Street Mortgage Loan and the Hilton Garden Inn W 54th Street Non-Serviced Companion Loan and does not take into account the Hilton Garden Inn W 54th Street B Note. Payments made in respect of the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination will be applied in accordance with the Hilton Garden Inn W 54th Street A/B Intercreditor Agreement and the Hilton Garden Inn W 54th Street Pari Passu Intercreditor Agreement.
Servicing of the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination
The Hilton Garden Inn W 54th Street Non-Serviced Loan Combination is currently being serviced pursuant to the MSBAM 2015-C22 PSA. The MSBAM 2015-C22 PSA constitutes the “Non-Serviced Mortgage Loan Pooling and Servicing Agreement” with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination. The servicing terms of such Non-Serviced Mortgage Loan Pooling and Servicing Agreement are substantially similar to the servicing terms of the Pooling and Servicing Agreement for this transaction. See “Servicing of the Mortgage Loans—Additional Matters Relating to the Servicing of the Non-Serviced Mortgage Loans—The Hilton Garden Inn W 54th Street Mortgage Loan” in this prospectus supplement.
The Hilton Garden Inn W 54th Street Intercreditor Agreement provides that the Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Special Servicer will be obligated to administer the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination consistently with the terms of such Intercreditor Agreement and the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement. None of the related Non-Serviced Mortgage Loan Master Servicer, Non-Serviced Mortgage Loan Special Servicer or Non-Serviced Mortgage Loan Trustee, as applicable, under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement will be required to make P&I Advances on the Hilton Garden Inn W 54th Street Mortgage Loan, but the Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Trustee, as applicable, will be required to make servicing advances on the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination unless the applicable party determines that such a servicing advance would be a nonrecoverable advance, all in accordance with the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement. None of the master servicer, the special servicer or the trustee under the Pooling and Servicing Agreement for this transaction will be obligated to make Servicing Advances with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination. P&I Advances on the Hilton Garden Inn W 54th Street Mortgage Loan are required to be made by the master servicer or the trustee, as applicable, to the extent provided under the Pooling and Servicing Agreement for this transaction, and each such party will be entitled to make its own nonrecoverability determination with respect to such P&I Advances.
If the related Non-Serviced Mortgage Loan Master Servicer, Non-Serviced Mortgage Loan Special Servicer or Non-Serviced Mortgage Loan Trustee, as applicable, under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement determines that a servicing advance it made with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination or the Hilton Garden Inn W 54th Street Mortgaged Property is nonrecoverable, it will be entitled to be reimbursed first from collections on, and proceeds of, the Hilton Garden Inn W 54th Street B Note, and then, the Hilton Garden Inn W 54th Street Mortgage Loan and the Hilton Garden Inn W 54th Street Non-Serviced Companion Loan, on apro rata basis (based on each such loan’s outstanding principal balance), and then from general collections on all the mortgage loans included in the Issuing Entity and amounts payable by the holder of any promissory note evidencing the Hilton Garden Inn W 54th Street Non-Serviced Companion Loan (or, to the extent any such promissory note has been securitized, from general collections on all mortgage loans included in the trust established in connection with such securitization), on apro rata basis (based on each such loan’s outstanding principal balance). In addition, each of the parties to the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement will be entitled to indemnification out of proceeds of the mortgage loans in the Issuing Entity to the same extent to which the parties to the Pooling and Servicing Agreement are entitled to indemnification out of proceeds on the mortgage loans held by the Issuing Entity.
The obligation of the master servicer to provide information and collections and make P&I Advances to the certificate administrator for the benefit of the Certificateholders with respect to the Hilton Garden Inn W 54th Street Mortgage Loan is dependent on its receipt of the corresponding information and/or collections from the applicable Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Special Servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement.
The Hilton Garden Inn W 54th Street A/B Intercreditor Agreement
Distributions. Generally, as long as no Hilton Garden Inn W 54th Street Triggering Event of Default (as defined below) has occurred and is continuing, all amounts available for payment on the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination (other than any amounts for required reserves or escrows required by the related mortgage loan documents and proceeds, awards or settlements to be applied to the restoration or repair of the Hilton Garden Inn W 54th Street Mortgaged Property or released to the related borrower in accordance with the servicing standard under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement or the related mortgage loan documents), including, without limitation, payments received in connection with any guaranty or indemnity agreement, will be allocated in the following order of priority, subject to any deduction, reimbursement, recovery or other payment required or permitted under the Hilton Garden Inn W 54th Street A/B Intercreditor Agreement (and such payments are required to be made at such times set forth in the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement), in each case to the extent of available funds:
· | first, to the Hilton Garden Inn W 54th Street Senior Note holder (or the related master servicer, special servicer, certificate administrator or trustee, as applicable, under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement), all unreimbursed costs and expenses paid by the Hilton Garden Inn W 54th Street Senior Note holder (or paid or advanced by |
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such master servicer, special servicer, certificate administrator or trustee, as applicable) with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, including unreimbursed advances made by the Hilton Garden Inn W 54th Street Senior Note holder and interest thereon; |
· | second, to the related master servicer, special servicer, certificate administrator and trust advisor under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement and CREFC®, the applicable accrued and unpaid servicing fees, certificate administrator fees (including the portion that is the trustee fee), trust advisor fees, CREFC® license fees and any workout fee earned by them with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination (or, in the case of the certificate administrator fee, the trust advisor fee and the CREFC® license fee, the Hilton Garden Inn W 54th Street Lead Note) under the Hilton Garden Inn W 54th Street A/B Intercreditor Agreement or the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement; |
· | third,pro rata, to the Hilton Garden Inn W 54th Street Senior Note holder and the Hilton Garden Inn W 54th Street B Note holder, in an amount equal to the accrued and unpaid interest on the respective principal balances of such holders’ notes (at aper annum rate equal to the related interest rate, net of any applicable servicing fees and, with respect to the Hilton Garden Inn W 54th Street Senior Note, any applicable certificate administrator fee, trust advisor fee and CREFC®license fee under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement); |
· | fourth,pro rata, to the Hilton Garden Inn W 54th Street Senior Note holder and the Hilton Garden Inn W 54th Street B Note holder,pro rata (based on their respective initial principal balances), any principal payments received on the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination for the related interest accrual period, to be applied in reduction of the principal balance of each such note; |
· | fifth, to the Hilton Garden Inn W 54th Street B Note holder, up to the amount of any unreimbursed advances or cure payments made by such holder and interest thereon at the applicable advance rate and all unreimbursed costs and expenses paid by such holder, in each case, with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination under the Hilton Garden Inn W 54th Street A/B Intercreditor Agreement or the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement; |
· | sixth, any interest accrued at the mortgage loan default rate on the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination to the extent such default interest amount is (i) actually paid by the related borrower and (ii) in excess of interest accrued on the principal balance of the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination at the non-default interest rate,first, to the Hilton Garden Inn W 54th Street Senior Note holder (subject to the allocation of such amount pursuant to the terms of the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement) in an amount calculated on the principal balance of the Hilton Garden Inn W 54th Street Senior Note prior to the application of funds under this cash flow waterfall at the excess of (A) the default interest rate for the Hilton Garden Inn W 54th Street Senior Note over (B) the non-default interest rate for the Hilton Garden Inn W 54th Street Senior Note; andsecond, to the Hilton Garden Inn W 54th Street B Note holder in an amount calculated on the principal balance of the Hilton Garden Inn W 54th Street B Note prior to the application of funds under this cash flow waterfall at the excess of (A) the default interest rate for the Hilton Garden Inn W 54th Street B Note over (B) the non-default interest rate for the Hilton Garden Inn W 54th Street B Note; |
· | seventh, to the Hilton Garden Inn W 54th Street Senior Note holder and the Hilton Garden Inn W 54th Street B Note holder,pro rata (based on the relative outstanding principal balances of such notes, in each case prior to the application of funds under this cash flow waterfall), any prepayment premiums or yield maintenance charges with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination (to the extent actually paid by the related borrower); |
· | eighth, to the extent not payable to the related master servicer or special servicer as additional servicing compensation under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, to the Hilton Garden Inn W 54th Street Senior Note holder and the Hilton Garden Inn W 54th Street B Note holder,pro rata (based on the relative outstanding principal balances of such notes, in each case prior to the application of funds under this cash flow waterfall), any extension fees, assumption fees and late payment charges, in each case to the extent actually paid by the related borrower; and |
· | ninth, to the Hilton Garden Inn W 54th Street Senior Note holder and the Hilton Garden Inn W 54th Street B Note holder,pro rata (based on the respective initial principal balances of such notes), any excess amount not otherwise applied pursuant to the provisions above. |
Generally, for so long as a Hilton Garden Inn W 54th Street Triggering Event of Default has occurred and is continuing, all amounts available for payments on the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination (other than any amounts for required reserves or escrows required by the related mortgage loan documents and proceeds, awards or settlements to be applied to the restoration or repair of the Hilton Garden Inn W 54th Street Mortgaged Property or released to the related borrower in accordance with the servicing standard under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement or the related mortgage loan documents), including, without limitation, payments received in connection with any guaranty or indemnity agreement, will be allocated generally in the following order of priority, subject to any deduction, reimbursement, recovery or other payment required or permitted under the Hilton Garden Inn W 54th Street A/B Intercreditor Agreement (and such payments are required to be made at such times set forth in the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement), in each case to the extent of available funds:
· | first, to the Hilton Garden Inn W 54th Street Senior Note holder (or the related master servicer, special servicer, certificate administrator or trustee, as applicable, under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement), all unreimbursed costs and expenses paid by the Hilton Garden Inn W 54th Street Senior Note holder (or paid or advanced by such master servicer, special servicer, certificate administrator or trustee, as applicable) with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, including unreimbursed Advances made by the Hilton Garden Inn W 54th Street Senior Note holder and interest thereon; |
· | second, to the related master servicer, certificate administrator and trust advisor under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement and CREFC®, the applicable accrued and unpaid servicing fees, certificate administrator fees (including the portion that is the trustee fee), trust advisor fees and CREFC® license fees, and then to the |
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special servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, any special servicing fees (including any liquidation or workout fees), in each case earned by them with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination (or in the case of the certificate administrator fee, the trust advisor fee and the CREFC® license fee, the Hilton Garden Inn W 54th Street Lead Note) under the Hilton Garden Inn W 54th Street A/B Intercreditor Agreement or the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement; |
· | third, to the Hilton Garden Inn W 54th Street Senior Note holder, an amount equal to all accrued and unpaid interest on the principal balance of the Hilton Garden Inn W 54th Street Senior Note (at aper annum rate equal to the related interest rate, net of any applicable servicing fees, the certificate administrator fee, the trust advisor fee and the CREFC® license fee); |
· | fourth, to the Hilton Garden Inn W 54th Street Senior Note holder, an amount equal to the outstanding principal balance of the Hilton Garden Inn W 54th Street Senior Note, until such principal balance has been reduced to zero; |
· | fifth, to the Hilton Garden Inn W 54th Street B Note holder, up to the amount of any unreimbursed advances or cure payments made by such holder and interest thereon at the applicable advance rate and all unreimbursed costs and expenses paid by such holder, in each case, with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination under the Hilton Garden Inn W 54th Street A/B Intercreditor Agreement or the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement; |
· | sixth, to the Hilton Garden Inn W 54th Street B Note holder, an amount equal to all accrued and unpaid interest on the principal balance of the Hilton Garden Inn W 54th Street B Note (at aper annum rate equal to the related interest rate, net of any applicable servicing fees); |
· | seventh, to the Hilton Garden Inn W 54th Street B Note holder, an amount equal to the outstanding principal balance of the Hilton Garden Inn W 54th Street B Note, until such principal balance has been reduced to zero; |
· | eighth, any interest accrued at the mortgage loan default rate on the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination to the extent such default interest amount is (i) actually paid by the related borrower and (ii) in excess of interest accrued on the principal balance of the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination at the non-default interest rate,first, to the Hilton Garden Inn W 54th Street Senior Note holder (subject to the allocation of such amount pursuant to the terms of the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement) in an amount calculated on the principal balance of the Hilton Garden Inn W 54th Street Senior Note prior to the application of funds under this cash flow waterfall at the excess of (A) the default interest rate for the Hilton Garden Inn W 54th Street Senior Note over (B) the non-default interest rate for the Hilton Garden Inn W 54th Street Senior Note; andsecond, to the Hilton Garden Inn W 54th Street B Note holder in an amount calculated on the principal balance of the Hilton Garden Inn W 54th Street B Note prior to the application of funds under this cash flow waterfall at the excess of (A) the default interest rate for the Hilton Garden Inn W 54th Street B Note over (B) the non-default interest rate for the Hilton Garden Inn W 54th Street B Note; |
· | ninth, to the Hilton Garden Inn W 54th Street Senior Note holder and the Hilton Garden Inn W 54th Street B Note holder,pro rata (based on the relative outstanding principal balances of such notes, in each case prior to the application of funds under this cash flow waterfall), any prepayment premiums or yield maintenance charges with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination (to the extent actually paid by the related borrower); |
· | tenth, to the extent not payable to the related master servicer or special servicer as additional servicing compensation under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, to the Hilton Garden Inn W 54th Street Senior Note holder and the Hilton Garden Inn W 54th Street B Note holder,pro rata (based on the relative outstanding principal balances of such notes, in each case prior to the application of funds under this cash flow waterfall), any extension fees, assumption fees and late payment charges, in each case to the extent actually paid by the related borrower; and |
· | eleventh, to the Hilton Garden Inn W 54th Street Senior Note holder and the Hilton Garden Inn W 54th Street B Note holder,pro rata (based on the respective initial principal balances of such notes), any excess amount not otherwise applied pursuant to the provisions above. |
“Hilton Garden Inn W 54th Street Triggering Event of Default” means (i) any event of default with respect to an obligation of the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination borrower to pay money due under such mortgage loan or (ii) any non-monetary event of default that causes the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination to become a specially serviced mortgage loan under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement (which, for clarification, will not include any imminent event of default). A Hilton Garden Inn W 54th Street Triggering Event of Default will not exist to the extent the Hilton Garden Inn W 54th Street B Note Holder is exercising its cure rights as described below.
Rights of the Hilton Garden Inn W 54th Street B Note Holder.The holder of the Hilton Garden Inn W 54th Street B Note has certain rights under the Hilton Garden Inn W 54th Street A/B Intercreditor Agreement, including, among others, the rights described below.
Option to Cure Defaults Under the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination. The holder of the Hilton Garden Inn W 54th Street B Note, provided that such holder is not the related borrower or an affiliate thereof, has the right to cure monetary events of default (within ten (10) business days of receipt of notice thereof) or non-monetary events of default (within thirty (30) days of receipt of notice thereof) with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination. No more than six (6) events of default may be cured over the life of the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, no more than six (6) events of default may be cured in any twelve (12) month period, and no more than four (4) consecutive events of default may be cured. So long as the Hilton Garden Inn W 54th Street B Note holder is exercising a cure right and the cure period has not expired, the master servicer, the special servicer and the trustee, in each case under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, will not be permitted to treat such event of default as a default or a Hilton Garden Inn W 54th Street Triggering Event of Default for purposes of (i) accelerating the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, (ii) modifying, amending or waiving any provisions of the related mortgage loan documents, (iii) commencing foreclosure proceedings, (iv) transferring the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination to special servicing or (v) the payment priorities described above under “—Distributions.”
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Option to Purchase the Hilton Garden Inn W 54th Street Senior Note. The holder of the Hilton Garden Inn W 54th Street B Note has the right at any time that the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination is in default and remains in default, to purchase the Hilton Garden Inn W 54th Street Senior Note, at a price with respect to such note generally equal to the aggregate unpaid principal balance of such note, plus accrued and unpaid interest thereon at the applicable interest rate, plus any unreimbursed advances made by or on behalf of the Hilton Garden Inn W 54th Street Non-Serviced Companion Loan holder and interest thereon, any accrued and unpaid servicing fees, certain liquidation fees and any unreimbursed costs and expenses incurred by the holder of such note.
Such purchase option will terminate on the earliest date to occur of (i) thirty (30) days after delivery of a purchase option notice to the Hilton Garden Inn W 54th Street B Note holder of the related event of default, (ii) the cure of the event or circumstance resulting in such event of default, (iii) consummation of a foreclosure in respect of the Hilton Garden Inn W 54th Street Mortgaged Property, except that if the master servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement intends to accept a deed in lieu of foreclosure, the Hilton Garden Inn W 54th Street B Note holder will have ten (10) business days from the date of notice thereof to exercise its purchase option, and (iv) the modification of the Hilton Garden Inn W 54th Street mortgage loan documents effected in accordance with the Hilton Garden Inn W 54th Street A/B Intercreditor Agreement and the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement.
Workout.Notwithstanding anything to the contrary, if the master servicer or the special servicer, as applicable, under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, in connection with a workout of the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, modifies the terms thereof such that (i) the outstanding principal balance thereof is decreased, (ii) the interest rate thereon is reduced, (iii) payments of interest or principal thereon are waived, reduced or deferred, other than a deferral of a balloon payment resulting solely from the extension of the maturity date by such master servicer or special servicer pursuant to the terms of the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, or (iv) any other adjustment is made to any of the payment terms of the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, the full adverse economic effect of such modification, waiver or amendment of amounts due will be borne,first, by the Hilton Garden Inn W 54th Street B Note holder (up to the principal balance of such note, together with accrued interest thereon and any other amounts due such holder), andsecond, by the Hilton Garden Inn W 54th Street Senior Note holder (up to the principal balance of such note, together with accrued interest thereon and any other amounts due such holder), and all distributions described under “—Distributions” above will be made accordingly.
Consent Rights of the Hilton Garden Inn W 54th Street Controlling Holder. Pursuant to the Hilton Garden Inn W 54th Street A/B Intercreditor Agreement, the Hilton Garden Inn W 54th Street Controlling Holder (as defined below) is entitled to consent to the master servicer’s or the special servicer’s (in each case under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement) taking (as the case may be), subject to the related servicing standard, certain actions with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination (collectively, the “Hilton Garden Inn W 54th Street Major Decisions”), including, without limitation:
· | any proposed or actual foreclosure upon or comparable conversion (which may include acquisitions of an REO Property) of the ownership of the Hilton Garden Inn W 54th Street Mortgaged Property if the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination comes into and continues in default; |
· | any modification, consent to a modification or waiver of a monetary term (other than penalty charges, but including, without limitation, the timing of payments and the acceptance of discounted payoffs) or material non-monetary term of the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination or any extension of the maturity date thereof; |
· | following a default or an event of default with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, any exercise of remedies, including any acceleration thereof or initiation of judicial, bankruptcy or similar proceedings under the related mortgage loan documents; |
· | any sale of the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination if it is a defaulted loan or related REO Property for less than the applicable purchase price set forth in the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement; |
· | any determination to bring the Hilton Garden Inn W 54th Street Mortgaged Property or a related REO Property into compliance with applicable environmental laws or to otherwise address hazardous material located at the Hilton Garden Inn W 54th Street Mortgaged Property or at a related REO Property; |
· | any release of collateral or any acceptance of substitute or additional collateral for the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination or any consent to either of the foregoing, unless required or permitted pursuant to the specific terms of the related mortgage loan documents and for which there is no material lender discretion; |
· | any waiver of a “due-on-sale” or “due-on-encumbrance” clause with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination or, if lender consent is required, any consent to such a waiver or consent to a transfer of the Hilton Garden Inn W 54th Street Mortgaged Property or interests in the related borrower, other than any such transfer or incurrence of debt as may be effected without the consent of the lender under the related mortgage loan documents; |
· | any incurrence of additional debt by the related borrower or of any mezzanine financing by any beneficial owner of the related borrower (to the extent that the lender has consent rights pursuant to the related mortgage loan documents (for purposes of the determination whether a lender has such consent rights pursuant to the related mortgage loan documents, any mortgage loan document provision that requires that an intercreditor agreement be reasonably or otherwise acceptable to the lender will constitute such consent rights)); |
· | any material modification, waiver or amendment of an intercreditor agreement, co-lender agreement, participation agreement or similar agreement with any mezzanine lender or subordinate debt holder related to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination or an action to enforce rights with respect thereto or decision not to enforce such rights; |
· | any franchise changes or amendments or modifications to the related franchise agreement (with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination if the lender is required to consent or approve under the related mortgage loan documents) or any property management company changes or amendments or modifications to the related management agreement, including, without limitation, approval of the termination of a manager and appointment of a new property manager |
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with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination if the lender is required to consent or approve under the related mortgage loan documents; |
· | releases of any escrow accounts, reserve accounts or letters of credit held as performance escrows or reserves, other than those required pursuant to the specific terms of the related mortgage loan documents and for which there is no material lender discretion; |
· | any requests for the funding or disbursement of “performance,” “earn-out,” holdback or similar escrows and reserves (including those evidenced by letters of credit) if, with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, escrows and reserves (i) exceed, at the related origination date, in the aggregate, 10% of the initial principal balance of the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination (regardless of whether such funding or disbursement may be characterized as routine and/or customary and regardless of whether the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination has a primary servicer other than the related master servicer) or (ii) are not routine and/or customary escrow and reserve fundings or disbursements; |
· | any acceptance of an assumption agreement or any other agreement permitting a transfer of interests in the related borrower, guarantor or other obligor, or releasing the related borrower, guarantor or other obligor from liability under the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, other than pursuant to the specific terms thereof and for which there is no lender discretion; |
· | any determination of an acceptable insurance default under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement; |
· | the modification, waiver, amendment, execution, termination or renewal of any lease, to the extent lender approval is required under the related mortgage loan documents (including entering into any related subordination, non-disturbance and attornment agreement) and if such lease (a) involves a ground lease or lease of an outparcel or affects an area greater than or equal to the greater of (i) 10% of leasable space or (ii) 20,000 square feet, (b) is for over 50,000 square feet, or (c) otherwise constitutes a “major lease” or “material lease,” if applicable, under the related mortgage loan documents, subject to any deemed approval expressly set forth in the related lease; |
· | any adoption or implementation of a budget submitted by the related borrower with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination (to the extent lender approval is required under the related mortgage loan documents), if (a) the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination is on the CREFC® servicer watch list or (b) such budget includes material (more than 25%) increases in operating expenses or payments to entities actually known by the related master servicer to be affiliates of the related borrower (excluding affiliated managers paid at fee rates agreed to at the origination of the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination), subject in each case to any deemed approval expressly set forth in the related mortgage loan documents; |
· | the voting on any plan of reorganization, restructuring or similar plan in the bankruptcy of the related borrower; |
· | the exercise of the rights and powers granted under the Hilton Garden Inn W 54th Street A/B Intercreditor Agreement or any related mezzanine loan intercreditor agreement to the Hilton Garden Inn W 54th Street Senior Note holder, the “Senior Lender” or such other similar term as may be set forth in any such agreement, as applicable, and/or the “Servicer” referred to therein, if and to the extent such rights or powers affect the priority, payments, consent rights, or security interest with respect to the Hilton Garden Inn W 54th Street Senior Note holder, the “Senior Lender” or such other similar term; |
· | approval of any replacement guarantor under the related mortgage loan documents; |
· | approval of any property improvement plans or other material alterations proposed for the Hilton Garden Inn W 54th Street Mortgaged Property; and |
· | any determination regarding the application of casualty or condemnation proceeds to restoration of the Hilton Garden Inn W 54th Street Mortgaged Property or to repayment of the debt related to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination (in each case, subject to the REMIC provisions). |
As used above, the terms “material lender discretion” and “lender discretion” require mortgagee discretion in making the relevant decision regarding the release of collateral or the acceptance of substitute or additional collateral, as applicable, and such decision need not be based upon the satisfaction of specified objective conditions, the satisfactory delivery of certain factual evidence or opinions or the satisfaction of any other specified objective criteria that is set forth in the related mortgage loan documents.
If the Hilton Garden Inn W 54th Street Controlling Holder fails to respond within ten (10) business days of a request for consent to a Hilton Garden Inn W 54th Street Major Decision, the related master servicer or special servicer, as applicable, under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, will be required to deliver a second notice, and if the Hilton Garden Inn W 54th Street Controlling Holder fails to respond within (5) business days of such second notice, such holder will be deemed to have consented to such action.
Furthermore, the related master servicer or special servicer, as applicable, under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, will be required to deliver to the controlling class representative under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement reasonable (as determined by the related master servicer or the related special servicer, as applicable, under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement) prior notice of any final decision with respect to the actions described above, together with certain other information obtained or prepared by such master servicer or special servicer, as applicable, in connection with such proposed action. Upon the request of the Hilton Garden Inn W 54th Street Controlling Holder, the applicable servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement will be required to make a knowledgeable servicing officer available by telephone conference during regular business hours to verbally answer questions from the controlling class representative under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement during the applicable consent period. The Hilton Garden Inn W 54th Street Controlling Holder will be entitled but not required to participate in any such telephone conference and will not be required to answer questions. The applicable master servicer or special servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing
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Agreement will not be required to accept any advice from the controlling class representative under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement and will not take any action in response to a communication from such controlling class representative unless the Hilton Garden Inn W 54th Street Controlling Holder has approved such action or the master servicer or the special servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, as applicable, determines that no other action complies with the related servicing standard).
Notwithstanding the foregoing, if the applicable master servicer or special servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, determines, in accordance with the applicable servicing standard, that immediate action is necessary to protect the interests of the holders of the notes comprising the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination (as a collective whole), such master servicer or such special servicer may take any such action without waiting for the Hilton Garden Inn W 54th Street Controlling Holder’s consent. In addition, no advice, direction or objection from or by the Hilton Garden Inn W 54th Street Controlling Holder may (and the holder of the Hilton Garden Inn W 54th Senior Note and the related master servicer and the related special servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement will be required to ignore and act without regard to any such advice, direction or objection that the holder of the Hilton Garden Inn W 54th Street Senior Note, such master servicer or such special servicer has determined, in its reasonable, good faith judgment, will) require or cause the holder of the Hilton Garden Inn W 54th Street Senior Note or such master servicer or special servicer to violate any provision of the Hilton Garden Inn W 54th Street A/B Intercreditor Agreement, the related mortgage loan documents or the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement (including any REMIC provisions), including each of such master servicer’s and special servicer’s obligation to act in accordance with the applicable servicing standard.
The “Hilton Garden Inn W 54th Street Controlling Holder” will be the holder of the Hilton Garden Inn W 54th Street B Note for so long as (i) a Hilton Garden Inn W 54th Street Control Appraisal Event has not occurred and (ii) the holder thereof is not the related borrower or an affiliate thereof; provided, that if neither of such conditions is satisfied with respect to such notes, the Hilton Garden Inn W 54th Street Controlling Holder will be the holder of the Hilton Garden Inn W 54th Street Senior Note (see “—The Hilton Garden Inn W 54th Street Pari Passu Intercreditor Agreement” below). A “Hilton Garden Inn W 54th Street Control Appraisal Event” will exist with respect to the Hilton Garden Inn W 54th Street B Note if and for so long as (A) the origination date principal balance of such note, together with any Hilton Garden Inn W 54th Street Threshold Event Collateral (less payments of principal, appraisal reductions and realized principal losses allocated to such note) is less than (B) 25% of the origination date principal balance of such note (less payments of principal allocated to such note).
Right to Appoint Special Servicer. The Hilton Garden Inn W 54th Street Controlling Holder may remove the existing special servicer for the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, with or without cause, and appoint a successor to the special servicer that satisfies the requirements, including certain ratings requirements, and makes the representations, warranties and covenants, set forth in the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement.
Collateral Posting Rights.If a Hilton Garden Inn W 54th Street Control Appraisal Event would otherwise result in the holder of the Hilton Garden Inn W 54th Street B Note losing its status as the Hilton Garden Inn W 54th Street Controlling Holder, such note holder will generally be entitled to retain that status by posting cash collateral or an unconditional and irrevocable standby letter of credit with the master servicer or special servicer, as applicable, within thirty (30) days after the receipt of the relevant appraisal (such collateral, “Hilton Garden Inn W 54th Street Threshold Event Collateral”). Hilton Garden Inn W 54th Street Threshold Event Collateral may be returned if and to the extent that the posting holder would be the Hilton Garden Inn W 54th Street Controlling Holder without regard to such posted collateral.
Appraisal Rights. If at any time an appraisal reduction exists that would result in a Hilton Garden Inn W 54th Street Control Appraisal Event with respect to the Hilton Garden Inn W 54th Street B Note, the then-current Hilton Garden Inn W 54th Street Controlling Holder will be entitled to obtain, or require the special servicer, under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement to obtain, a second appraisal that satisfies the appraisal requirements under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement. Upon receipt of such new appraisal, such special servicer will be required to recalculate (within three (3) business days of receipt of such appraisal) the appraisal reduction in respect of the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination. If, as a result of such calculation based on the new appraisal, a Hilton Garden Inn W 54th Street Control Appraisal Event is no longer deemed to exist with respect to the Hilton Garden Inn W 54th Street B Note, then such note holder will be reinstated as the Hilton Garden Inn W 54th Street Controlling Holder. Until the appraisal reduction is recalculated based on such new appraisal as described above, the first appraisal will control.
The Hilton Garden Inn W 54th Street Pari Passu Intercreditor Agreement
Pursuant to the Hilton Garden Inn W 54th Street Pari Passu Intercreditor Agreement, the Hilton Garden Inn W 54th Street Mortgage Loan ispari passu in right of payment with the Hilton Garden Inn W 54th Street Non-Serviced Companion Loan. The Hilton Garden Inn W 54th Street Pari Passu Intercreditor Agreement provides, in general, that:
· | The Hilton Garden Inn W 54th Street Mortgage Loan and the Hilton Garden Inn W 54th Street Non-Serviced Companion Loan are of equal priority with each other and neither will have priority or preference over the other; |
· | All payments, proceeds and other recoveries on the Hilton Garden Inn W 54th Street Senior Note will be applied to the Hilton Garden Inn W 54th Street Mortgage Loan and the Hilton Garden Inn W 54th Street Non-Serviced Companion Loan on apro rata andpari passu basis (subject, in each case, to certain payment and reimbursement rights of the related master servicer, special servicer, trustee, certificate administrator and trust advisor, in accordance with the terms of the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement); |
· | So long as the holder of the Hilton Garden Inn W 54th Street Senior Note is the Hilton Garden Inn W 54th Street Controlling Holder under the Hilton Garden Inn W 54th Street A/B Intercreditor Agreement (a “Hilton Garden Inn W 54th Street Senior Note Control Period”), the controlling class representative under the MSBAM 2015-C22 PSA (or other party designated under such agreement to exercise the rights of the “Controlling Note Holder” under the Hilton Garden Inn W 54th Street Pari Passu Intercreditor Agreement) will be entitled to, among other things, direct the servicing of, and replace the special servicer with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination and approve Hilton Garden Inn W 54th Street Major Decisions all in accordance with and to the extent provided in the MSBAM 2015-C22 PSA; and |
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· | The transfer of up to 49% of the beneficial interest of the Hilton Garden Inn W 54th Street Mortgage Loan or any note comprising the Hilton Garden Inn W 54th Street Non-Serviced Companion Loan is generally permitted. The transfer of more than 49% of the beneficial interest in the Hilton Garden Inn W 54th Street Mortgage Loan or any note comprising the Hilton Garden Inn W 54th Street Non-Serviced Companion Loan is generally prohibited unless (i) the transferee is an institutional lender or investment fund (other than the related borrower or an affiliate thereof) that satisfies minimum net worth and experience requirements or a securitization vehicle meeting certain rating and other requirements or (ii)(a) each non-transferring holder has consented to such transfer and (b) if a non-transferring holder’s promissory note is held in a securitization, a rating agency communication is provided to each applicable rating agency. The foregoing restrictions do not apply to a sale of the Hilton Garden Inn W 54th Street Mortgage Loan together with the Hilton Garden Inn W 54th Street Non-Serviced Companion Loan. |
Certain Rights of the Hilton Garden Inn W 54th Street Non-Controlling Senior Note Holders. During a Hilton Garden Inn W 54th Street Senior Note Control Period, the related Non-Serviced Mortgage Loan Special Servicer is required (i) to provide to each Hilton Garden Inn W 54th Street Non-Controlling Senior Note Holder (as defined below) copies of any notice, information and report that it is required to provide to the controlling class representative under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement with respect to the implementation of any recommended actions outlined in an asset status report relating to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination or any proposed action to be taken in respect of Hilton Garden Inn W 54th Street Major Decisions (for this purpose, without regard to whether such items are actually required to be provided to the controlling class representative under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement due to the expiration of any “subordinate control period” or “collective consultation period” under such Non-Serviced Mortgage Loan Pooling and Servicing Agreement) and (ii) to use reasonable efforts to consult with each Hilton Garden Inn W 54th Street Non-Controlling Senior Note Holder on a strictly non-binding basis (to the extent such party requests consultation after having received the aforementioned notices, information and reports) with respect to any such recommended actions by such Non-Serviced Mortgage Loan Special Servicer or any proposed action to be taken by such Non-Serviced Mortgage Loan Special Servicer in respect of Hilton Garden Inn W 54th Street Major Decisions.
Such consultation right will expire ten (10) business days after the delivery to the applicable Hilton Garden Inn W 54th Street Non-Controlling Senior Note Holder of written notice of a proposed action, whether or not such Hilton Garden Inn W 54th Street Non-Controlling Senior Note Holder has responded within such period (unless the related Non-Serviced Mortgage Loan Special Servicer proposes a new course of action that is materially different from the action previously proposed, in which case such ten (10) business day period will be deemed to begin anew). In no event will the related Non-Serviced Mortgage Loan Special Servicer be obligated to follow or take any alternative actions recommended by any Hilton Garden Inn W 54th Street Non-Controlling Senior Note Holder (or its representative).
If the related Non-Serviced Mortgage Loan Special Servicer determines that immediate action is necessary to protect the interests of the holders of the promissory notes comprising the Hilton Garden Inn W 54th Street Senior Note, it may take, in accordance with the servicing standard set forth in the MSBAM 2015-C22 PSA, any action constituting a Hilton Garden Inn W 54th Street Major Decision with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination or any action set forth in any applicable asset status report before the expiration of the aforementioned ten (10) business day period.
In addition to the aforementioned consultation right, during a Hilton Garden Inn W 54th Street Senior Note Control Period, each Hilton Garden Inn W 54th Street Non-Controlling Senior Note Holder will have the right to annual meetings (which may be held telephonically) with the related Non-Serviced Mortgage Loan Special Servicer, upon reasonable notice and at times reasonably acceptable to the related Non-Serviced Mortgage Loan Special Servicer, in which servicing issues related to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination are discussed.
During a Hilton Garden Inn W 54th Street Senior Note Control Period, if a special servicer termination event under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement has occurred that affects a Hilton Garden Inn W 54th Street Non-Controlling Senior Note Holder, such holder will have the right to direct the related Non-Serviced Mortgage Loan Trustee to terminate the related Non-Serviced Mortgage Loan Special Servicer under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, solely with respect to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, other than with respect to any rights such Non-Serviced Mortgage Loan Special Servicer may have as a certificateholder under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement, entitlements to amounts payable to such Non-Serviced Mortgage Loan Special Servicer at the time of termination, entitlements to indemnification amounts and any other entitlements of the terminated party that survive the termination.
The “Hilton Garden Inn W 54th Street Non-Controlling Senior Note Holders” will be (i) the holder of the Hilton Garden Inn W 54th Street Mortgage Loan, whose rights will be exercised by the Controlling Class Representative (during any Subordinate Control Period or Collective Consultation Period) as and to the extent set forth in the Pooling and Servicing Agreement and (ii) the holder of the portion of the Hilton Garden Inn W 54th Street Non-Serviced Companion Loan represented by promissory note A-3.
Custody of the Mortgage File. Wells Fargo Bank, National Association, as custodian under the MSBAM 2015-C22 PSA is the current custodian of the mortgage file related to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination (other than the Hilton Garden Inn W 54th Street B Note, the promissory note included in the Issuing Entity and the promissory note held by Morgan Stanley Bank).
Sale of Defaulted Mortgage Loan. In connection with the sale of promissory note A-2 by the related Non-Serviced Mortgage Loan Special Servicer upon the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination becoming a defaulted mortgage loan, such Non-Serviced Mortgage Loan Special Servicer will be required to sell the Hilton Garden Inn W 54th Street Mortgage Loan and the Hilton Garden Inn W 54th Street Non-Serviced Companion Loan together as notes evidencing one whole loan in accordance with the terms of the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement. Notwithstanding the foregoing, the related Non-Serviced Mortgage Loan Special Servicer will not be permitted to sell the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination without the consent of each Hilton Garden Inn W 54th Street Non-Controlling Senior Note Holder unless it has delivered to such holder (a) at least fifteen (15) business days prior written notice of any decision to attempt to sell the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, (b) at least ten (10) days prior to the proposed sale date, a copy of each bid package received by the related Non-Serviced Mortgage Loan Special Servicer and a copy of the most recent appraisal, and (c) until the sale is completed, and a reasonable period prior to the proposed sale date, all information and documents being provided to offerors or otherwise approved by the related Non-Serviced Mortgage Loan Special Servicer in connection with the proposed sale.
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Additional Mortgage Loan Information
This prospectus supplement sets forth certain information with respect to the mortgage loans and the mortgaged properties. Each of the tables presented in Appendix II to this prospectus supplement sets forth selected characteristics of the Mortgage Pool. For a detailed presentation of certain of the characteristics of the mortgage loans and the mortgaged properties, on an individual basis, see Appendix I to this prospectus supplement, and for a brief summary of the fifteen (15) largest mortgage loans or groups of cross-collateralized mortgage loans in the Mortgage Pool, see Appendix III to this prospectus supplement. Additional information regarding the mortgage loans is contained in this prospectus supplement under “Risk Factors” and elsewhere in this “Description of the Mortgage Pool” section.
The sum in any column of the tables presented in Appendix II or Appendix III may not equal the indicated total due to rounding. The information in Appendix I, Appendix II and Appendix III to this prospectus supplement with respect to the mortgage loans (or A/B Whole Loans or Loan Pairs, if applicable) and the mortgaged properties is based upon the Mortgage Pool as it is expected to be constituted as of the close of business on the Cut-off Date, assuming that (i) all scheduled principal and interest payments due on or before the Cut-off Date will be made, and (ii) there will be no principal prepayments on or before the Cut-off Date. When information with respect to mortgaged properties is expressed as a percentage of the Initial Pool Balance, the percentages are based upon the Cut-off Date principal balances of the related mortgage loans or, in the case of multiple mortgaged properties securing the same mortgage loan (other than through cross-collateralization of that mortgage loan with other mortgage loans), based on allocated loan amounts that have been assigned to the related mortgaged properties based upon one or more of the related appraised values, the related underwritten net cash flow or prior allocations reflected in the related mortgage loan documents. The allocated loan amount for each such mortgaged property securing a multi-property mortgage loan is set forth on Appendix I to this prospectus supplement. References to “weighted averages” are references to averages weighted on the basis of the Cut-off Date Balances of the related mortgage loans. The statistics in Appendix I, Appendix II and Appendix III to this prospectus supplement were primarily derived from information provided to the depositor by the sponsor.
With respect to any mortgage loan that is part of an A/B Whole Loan, all information related to or based on LTV, DSCR, NCF or Debt Yield or the defined terms specified below, as applicable, is calculated without regard to the subordinate Serviced B Note and is based solely on the mortgage loan included in the Issuing Entity, unless otherwise indicated. With respect to any mortgage loan that is part of a Loan Pair or Non-Serviced Loan Combination, all information related to or based on LTV, DSCR, NCF or Debt Yield or the defined terms specified below, as applicable, is calculated with regard to both the Serviced Companion Loan (or Non-Serviced Companion Loan, as applicable) and the related mortgage loan included in the Issuing Entity (and, with respect to each of the Alderwood Mall Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, without regard to any related B Note), unless otherwise indicated.
For purposes of the tables in Appendix II to this prospectus supplement and for the information presented in Appendix I and Appendix III to this prospectus supplement:
“ADR” means, for any hotel property, average daily rate.
“Annual Debt Service” generally means, for any mortgage loan, twelve (12) times the monthly payment in effect as of the Cut-off Date for such mortgage loan or, for certain mortgage loans that provide for payments of interest-only for a period of time, twelve (12) times the monthly payment of principal and interest as of the date immediately following the expiration of such interest-only period, unless otherwise indicated. With respect to any mortgage loan that is part of an A/B Whole Loan, Annual Debt Service is calculated without regard to the subordinate Serviced B Note and is based solely on the mortgage loan included in the Issuing Entity, unless otherwise indicated. With respect to any mortgage loan that is part of a Loan Pair or Non-Serviced Loan Combination, Annual Debt Service is calculated with regard to the related mortgage loan included in the Issuing Entity only, unless otherwise indicated. The schedule of Scheduled Payments for the mortgage loan secured by the mortgaged property identified on Appendix I to this prospectus supplement as Alderwood Mall is set forth on Appendix VIII to this prospectus supplement.
“Appraised Value” means, for any mortgaged property, the appraiser’s adjusted value as stated in the most recent third party appraisal available to the mortgage loan seller as set forth under “Appraised Value” on Appendix I to this prospectus supplement. In certain cases, the appraiser’s adjusted value assumes the completion of construction, renovation or repairs. In most such cases, the mortgage loan seller has taken reserves sufficient to complete such construction, renovation or repairs. No representation is made that sufficient amounts have been reserved or that the appraised value would approximate either the value that would be determined in a current appraisal of the related mortgaged property or the amount that would be realized upon a sale. With respect to any mortgage loan that is part of an A/B Whole Loan or Loan Pair, Appraised Value is based on the appraised value of the related mortgaged property that secures the entire A/B Whole Loan or Loan Pair, as applicable. See “Risk Factors—Risks Related to the Mortgage Loans—Limitations of Appraisals” in this prospectus supplement.
“Cut-off Date Loan-to-Value Ratio,” “Cut-off Date LTV” or “Cut-off Date LTV Ratio” means, with respect to any mortgage loan, the ratio, expressed as a percentage of (1) the Cut-off Date Balance of that mortgage loan set forth on Appendix I to this prospectus supplement divided by (2) the Appraised Value of the related mortgaged property set forth on Appendix I to this prospectus supplement; except that:
· | with respect to any mortgage loan that is part of an A/B Whole Loan, the Cut-off Date Loan-to-Value Ratio is calculated without regard to the subordinate Serviced B Note and is based solely on the principal balance of the mortgage loan included in the Issuing Entity, unless otherwise indicated; |
· | with respect to any mortgage loan that is part of a Loan Pair or Non-Serviced Loan Combination, the Cut-off Date Loan-to-Value Ratio is calculated with regard to the principal balance of both the Serviced Companion Loan or Non-Serviced Companion Loan, as applicable, and the related mortgage loan included in the Issuing Entity (and, with respect to each of the Alderwood Mall Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, without regard to any related B Note), unless otherwise indicated; and |
· | with respect to any mortgage loan contained in any group of cross-collateralized mortgage loans, the Cut-off Date Loan-to-Value Ratio is calculated on the basis of the aggregate Cut-off Date Balance of all mortgage loans comprising such group and the aggregate Appraised Value of all the mortgaged properties securing such group. |
“GLA” means gross leasable area.
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“Grace Period” is the number of days before a payment default is an event of default under the related mortgage loan and/or before the imposition of late payment charges and/or default interest.
“IO” means interest only.
“IO Period UW NCF DSCR” means the Debt Service Coverage Ratio with respect to any related mortgage loan that has an interest-only period that has not expired as of the Cut-off Date but will expire prior to maturity.
“Loan Per Unit” means the principal balance per unit of measure as of the Cut-off Date. With respect to any mortgage loan that is part of an A/B Whole Loan, the Loan Per Unit is calculated without regard to the subordinate Serviced B Note and is based solely on the mortgage loan included in the Issuing Entity, unless otherwise indicated. With respect to any mortgage loan that is part of a Loan Pair or Non-Serviced Loan Combination, the Loan Per Unit is calculated with regard to both the Serviced Companion Loan (or Non-Serviced Companion Loan, as applicable) and the related mortgage loan included in the Issuing Entity (and, with respect to each of the Alderwood Mall Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, without regard to any related B Note), unless otherwise indicated. With respect to any mortgage loan contained in any group of cross-collateralized mortgage loans, the Loan Per Unit is calculated on the basis of the aggregate principal balances of all mortgage loans comprising such group.
“LTV” or “Loan-to-Value Ratio” means loan-to-value ratio.
“LTV Ratio at Maturity,” “Maturity Date LTV Ratio” or “Balloon LTV” means, with respect to any mortgage loan, the ratio, expressed as a percentage, of (a) (i) the principal balance of a Balloon Loan anticipated to be outstanding on the date on which the related Balloon Payment is scheduled to be due, as adjusted to give effect to the amortization of the applicable mortgage loan as of its maturity date, or (ii) in the case of an ARD Loan, the principal balance anticipated to be outstanding on its related Anticipated Repayment Date, divided by (b) the Appraised Value of the related mortgaged property set forth on Appendix I to this prospectus supplement; except that:
· | with respect to any mortgage loan that is part of an A/B Whole Loan, the LTV Ratio at Maturity is calculated without regard to the subordinate Serviced B Note and is based solely on the principal balance of the mortgage loan included in the Issuing Entity, unless otherwise indicated; |
· | with respect to any mortgage loan that is part of a Loan Pair or Non-Serviced Loan Combination, the LTV Ratio at Maturity is calculated with regard to both the principal balance of the Serviced Companion Loan (or Non-Serviced Companion Loan, as applicable) and the related mortgage loan included in the Issuing Entity (and, with respect to each of the Alderwood Mall Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, without regard to any related B Note), unless otherwise indicated; and |
· | with respect to any mortgage loan contained in any group of cross-collateralized mortgage loans, the LTV Ratio at Maturity is calculated on the basis of the aggregate principal balance of all mortgage loans comprising such group and the aggregate Appraised Value of all the mortgaged properties securing such group. |
We cannot assure you that the value of any particular mortgaged property will not have declined from the Appraised Value. No representation is made that any Appraised Value presented in this prospectus supplement would approximate either the value that would be determined in a current appraisal of the mortgaged property or the amount that would be realized upon a sale of the mortgaged property.
“Mortgage Rate” with respect to each mortgage loan, A/B Whole Loan, Loan Pair and Non-Serviced Loan Combination for any interest accrual period, means the annual rate at which interest accrues on such mortgage loan, A/B Whole Loan, Loan Pair or Non-Serviced Loan Combination (without regard to any increase in such rate after the Anticipated Repayment Date in the case of an ARD Loan) during such period (in the absence of a default), as set forth in the related mortgage note from time to time (the initial Mortgage Rate with respect to each mortgage loan is set forth on Appendix I to this prospectus supplement);provided, that for purposes of calculating the Net Mortgage Rate and the Weighted Average Net Mortgage Rate, the Mortgage Rate for any mortgage loan will be determined without regard to any default interest and without taking into account any reduction in the interest rate by a bankruptcy court pursuant to a plan of reorganization or pursuant to any of its equitable powers or a reduction of interest or principal due to a modification, waiver or amendment of the terms of that mortgage loan pursuant to the Pooling and Servicing Agreement.
“Net Operating Income” or “NOI” means historical net operating income for a mortgaged property for the annual or other period specified (or ending on the “NOI Date” specified), and generally consists of revenue derived from the use and operation of the mortgaged property, consisting primarily of rental income (and in the case of cooperative mortgage loans, assuming that the property was operated as a rental property), less the sum of (a) operating expenses (such as utilities, administrative expenses, management fees and advertising) and (b) fixed expenses, such as insurance, real estate taxes (except in the case of certain mortgage loans included in the Issuing Entity, where the related borrowers are exempted from real estate taxes and assessments) and, if applicable, ground, space or air rights lease payments. Net operating income generally does not reflect (i.e. it does not deduct for) capital expenditures, including tenant improvement costs and leasing commissions, interest expenses and non-cash items such as depreciation and amortization.
“NRA” means net rentable area.
“Occupancy Rate” means the percentage of Square Feet, Units, Rooms or Pads, as the case may be, of a mortgaged property that was occupied or leased as of or, in the case of certain properties, average Units or Rooms so occupied over a specified period ending on, a specified date (identified on Appendix I to this prospectus supplement as the “Occupancy Rate As-of Date”), as specified by the borrower or as derived from the mortgaged property’s rent rolls, operating statements or appraisals or as determined by a site inspection of such mortgaged property. Such percentage may include tenants which have executed a lease to occupy such mortgaged property even though the applicable tenant has not taken physical occupancy. The Occupancy Rate presented in this prospectus supplement may include space subject to build-out or other renovation and may exclude space currently under renovation. Generally, for purposes of the presentation in this prospectus supplement, we consider a “master lease” to be a lease by an affiliate of the borrower, or by an entity (or an affiliate of an entity) from which the borrower acquired the mortgaged property, that (in either case) is obligated to pay rent under a lease with the borrower but does not conduct business operations at the leased premises. We do not consider the following to be a “master lease” for purposes of the presentation in this prospectus supplement: (i) a lease executed in connection with a sale-leaseback arrangement under which an unaffiliated seller of a property (or an affiliate thereof) conducts business operations at the mortgaged property and executes a long-term lease at the mortgaged property simultaneously with its acquisition by the borrower; (ii) a lease executed by the borrower, property seller or other person that
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(a) relates to space, whether or not occupied, that is leased by an unaffiliated tenant and (b) has the effect of making that borrower, seller or other person liable, in whole or in part, for the payment of rent that is not more than the rent payable by the unaffiliated tenant under its lease or (iii) a master lease that was not taken into account in the underwriting. “Master leases” are typically used in connection with the origination of a loan to bring occupancy to a “stabilized” level but may not provide additional economic support for the mortgage loan. A master lease may relate to all or a portion of a mortgaged property. We identify the mortgaged properties that have “master leases,” the square footage represented by each master lease and the rental rate represented by each master lease in Appendix I and Appendix III to this prospectus supplement and, if applicable to the mortgaged properties securing the fifteen (15) largest mortgage loans or groups of cross-collateralized mortgage loans in the mortgage pool, in Appendix III to this prospectus supplement.
In some cases, the “Debt Service Coverage Ratio” information and the “Occupancy Rate” with respect to a mortgaged property reflects the existence of a “master lease.”
“RevPAR” means, with respect to any hotel property, revenues per available room.
“SF” or “Square Feet” or “Sq.Ft.” means, in the case of a mortgaged property operated as a retail center, office, industrial/warehouse facility, combination retail office facility or other special purpose property, the square footage of the net rentable or leasable area.
“Term to Maturity” means, with respect to any mortgage loan, the remaining term, in months, from the Cut-off Date for such mortgage loan to the related maturity date or, with respect to any ARD Loan, the Anticipated Repayment Date.
“Units,” “Rooms” or “Pads” means (a) in the case of a mortgaged property operated as multifamily housing, the number of apartments, regardless of the size of or number of rooms in such apartment, (b) in the case of a mortgaged property operated as a hotel property, the number of guest rooms or (c) in the case of a mortgaged property operated as a manufactured housing community property, the number of pads for manufactured homes.
“Underwritten Expenses” means, with respect to any mortgaged property securing an underlying mortgage loan, the annual operating expenses estimated for that property, generally derived from the historical annual expenses reflected in the operating statements and other information furnished by the related borrower, except that those expenses were often modified as follows:
· | operating expenses were generally adjusted by various factors such as inflation, appraisers’ estimates and historical trends; |
· | if there was no management fee or a management fee which varies from the market, it was assumed that a management fee is payable with respect to the mortgaged property in an amount that is the greater of the market rate as determined by an appraiser or the lender’s minimum management fee underwriting criteria for the applicable property type; and |
· | those expenses were adjusted so as to eliminate any capital expenditures, loan closing costs, tenant improvements or leasing commissions and similar nonrecurring expenses. |
Underwritten Expenses generally include:
· | salaries, wages and benefits; |
· | the costs of utilities; |
· | repairs and maintenance; |
· | marketing; |
· | insurance; |
· | management; |
· | landscaping; |
· | security, if provided at the mortgaged property; |
· | real estate taxes; |
· | general and administrative expenses; and |
· | ground, space or air rights lease payments, and other costs, |
but without any deductions for debt service, depreciation and amortization or capital expenditures, tenant improvements or leasing commissions.
“Underwritten NCF DSCR,” “UW NCF DSCR,” “UW DSCR,” “Debt Service Coverage Ratio” or “DSCR” means, with respect to any mortgage loan, (a) the Underwritten Net Cash Flow for the related mortgaged property or mortgaged properties, divided by (b) the Annual Debt Service for such mortgage loan. For purposes of the information presented in this prospectus supplement, the Debt Service Coverage Ratio (unless otherwise indicated) with respect to (a) any mortgage loan that is part of an A/B Whole Loan, reflects solely the Annual Debt Service payable under the mortgage loan included in the Issuing Entity, without regard to the subordinate Serviced B Note, (b) any mortgage loan that is part of a Loan Pair or Non-Serviced Loan Combination, reflects the Annual Debt Service payable under both the Serviced Companion Loan (or Non-Serviced Companion Loan, as applicable) and the mortgage loan included in the Issuing Entity (and, with respect to each of the Alderwood Mall Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, without regard to any related B Note), unless otherwise indicated, and (c) any mortgage loan contained in any group of cross-collateralized mortgage loans, is calculated on the basis of the Underwritten Net Cash Flow generated by all the mortgaged properties securing such group and the aggregate Annual Debt Service payable under all mortgage loans comprising such group, in each case unless otherwise indicated.
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In general, debt service coverage ratios are used by income property lenders to measure the ratio of (a) cash currently generated by a property that is available for debt service to (b) required debt service payments. However, debt service coverage ratios only measure the current, or recent, ability of a property to service mortgage debt. If a property does not possess a stable operating expectancy (for instance, if it is subject to material leases that are scheduled to expire during the loan term and that provide for above-market rents and/or that may be difficult to replace), a debt service coverage ratio may not be a reliable indicator of a property’s ability to service the mortgage debt over the entire remaining loan term. The Underwritten NCF DSCRs are presented herein for illustrative purposes only and, as discussed above, are limited in their usefulness in assessing the current, or predicting the future, ability of a mortgaged property to generate sufficient cash flow to repay the related mortgage loan.
In some cases, the “UW NCF DSCR” information and the “Occupancy Rate” with respect to a mortgaged property reflects the existence of a “master lease.”
“Underwritten Net Cash Flow,” “Underwritten NCF” or “UW NCF,” with respect to any mortgaged property, means the Underwritten Net Operating Income decreased by the estimated capital expenditures and reserves for capital expenditures, including tenant improvement costs and leasing commissions, as applicable. Underwritten Net Cash Flow generally does not reflect interest expense and non-cash items such as depreciation and amortization. See “Risk Factors—Risks Related to the Mortgage Loans—Debt Service Coverage Ratio and Net Cash Flow Information is Based on Numerous Assumptions” in this prospectus supplement.
“Underwritten Net Operating Income” or “UW NOI” with respect to any mortgaged property, means an estimate of cash flow available for debt service in a typical year of stable, normal operations as determined by the mortgage loan seller. In general, it is the estimated revenue derived from the use and operation of such mortgaged property (in certain cases, however, inclusive of rents under master leases with an affiliate of the borrower that relate to space not used or occupied by the master lease tenant), consisting primarily of rental income, less the sum of (a) estimated operating expenses (such as utilities, administrative expenses, repairs and maintenance, management fees, franchise fees and advertising), and (b) estimated fixed expenses, such as insurance, real estate taxes and, if applicable, ground, space or air rights lease payments. The Underwritten Net Operating Income for each mortgaged property is calculated on the basis of numerous assumptions and subjective judgments, which, if ultimately proven erroneous, could cause the actual net cash flow for such mortgaged property to differ materially from the Underwritten Net Operating Income set forth herein. Certain of such assumptions and subjective judgments of the mortgage loan seller relate to future events, conditions and circumstances, including future expense levels, future increases in rents over current rental rates (including in circumstances where a tenant may currently be in a free or reduced rent period), future vacancy rates, commencement of occupancy and rent payments with respect to leases for which rentals have not yet commenced, the re-leasing of vacant space and the continued leasing of occupied space, which will be affected by a variety of complex factors over which none of the depositor, the mortgage loan seller, the master servicer or the special servicer has control. In some cases, the Underwritten Net Operating Income set forth herein for any mortgaged property is higher, and may be materially higher, than the annual net operating income for such mortgaged property based on historical operating statements.
In determining Underwritten Net Operating Income for a mortgaged property, the mortgage loan seller generally relied on rent rolls and/or other generally unaudited financial information provided by the respective borrowers; and in some cases, the appraisal and/or local market information was the primary basis for the determination. From that information, the mortgage loan seller calculated stabilized estimates of cash flow that took into consideration historical financial statements (where available), material changes in the operating position of a mortgaged property of which the mortgage loan seller was aware (e.g., current rent roll information including newly signed leases, near term market rent steps, expirations of “free rent” periods, market rents, and market vacancy data), contractual rent increases and estimated capital expenditures, leasing commissions and tenant improvement costs. In certain cases, the mortgage loan seller’s estimate of Underwritten Net Operating Income reflected differences from the information contained in the operating statements obtained from the respective borrowers (resulting in either an increase or decrease from the recent historical net operating income set forth therein) based upon the mortgage loan seller’s own analysis of such operating statements and the assumptions applied by the respective borrowers in preparing such statements and information. In certain instances, for example, property management fees and other expenses may have been taken into account in the calculation of Underwritten Net Operating Income even though such expenses may not have been reflected in actual historic operating statements. In most of those cases, the information was annualized, with some exceptions, before using it as a basis for the determination of Underwritten Net Operating Income.
The Underwritten Net Operating Income for cooperative mortgaged properties is based on projected net operating income at the mortgaged property, as determined by the appraisal obtained in connection with the origination of the related mortgage loan, assuming that the related mortgaged property was operated as a rental property with rents set at prevailing market rates taking into account the presence, if any, of existing rent-controlled or rent-stabilized occupants, if any, reduced by underwritten capital expenditures, property operating expenses, a market-rate vacancy assumption and projected reserves.
Historical operating results may not be available or were deemed not relevant for some of the mortgage loans which are secured by mortgaged properties with newly constructed improvements, mortgaged properties with triple net leases, mortgaged properties that have recently undergone substantial renovations and newly acquired mortgaged properties. In such cases, items of revenue and expense used in calculating Underwritten Net Operating Income were generally derived from rent rolls, estimates set forth in the related appraisal, leases with tenants or from other borrower-supplied information such as estimates or budgets.
“Underwritten NOI Debt Yield” or “UW NOI Debt Yield” means, with respect to any mortgage loan, the Underwritten Net Operating Income for the related mortgaged property divided by the Cut-off Date Balance for such mortgage loan. With respect to any mortgage loan that is part of an A/B Whole Loan, the calculation of the UW NOI Debt Yield is calculated without regard to the subordinate Serviced B Note and is based solely on the mortgage loan included in the Issuing Entity, unless otherwise indicated. With respect to any mortgage loan that is part of a Loan Pair or Non-Serviced Loan Combination, the calculation of the UW NOI Debt Yield is calculated with regard to both the Serviced Companion Loan (or Non-Serviced Companion Loan, as applicable) and the related mortgage loan included in the Issuing Entity (and, with respect to each of the Alderwood Mall Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, without regard to any related B Note), unless otherwise indicated. With respect to any mortgage loan in any group of cross-collateralized mortgage loans, UW NOI Debt Yield is calculated on the basis of the aggregate Cut-off Date Balance of all mortgage loans comprising such group and the aggregate Underwritten Net Operating Income of all mortgage loans comprising such group, in each case unless otherwise indicated.
“UW EGI” or “Underwritten EGI” with respect to any mortgaged property, means the gross potential rent, recoveries and other income, less mark-to-market, vacancy and collection loss.
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“UW NCF Debt Yield” means, with respect to any mortgaged property, the Underwritten Net Cash Flow for such mortgaged property divided by the Cut-off Date Balance for the related mortgage loan. With respect to any mortgage loan that is part of an A/B Whole Loan, the calculation of the UW NCF Debt Yield is calculated without regard to the subordinate Serviced B Note and is based solely on the mortgage loan included in the Issuing Entity, unless otherwise indicated. With respect to any mortgage loan that is part of a Loan Pair or Non-Serviced Loan Combination, the calculation of the UW NCF Debt Yield is calculated with regard to both the Serviced Companion Loan (or Non-Serviced Companion Loan, as applicable) and the related mortgage loan included in the Issuing Entity (and, with respect to each of the Alderwood Mall Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, without regard to any related B Note), unless otherwise indicated. With respect to any mortgage loan in any group of cross-collateralized mortgage loans, UW NCF Debt Yield is calculated on the basis of the aggregate Cut-off Date Balance of all mortgage loans comprising such group and the aggregate Underwritten Net Cash Flow of all mortgage loans comprising such group, in each case unless otherwise indicated.
“UW NOI DSCR” means, with respect to any mortgage loan, (a) the Underwritten Net Operating Income for the related mortgaged property or mortgaged properties, divided by (b) the Annual Debt Service for such mortgage loan. With respect to any mortgage loan that is part of an A/B Whole Loan, Annual Debt Service is calculated without regard to the subordinate Serviced B Note and is based solely on the mortgage loan included in the Issuing Entity, unless otherwise indicated. With respect to any mortgage loan that is part of a Loan Pair or Non-Serviced Loan Combination, Annual Debt Service is calculated with regard to both the Serviced Companion Loan (or Non-Serviced Companion Loan, as applicable) and the related mortgage loan included in the Issuing Entity (and, with respect to each of the Alderwood Mall Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, without regard to any related B Note), unless otherwise indicated. With respect to any mortgage loan in any group of cross-collateralized mortgage loans, UW NOI DSCR is calculated on the basis of the aggregate Annual Debt Service of all mortgage loans comprising such group and the aggregate Underwritten Net Operating Income of all mortgage loans comprising such group, in each case unless otherwise indicated.
“UW Revenue” or “Underwritten Revenue” with respect to any mortgage loan, the gross potential rent, less vacancies and collection loss.
Standard Hazard Insurance
The master servicer is required to use reasonable efforts, consistent with the Servicing Standard, to cause each borrower to maintain for the related mortgaged property (other than mortgaged property related to a Non-Serviced Mortgage Loan) all insurance required by the terms of the loan documents and the related mortgage in the amounts set forth therein, which shall be obtained from an insurer meeting the requirements of the applicable loan documents. This includes a fire and hazard insurance policy with extended coverage that contains no exclusion for damages due to acts of terrorism (subject to the provisions set forth below). Certain mortgage loans may permit such hazard insurance policy to be maintained by a tenant at the related mortgaged property, or may permit the related borrower or its tenant to self-insure. The coverage of each such policy will be in an amount, subject to a deductible customary in the related geographic area, that is not less than the lesser of the full replacement cost of the improvements that represent security for such mortgage loan, with no deduction for depreciation, and the outstanding principal balance owing on such mortgage loan, but in any event, unless otherwise specified in the applicable mortgage or mortgage note, in an amount sufficient to avoid the application of any coinsurance clause. The master servicer will be deemed to have satisfied the Servicing Standard in respect of such insurance requirement if the borrower maintains, or the master servicer has otherwise caused to be obtained, a standard hazard insurance policy that is in compliance with the related mortgage loan documents, and, if required by such mortgage loan documents, the borrower pays, or the master servicer has otherwise caused to be paid, the premium required by the related insurance provider that is necessary to avoid an exclusion in such policy against “acts of terrorism” as defined by the Terrorism Risk Insurance Act of 2002;provided, the master servicer shall not be obligated to maintain such insurance if the master servicer determines that such insurance is (a) not available at any rate or (b) such insurance is not available at commercially reasonable rates and such hazards are not at the time commonly insured against for properties similar to the related mortgaged property and located in or around the region in which such related mortgaged property is located. Notwithstanding the limitation set forth in the preceding sentence, if the related mortgage loan documents and the related mortgage require the borrower to maintain insurance against property damage resulting from terrorism or similar acts, the master servicer will be required to cause the borrower to maintain such insurance or itself obtain such insurance unless the special servicer determines, subject to the consent of the Controlling Class Representative (during any Subordinate Control Period and with respect to each mortgage loan other than a Non-Serviced Mortgage Loan) that the failure to maintain such insurance would be an Acceptable Insurance Default, in accordance with the procedures set forth in the Pooling and Servicing Agreement. The master servicer will be entitled to rely on the determination of the special servicer made in connection with such approval or disapproval. The special servicer will decide whether to withhold or grant such approval in accordance with the Servicing Standard. If any such approval has not been expressly denied within ninety (90) days of receipt by the special servicer and Controlling Class Representative from the master servicer of the master servicer’s determination and analysis and all information reasonably requested thereby and reasonably available to the master servicer in order to make an informed decision, such approval will be deemed to have been granted. See “Risk Factors—Risks Related to the Mortgage Loans—The Absence of or Inadequacy of Insurance Coverage on the Property May Adversely Affect Payments on Your Certificates” in this prospectus supplement.
If, on the date of origination of a mortgage loan, a portion of the improvements on a related mortgaged property was in an area identified in the Federal Register by the Federal Emergency Management Agency as having special flood hazards (and such flood insurance is required by the Federal Emergency Management Agency and has been made available), the master servicer will, in accordance with the Servicing Standard, cause to be maintained a flood insurance policy meeting the requirements of the current guidelines of the Federal Insurance and Mitigation Administration in an amount representing coverage of at least the lesser of:
· | the outstanding principal balance of the related mortgage loan, Loan Pair or A/B Whole Loan, as applicable; and |
· | the maximum amount of such insurance available for the related mortgaged property, but only to the extent such mortgage loan permits the lender to require such coverage and such coverage conforms to the Servicing Standard. |
If a borrower fails to maintain such fire and hazard insurance, the master servicer will be required to obtain such insurance and the cost of the insurance will be a Servicing Advance made by the master servicer, subject to a determination of recoverability. The special servicer will be required to maintain fire and hazard insurance with extended coverage and, if applicable, flood insurance (and other insurance required under the related mortgage) on an REO Property (other than an REO Property related to a Non-Serviced Mortgage Loan) in an amount not less than the maximum amount obtainable with respect to such REO Property and the cost of the insurance will be a Servicing Advance made by the master servicer, subject to a determination of recoverability,provided that the special servicer shall not be required in
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any event to maintain or obtain insurance coverage beyond what is available at commercially reasonable rates and what is consistent with the Servicing Standard;provided that the special servicer will be required to maintain insurance against property damage resulting from terrorism or similar acts if the terms of the related mortgage loan documents and the related mortgage so require unless the special servicer determines that (i) such insurance is not available at any rate or (ii) such insurance is not available at commercially reasonable rates and such hazards are not at the time commonly insured against for properties similar to the related mortgaged property and located in or around the region in which such related mortgaged property is located.
In addition, except with respect to any Non-Serviced Mortgage Loan, the master servicer may require any borrower to maintain other forms of insurance as the master servicer may be permitted to require under the related mortgage loan documents, including, but not limited to, loss of rents endorsements and comprehensive public liability insurance. The master servicer will not require borrowers to maintain earthquake insurance unless the related borrower is required under the terms of its mortgage loan to maintain earthquake insurance. Any losses incurred with respect to mortgage loans due to uninsured risks, including terrorist attacks, earthquakes, mudflows and floods, or insufficient hazard insurance proceeds may adversely affect payments to Certificateholders. The special servicer will have the right, but not the obligation, at the expense of the Issuing Entity, to obtain earthquake insurance on any mortgaged property securing a Specially Serviced Mortgage Loan and/or any REO Property (other than an REO Property related to a Non-Serviced Mortgage Loan) so long as such insurance is available at commercially reasonable rates. The master servicer will not be required in any event to cause a borrower to maintain or itself obtain insurance coverage unless the trustee or Issuing Entity, as applicable, has an insurable interest in the related mortgage loan and only to the extent available on commercially reasonable terms at a cost customarily acceptable (as determined by the master servicer) and consistent with the Servicing Standard.
Sale of the Mortgage Loans
On the Closing Date, the mortgage loan seller will sell the mortgage loans, without recourse, to the depositor, and the depositor, in turn, will sell all of the mortgage loans, without recourse and will assign the representations and warranties made by the mortgage loan seller in respect of the mortgage loans and the related remedies for breach of the representations and warranties to the trustee for the benefit of the Certificateholders. In connection with such assignments, the mortgage loan seller is required in accordance with the Mortgage Loan Purchase Agreement to deliver the Mortgage File, with respect to each mortgage loan so assigned by it to the custodian.
“Mortgage File” means the following documents, among others:
· | the original mortgage note (or lost note affidavit), endorsed (without recourse) in blank or to the order of the trustee; |
· | the original or a copy of the related mortgage(s), together with originals or copies of any intervening assignments of such document(s), in each case with evidence of recording thereon (unless such document(s) have not been returned by the applicable recorder’s office); |
· | the original or a copy of any related assignment(s) of rents and leases (if any such item is a document separate from the mortgage), together with originals or copies of any intervening assignments of such document(s), in each case with evidence of recording thereon (unless such document(s) have not been returned by the applicable recorder’s office); |
· | an assignment of each related mortgage in blank or in favor of the trustee, in recordable form; |
· | an assignment of any related assignment(s) of rents and leases (if any such item is a document separate from the mortgage) in blank or in favor of the trustee, in recordable form; |
· | an original or copy of the related lender’s title insurance policy (or, if a title insurance policy has not yet been issued, a binder, commitment for title insurance or a preliminary title report binding on the title company); |
· | copies of any loan agreements, lock-box agreements, co-lender agreements and intercreditor agreements related to the mortgage loan; and |
· | when relevant, the related ground lease, space lease or air rights lease, or in each case a copy thereof. |
The custodian will be required to review the documents delivered by the mortgage loan seller with respect to its mortgage loans within seventy-five (75) days following the Closing Date, and the custodian on behalf of the trustee will hold the related documents on behalf of the Issuing Entity. Within forty-five (45) days following the Closing Date, pursuant to the Pooling and Servicing Agreement, the assignments with respect to each mortgage loan and any related assignment of rents and leases, as described in the definition of “Mortgage File” above, are to be completed in the name of the trustee, if delivered in blank, and submitted for recording in the real property records of the appropriate jurisdictions at the expense of the mortgage loan seller.
With respect to any Non-Serviced Mortgage Loan, (A) the preceding document delivery requirements will be met by the delivery by the depositor of copies of the documents specified above (other than the related mortgage note (and all intervening endorsements) respectively evidencing such Non-Serviced Mortgage Loan with respect to which the originals will be required), including a copy of the related mortgage and (B) the requirement to deliver any of the preceding documents in the name of the trustee will be met by the delivery of copies of such documents in the name of the Non-Serviced Mortgage Loan Trustee for the benefit of, among others, the trustee, as holder of such Non-Serviced Mortgage Loan.
Representations and Warranties
As of the Closing Date, the sponsor will make, with respect to each mortgage loan sold by it that we include in the Issuing Entity, representations and warranties generally to the effect set forth on Appendix V to this prospectus supplement, subject to the exceptions described in Appendix VI to this prospectus supplement.
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Repurchases and Other Remedies
If any mortgage loan document required to be delivered to the custodian by the mortgage loan seller with respect to its mortgage loans as described under “—Sale of the Mortgage Loans” above has a Material Document Defect, or if there is a Material Breach by the mortgage loan seller regarding the characteristics of any of its mortgage loans and/or the related mortgaged properties as described under
“—Representations and Warranties” above, then the mortgage loan seller will be obligated to cure such Material Document Defect or Material Breach in all material respects within the applicable Permitted Cure Period. Notwithstanding the foregoing, if the payments described under the representation and warranty referred to as No. 30 or No. 32 in Appendix V to this prospectus supplement are insufficient to pay the expenses associated with securing the consent or approval of the holder of the Mortgage for a waiver of a “due-on-sale” or “due-on-encumbrance” clause or the defeasance of the related mortgage loan, as applicable, it shall be the sole obligation of the mortgage loan seller to pay an amount sufficient to pay such expenses.
A “Material Document Defect” is a Document Defect that either (i) materially and adversely affects the interests of the holders of the certificates in the related mortgage loan, or (ii) both (A) materially and adversely affects the value of the related mortgage loan and (B) the mortgage loan is a Specially Serviced Mortgage Loan or Rehabilitated Mortgage Loan. Subject to certain exceptions, the absence from the Mortgage File of any of the following with respect to any mortgage loan will constitute a deemed Material Document Defect: the original mortgage note (or lost note affidavit), the original mortgage, an original or copy of the related title policy, an original or copy of any letter of credit or a copy of the ground lease (if such mortgage loan is secured only by such ground lease).
A “Material Breach” is a breach of any of the representations and warranties that (i) materially and adversely affects the interests of the holders of the certificates in the related mortgage loan or (ii) both (A) materially and adversely affects the value of the related mortgage loan and (B) the mortgage loan is a Specially Serviced Mortgage Loan or Rehabilitated Mortgage Loan.
A “Document Defect” exists if any document or documents constituting a part of a Mortgage File has not been delivered as and when required, has not been properly executed, or is defective on its face.
If any such Material Document Defect or Material Breach cannot be corrected or cured in all material respects within the applicable Permitted Cure Period, the mortgage loan seller will be obligated, not later than the last day of such Permitted Cure Period, to:
· | repurchase the affected mortgage loan from the Issuing Entity at the Purchase Price; or |
· | at its option, if within the three-month period commencing on the Closing Date (or prior to the second anniversary of the Closing Date if a mortgage loan is a “defective obligation” within the meaning of Section 860G(a)(4)(B)(ii) of the Code and Treasury Regulations Section 1.860G-2(f)), replace such mortgage loan with a Qualifying Substitute Mortgage Loan, and pay an amount generally equal to the excess of the applicable Purchase Price for the mortgage loan to be replaced, over the unpaid principal balance of the applicable Qualifying Substitute Mortgage Loan as of the date of substitution, after application of all payments due on or before such date, whether or not received. |
“Permitted Cure Period” means, for the purposes of any Material Document Defect or Material Breach in respect of any mortgage loan, the 90-day period immediately following the receipt by the mortgage loan seller of notice of such Material Document Defect or Material Breach, as the case may be. However, if such Material Document Defect or Material Breach cannot be corrected or cured in all material respects within such 90-day period and such Material Document Defect or Material Breach would not cause the mortgage loan to be other than a “qualified mortgage,” but the mortgage loan seller is diligently attempting to effect such correction or cure, then the applicable Permitted Cure Period will be extended for an additional ninety (90) days unless, solely in the case of a Material Document Defect, (x) the mortgage loan is then a Specially Serviced Mortgage Loan and a Servicing Transfer Event has occurred as a result of a monetary default or as described in the second and fifth bullet points of the definition of Specially Serviced Mortgage Loan and (y) the Material Document Defect was identified in a certification delivered to the mortgage loan seller by the custodian in accordance with the Pooling and Servicing Agreement not less than ninety (90) days prior to the mortgage loan seller’s receipt of notice.
“Purchase Price” means an amount equal to the unpaid principal balance of such mortgage loan, together with accrued but unpaid interest thereon to but not including the Due Date in the Collection Period in which the purchase or liquidation occurs and the amount of any expenses related to such mortgage loan and any related Serviced B Note, Serviced Companion Loan or REO Property (including any unreimbursed Servicing Advances, interest on any Advances related to such mortgage loan, Serviced B Note or Serviced Companion Loan, as applicable, and also includes the amount of any Servicing Advances (and interest thereon) that were reimbursed from collections on the Mortgage Pool and not subsequently recovered from the related borrower, and any Special Servicing Fees and Liquidation Fees paid or payable with respect to such mortgage loan, Serviced B Note or Serviced Companion Loan, as applicable) that are reimbursable or payable to the master servicer, the special servicer, the certificate administrator, the custodian or the trustee (or any entity acting in a similar capacity with respect to the securitization of a Non-Serviced Mortgage Loan), plus if such mortgage loan is being repurchased or substituted for by the mortgage loan seller pursuant to the Mortgage Loan Purchase Agreement, all expenses reasonably incurred or to be incurred by, the master servicer, the special servicer, the trust advisor, the certificate administrator, the custodian, the depositor or the trustee in respect of the Material Breach or Material Document Defect giving rise to the repurchase or substitution obligation (and that are not otherwise included above).
“Qualifying Substitute Mortgage Loan” means a mortgage loan having the characteristics required in the Pooling and Servicing Agreement (including, subject to certain conditions and qualifications, (i) an outstanding principal balance not exceeding that of the substituted mortgage loan, (ii) an interest rate at least equal to that of the substituted mortgage loan, (iii) a remaining term to stated maturity not greater than, and not more than two (2) years less than, that of the substituted mortgage loan (and in no event will such mortgage loan mature after the date that is three (3) years prior to the Distribution Date in May 2048), (iv) original and current loan-to-value ratios not higher than the current loan-to-value ratio of the substituted mortgage loan, (v) a current debt service coverage ratio equal to or greater than the current debt service coverage ratio of the substituted mortgage loan, (vi) compliance with the representations and warranties relating to mortgage loans set forth in the Mortgage Loan Purchase Agreement, (vii) a “Phase I” environmental assessment and an engineering report are included in the related Mortgage File and do not raise material issues that have not been adequately addressed and (viii) a REMIC opinion has been delivered to the trustee and certificate administrator) and otherwise satisfying the conditions set forth in the Pooling and Servicing Agreement.
The mortgage loan seller must cure any Material Document Defect or Material Breach within the Permitted Cure Period,provided, that if such Material Document Defect or Material Breach would cause the mortgage loan to be other than a “qualified mortgage,” as defined in
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the Code, then the cure, repurchase or substitution must occur within eighty-five (85) days from the date the mortgage loan seller was notified of the defect or breach;provided, that in any event, any such cure, repurchase or substitution must occur no later than eighty-five (85) days from the date of determination of the existence of such Material Document Defect or Material Breach.
The foregoing obligations of the mortgage loan seller to cure a Material Document Defect or a Material Breach in respect of any of its mortgage loans or the obligation of the mortgage loan seller to repurchase or replace the defective mortgage loan, will constitute the sole remedies of the trustee and the Certificateholders with respect to such Material Document Defect or Material Breach and none of us, the mortgage loan seller or any other person or entity will be obligated to repurchase or replace the affected mortgage loan if the mortgage loan seller defaults on its obligation to do so. See “Risk Factors—Risks Related to the Offered Certificates—The Mortgage Loan Seller May Not Make a Required Repurchase or Substitution of a Defective Mortgage Loan” in this prospectus supplement.
If (x) a mortgage loan is to be repurchased or replaced as contemplated above (a “Defective Mortgage Loan”), (y) such Defective Mortgage Loan is cross-collateralized and cross-defaulted with one or more other mortgage loans (such Defective Mortgage Loan and such other mortgage loans, collectively, “Crossed Mortgage Loans”) and (z) the applicable Document Defect or breach does not constitute a Material Document Defect or Material Breach, as the case may be, as to such other Crossed Mortgage Loans (without regard to this paragraph), then the applicable Document Defect or breach (as the case may be) shall be deemed to constitute a Material Document Defect or Material Breach, as the case may be, as to each such other Crossed Mortgage Loan, and the mortgage loan seller shall be obligated to repurchase or replace each such other Crossed Mortgage Loan in accordance with the provisions of the Mortgage Loan Purchase Agreement, unless, in the case of such breach or Document Defect, (A) the mortgage loan seller provides a nondisqualification opinion to the trustee at the expense of the mortgage loan seller and (B) both of the following conditions would be satisfied if the mortgage loan seller were to repurchase or replace only those mortgage loans as to which a Material Breach or Material Document Defect had occurred (without regard to this paragraph) (the “Affected Loan(s)”): (i) the debt service coverage ratio for all those Crossed Mortgage Loans (excluding the Affected Loan(s)) for the four calendar quarters immediately preceding the repurchase or replacement is not less than the lesser of (A) 0.10x below the debt service coverage ratio for all such Crossed Mortgage Loans (including the Affected Loans(s)) set forth in Appendix I to this prospectus supplement and (B) the debt service coverage ratio for all such Crossed Mortgage Loans (including the Affected Loan(s)) for the four preceding calendar quarters preceding the repurchase or replacement, and (ii) the loan-to-value ratio for all such Crossed Mortgage Loans (excluding the Affected Loan(s)) is not greater than the greater of (A) the loan-to-value ratio, expressed as a whole number (taken to one decimal place), for all such Crossed Mortgage Loans (including the Affected Loan(s)) set forth in Appendix I to this prospectus supplement plus 10% and (B) the loan-to-value ratio for all such Crossed Mortgage Loans (including the Affected Loans(s)), at the time of repurchase or replacement. The determination of the master servicer as to whether the conditions set forth above have been satisfied shall be conclusive and binding in the absence of manifest error. The master servicer will be entitled to cause to be delivered, or direct the mortgage loan seller to (in which case the mortgage loan seller shall) cause to be delivered to the master servicer, an appraisal of any or all of the related mortgaged properties for purposes of determining whether the condition set forth in clause (ii) above has been satisfied, in each case at the expense of the mortgage loan seller if the scope and cost of the appraisal is approved by the mortgage loan seller (such approval not to be unreasonably withheld).
Changes In Mortgage Pool Characteristics
The description in this prospectus supplement of the Mortgage Pool and the mortgaged properties is based upon the Mortgage Pool as expected to be constituted at the time the Offered Certificates are issued. Prior to the issuance of the Offered Certificates, a mortgage loan may be removed from the Mortgage Pool if we deem such removal necessary or appropriate or if it is prepaid. A limited number of other mortgage loans may be included in the Mortgage Pool prior to the issuance of the Offered Certificates, unless including such mortgage loans would materially alter the characteristics of the Mortgage Pool as described in this prospectus supplement. The information presented in this prospectus supplement is representative of the characteristics of the Mortgage Pool as it will be constituted at the time the Offered Certificates are issued, although the range of mortgage rates and maturities and certain other characteristics of the mortgage loans in the Mortgage Pool may vary.
A Current Report on Form 8-K (the “Form 8-K”) will be available to purchasers of the Offered Certificates and will be filed by the Depositor, together with the Pooling and Servicing Agreement, with the SEC. If mortgage loans are removed from the Mortgage Pool as set forth in the preceding paragraph, such removal will be noted in the Form 8-K, and, if such removal or any other event results in any material pool characteristic of the actual Mortgage Pool differing by 5% or more (other than by reason of the mortgage loans converting into cash in accordance with their terms) from the description of the Mortgage Pool in the final prospectus supplement filed with the SEC, such Form 8-K will be filed no later than four (4) business days after the initial issuance of the Offered Certificates. Such Form 8-K will be available to purchasers and potential purchasers of the Offered Certificates.
SERVICING OF THE MORTGAGE LOANS
General
The master servicer and the special servicer, either directly or through sub-servicers, will be required to service and administer the mortgage loans (in each case, for which the related servicer is responsible) in accordance with the Servicing Standard (subject to the servicing of any Non-Serviced Mortgage Loan by the Non-Serviced Mortgage Loan Master Servicer or Non-Serviced Mortgage Loan Special Servicer, as applicable, pursuant to the applicable Non-Serviced Mortgage Loan Pooling and Servicing Agreement). The Servicing Standard is set forth in the Pooling and Servicing Agreement, dated as of the Cut-off Date (the “Pooling and Servicing Agreement”), between Morgan Stanley Capital I Inc., as depositor, Midland, as master servicer and special servicer, Wells Fargo Bank, as trustee, certificate administrator, certificate registrar, authenticating agent and custodian, and Park Bridge Lender Services, as trust advisor.
Reference is made to the accompanying prospectus for important information in addition to that set forth in this prospectus supplement regarding the terms of the Pooling and Servicing Agreement and the terms and conditions of the Offered Certificates. Copies of the final Pooling and Servicing Agreement and related exhibits will be available after the Closing Date by visiting EDGAR on the SEC Web site at www.sec.gov.
“Servicing Standard” means with respect to the master servicer or the special servicer, as the case may be, to service and administer the mortgage loans (and any related Serviced B Note and Serviced Companion Loan but not any Non-Serviced Mortgage Loan)
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that it is obligated to service and administer pursuant to the Pooling and Servicing Agreement on behalf of the Issuing Entity and in the best interests of and for the benefit of the Certificateholders (and, in the case of any related Serviced B Note (taking into account the subordinate nature of any such Serviced B Note) or Serviced Companion Loan, the related holder of such Serviced B Note or Serviced Companion Loan, as applicable) as a collective whole (as determined by the master servicer or the special servicer, as the case may be, in its good faith and reasonable judgment), in accordance with applicable law, the terms of the Pooling and Servicing Agreement and the terms of the respective mortgage loans, any related Serviced B Note and Serviced Companion Loan and any related Intercreditor Agreement and, to the extent consistent with the foregoing, further as follows:
· | with the same care, skill and diligence as is normal and usual in its general mortgage servicing and REO Property management activities on behalf of third parties or on behalf of itself, whichever is higher, with respect to mortgage loans and REO properties that are comparable to those for which it is responsible under the Pooling and Servicing Agreement; |
· | with a view to the timely collection of all Scheduled Payments of principal and interest under the mortgage loans, any related Serviced B Note and any Serviced Companion Loan or, if a mortgage loan or the related Serviced B Note or Serviced Companion Loan comes into and continues in default and with respect to the special servicer, if, in the good faith and reasonable judgment of the special servicer, no satisfactory arrangements can be made for the collection of the delinquent payments, the maximization of the recovery of principal and interest on such mortgage loan to the Certificateholders (as a collective whole) (or in the case of any A/B Whole Loan or Loan Pair, the maximization of recovery thereon of principal and interest to the Certificateholders and the holder of the related Serviced B Note (taking into account the subordinate nature of any such B Note) or Serviced Companion Loan, as applicable, all taken as a collective whole) on a net present value basis (the relevant discounting of anticipated collections that will be distributable to Certificateholders to be performed at the applicable NPV Calculation Rate); and without regard to: |
· | any other known relationship that the master servicer or the special servicer, as the case may be, or any of their affiliates may have with the related borrower or any affiliate of the related borrower; |
· | the ownership of any Certificate or any interest in any B Note, Serviced Companion Loan, Non-Serviced Companion Loan or any mezzanine loan related to a mortgage loan by the master servicer or the special servicer, as the case may be, or any of their affiliates; |
· | the master servicer’s or the special servicer’s obligation to make Advances; |
· | the right of the master servicer (or any of its affiliates) or the special servicer (or any of its affiliates), as the case may be, to receive any compensation and/or reimbursement of costs, or the sufficiency of any compensation payable to it, under the Pooling and Servicing Agreement or with respect to any particular transaction; and |
· | any obligation of the master servicer (or any of its affiliates) to repurchase any mortgage loan from the Issuing Entity. |
“NPV Calculation Rate” means a discount rate appropriate for the type of cash flows being discounted, namely: (A) for principal and interest payments on a mortgage loan, Serviced B Note or Serviced Companion Loan or from the sale of a defaulted mortgage loan, the higher of (1) the rate determined by the master servicer or special servicer, as applicable, that approximates the market rate that would be obtainable by the related borrower on similar non-defaulted debt of such borrower as of such date of determination, and (2) the related mortgage rate or B note interest rate, as applicable, based on its outstanding principal balance; and (B) for all other cash flows, including property cash flows, the “discount rate” set forth in the most recent appraisal (or update of such appraisal) of the related mortgaged property.
“A/B Whole Loan” means any mortgage loan serviced under the Pooling and Servicing Agreement that is divided into a senior mortgage note that is included in the Issuing Entity and one or more subordinated mortgage note(s) that are not included in the Issuing Entity. References herein to an A/B Whole Loan shall be construed to refer to the aggregate indebtedness under the related mortgage loan and the related subordinated note(s). There is no A/B Whole Loan related to the Issuing Entity as of the Closing Date.
“B Note” means, (i) with respect to any A/B Whole Loan, any related subordinated note not included in the Issuing Entity, which is subordinated in right of payment to the related mortgage loan (which is an A note) to the extent set forth in the related Intercreditor Agreement, (ii) the Alderwood Mall B Note and (iii) the Hilton Garden Inn W 54th Street B Note. See “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” and “—The Non-Serviced Loan Combinations” in this prospectus supplement. The only B Notes related to the Issuing Entity are the promissory notes comprising the Alderwood Mall B Note (individually or collectively, as the context may require) and the Hilton Garden Inn W 54th Street B Note.
“Intercreditor Agreement” means: (a) with respect to an A/B Whole Loan, the related intercreditor agreement, co-lender agreement or similar agreement in effect from time to time by and between the holder of the related mortgage loan (which is an A note), the holder of any other related A note that is not included in the Issuing Entity and the holder of any related Serviced B Note, governing the relative rights of such holders; (b) with respect to a Loan Pair, the related intercreditor agreement, co-lender agreement or similar agreement in effect from time to time by and between the holders of the related Serviced Pari Passu Mortgage Loan and the related Serviced Companion Loan governing the relative rights of such holders; and (c) with respect to any Non-Serviced Loan Combination, the related intercreditor agreement(s), co-lender agreement(s) or similar agreement(s) in effect from time-to-time between the holders of the related Non-Serviced Mortgage Loan and the related Non-Serviced Companion Loan (and, with respect to each of the Alderwood Mall Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, each related B Note).
“Loan Pair” means a Serviced Pari Passu Mortgage Loan and the related Serviced Companion Loan, collectively. The Loan Pair related to the Issuing Entity as of the Closing Date is the TKG 3 Retail Portfolio Loan Pair.
“Directing Holder” means, with respect to any A/B Whole Loan or Loan Pair, any holder of a related Serviced B Note or Serviced Companion Loan, or any designee thereof or participant in a securitization thereof, that constitutes the “Controlling Holder,” “Controlling Note Holder,” “Directing Holder,” “Directing Lender” or any analogous concept under the related Intercreditor Agreement. As of the Closing Date, there is no Directing Holder related to the Issuing Entity.
“Serviced B Note” means, with respect to any A/B Whole Loan or Loan Pair, any related subordinated note not included in the Issuing Entity, which is serviced pursuant to the Pooling and Servicing Agreement and is subordinated in right of payment to the related
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mortgage loan to the extent set forth in the related Intercreditor Agreement. See “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” in this prospectus supplement. There are no Serviced B Notes related to the Issuing Entity.
“Serviced Companion Loan” means, with respect to any Loan Pair, a mortgage loan that is serviced under the Pooling and Servicing Agreement, is not a mortgage loan included in the Issuing Entity, and is paid on apari passu basis with the related Serviced Pari Passu Mortgage Loan. The only Serviced Companion Loan related to the Issuing Entity as of the Closing Date is the TKG 3 Retail Portfolio Serviced Companion Loan.
“Serviced Pari Passu Mortgage Loan” means a mortgage loan that is included in the Issuing Entity and is paid on apari passu basis with a Serviced Companion Loan to the extent set forth in the related Intercreditor Agreement. The only Serviced Pari PassuMortgage Loan included in the Issuing Entity as of the Closing Date is the TKG 3 Retail Portfolio Mortgage Loan.
“Non-Serviced Companion Loan” means a loan not included in the Issuing Entity that is generally payable on apari passu basis with the related Non-Serviced Mortgage Loan. The only Non-Serviced Companion Loans related to the Issuing Entity as of the Closing Date are the 300 South Riverside Plaza Fee Non-Serviced Companion Loan, the 32 Old Slip Fee Non-Serviced Companion Loan, the Waterfront at Port Chester Non-Serviced Companion Loan, the Alderwood Mall Non-Serviced Companion Loan and the Hilton Garden Inn W 54th Street Non-Serviced Companion Loan.
“Non-Serviced Loan Combination” means a Non-Serviced Mortgage Loan and the related Non-Serviced Companion Loan (and, with respect to each of the Alderwood Mall Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, each related B Note), collectively. The only Non-Serviced Loan Combinations related to the Issuing Entity as of the Closing Date are the 300 South Riverside Plaza Fee Non-Serviced Loan Combination, the 32 Old Slip Fee Non-Serviced Loan Combination, the Waterfront at Port Chester Non-Serviced Loan Combination, the Alderwood Mall Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination.
“Non-Serviced Mortgage Loan” means a mortgage loan included in the Issuing Entity but serviced under another agreement. The only Non-Serviced Mortgage Loans included in the Issuing Entity as of the Closing Date are the 300 South Riverside Plaza Fee Mortgage Loan, the 32 Old Slip Fee Mortgage Loan, the Waterfront at Port Chester Mortgage Loan, the Alderwood Mall Mortgage Loan and the Hilton Garden Inn W 54th Street Mortgage Loan.
“Non-Serviced Mortgage Loan Pooling and Servicing Agreement” means the pooling and servicing agreement or trust and servicing agreement, as applicable, under which a Non-Serviced Mortgage Loan is serviced. The Non-Serviced Mortgage Loan Pooling and Servicing Agreements related to the Issuing Entity as of the Closing Date are the pooling and servicing agreement for the MSBAM 2015-C22 securitization (pursuant to which the 300 South Riverside Plaza Fee Non-Serviced Companion Loan, the Waterfront at Port Chester Non-Serviced Companion Loan and the Hilton Garden Inn W 54th Non-Serviced Companion Loan are serviced), the pooling and servicing agreement for the MSBAM 2015-C23 securitization (pursuant to which the 32 Old Slip Fee Non-Serviced Companion Loan is serviced) and the trust and servicing agreement for the MSCCG 2015-ALDR securitization (pursuant to which the Alderwood Mall Non-Serviced Companion Loan is serviced).
“Non-Serviced Mortgage Loan Master Servicer”, “Non-Serviced Mortgage Loan Special Servicer”, “Non-Serviced Mortgage Loan Trust Advisor,” “Non-Serviced Mortgage Loan Certificate Administrator” and “Non-Serviced Mortgage Loan Trustee” mean, with respect to any Non-Serviced Loan Combination, the master servicer, the special servicer, the trust advisor, the certificate administrator and the trustee, respectively, under the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement. With respect to any Non-Serviced Mortgage Loan Pooling and Servicing Agreement, the related Non-Serviced Mortgage Loan Master Servicer, the Non-Serviced Mortgage Loan Special Servicer, the Non-Serviced Mortgage Loan Trust Advisor, the Non-Serviced Mortgage Loan Certificate Administrator and the Non-Serviced Mortgage Loan Trustee are referred to collectively as the “Non-Serviced Mortgage Loan Service Providers.”
“Pari Passu Loan Primary Servicing Fee Rate” means the “master servicing fee rate” or analogous term (as defined in the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement) and any other servicing fee rate payable to the applicable Non-Serviced Mortgage Loan Master Servicer applicable to any Non-Serviced Mortgage Loan. The Pari Passu Loan Primary Servicing Fee Rate will be (i) with respect to the 300 South Riverside Plaza Fee Mortgage Loan, the Waterfront at Port Chester Mortgage Loan and the Hilton Garden Inn W 54th Street Mortgage Loan, 0.0050%per annum,(ii) with respect to the 32 Old Slip Fee Mortgage Loan, 0.0050%per annum, and (iii) with respect to the Alderwood Mall Mortgage Loan, 0.0050%per annum.
Each of the master servicer and the special servicer is required to adhere to the Servicing Standard. Each of the master servicer and the special servicer may become the owner or pledgee of Certificates with the same rights as each would have if it were not the master servicer or the special servicer, as the case may be.
Any such interest of the master servicer or the special servicer in the Certificates will not be taken into account when evaluating whether actions of the master servicer or the special servicer are consistent with their respective obligations in accordance with the Servicing Standard, regardless of whether such actions may have the effect of benefiting the class or classes of Certificates owned by the master servicer or the special servicer. In addition, subject to the Servicing Standard, the Pooling and Servicing Agreement will not limit the ability of the master servicer or the special servicer to lend money to (to the extent not secured, in whole or in part, by any mortgaged property), accept deposits from and otherwise generally engage in any kind of business or dealings with any borrower as though the master servicer or the special servicer, as applicable, were not a party to the Pooling and Servicing Agreement or to the transactions contemplated hereby.
Each of the master servicer and the special servicer is permitted to enter into a sub-servicing agreement, and any such sub-servicer will receive a fee for the services specified in such sub-servicing agreement. However, any sub-servicing is subject to various conditions set forth in the Pooling and Servicing Agreement including the requirement that the master servicer or the special servicer, as the case may be, will remain liable for its servicing obligations under the Pooling and Servicing Agreement. Furthermore, the special servicer may not enter into any sub-servicing agreement that provides for the performance by third parties of any or all of its obligations under the Pooling and Servicing Agreement without the consent of the Controlling Class Representative during any Subordinate Control Period or the Directing Holder (with respect to any A/B Whole Loan or Loan Pair), as applicable (in each case, such consent not to be unreasonably withheld), except to the extent necessary for the special servicer to comply with applicable regulatory requirements. No sub-servicer may be permitted to make material servicing decisions, such as loan modifications or determinations as to the manner or timing of enforcing remedies under the mortgage loan documents, without the consent of the master servicer, whose consent will be subject to the consent of the special servicer. The master
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servicer or the special servicer, as the case may be, will be required to pay any servicing compensation due to any sub-servicer out of its own funds.
The master servicer or special servicer may resign from the obligations and duties imposed on it under the Pooling and Servicing Agreement, upon thirty (30) days’ notice to the depositor, the trust advisor (in the case of the resignation of the special servicer), trustee, certificate administrator and custodian,provided that:
· | a successor master servicer or special servicer is available, has a net worth of at least $15,000,000, and is willing to and does assume the obligations of the master servicer or special servicer, and accepts appointment as successor master servicer or special servicer, on substantially the same terms and conditions, and for not more than equivalent compensation (unless, in the case of the special servicer, a successor cannot be found for existing compensation) and, in the case of the special servicer, (i) during any Subordinate Control Period, is acceptable to or has been appointed by the Controlling Class Representative, (ii) during any Collective Consultation Period, is reasonably acceptable to the Controlling Class Representative, the depositor and the trustee, (iii) during any Senior Consultation Period, is reasonably acceptable to the depositor and the trustee, and (iv) is a Qualified Replacement Special Servicer; |
· | the master servicer or special servicer, as applicable, bears all costs associated with its resignation and the transfer of servicing; |
· | the resigning master servicer or the resigning special servicer, as applicable, shall have provided each Rating Agency with a Rating Agency Communication with respect to such servicing transfer; and |
· | (a) the successor master servicer or special servicer is acting as master servicer or special servicer, as applicable, in a commercial mortgage loan securitization that was rated by Moody’s, a commercial mortgage loan securitization that was rated by DBRS and a commercial mortgage loan securitization that was rated by KBRA, in each case within the twelve (12) month period prior to the date of determination, and none of Moody’s, DBRS or KBRA has downgraded or withdrawn the then current rating on any class of commercial mortgage securities or placed any class of commercial mortgage securities on watch citing the continuation of such master servicer or special servicer, as applicable, as master servicer or special servicer of such commercial mortgage securities, as applicable, as the sole or material reason for such downgrade or withdrawal (or placement on watch) or (b) if such successor master servicer or special servicer, as applicable, is not acting as master servicer or special servicer, as applicable, in a commercial mortgage loan securitization that was rated by Moody’s, DBRS and/or KBRA in such twelve (12) month period, then a Rating Agency Confirmation from such Rating Agency will be required. |
Furthermore, the master servicer or special servicer may resign if it determines that its duties 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. Any such determination permitting the resignation of the master servicer or the special servicer shall be evidenced by an opinion of counsel to such effect delivered to the trustee, in the case of the resignation of the master servicer, or to the master servicer, the Controlling Class Representative (during any Subordinate Control Period and any Collective Consultation Period) and the trustee, in the case of the resignation of the special servicer. If the master servicer ceases to serve as such and shall not have been replaced by a qualified successor, the trustee or an agent of the trustee will assume the master servicer’s duties and obligations under the Pooling and Servicing Agreement. If the special servicer ceases to serve as such and a qualified successor shall not have been engaged (or, if applicable in the case of an A/B Whole Loan or Loan Pair, appointed by a related Directing Holder and engaged or, otherwise during any Subordinate Control Period, appointed by the Controlling Class Representative and engaged), the trustee or an agent of the trustee will assume the duties and obligations of the special servicer. If the trustee or any agent of the trustee assumes the duties and obligations of the master servicer or special servicer under such circumstances, the trustee or such agent will be permitted to resign as master servicer or special servicer notwithstanding the first sentence of this paragraph if it has been replaced by a qualified successor pursuant to the terms of the Pooling and Servicing Agreement.
The relationship of each of the master servicer and the special servicer to the trustee is intended to be that of an independent contractor and not that of a joint venture, partner or agent.
The master servicer will have no responsibility for the performance by the special servicer, to the extent they are different entities, of its duties under the Pooling and Servicing Agreement, and the special servicer will have no responsibility for the performance by the master servicer of its duties under the Pooling and Servicing Agreement.
The master servicer generally will be responsible for servicing and administering the entire pool of mortgage loans. The special servicer will be responsible for servicing and administering any Specially Serviced Mortgage Loans.
Upon the occurrence of any of the Servicing Transfer Events (as defined below), the master servicer will be required to transfer its principal servicing responsibilities with respect to a Specially Serviced Mortgage Loan to the special servicer in accordance with the procedures set forth in the Pooling and Servicing Agreement. Notwithstanding such transfer, the master servicer will continue to receive any payments on such mortgage loan, including amounts collected by the special servicer, to make selected calculations with respect to such mortgage loan, and to make remittances to the certificate administrator and prepare reports for the trustee and the certificate administrator with respect to such mortgage loan. If title to the related mortgaged property is acquired by the Issuing Entity, whether through foreclosure, deed in lieu of foreclosure or otherwise, the special servicer will be responsible for the operation and management of the property and such loan will be considered an REO Mortgage Loan.
“Servicing Transfer Event” means each event set forth under the definition of Specially Serviced Mortgage Loan that has caused a mortgage loan, Serviced B Note or Serviced Companion Loan to become a Specially Serviced Mortgage Loan. If a Servicing Transfer Event occurs with respect to a mortgage loan that is part of an A/B Whole Loan or Loan Pair, it will be deemed to have occurred also with respect to the related Serviced B Note or Serviced Companion Loan, as applicable. If a Servicing Transfer Event occurs with respect to a Serviced B Note or Serviced Companion Loan, it will be deemed to have occurred also with respect to the mortgage loan that is part of the related A/B Whole Loan or Loan Pair, as applicable.
“Specially Serviced Mortgage Loan” means the following:
· | any mortgage loan (other than a Non-Serviced Mortgage Loan), Serviced B Note or Serviced Companion Loan as to which a Balloon Payment is past due, and the master servicer has determined, in its good faith reasonable judgment in accordance |
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with the Servicing Standard, that payment is unlikely to be made on or before the 60th day after the date the Balloon Payment was due (or if the master servicer has received, prior to the 60th day after the Due Date of such Balloon Payment, written evidence from an institutional lender of such lender’s binding commitment to refinance such mortgage loan, one hundred twenty (120) days following such default;provided, that if such refinancing does not occur during the time period specified in such written refinancing commitment, a Servicing Transfer Event will be deemed to have occurred), or any other payment is more than sixty (60) days past due or has not been made on or before the second Due Date following the date such payment was due; |
· | any mortgage loan (other than a Non-Serviced Mortgage Loan), Serviced B Note or Serviced Companion Loan as to which, to the master servicer’s knowledge, the borrower has consented to the appointment of a receiver or conservator in any insolvency or similar proceeding of or relating to such borrower or to all or substantially all of its property, or the borrower has become the subject of a decree or order issued under a bankruptcy, insolvency or similar law and such decree or order shall have remained undischarged or unstayed for a period of sixty (60) days; |
· | any mortgage loan (other than a Non-Serviced Mortgage Loan), Serviced B Note or Serviced Companion Loan as to which the master servicer shall have received notice of the foreclosure or proposed foreclosure of any other lien on the mortgaged property; |
· | any mortgage loan (other than a Non-Serviced Mortgage Loan), Serviced B Note or Serviced Companion Loan as to which the master servicer has knowledge of a default (other than a failure by the related borrower to pay principal or interest) which, in the good faith reasonable judgment of the master servicer, materially and adversely affects the interests of the Certificateholders or the holder of the related Serviced B Note or Serviced Companion Loan and which has occurred and remains unremedied for the applicable grace period specified in such mortgage loan (or, if no grace period is specified, sixty (60) days); |
· | any mortgage loan (other than a Non-Serviced Mortgage Loan), Serviced B Note or Serviced Companion Loan as to which the borrower admits in writing its inability to pay its debts generally as they become due, files a petition to take advantage of any applicable insolvency or reorganization statute, makes an assignment for the benefit of its creditors or voluntarily suspends payment of its obligations; and |
· | any mortgage loan (other than a Non-Serviced Mortgage Loan), Serviced B Note or Serviced Companion Loan as to which, in the good faith reasonable judgment of the master servicer or the special servicer (and, in the case of the special servicer, during any Subordinate Control Period, with the consent of the Controlling Class Representative), (a) a payment default is imminent or is likely to occur within sixty (60) days, or (b) any other default is imminent or is likely to occur within sixty (60) days and such default, in the good faith reasonable judgment of the master servicer or the special servicer (and, in the case of the special servicer, during any Subordinate Control Period, with the consent of the Controlling Class Representative), is reasonably likely to materially and adversely affect the interests of the Certificateholders or the holder of the Serviced B Note or Serviced Companion Loan (as the case may be),provided that any determination under this clause (b) with respect to any mortgage loan (or Serviced B Note or Serviced Companion Loan, if applicable) solely by reason of the failure (or imminent failure) of the related borrower to maintain or cause to be maintained insurance coverage against damages or losses arising from acts of terrorism may only be made by the special servicer if it determines that such default is not an Acceptable Insurance Default (during any Subordinate Control Period, with the consent of the Controlling Class Representative). |
Under any applicable Non-Serviced Mortgage Loan Pooling and Servicing Agreement, if a servicing transfer event thereunder occurs with respect to any Non-Serviced Companion Loan, it will be deemed to have occurred also with respect to the related Non-Serviced Mortgage Loan, and the Non-Serviced Loan Combination will be transferred to special servicing. “Servicing transfer events” under any Non-Serviced Mortgage Loan Pooling and Servicing Agreement are substantially similar to those under the Pooling and Servicing Agreement.
A Specially Serviced Mortgage Loan can become a Rehabilitated Mortgage Loan, after which the master servicer will be required to resume all servicing responsibilities described herein as being allocated to the master servicer under the Pooling and Servicing Agreement.
A “Rehabilitated Mortgage Loan” is a Specially Serviced Mortgage Loan for which (a) three consecutive Scheduled Payments have been made, in the case of any such mortgage loan, Serviced B Note or Serviced Companion Loan that was modified, based on the modified terms, or a complete defeasance has occurred, (b) no other Servicing Transfer Event has occurred and is continuing with respect to such mortgage loan, Serviced B Note or Serviced Companion Loan (or, with respect to determining whether a mortgage loan, Serviced B Note or Serviced Companion Loan as to which an Appraisal Event has occurred is a Rehabilitated Mortgage Loan for purposes of applying Appraisal Reductions, no other Appraisal Event has occurred and is continuing) and (c) the Issuing Entity has been reimbursed for all costs incurred as a result of the occurrence of the Servicing Transfer Event, such amounts constitute a Workout-Delayed Reimbursement Amount or such amounts have been forgiven. A mortgage loan that is part of an A/B Whole Loan will not constitute a Rehabilitated Mortgage Loan unless each related Serviced B Note would also constitute a Rehabilitated Mortgage Loan. A Serviced B Note will not constitute a Rehabilitated Mortgage Loan unless its related mortgage loan would also constitute a Rehabilitated Mortgage Loan. A Serviced Pari Passu Mortgage Loan will not constitute a Rehabilitated Mortgage Loan unless its related Serviced Companion Loan would also constitute a Rehabilitated Mortgage Loan. A Serviced Companion Loan will not constitute a Rehabilitated Mortgage Loan unless its related Serviced Pari Passu Mortgage Loan would also constitute a Rehabilitated Mortgage Loan.
The master servicer and the special servicer will, in general, each be required to pay all ordinary expenses incurred by it in connection with its servicing activities under the Pooling and Servicing Agreement and will not be entitled to reimbursement therefor except as expressly provided in the Pooling and Servicing Agreement. See “Description of the Offered Certificates—Advances—Servicing Advances” in this prospectus supplement.
The master servicer and the special servicer and any affiliate, director, officer, employee, member, manager or agent of any of them will be entitled to indemnification from the Issuing Entity out of collections on, and other proceeds of, the mortgage loans, including REO Mortgage Loans (and, if and to the extent that the matter relates to a Serviced B Note or Serviced Companion Loan, out of collections on, and other proceeds of, the Serviced B Note or Serviced Companion Loan) against any loss, liability, or expense incurred in connection with any legal action relating to the Pooling and Servicing Agreement, the mortgage loans, any Serviced B Note or Serviced Companion Loan, any REO Property or the Certificates or any exercise of rights under the Pooling and Servicing Agreement reasonably requiring the use of counsel
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or the incurring of expenses other than, among other things, any loss, liability or expense incurred by reason of the master servicer’s or special servicer’s willful misfeasance, bad faith or negligence in the performance of their duties under the Pooling and Servicing Agreement. Any Non-Serviced Mortgage Loan Master Servicer and Non-Serviced Mortgage Loan Special Servicer and their respective affiliates, directors, officers, employees, members, managers or agents of any of them will be entitled to similar indemnification from the Issuing Entity for losses, liabilities and expenses relating to any Non-Serviced Mortgage Loan (but excluding any losses allocable to the Non-Serviced Companion Loan).
The Master Servicer
Master Servicer Compensation
The master servicer will be entitled to a Master Servicing Fee (the “Master Servicing Fee”) equal to the Master Servicing Fee Rate applied to the outstanding principal balance of each mortgage loan (including any Non-Serviced Mortgage Loan), any related Serviced Companion Loan (and in each case including any REO Mortgage Loan or REO Serviced Companion Loan) and, if applicable, A/B Whole Loan or Loan Pair. The “Master Servicing Fee Rate” means the rate payable each month equal to (i) with respect to each mortgage loan(other than the 300 South Riverside Plaza Fee Mortgage Loan, the 32 Old Slip Fee Mortgage Loan, the Waterfront at Port Chester Mortgage Loan, the Alderwood Mall Mortgage Loan and the Hilton Garden Inn W 54th Street Mortgage Loan), 0.0050%per annum plus the primary servicing fee rate set forth next to such mortgage loan on Appendix I to this prospectus supplement, (ii) with respect to the TKG 3 Retail Portfolio Serviced Companion Loan, 0.0050%per annum, and (iii) with respect to the 300 South Riverside Plaza Fee Mortgage Loan, the 32 Old Slip Mortgage Loan, the Waterfront at Port Chester Mortgage Loan, the Alderwood Mall Mortgage Loan and the Hilton Garden Inn W 54th Street Mortgage Loan, 0.0050%per annum. In addition, (i) the master servicer under the MSBAM 2015-C22 transaction will be paid a primary servicing fee in respect of the 300 South Riverside Mortgage Loan, the Waterfront at Port Chester Mortgage Loan and the Hilton Garden Inn W 54th Street Mortgage Loan at a rate equal to the related Pari Passu Loan Primary Servicing Fee Rate (0.0050%per annum), (ii) the master servicer under the MSBAM 2015-C23 transaction will be paid a primary servicing fee in respect of the 32 Old Slip Fee Mortgage Loan at a rate equal to the related Pari Passu Loan Primary Servicing Fee Rate (0.0050%per annum), and (iii) the master servicer under the MSCCG 2015-ALDR transaction will be paid a primary servicing fee in respect of the Alderwood Mall Mortgage Loan at a rate equal to the related Pari Passu Loan Primary Servicing Fee Rate (0.0050%per annum). The Master Servicing Fee includes all amounts required to be paid to any primary or sub-servicer.
The related Master Servicing Fee and certain other compensation payable to the master servicer will be reduced, on each Distribution Date by the amount, if any, of any payment of Compensating Interest (a “Compensating Interest Payment”) required to be made by the master servicer on such Distribution Date. Any Net Aggregate Prepayment Interest Shortfall will be allocated as presented under “Description of the Offered Certificates—Distributions—Prepayment Interest Shortfalls and Prepayment Interest Excesses” in this prospectus supplement. If Prepayment Interest Excesses for all mortgage loans other than Specially Serviced Mortgage Loans exceed Prepayment Interest Shortfalls for such mortgage loans as of any Distribution Date, such excess amount will be payable to the master servicer as additional servicing compensation.
In addition to the Master Servicing Fee, the master servicer will be entitled to retain, as additional servicing compensation (a) a specified percentage (which may be zero) of Excess Modification Fees, Consent Fees, Ancillary Fees, Assumption Fees and Excess Penalty Charges with respect to each mortgage loan, Serviced B Note (to the extent set forth in the related intercreditor agreement) and Serviced Companion Loan and (b) 100% of any assumption application fees with respect to non-Specially Serviced Mortgage Loans and any defeasance fee (provided, that for the avoidance of doubt, any such defeasance fee shall not include any modification fees or waiver fees in connection with a defeasance that the special servicer is entitled to under the Pooling and Servicing Agreement) actually paid by a borrower in connection with the defeasance of a mortgage loan. The Master Servicer will also be authorized but not required to invest or direct the investment of funds held in the Collection Account in certain investments permitted under the terms of the Pooling and Servicing Agreement, 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, except as set forth in the Pooling and Servicing Agreement. The Master Servicer will also be 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.
“Assumption Fees” means, with respect to any mortgage loan (or A/B Whole Loan or Loan Pair, if applicable, but not any Non-Serviced Mortgage Loan), any and all assumption fees actually paid by the related borrower and other applicable fees (excluding assumption application fees) actually paid by the related borrower in accordance with the related loan documents, with respect to a transfer of a related mortgaged property or interests in a related borrower.
“Consent Fees” means, with respect to any mortgage loan (or A/B Whole Loan or Loan Pair, if applicable, but not any Non-Serviced Mortgage Loan), any and all fees actually paid by a borrower with respect to any consent or approval required pursuant to the terms of the mortgage loan, A/B Whole Loan or Loan Pair documents that does not involve a restructuring, modification, assumption, extension, waiver or amendment of the terms of the mortgage loan, A/B Whole Loan or Loan Pair documents.
“Modification Fees” means, with respect to any mortgage loan (or A/B Whole Loan or Loan Pair, if applicable, but not any Non-Serviced Mortgage Loan), any and all fees with respect to a written restructuring, modification, extension, waiver or amendment that restructures, modifies, extends, amends or waives any term of the mortgage loan, A/B Whole Loan or Loan Pair (as evidenced by a signed writing) agreed to by the master servicer or the special servicer (other than any Assumption Fees, assumption application fees, Consent Fees and defeasance fees). For each written restructuring, modification, extension, waiver or amendment that restructures, modifies, extends, amends or waives any term of the mortgage loan, A/B Whole Loan or Loan Pair in connection with working out of a Specially Serviced Mortgage Loan, the Modification Fees collected from the related borrower will be subject to a cap of the lesser of (i) 1.0% of the outstanding principal balance of such mortgage loan, A/B Whole Loan or Loan Pair, as applicable, on the closing date of the related modification, restructure, extension, waiver or amendment (prior to giving effect to such modification, restructure, extension, waiver or amendment);provided, that no aggregate cap will exist in connection with the amount of Modification Fees which may be collected from the related borrower with respect to any Specially Serviced Mortgage Loan or REO Loan and (ii) $1,000,000,provided,further, that no aggregate cap exists in connection with the amount of Modification Fees which may be collected from the related borrower with respect to any Specially Serviced Mortgage Loan or REO Loan.
“Allocable Modification Fee” means, with respect to any mortgage loan (or A/B Whole Loan or Loan Pair, if applicable, but not any Non-Serviced Mortgage Loan) as to which a Modification Fee is collected, the excess, if any, of (i) such Modification Fee, over (ii) 0.75% of the
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outstanding principal balance of such mortgage loan (or A/B Whole Loan or Loan Pair, if applicable, but not any Non-Serviced Mortgage Loan) immediately following the related restructuring, modification, extension, amendment or waiver.
“Unallocable Modification Fee” means, with respect to any mortgage loan (or A/B Whole Loan or Loan Pair, if applicable, but not any Non-Serviced Mortgage Loan) as to which a Modification Fee is collected, the lesser of (i) such Modification Fee, and (ii) 0.75% of the outstanding principal balance of such mortgage loan (or A/B Whole Loan or Loan Pair, if applicable, but not any Non-Serviced Mortgage Loan) immediately following the related restructuring, modification, extension, amendment or waiver.
“Excess Modification Fees” means, with respect to any mortgage loan (or A/B Whole Loan or Loan Pair, if applicable, but not any Non-Serviced Mortgage Loan), the sum of (A) any and all Unallocable Modification Fees with respect to a modification, waiver, extension or amendment of any of the terms of such mortgage loan (or A/B Whole Loan or Loan Pair, if applicable), exclusive, in the case of an A/B Whole Loan or a Loan Pair, of any portion of such Modification Fees payable to the holder of the related Serviced B Note or Serviced Companion Loan, as applicable, pursuant to the related Intercreditor Agreement, and (B) the excess, if any, of (i) any and all Allocable Modification Fees with respect to a modification, waiver, extension or amendment of any of the terms of such mortgage loan (or A/B Whole Loan or Loan Pair, if applicable), exclusive, in the case of an A/B Whole Loan or a Loan Pair, of any portion of such Modification Fees payable to the holder of the related Serviced B Note or Serviced Companion Loan, as applicable, pursuant to the related Intercreditor Agreement, over (ii) all unpaid or unreimbursed Additional Trust Fund Expenses outstanding or previously incurred on behalf of the Issuing Entity with respect to such mortgage loan (or A/B Whole Loan or Loan Pair, if applicable) and reimbursed from such Allocable Modification Fees (which additional expenses will be reimbursed from such Allocable Modification Fees, exclusive, in the case of an A/B Whole Loan or a Loan Pair, of any portion of such Allocable Modification Fees payable to the holder of the related Serviced B Note or Serviced Companion Loan, as applicable, pursuant to the related Intercreditor Agreement) and (C) expenses previously paid or reimbursed from Allocable Modification Fees as described in the preceding clause (B), which expenses have been recovered from the related borrower or otherwise.
“Penalty Charges” means, with respect to any mortgage loan (or A/B Whole Loan or Loan Pair, if applicable) (or any related REO Property), any amounts actually collected thereon from the borrower that represent late fees and default interest, but excluding any amounts allocable to any Non-Serviced Mortgage Loan and its related Non-Serviced Companion Loan pursuant to the terms of the related Intercreditor Agreement.
“Excess Penalty Charges” means, with respect to any mortgage loan (or A/B Whole Loan or Loan Pair, if applicable), (A) the excess, if any, of (i) any and all Penalty Charges collected in respect of such mortgage loan (or A/B Whole Loan or Loan Pair, if applicable) (exclusive, in the case of an A/B Whole Loan or Loan Pair, of any portion of such Penalty Charges payable to the holder of the related Serviced B Note or Serviced Companion Loan pursuant to the related Intercreditor Agreement), over (ii) all unpaid or unreimbursed Additional Trust Fund Expenses (including, without limitation, reimbursement of Advances and interest on Advances to the extent not otherwise paid or reimbursed by the borrower and, also, the payment of Special Servicing Fees, Workout Fees and Liquidation Fees) outstanding or previously incurred on behalf of the Issuing Entity with respect to the related mortgage loan (or A/B Whole Loan or Loan Pair, if applicable) and reimbursed from such Penalty Charges (which expenses shall be reimbursed from such Penalty Charges (exclusive, in the case of an A/B Whole Loan or Loan Pair, of any portion of such Penalty Charges payable to the holder of the related Serviced B Note or Serviced Companion Loan pursuant to the related Intercreditor Agreement)) and (B) expenses previously paid or reimbursed from Penalty Charges as described in the precedingclause (A), which expenses have been recovered from the related borrower or otherwise.
“Ancillary Fees” means, with respect to any mortgage loan (or A/B Whole Loan or Loan Pair, if applicable), any and all demand fees, beneficiary statement charges, fees for insufficient or returned checks and other usual and customary charges and fees (other than Modification Fees, Consent Fees, Penalty Charges, defeasance fees, Assumption Fees and assumption application fees) actually received from the borrower.
Although the Master Servicer will be required to service and administer the pool of mortgage loans (other than any Non-Serviced Mortgage Loans), Serviced B Notes and Serviced Companion Loans in accordance with the Servicing Standard above and, accordingly, without regard to their rights 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 with an economic disincentive to comply with this standard.
Any successor master servicer will receive the Master Servicing Fee as compensation, together with the foregoing additional servicing compensation. The Pooling and Servicing Agreement will not provide for any successor master servicer to receive compensation in excess of that permitted to be received by its predecessor. Any change to the compensation of the master servicer will require an amendment to the Pooling and Servicing Agreement.
Master Servicer Termination Events
A “Master Servicer Termination Event” means, with respect to the master servicer under the Pooling and Servicing Agreement, any one of the following events:
· | any failure by the master servicer to remit to the certificate administrator or otherwise make any payment required to be remitted by the master servicer under the terms of the Pooling and Servicing Agreement, including any required Advances;provided, that if a payment is required to be remitted by the master servicer to the certificate administrator on the Master Servicer Remittance Date, the failure to remit that payment to the certificate administrator will only be a “Master Servicer Termination Event” under this bullet if that payment has not been remitted to the certificate administrator prior to 10:00 a.m. (New York City time) on the related Distribution Date; |
· | any failure by the master servicer to make a required deposit to the Collection Account which continues unremedied for one (1) Business Day following the date on which such deposit was first required to be made; |
· | any failure on the part of the master servicer duly to observe or perform in any material respect any other of the duties, covenants or agreements on the part of the master servicer contained in the Pooling and Servicing Agreement (other than, if and for so long as the Issuing Entity or a trust created pursuant to a pooling and servicing agreement or trust and servicing agreement, as applicable, relating to a Non-Serviced Companion Loan or a Serviced Companion Loan is subject to the reporting requirements of the Exchange Act, with respect to the duties described under “Description of the Offered Certificates—Evidence as to Compliance” in this prospectus supplement or certain other reporting duties imposed on it for |
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purposes of compliance with Regulation AB and the Exchange Act to the extent described in the ninth bullet of this definition), which continues unremedied for a period of thirty (30) days after the date on which written notice of such failure, requiring the same to be remedied, is given to the master servicer by the depositor or the trustee;provided, such cure period may be extended to the extent necessary to permit the master servicer to cure such failure if the master servicer certifies to the trustee and the depositor that the master servicer is in good faith attempting to remedy such failure and the Certificateholders will not be materially and adversely affected thereby;provided,further that such cure period may not exceed ninety (90) days; |
· | any breach of the representations and warranties of the master servicer in the Pooling and Servicing Agreement that materially and adversely affects the interest of any Holder of any class of Certificates and that continues unremedied for a period of thirty (30) days after the date on which notice of such breach, requiring the same to be remedied is given to the master servicer by the depositor or the trustee,provided, such cure period may be extended to the extent necessary to permit the master servicer to cure such breach if the master servicer certifies to the trustee and the depositor that the master servicer is in good faith attempting to remedy such breach and the Certificateholders will not be materially and adversely affected thereby;provided,further that such cure period may not exceed ninety (90) days; |
· | a decree or order of a court or agency or supervisory authority having jurisdiction in the premises in an involuntary case under any present or future federal or state bankruptcy, insolvency or similar law for the appointment of a conservator, receiver, liquidator, trustee or similar official in any bankruptcy, insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, is entered against the master servicer and such decree or order remains in force undischarged or unstayed for a period of sixty (60) days; |
· | the master servicer consents to the appointment of a conservator, receiver, liquidator, trustee or similar official in any bankruptcy, insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings of or relating to the master servicer or of or relating to all or substantially all of its property; |
· | the master servicer admits in writing its inability to pay its debts generally as they become due, files a petition to take advantage of any applicable bankruptcy, insolvency or reorganization statute, makes an assignment for the benefit of its creditors, voluntarily suspends payment of its obligations, or takes any corporate action in furtherance of the foregoing; |
· | a servicing officer of the master servicer obtains knowledge that Moody’s, DBRS or KBRA has (i) qualified, downgraded or withdrawn its rating or ratings of one or more Classes of Certificates or one or more classes of securities backed by a Serviced B Note or Serviced Companion Loan or (ii) placed one or more Classes of Certificates or one or more classes of securities backed by a Serviced B Note or Serviced Companion Loan on “watch status” in contemplation of a ratings downgrade or withdrawal (and, in the case of either of clauses (i) or (ii), such qualification, downgrade, withdrawal or “watch status” placement shall not have been withdrawn by Moody’s, DBRS or KBRA, as applicable, within sixty (60) days of the date such servicing officer obtained such actual knowledge) and, in the case of either of clauses (i) or (ii), cited servicing concerns with the master servicer as the sole or material factor in such rating action. |
· | if and for so long as the Issuing Entity or a trust created pursuant to a pooling and servicing agreement or trust and servicing agreement, as applicable, relating to a Non-Serviced Companion Loan or a Serviced Companion Loan is subject to the reporting requirements of the Exchange Act, any failure by the master servicer, an Additional Servicer or a sub-servicer appointed by the master servicer (other than any Additional Servicer that the master servicer is required to retain by the mortgage loan seller) to deliver any reporting items required to be delivered under Regulation AB and the Exchange Act by such entity under the Pooling and Servicing Agreement by the time required under the Pooling and Servicing Agreement after any applicable grace period; or |
· | if and for so long as the Issuing Entity or a trust created pursuant to a pooling and servicing agreement or trust and servicing agreement, as applicable, relating to a Non-Serviced Companion Loan or a Serviced Companion Loan is subject to the reporting requirements of the Exchange Act, any failure by the master servicer to terminate any sub-servicer that is a Reporting Servicer for certain failures to deliver reporting items required to be delivered under Regulation AB and the Exchange Act;provided, that the depositor may waive any such Master Servicer Termination Event (or the failure to deliver by the Reporting Servicer) under this tenth bullet in its sole discretion without the consent of the trustee or any Certificateholders. |
“Additional Servicer”means each affiliate of the master servicer, the special servicer, the mortgage loan seller, the certificate administrator, the trustee, the custodian, the depositor or the underwriter that services any of the mortgage loans and each person, other than the special servicer, who is not an affiliate of the master servicer, the mortgage loan seller, the certificate administrator, the trustee, the custodian, the depositor or the underwriter, that services 10% or more of the mortgage loans (based on the unpaid principal balance of the mortgage loans).
“Reporting Servicer” means each of the master servicer, the special servicer, the trust advisor and any Servicing Function Participant (including the certificate administrator, the trustee (if it has made an advance during the calendar year related to the annual report or assessment of compliance with servicing criteria), the custodian and each sub-servicer), as the case may be.
“Servicing Criteria” means the criteria set forth in paragraph (d) of Item 1122 of Regulation AB, as such may be amended from time to time.
“Servicing Function Participant” means any person (including the certificate administrator, the trustee and the custodian), other than the master servicer and the special servicer, that, within the meaning of Item 1122 of Regulation AB, is performing activities addressed by the Servicing Criteria, unless such person’s activities relate only to 5% or less of the mortgage loans (based on their unpaid principal balance). The Trustee will be a Servicing Function Participant only if, and for such time as, it has made an Advance during any calendar year covered by an annual report on assessment of compliance with Servicing Criteria.
If a Master Servicer Termination Event described under the third, fourth, eighth, ninth or tenth bullet under the definition of “Master Servicer Termination Event” above has occurred and is continuing, the obligations and responsibilities of the master servicer under the Pooling and Servicing Agreement will terminate on the date which is sixty (60) days following the date on which the trustee or the depositor gives written notice to the master servicer that the master servicer is terminated. If a Master Servicer Termination Event described under the
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first, second, fifth, sixth or seventh bullet under the definition of “Master Servicer Termination Event” above has occurred and is continuing, the obligations and responsibilities of the master servicer under the Pooling and Servicing Agreement will terminate immediately upon the date which the trustee or the depositor gives written notice to the master servicer that the master servicer is terminated. After the occurrence and during the continuance of any Master Servicer Termination Event (subject to the depositor’s waiver right with respect to the event described in the tenth bullet point under the definition of “Master Servicer Termination Event” above), the trustee may elect to terminate the master servicer by providing such notice, and will be required to provide such notice if Holders of Certificates representing more than 25% of the aggregate Voting Rights of all Certificates so direct the trustee.
Upon termination of the master servicer under the Pooling and Servicing Agreement, all authority, power and rights of the master servicer under the Pooling and Servicing Agreement, whether with respect to the mortgage loans or otherwise, will terminate except for any rights related to indemnification, unpaid servicing compensation or unreimbursed Advances and related interest,provided that in no event will the termination of the master servicer be effective until a successor servicer has succeeded the master servicer as successor servicer, notified the master servicer of such succession, and such successor servicer has assumed the master servicer’s obligations and responsibilities with respect to the mortgage loans as set forth in the Pooling and Servicing Agreement. The trustee may not succeed the master servicer as servicer until and unless it has satisfied the provisions specified in the Pooling and Servicing Agreement. However, if the master servicer is terminated as a result of a Master Servicer Termination Event described under the fifth, sixth or seventh bullet under the definition of “Master Servicer Termination Event” described above, the trustee will act as successor servicer immediately and shall use commercially reasonable efforts to either satisfy the conditions specified in the Pooling and Servicing Agreement or transfer the duties of the master servicer to a successor servicer who has satisfied such conditions. If any master servicer is terminated based upon a Master Servicer Termination Event under the eighth bullet of the definition thereof, then such terminated master servicer will have the right to enter into a sub-servicing agreement or primary servicing agreement with the applicable successor master servicer with respect to all applicable mortgage loans that are not then subject to a sub-servicing agreement or primary servicing agreement, so long as certain conditions are met including that such terminated master servicer is acting as primary servicer in a commercial mortgage loan securitization that was rated by Moody’s, a commercial mortgage loan securitization that was rated by DBRS and a commercial mortgage loan securitization that was rated by KBRA, in each case within the twelve (12) month period prior to the date of determination, and none of Moody’s, DBRS or KBRA has downgraded or withdrawn the then current rating on any class of commercial mortgage securities or placed any class of commercial mortgage securities on watch citing the continuation of such primary servicer as primary servicer of such commercial mortgage securities as the sole or material reason for such downgrade or withdrawal (or placement on watch) or, in the case of each such Rating Agency, be otherwise acceptable to such Rating Agency as evidenced by a Rating Agency Confirmation.
If the master servicer (i) is terminated solely due to a Master Servicer Termination Event described in the eighth or ninth bullet of the definition of Master Servicer Termination Event and (ii) provides the trustee with the appropriate “request for proposal” materials, the trustee will be required to solicit good faith bids for the rights to master service the mortgage loans under the Pooling and Servicing Agreement. The trustee will be required to select the bidder with the highest cash bid (or such other bidder as the master servicer may direct) that also meets the qualifications set forth in the Pooling and Servicing Agreement to act as master servicer. Upon the agreement of such successor servicer to succeed the master servicer and assume the master servicer’s obligations and responsibilities with respect to the mortgage loans under the Pooling and Servicing Agreement, the trustee will be required to remit the cash bid received from such successor servicer to the terminated master servicer. If a successor master servicer is not appointed within thirty (30) days of the master servicer’s termination, the trustee may select a successor master servicer as described in the previous paragraph.
The Pooling and Servicing Agreement will not provide for any successor master servicer to receive any compensation in excess of that paid to the predecessor master servicer. The predecessor master servicer will be required to cooperate with respect to the transfer of servicing and to pay for the expenses of its termination and replacement if such termination is due to voluntary resignation.
The Special Servicer
Special Servicer Compensation
“Special Servicer Compensation” means such fees payable to the special servicer, collectively, including:
· | A “Special Servicing Fee” meaning, in any month, an amount of interest accrued at a rate equal to 0.25%per annum, in each case determined in the same manner as interest at the applicable mortgage rate is determined for each Specially Serviced Mortgage Loan (or successor REO Mortgage Loan, successor REO Serviced B Note or successor REO Serviced Companion Loan) for such month, and based on the outstanding principal balance of each Specially Serviced Mortgage Loan (or successor REO Mortgage Loan, successor REO Serviced B Note or successor REO Serviced Companion Loan). |
· | A “Workout Fee” meaning a fee payable with respect to any Rehabilitated Mortgage Loan, equal to the lesser of (i) $1,000,000 in the aggregate with respect to any particular workout of a mortgage loan (other than any Non-Serviced Mortgage Loan) that is a Specially Serviced Mortgage Loan, and (ii) the product of (x) 1.0% and (y) the amount of each collection of interest (other than default interest and any Excess Interest) and principal received (including any Condemnation Proceeds or Insurance Proceeds received and applied as a collection of such interest and principal) on such mortgage loan (including, for this purpose, any related Serviced B Note or Serviced Companion Loan, as applicable), for so long as it remains a Rehabilitated Mortgage Loan;provided, that the Workout Fee with respect to any Rehabilitated Mortgage Loan will be reduced by the amount of any Excess Modification Fees actually received by the Special Servicer as additional servicing compensation (i) with respect to the related mortgage loan, Serviced Companion Loan or Serviced B Note, as applicable, at any time within the prior eighteen (18) months in connection with each modification, restructure, extension, waiver or amendment that constituted a modification of the related mortgage loan, Loan Pair or A/B Whole Loan while the mortgage loan or the related Serviced Companion Loan or Serviced B Note, as applicable, was a Specially Serviced Mortgage Loan and (ii) with respect to the related mortgage loan, Serviced Companion Loan or Serviced B Note, as applicable, at any time within the prior nine (9) months in connection with each modification, restructure, extension, waiver or amendment that constitutes a modification of the related mortgage loan, Loan Pair or A/B Whole Loan while the mortgage loan or the related Serviced Companion Loan or Serviced B Note, as applicable, was a non-Specially Serviced Mortgage Loan, but, in each case, only to the extent those Excess Modification Fees have not previously been deducted from a Workout Fee or Liquidation Fee. Notwithstanding the foregoing, if a mortgage loan, Serviced B Note or Serviced Companion Loan becomes a Specially Serviced Mortgage Loan only because of an event described in clause (i) of the definition of “Specially Serviced Mortgage Loan” as a result of a |
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payment default on the related maturity date and the related collection of principal and interest is received within three (3)months following the related maturity date as a result of the related mortgage loan, Serviced B Note or Serviced Companion Loan being refinanced or otherwise repaid in full, the special servicer will not be entitled to collect a Workout Fee out of the proceeds received in connection with such workout if such fee would reduce the amount available for distributions to Certificateholders, but the special servicer may collect from the related mortgagor and retain (x) a workout fee, (y) such other fees as are provided for in the related mortgage loan documents and (z) other appropriate fees in connection with such workout. |
· | A “Liquidation Fee” meaning a fee payable with respect to the final disposition or liquidation of any mortgage loan (other than any Non-Serviced Mortgage Loan) that is a Specially Serviced Mortgage Loan (including, for this purpose, any related Serviced Companion Loan or Serviced B Note) or REO Property (other than any REO Property related to a Non-Serviced Mortgage Loan) equal to the lesser of (i) $1,000,000, and (ii) the product of (x) 1.0% and (y) the Liquidation Proceeds received in connection with a final disposition of, and any Condemnation Proceeds and Insurance Proceeds received by the Issuing Entity (net of any expenses incurred by the special servicer on behalf of the Issuing Entity in connection with the collection of such Condemnation Proceeds and Insurance Proceeds) with respect to, such Specially Serviced Mortgage Loan or REO Property or portion thereof; provided, that the Liquidation Fee with respect to any Specially Serviced Mortgage Loan or REO Property will be reduced by the amount of any Excess Modification Fees actually received by the special servicer as additional servicing compensation (i) with respect to the related mortgage loan, Serviced Companion Loan or Serviced B Note, as applicable, at any time within the prior eighteen (18) months in connection with each modification, restructure, extension, waiver or amendment that constituted a modification of the related mortgage loan, Loan Pair or A/B Whole Loan while the mortgage loan or the related Serviced Companion Loan or Serviced B Note, as applicable, was a Specially Serviced Mortgage Loan and (ii) with respect to the related mortgage loan, Serviced Companion Loan or Serviced B Note, as applicable, at any time within the prior nine (9) months in connection with each modification, restructure, extension, waiver or amendment that constitutes a modification of the related mortgage loan, Loan Pair or A/B Whole Loan while the mortgage loan or the related Serviced Companion Loan or Serviced B Note, as applicable, was a non-Specially Serviced Mortgage Loan, but, in each case, only to the extent those Excess Modification Fees have not previously been deducted from a Workout Fee or Liquidation Fee. No Liquidation Fee will be payable based upon, or out of, Liquidation Proceeds received in connection with (i) the repurchase of, or substitution for, any mortgage loan by the mortgage loan seller for a Material Breach or Material Document Defect, as applicable, if such repurchase or substitution occurs on or before the later of (x) one hundred eighty (180) days after the discovery or receipt of notice by the mortgage loan seller of the Material Breach or Material Document Defect, as applicable, that gave rise to the particular repurchase or substitution obligation, and (y) the expiration of the time period (or extension thereof) provided for such repurchase or substitution if such repurchase or substitution occurs prior to the termination of any applicable extended resolution period, (ii) the purchase of any Specially Serviced Mortgage Loan that is, or is part of, an A/B Whole Loan or Loan Pair by the holder of the related Serviced B Note or Serviced Companion Loan, as applicable, within ninety (90) days following the date that such mortgage loan became a Specially Serviced Mortgage Loan, (iii) the purchase of any Specially Serviced Mortgage Loan that is subject to mezzanine indebtedness by the holder of the related mezzanine loan within the ninety (90) days following the date that such holder’s option to purchase the related mortgage loan first becomes exercisable, (iv) the purchase of all of the mortgage loans and REO Properties in connection with an optional termination of the Issuing Entity, (v) the purchase of any Specially Serviced Mortgage Loan by the special servicer or any affiliate thereof (other than the Controlling Class Representative), or (vi) the purchase of any Specially Serviced Mortgage Loan or related REO Property by the Controlling Class Representative or any affiliate thereof (other than the special servicer), if such purchase occurs within ninety (90) days after the date on which the special servicer delivers to the Controlling Class Representative for its approval the initial Asset Status Report with respect to such Specially Serviced Mortgage Loan. For the avoidance of doubt, the special servicer may not receive a Workout Fee and a Liquidation Fee with respect to the same proceeds collected on a mortgage loan, Serviced Companion Loan, Serviced B Note, REO Mortgage Loan, REO Serviced B Note or REO Serviced Companion Loan. Notwithstanding the foregoing, if a mortgage loan, Serviced B Note or Serviced Companion Loan becomes a Specially Serviced Mortgage Loan only because of an event described in clause (i) of the definition of “Specially Serviced Mortgage Loan” as a result of a payment default on the related maturity date and the related Liquidation Proceeds are received within three (3) months following the related maturity date as a result of the related mortgage loan, Serviced B Note or Serviced Companion Loan being refinanced or otherwise repaid in full, the special servicer will not be entitled to collect a Liquidation Fee out of the proceeds received in connection with such liquidation if such fee would reduce the amount available for distributions to Certificateholders, but the special servicer may collect from the related mortgagor and retain (x) a liquidation fee, (y) such other fees as are provided for in the related mortgage loan documents and (z) other appropriate fees in connection with such liquidation. |
· | Any other fees payable to the special servicer pursuant to the Pooling and Servicing Agreement. |
The Special Servicing Fee for any Specially Serviced Mortgage Loan (or successor REO Mortgage Loan, successor REO Serviced B Note or successor REO Serviced Companion Loan) will be payable monthly from general collections on all the mortgage loans in the Mortgage Pool and, to the extent of the Issuing Entity’s interest in the mortgage loan, any foreclosure properties, prior to any distribution of such collections to Certificateholders. The Workout Fee with respect to any Rehabilitated Mortgage Loan in the Issuing Entity will cease to be payable if such mortgage loan again becomes a Specially Serviced Mortgage Loan or if the related mortgaged property becomes an REO Property but otherwise such fee is paid until maturity. If the special servicer is terminated for any reason or resigns, it will retain the right to receive any Workout Fees payable on mortgage loans, Serviced B Notes and Serviced Companion Loans that became (or would become, but for the making of three scheduled monthly payments) Rehabilitated Mortgage Loans while it acted as special servicer and remained Rehabilitated Mortgage Loans at the time of such termination or resignation until such mortgage loan becomes a Specially Serviced Mortgage Loan or until the related mortgaged property becomes an REO Property. The successor special servicer will not be entitled to any portion of such Workout Fees.
The Special Servicer will also be entitled to retain, as additional servicing compensation (a) a specified percentage (which may be zero) of Excess Modification Fees, Consent Fees, Ancillary Fees and Assumption Fees with respect to each mortgage loan, Serviced B Note and Serviced Companion Loan and 100% of any assumption application fees with respect to Specially Serviced Mortgage Loans, (b) Excess Penalty Charges with respect to Specially Serviced Mortgage Loans, and (c) any interest or other income earned on deposits in the REO Accounts.
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With respect to any Non-Serviced Mortgage Loan, the Special Servicer will not receive any special servicing compensation, and the Non-Serviced Mortgage Loan Special Servicer will be entitled to compensation similar to the compensation to which the Special Servicer is entitled under the Pooling and Servicing Agreement, except that there may be a higher cap (or no cap) on workout fees and/or liquidation fees.
Although the Special Servicer will be required to service and administer the pool of mortgage loans (other than any Non-Serviced Mortgage Loans) and the Serviced B Notes and Serviced Companion Loans in accordance with the Servicing Standard above and, accordingly, without regard to their rights 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 Special Servicer with an economic disincentive to comply with this standard.
If Prepayment Interest Excesses for all Specially Serviced Mortgage Loans exceed Prepayment Interest Shortfalls for such mortgage loans as of any Distribution Date, such excess amount will be payable to the special servicer as additional servicing compensation.
As described in this prospectus supplement under “—The Controlling Class Representative,” the Controlling Class Representative (or with respect to an A/B Whole Loan or Loan Pair, the related Directing Holder to the extent described under “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” above) will have the right to receive notification of, advise the special servicer regarding, and consent to, certain actions of the special servicer, subject to the limitations described in this prospectus supplement and the Pooling and Servicing Agreement.
Any successor special servicer will receive the foregoing Special Servicing Compensation as compensation. The Pooling and Servicing Agreement does not provide for any successor special servicer to receive compensation in excess of that permitted to be received by its predecessor, except in the case where a successor cannot be found for existing compensation. Any change to the compensation of the special servicer will require an amendment to the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement will provide that, with respect to each Collection Period, the special servicer must deliver or cause to be delivered to the master servicer, without charge and within two (2) Business Days following the end of such Collection Period a report which discloses and contains an itemized listing of any Disclosable Special Servicer Fees received by the special servicer or any of its affiliates during the related Collection Period (and the master servicer to the extent it has received such report must forward such information to the certificate administrator on the Master Servicer Remittance Date).
“Disclosable Special Servicer Fees” means, with respect to any mortgage loan, A/B Whole Loan, Loan Pair or REO Property, any compensation and other remuneration (including, without limitation, in the form of commissions, brokerage fees, rebates, or as a result of any other fee-sharing arrangement) received or retained by the special servicer or any of its affiliates that is paid by any person (including, without limitation, the Issuing Entity, any borrower, any manager, any guarantor or indemnitor in respect of a mortgage loan, A/B Whole Loan, Loan Pair or REO Property and any purchaser of any mortgage loan, A/B Whole Loan, Loan Pair or REO Property) in connection with the disposition, workout or foreclosure of any mortgage loan (or A/B Whole Loan or Loan Pair, if applicable), the management or disposition of any REO Property, and the performance by the special servicer or any such affiliate of any other special servicing duties under the Pooling and Servicing Agreement, other than (1) any Permitted Special Servicer/Affiliate Fees (defined below) and (2) any Special Servicer Compensation to which the special servicer is entitled pursuant to the Pooling and Servicing Agreement; provided, that to the extent Midland is acting as special servicer, any compensation and other remuneration that Midland is permitted to receive or retain pursuant to the terms of the Pooling and Servicing Agreement in connection with its duties as master servicer under the Pooling and Servicing Agreement will not be Disclosable Special Servicer Fees.
“Permitted Special Servicer/Affiliate Fees” means any commercially reasonable treasury management fees, banking fees, customary title agent fees and insurance commissions or fees received or retained by the special servicer or any of its affiliates in connection with any services performed by such party with respect to any mortgage loan, A/B Whole Loan, Loan Pair or REO Property, in each case, in accordance with the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement will provide that the special servicer and its affiliates will be prohibited from receiving or retaining any compensation or any other remuneration (including, without limitation, in the form of commissions, brokerage fees, rebates, or as a result of any other fee-sharing arrangement) from any person (including, without limitation, the Issuing Entity, any borrower, any manager, any guarantor or indemnitor in respect of a mortgage loan, A/B Whole Loan or Loan Pair and any purchaser of any mortgage loan, A/B Whole Loan, Loan Pair or REO Property) in connection with the disposition, workout or foreclosure of any mortgage loan (or A/B Whole Loan or Loan Pair, if applicable), the management or disposition of any REO Property, or the performance of any other special servicing duties under the Pooling and Servicing Agreement, other than as expressly provided for in the Pooling and Servicing Agreement;provided, that such prohibition will not apply to Permitted Special Servicer/Affiliate Fees.
Special Servicer Termination Events
“Special Servicer Termination Event” means, with respect to the special servicer under the Pooling and Servicing Agreement, any one of the following events:
· | any failure by the special servicer to remit to the master servicer within one (1) Business Day of the date when due any amount required to be so remitted under the terms of the Pooling and Servicing Agreement; |
· | any failure by the special servicer to deposit into any account any amount required to be so deposited or remitted under the terms of the Pooling and Servicing Agreement which failure continues unremedied for one (1) Business Day following the date on which such deposit or remittance was first required to be made; |
· | any failure on the part of the special servicer duly to observe or perform in any material respect any other of the covenants or agreements on the part of the special servicer contained in the Pooling and Servicing Agreement (other than, if and for so long as the Issuing Entity or a trust created pursuant to a pooling and servicing agreement or trust and servicing agreement, as applicable, relating to a Non-Serviced Companion Loan or a Serviced Companion Loan is subject to the reporting requirements of the Exchange Act, with respect to the duties described under “Description of the Offered Certificates—Evidence as to Compliance” in this prospectus supplement or certain other reporting duties imposed on it for purposes of compliance with Regulation AB and the Exchange Act to the extent described in the ninth bullet of this definition) which continues unremedied for a period of thirty (30) days after the date on which written notice of such failure, requiring the same to be remedied, is given |
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to the special servicer by the depositor or the trustee;provided, such cure period may be extended to the extent necessary to permit the special servicer to cure such failure if the special servicer certifies to the trustee and the depositor that the special servicer is in good faith attempting to remedy such failure and the Certificateholders will not be materially and adversely affected thereby;provided that such cure period may not exceed ninety (90) days; |
· | any breach by the special servicer of the representations and warranties contained in the Pooling and Servicing Agreement that materially and adversely affects the interests of the Holders of any class of Certificates and that continues unremedied for a period of thirty (30) days after the date on which notice of such breach, requiring the same to be remedied, is given to the special servicer by the depositor or the trustee,provided, such cure period may be extended to the extent necessary to permit the special servicer to cure such failure if the special servicer certifies to the trustee and the depositor that the special servicer is in good faith attempting to remedy such breach and the Certificateholders will not be materially and adversely affected thereby;provided that such cure period may not exceed ninety (90) days; |
· | a decree or order of a court or agency or supervisory authority having jurisdiction in the premises in an involuntary case under any present or future federal or state bankruptcy, insolvency or similar law for the appointment of a conservator, receiver, liquidator, trustee or similar official in any bankruptcy, insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, is entered against the special servicer and such decree or order remains in force undischarged or unstayed for a period of sixty (60) days; |
· | the special servicer consents to the appointment of a conservator, receiver, liquidator, trustee or similar official in any bankruptcy, insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings of or relating to the special servicer or of or relating to all or substantially all of its property; |
· | the special servicer admits in writing its inability to pay its debts generally as they become due, files a petition to take advantage of any applicable bankruptcy, insolvency or reorganization statute, makes an assignment for the benefit of its creditors, voluntarily suspends payment of its obligations, or takes any corporate action in furtherance of the foregoing; |
· | a servicing officer of the special servicer obtains knowledge that Moody’s, DBRS or KBRA has (i) qualified, downgraded or withdrawn its rating or ratings of one or more Classes of Certificates or one or more classes of securities backed by a Serviced B Note or Serviced Companion Loan or (ii) placed one or more Classes of Certificates or one or more classes of securities backed by a Serviced B Note or Serviced Companion Loan on “watch status” in contemplation of a ratings downgrade or withdrawal (and, in the case of either of clauses (i) or (ii), such qualification, downgrade, withdrawal or “watch status” placement shall not have been withdrawn by Moody’s, DBRS or KBRA, as applicable, within sixty (60) days of the date such servicing officer obtained such actual knowledge) and, in the case of either of clauses (i) or (ii), cited servicing concerns with the special servicer as the sole or material factor in such rating action; |
· | if and for so long as the Issuing Entity or a trust created pursuant to a pooling and servicing agreement or trust and servicing agreement, as applicable, relating to a Non-Serviced Companion Loan or a Serviced Companion Loan is subject to the reporting requirements of the Exchange Act, any failure by the special servicer or any Servicing Function Participant appointed by the special servicer to deliver any reporting items required to be delivered under Regulation AB and the Exchange Act by such entity under the Pooling and Servicing Agreement by the time required under the Pooling and Servicing Agreement after any applicable grace period; or |
· | if and for so long as the Issuing Entity or a trust created pursuant to a pooling and servicing agreement or trust and servicing agreement, as applicable, relating to a Non-Serviced Companion Loan or a Serviced Companion Loan is subject to the reporting requirements of the Exchange Act, any failure by the special servicer to terminate any sub-servicer appointed by the special servicer for certain failures to deliver reporting items required to be delivered under Regulation AB and the Exchange Act. |
The trustee may, and at the direction of Holders of Certificates representing at least 25% of the aggregate Voting Rights, the trustee is required to, terminate the special servicer upon a Special Servicer Termination Event that is continuing and has not been cured or waived. With respect to any Loan Pair, if a Special Servicer Termination Event has occurred that affects the holder of the related Serviced Companion Loan, such holder will have the right to direct the trustee to terminate the special servicer under the Pooling and Servicing Agreement solely with respect to such Loan Pair, other than with respect to than any rights such special servicer may have as a Certificateholder, entitlements to amounts payable to the special servicer at the time of termination and any entitlements of the terminated party that survive the termination. The termination of the special servicer will be effective on the date specified in a written notice from the trustee to the special servicer. During any Subordinate Control Period, the Controlling Class Representative will have the right to appoint a successor special servicer. If a successor special servicer is not appointed within the time periods set forth in the Pooling and Servicing Agreement, the special servicer will be replaced by the trustee as described in the Pooling and Servicing Agreement. The predecessor special servicer is required to cooperate with respect to the transfer of servicing and to pay for the expenses of its termination and replacement, if such termination is due to a voluntary resignation.
In addition, during any Senior Consultation Period, if the trust advisor determines that the special servicer is not performing its duties in accordance with the Servicing Standard, the trust advisor may recommend the replacement of the special servicer. In such event, the trust advisor will be required to deliver to the trustee and the certificate administrator, with a copy to the special servicer, a written recommendation (along with relevant information justifying its recommendation) of a suggested replacement special servicer, which must be a Qualified Replacement Special Servicer. The certificate administrator will be required to notify each Certificateholder of the recommendation and post it on the certificate administrator’s internet website. The replacement of the special servicer based on the trust advisor’s recommendation must be confirmed by an affirmative vote of Holders of Principal Balance Certificates evidencing greater than 50% of the aggregate Voting Rights of all Principal Balance Certificates on an aggregate basis;provided, that if a proposed termination and replacement of the special servicer following the initial recommendation of the trust advisor is not consummated within one hundred eighty (180) days following the initial recommendation of the trust advisor, then the proposed termination and replacement will have no further force and effect. If the holders of such Principal Balance Certificates elect to remove and replace the special servicer, the trustee will be required to provide to each Rating Agency a Rating Agency Communication at that time. If the successor special servicer agrees to be bound by the terms of the Pooling and Servicing Agreement, the trustee will then be required to terminate all of the rights and obligations of the special servicer under the Pooling and Servicing Agreement and to appoint the successor special servicer approved by the Certificateholders,provided such successor special
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servicer is a Qualified Replacement Special Servicer, and shall be subject to the terminated special servicer’s rights to indemnification, payment of outstanding fees, reimbursement of advances and other rights set forth in the Pooling and Servicing Agreement which survive termination. The reasonable costs and expenses associated with the trust advisor’s identification of a Qualified Replacement Special Servicer, providing the Rating Agency Communications and administering the vote of the applicable Principal Balance Certificates will be an Additional Trust Fund Expense. The trustee will notify the outgoing special servicer promptly of the effective date of its termination.
A “Qualified Replacement Special Servicer” is a replacement special servicer that (i) satisfies all of the eligibility requirements applicable to special servicers in the Pooling and Servicing Agreement and, if applicable, any Intercreditor Agreement and (ii) is not, and is not an affiliate of, a current or former trust advisor.
The special servicer, any successor special servicer and any of their respective affiliates may not (i) pay, or become obligated, whether by agreement or otherwise, and whether or not subject to any condition or contingency, to pay the trust advisor or any affiliate thereof any fee, or otherwise compensate or grant monetary or other consideration to the trust advisor or any affiliate thereof (x) in connection with its obligations under the Pooling and Servicing Agreement or the performance thereof or (y) in connection with the appointment of such person as, or any recommendation by the trust advisor for such person to become, the successor special servicer, (ii) become entitled to receive any compensation from the trust advisor (x) in connection with its obligations under the Pooling and Servicing Agreement or the performance thereof or (y) in connection with the appointment of such person as, or any recommendation by the trust advisor for such person to become, the successor special servicer, or (iii) become entitled to receive any fee from the trust advisor or any affiliate thereof in connection with the appointment of such person as special servicer, unless, in each of the foregoing clauses (i) through (iii), such transaction has been expressly approved by 100% of the Certificateholders.
The holder of a Serviced B Note or Serviced Companion Loan or applicable portion therof, if and for so long as such holder is the related Directing Holder, may at any time remove and replace the special servicer with respect to the related A/B Whole Loan or Loan Pair, respectively, with or without cause, to the extent set forth in the related Intercreditor Agreement and subject to the satisfaction of certain conditions as set forth in the related Intercreditor Agreement. During such time, neither the Controlling Class Representative nor any Certificateholder will have the right to remove or replace the special servicer with respect to the related A/B Whole Loan or Loan Pair without cause. See “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” in this prospectus supplement.
Replacement of the Special Servicer Without Cause
The special servicer may be removed, and a successor special servicer appointed, at any time, as follows:
(a) | during any Subordinate Control Period, the special servicer may be removed and a successor special servicer appointed at the direction of the Controlling Class Representative; and |
(b) | during any Collective Consultation Period and any Senior Consultation Period, the special servicer may be removed and a successor special servicer appointed, in accordance with the procedures set forth below, at the written direction of Holders of the Certificates evidencing at least 75% of the aggregate Voting Rights of all Certificates. |
The procedures for removing the special servicer during any Collective Consultation Period and any Senior Consultation Period will be as follows: upon (i) the written direction of Holders of Certificates evidencing at least 25% of the Voting Rights of all classes of the Certificates requesting a vote to terminate and replace the special servicer with a proposed successor special servicer, (ii) payment by such Holders to the certificate administrator and/or the trustee of the reasonable fees and expenses to be incurred by the certificate administrator and/or the trustee in connection with administering such vote and (iii) delivery by such Holders to each Rating Agency (with a copy to the certificate administrator and the trustee) of a Rating Agency Communication, the certificate administrator will be required to promptly provide written notice to all Certificateholders of such request by posting such notice on its internet website and by mailing such notice to their addresses appearing in the certificate register. Upon the written direction of the Holders of Certificates evidencing at least 75% of the aggregate Voting Rights of all Certificates, the trustee will be required to terminate all of the rights and obligations of the special servicer under the Pooling and Servicing Agreement and appoint the proposed successor special servicer;provided that if that written direction is not provided within one hundred eighty (180) days of the initial request for a vote to terminate and replace the special servicer, then that written direction will have no force and effect. The certificate administrator will include on each Distribution Date Statement a statement that each Certificateholder and beneficial owner of Certificates may access such notices on the certificate administrator’s website and each Certificateholder and beneficial owner of Certificates may register to receive email notifications when such notices are posted on the website. The certificate administrator will be entitled to reimbursement from the requesting Certificateholders for the reasonable expenses of posting notices of such requests.
Any appointment of a successor special servicer by the Controlling Class Representative or by the Holders of the Certificates evidencing at least 75% of the aggregate Voting Rights of all Certificates (i) will be subject to delivery of a Rating Agency Communication to each Rating Agency (which Rating Agency Communications will be an expense of the Controlling Class Representative or such Holders, as applicable), and (ii) must be a Qualified Replacement Special Servicer.
Notwithstanding any of the foregoing to the contrary, the holder of a Serviced Companion Loan or Serviced B Note, to the extent set forth in the related Intercreditor Agreement and only for so long as such holder is the related Directing Holder, will have the sole right to terminate the special servicer with respect to the related Loan Pair or A/B Whole Loan, as applicable, without cause, upon the appointment and acceptance of such appointment by a successor to the special servicer;provided, that such holder appoints in accordance with the Pooling and Servicing Agreement a successor special servicer (i) reasonably satisfactory to the trustee and the depositor and (ii) that agrees to assume and perform punctually the duties of the special servicer specified in the Pooling and Servicing Agreement. The special servicer will not be terminated without cause until a successor special servicer has been appointed as described in this paragraph. The holder of the applicable Serviced Companion Loan or Serviced B Note will be required to pay any costs and expenses incurred by the Issuing Entity in connection with the removal and appointment of a special servicer pursuant to this paragraph (unless such removal is based on certain termination events relating to payment failures and/or other breaches of the Pooling and Servicing Agreement). If the holder of a Serviced Companion Loan or Serviced B Note terminates the special servicer with respect to the related Loan Pair or A/B Whole Loan, as applicable, and appoints a successor special servicer with respect to such Loan Pair or A/B Whole Loan, as applicable, then the Controlling Class Representative will not have the right to terminate any such successor special servicer without cause until the holder of the related mortgage loan included in the Issuing Entity is the Directing Holder with respect to such Loan Pair or A/B Whole Loan, as applicable, under the related Intercreditor Agreement. See “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” in this prospectus supplement.
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“Rating Agency Communication” means, with respect to any action, any written communication intended for a Rating Agency relating to such action, which shall be delivered at least ten (10) Business Days prior to completing such action, in electronic document format suitable for website posting to the 17g-5 Information Provider (which will be required to post such request on the 17g-5 Information Provider’s Website in accordance with the Pooling and Servicing Agreement).
“17g-5 Information Provider’s Website” means the internet website of the 17g-5 Information Provider, initially located at www.ctslink.com under the “NRSRO” tab of the respective transaction, access to which is limited to the Rating Agencies and other NRSROs who have provided the certificate administrator a certificate either stating that it is either a Rating Agency or providing the required certifications pursuant to Rule 17g-5(e) under the Exchange Act.
Any information required to be delivered to the Rating Agencies pursuant to the Pooling and Servicing Agreement or requested by the Rating Agencies in connection with the Certificates or the mortgage loans, will first be provided to the 17g-5 Information Provider in electronic format (which will be required to post such information to the 17g-5 Information Provider’s Website in accordance with the Pooling and Servicing Agreement), and thereafter be delivered by the applicable party to the Rating Agencies in accordance with the delivery instructions set forth in the Pooling and Servicing Agreement. No party will have authority to communicate directly with the Rating Agencies regarding any of the mortgage loan documents or any matter related to the mortgage loans, the related mortgaged properties, the related borrowers or any other matters in connection with the Certificates or pursuant to the Pooling and Servicing Agreement, without the consent of the depositor.
Rating Agency Confirmations
“Rating Agency Confirmation” means, with respect to any matter, written confirmation (which may be in any format that is consistent with the policies, procedures or guidelines of the applicable Rating Agency at the time such Rating Agency Confirmation is sought, including, without limitation, by way of electronic communication, press release or any other written communication and need not be directed or addressed to any party to the Pooling and Servicing Agreement) by each applicable Rating Agency that a proposed action, failure to act or other event so specified will not, in and of itself, result in the downgrade or withdrawal of the then-current rating assigned to any class of Certificates or, if applicable, any class of securities backed by a Serviced Companion Loan or securities related to a Non-Serviced Mortgage Loan, in each case, if then rated by the Rating Agency;provided, that a written waiver or other acknowledgment from any Rating Agency indicating its decision not to review the matter for which the Rating Agency Confirmation is sought shall be deemed to satisfy the requirement for the Rating Agency Confirmation from such Rating Agency with respect to such matter. To the extent a rating agency has been engaged to rate any class of securities backed by a Serviced Companion Loan, a “Rating Agency Confirmation” will also require similar written confirmation from each such rating agency with respect to such securities. To the extent a rating agency has been engaged to rate any class of securities backed by a Non-Serviced Companion Loan, a “Rating Agency Confirmation” will also require similar written confirmation from each such rating agency with respect to such securities to the extent the matter affects such Non-Serviced Companion Loan.
At any time during which no Certificates are rated by a Rating Agency, no Rating Agency Confirmation shall be required from that Rating Agency.
Notwithstanding the terms of any related mortgage loan documents or other provisions of the Pooling and Servicing Agreement, if any action under any mortgage loan documents or the Pooling and Servicing Agreement requires a Rating Agency Confirmation as a condition precedent to such action, if the party (the “Requesting Party”) attempting to obtain such Rating Agency Confirmation from each Rating Agency has made a request to any Rating Agency for such Rating Agency Confirmation and, within ten (10) Business Days of the Rating Agency Confirmation request being posted to the 17g-5 Information Provider’s Website, such Rating Agency has not replied to such request or has responded in a manner that indicates that such Rating Agency is neither reviewing such request nor waiving the requirement for Rating Agency Confirmation, then (i) such Requesting Party will be required to confirm that the applicable Rating Agency has received the Rating Agency Confirmation request, and, if it has not, promptly request the related Rating Agency Confirmation again and (ii) if there is no response to either such Rating Agency Confirmation request within five (5) Business Days of such second request or such Rating Agency has responded in a manner that indicates it is neither reviewing such request nor waiving the requirement for Rating Agency Confirmation, (x) with respect to any such condition in any mortgage loan document requiring such Rating Agency Confirmation or any other matter under the Pooling and Servicing Agreement relating to the servicing of the mortgage loans (other than as set forth in clause (y) below), the Requesting Party (or, if the Requesting Party is the related mortgagor, then the master servicer (with respect to non-Specially Serviced Mortgage Loans) or the special servicer (with respect to Specially Serviced Mortgage Loans and REO Loans), as applicable) will be required to determine, in accordance with its duties under the Pooling and Servicing Agreement and, in the case of the master servicer or the special servicer, in accordance with the Servicing Standard, whether or not such action would be in the best interests of the Certificateholders and, in the case of an A/B Whole Loan or Loan Pair, Certificateholders and any holder of the related Serviced B Note or Serviced Companion Loan (as a collective whole as if such Certificateholders and Serviced B Note or Serviced Companion Loan holder constituted a single lender), and if it so determines, then the requirement for a Rating Agency Confirmation will be deemed not to apply, and (y) with respect to a replacement of the master servicer or special servicer, such condition will be deemed to be satisfied if the non-responding Rating Agency has not cited servicing concerns of the applicable replacement as the sole or material factor in any qualification, downgrade or withdrawal of the ratings (or placement on “watch status” in contemplation of a ratings downgrade or withdrawal) of securities in any other CMBS transaction rated by such non-responding Rating Agency and serviced by the applicable servicer prior to the time of determination.
Notwithstanding any of the foregoing to the contrary, for purposes of the provisions of any mortgage loan document relating to defeasance (including without limitation the type of collateral acceptable for use as defeasance collateral), release or substitution of any collateral, any Rating Agency Confirmation requirement in the mortgage loan documents with respect to which the master servicer or special servicer would have been required to make the determination described in the paragraph above will be deemed not to apply regardless of any such determination by the Requesting Party (or the master servicer or special servicer, as applicable);provided, that the Requesting Party (or the master servicer or the special servicer, as applicable) will be required in any event to review the other conditions required under the related mortgage loan documents with respect to such defeasance, release or substitution and to confirm to its satisfaction in accordance with the Servicing Standard that such conditions (other than the requirement for a Rating Agency Confirmation) have been satisfied.
Waivers of Servicer Termination Events
A Master Servicer Termination Event (other than as described under the ninth or tenth bullet under the definition of “Master Servicer Termination Event”) or a Special Servicer Termination Event (other than as described under the ninth or tenth bullet under the definition of
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“Special Servicer Termination Event”) may be waived by the Certificateholders evidencing not less than 66-2/3% of the aggregate Voting Rights of the Certificates (except a default in making any required deposits to or payments from the Collection Account, the Distribution Account or in remitting payments as received, in each case in accordance with the Pooling and Servicing Agreement).
Withdrawals from the Collection Account
The master servicer may make withdrawals from the Collection Account for the following purposes, to the extent permitted, as well as any other purpose described in this prospectus supplement: (i) to remit on or before each Master Servicer Remittance Date to the master servicer and the special servicer any Excess Penalty Charges, Excess Modification Fees, and Assumption Fees; (ii) to pay or reimburse the master servicer, the special servicer and the trustee, as applicable, pursuant to the terms of the Pooling and Servicing Agreement, for Servicing Advances (together with interest thereon calculated at the Advance Rate); (iii) with respect to any Non-Serviced Mortgage Loan, to pay or reimburse the applicable Non-Serviced Mortgage Loan Master Servicer, the applicable Non-Serviced Mortgage Loan Special Servicer and the applicable Non-Serviced Mortgage Loan Trustee for nonrecoverable advances (together with interest thereon) pursuant to the related Non-Serviced Mortgage Loan Pooling and Servicing Agreement; (iv) to pay or reimburse the master servicer and the trustee pursuant to the terms of the Pooling and Servicing Agreement, for P&I Advances (together with interest thereon calculated at the Advance Rate); (v) to pay or reimburse the master servicer, the special servicer and the trust advisor, as applicable, pursuant to the terms of the Pooling and Servicing Agreement, for Master Servicing Fees, Special Servicing Fees, Trust Advisor Fees and any unpaid Trust Advisor Consulting Fees (but only to the extent such Trust Advisor Consulting Fees were received from the related borrower); (vi) to pay to the Distribution Account for withdrawal by the certificate administrator for payment to itself, the custodian and the trustee of its respective fees; (vii) to pay to the master servicer, the special servicer, the certificate administrator, the custodian, the trustee and/or, in respect of any Non-Serviced Mortgage Loan, any applicable Non-Serviced Mortgage Loan Master Servicer and any applicable Non-Serviced Mortgage Loan Special Servicer, pursuant to the terms of the Pooling and Servicing Agreement (or Non-Serviced Mortgage Loan Pooling and Servicing Agreement, as applicable), any Additional Trust Fund Expenses payable to such parties; (viii) to pay to the special servicer any liquidation and workout fees; (ix) to pay to the master servicer, pursuant to the terms of the Pooling and Servicing Agreement, any net income and gain realized on the investment of funds deposited in the Collection Account; (x) to pay to the master servicer the aggregate Prepayment Interest Excesses relating to mortgage loans that are not Specially Serviced Mortgage Loans and to pay the special servicer the aggregate Prepayment Interest Excesses relating to Specially Serviced Mortgage Loans that were subject to voluntary prepayment; (xi) to pay to CREFC® (solely to the extent of funds available in the Collection Account following the withdrawal of the amounts described in clauses (i) through (x) above), the CREFC®License Fee; (xii) to withdraw funds deposited in the Collection Account in error; (xiii) to make payment on each Master Servicer Remittance Date of the remaining amount in the Collection Account to the Distribution Account or applicable sub-account thereof (other than amounts to be held in the Interest Reserve Account); (xiv) to make payment on each Master Servicer Remittance Date to applicable reserve accounts; and (xv) to clear and terminate the Collection Account pursuant to a plan for termination and liquidation of the Issuing Entity.
Enforcement of “Due-On-Sale” and “Due-On-Encumbrance” Clauses
Subject to the discussion under “—The Controlling Class Representative” and “—The Trust Advisor” below, the master servicer (with respect to non-Specially Serviced Mortgage Loans (other than Non-Serviced Mortgage Loans) and with the special servicer’s consent) and the special servicer (with respect to Specially Serviced Mortgage Loans) will be required to determine, in a manner consistent with the Servicing Standard, whether to waive any right under any mortgage loan the lender may have under a due-on-sale clause (which shall include, without limitation, sale or transfers of mortgaged properties, in full or in part, or the sale or transfer of interests in the borrower or its owner, to the extent prohibited under the related loan documents), or a due-on-encumbrance clause, to accelerate payment of that mortgage loan.
With respect to due-on-sale clauses under non-Specially Serviced Mortgage Loans, A/B Whole Loans or Loan Pairs (but not any Non-Serviced Mortgage Loan), the master servicer will be required to review the proposed transaction and, whether or not it determines that approval of the transaction is favorable, make and submit its written recommendation and analysis to the special servicer, together with all information reasonably available to the master servicer that the special servicer may reasonably request in order to withhold or grant its consent, and in all cases the special servicer will be entitled (subject to the discussion under “—The Controlling Class Representative” and“Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs”) to approve or disapprove the transaction. However, neither the master servicer nor the special servicer may waive its rights or grant its consent under any due-on-sale clause, unless it shall have provided each Rating Agency with a Rating Agency Communication if such mortgage loan (A) represents at least 5% of the aggregate Certificate Principal Balance of the Principal Balance Certificates, (B) has an unpaid principal balance that exceeds $35 million or (C) is one of the then current ten (10) largest mortgage loans or groups of cross-collateralized mortgage loans based on principal balance (provided, that no such Rating Agency Communication will be required if such mortgage loan has an unpaid principal balance less than $5,000,000).
With respect to due-on-sale clauses under Specially Serviced Mortgage Loans, the special servicer, on behalf of the Issuing Entity will be required, after obtaining the consent of the Controlling Class Representative (during any Subordinate Control Period) or the Directing Holder (with respect to any A/B Whole Loan or Loan Pair), as applicable, and in accordance with the REMIC provisions, to take such actions as it deems to be in the best economic interest of the Issuing Entity in accordance with the Servicing Standard, and may waive or enforce such due-on-sale clause contained in the related mortgage loan.
Subject to the discussion under “—The Controlling Class Representative” and “—The Trust Advisor” below and “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” above, with respect to due-on-encumbrance clauses, the master servicer (with respect to non-Specially Serviced Mortgage Loans (other than Non-Serviced Mortgage Loans) and with the special servicer’s consent) and the special servicer (with respect to Specially Serviced Mortgage Loans) will be required, after obtaining the consent of the Controlling Class Representative (during any Subordinate Control Period) or the Directing Holder (with respect to any A/B Whole Loan or Loan Pair), as applicable, to determine on behalf of the Issuing Entity, in a manner consistent with the Servicing Standard, whether to waive any right under any mortgage loan the lender may have under a due-on-encumbrance clause (which shall include, without limitation, any mezzanine financing of the mortgagor or the mortgaged property or any sale or transfer of preferred equity in the mortgagor or its owners, to the extent prohibited under the related loan documents) to accelerate payment of that mortgage loan.
With respect to due-on-encumbrance clauses under non-Specially Serviced Mortgage Loans (other than Non-Serviced Mortgage Loans), the master servicer will be required to review the proposed transaction and, whether or not it determines that approval of the transaction is favorable, make and submit its written recommendation and analysis to the special servicer, together with all information reasonably available to the master servicer that the special servicer may reasonably request in order to withhold or grant its consent, and in all cases the special servicer will be entitled (subject to the discussion under “—The Controlling Class Representative” and “Description of the
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Mortgage Pool—The A/B Whole Loans and the Loan Pairs”) to approve or disapprove the transaction. However, neither the master servicer nor the special servicer may waive its rights or grant its consent under any due-on-encumbrance clause, unless it provides each Rating Agency with a Rating Agency Communication.
See “Legal Aspects of the Mortgage Loans and the Leases—Foreclosure,” “—Due-on-Sale and Due-on-Encumbrance” and “—Default Interest, Prepayment Premiums and Prepayments” in the accompanying prospectus.
Inspections
The master servicer at its own expense is required to inspect or cause to be inspected each mortgaged property (other than properties related to Specially Serviced Mortgage Loans or Non-Serviced Mortgage Loans) every calendar year with respect to mortgage loans or Loan Pairs with an unpaid principal balance of $2,000,000 or more, beginning in 2016, and at least once every other calendar year with respect to mortgage loans or Loan Pairs with an unpaid principal balance of less than $2,000,000, beginning in 2017,providedthat, to the extent the mortgaged property has not been inspected within the prior 60 days, the master servicer will be required, at the expense of the Issuing Entity, to inspect or cause to be inspected each mortgaged property related to a mortgage loan that has a debt service coverage ratio that falls below 1.0x, andprovidedfurther, that with respect to any mortgage loan or Loan Pair that has an unpaid principal balance of less than $2,000,000 and has been placed on the CREFC® Servicer Watch List, the master servicer will be required to inspect or cause to be inspected the related mortgaged property every calendar year beginning in 2017 so long as such mortgage loan or Loan Pair continues to be on the CREFC® Servicer Watch List, but if such mortgage loan is no longer on the CREFC® Servicer Watch List at the time the inspection was scheduled, no such annual inspection will be required. The master servicer will be required to prepare an inspection report relating to each inspection. The special servicer will have the right (but not the obligation), in its sole discretion, to inspect or cause to be inspected (at its own expense) every calendar year any mortgaged property related to a mortgage loan that is not a Specially Serviced Mortgage Loan if the special servicer notifies the master servicer prior to such inspection. The master servicer is not required to inspect any mortgaged property that has been inspected by the special servicer during the preceding twelve (12) months.
The special servicer is required to inspect (or cause to be inspected) each mortgaged property securing each mortgage loan that becomes a Specially Serviced Mortgage Loan as soon as practicable after it becomes a Specially Serviced Mortgage Loan and thereafter at least every twelve (12) months until such mortgage loan ceases to be a Specially Serviced Mortgage Loan, and the cost of any such inspections will be treated as a Servicing Advance (or as an expense of the Issuing Entity if the Servicing Advance would be a Nonrecoverable Advance) and any out-of-pocket costs will be borne by the Issuing Entity.
The Controlling Class Representative
General
Except as otherwise described in the succeeding paragraphs below or under “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” in this prospectus supplement, (a) the master servicer will not be permitted to take any of the following actions unless it has obtained the consent of the special servicer (which approval is deemed given if the special servicer does not object within fifteen (15) Business Days (or (i) in the case of an action relating to an A/B Whole Loan or Loan Pair (as long as the holder of the related Serviced B Note or Serviced Companion Loan is the Directing Holder of such A/B Whole Loan or Loan Pair), within the period expiring five (5) Business Days following the expiration of the related Directing Holder’s decision period under the related Intercreditor Agreement and (ii) in the case of a determination of an Acceptable Insurance Default, ninety (90) days) of receipt of a written analysis and recommendation together with any information in the possession of the master servicer that is reasonably required to make a decision regarding the subject action) and (b) the special servicer will not be permitted to consent to the master servicer’s taking any of the following actions, nor will the special servicer itself be permitted to take any of the following actions (i) during any Subordinate Control Period, as to which the Controlling Class Representative has objected in writing within ten (10) Business Days (or in the case of a determination of an Acceptable Insurance Default, thirty (30) days) or (ii) in the case of an action relating to an A/B Whole Loan or Loan Pair (as long as the holder of the related Serviced B Note or Serviced Companion Loan is the Directing Holder of such A/B Whole Loan or Loan Pair), as to which the related Directing Holder has objected within the decision period provided for under the related Intercreditor Agreement, in each case after receipt of the written recommendation and analysis together with any information in the possession of the special servicer that is reasonably necessary to make a decision regarding the subject action (provided that if such written objection of the Controlling Class Representative or Directing Holder, as the case may be, has not been received by the special servicer within such period, the Controlling Class Representative will be deemed to have approved such action) (each of the following, a “Major Decision”):
· | any proposed or actual foreclosure upon or comparable conversion (which may include acquisitions of an REO Property) of the ownership of properties securing such of the mortgage loans as come into and continue in default; |
· | any modification, consent to a modification or waiver of any monetary term (other than late fees and default interest but including, without limitation, the timing of payments and the acceptance of discounted payoffs) or material non-monetary term of a mortgage loan or any extension of the maturity date of such mortgage loan; |
· | following a default or an event of default with respect to a mortgage loan, any exercise of remedies, including any acceleration of the mortgage loan or initiation of judicial, bankruptcy or similar proceedings under the related loan documents; |
· | any sale of a defaulted mortgage loan or REO Property for less than the applicable Purchase Price; |
· | any determination to bring a mortgaged property or an REO Property into compliance with applicable environmental laws or to otherwise address hazardous material located at a mortgaged property or an REO Property; |
· | any release of collateral or any acceptance of substitute or additional collateral for a mortgage loan or any consent to either of the foregoing, unless required or permitted pursuant to the specific terms of the related mortgage loan and for which there is no material lender discretion; |
· | any waiver of a “due-on-sale” or “due-on-encumbrance” clause with respect to a mortgage loan or, if lender consent is required, any consent to such a waiver or consent to a transfer of the mortgaged property or interests in the borrower, other |
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than any such transfer or incurrence of debt as may be effected without the consent of the lender under the related mortgage loan documents; |
· | any incurrence of additional debt by a borrower or of any mezzanine financing by any beneficial owner of a borrower (to the extent that the lender has consent rights pursuant to the related mortgage loan documents (for purposes of the determination whether a lender has such consent rights pursuant to the related mortgage loan documents, any mortgage loan document provision that requires that an Intercreditor Agreement be reasonably or otherwise acceptable to the lender will constitute such consent rights)); |
· | any material modification, waiver or amendment of an Intercreditor Agreement, co-lender agreement, participation agreement or similar agreement with any mezzanine lender or subordinate debt holder related to a mortgage loan, or an action to enforce rights with respect thereto or decision not to enforce such rights; |
· | any franchise changes (with respect to a mortgage loan for which the lender is required to consent or approve under the mortgage loan documents), or, with respect to a mortgage loan with an unpaid principal balance greater than $2,500,000, any material property management company changes, including, without limitation, approval of the termination of a manager and appointment of a new property manager; |
· | releases of any escrow accounts, reserve accounts or letters of credit held as performance escrows or reserves, other than those required pursuant to the specific terms of the related mortgage loan and for which there is no material lender discretion; |
· | any requests for the funding or disbursement of “performance,” “earn-out,” holdback or similar escrows and reserves (including those evidenced by letters of credit) for any mortgage loan whose escrows and reserves (i) exceed, at the related origination date, in the aggregate, 10% of the initial principal balance of such mortgage loan (regardless of whether such funding or disbursement may be characterized as routine and/or customary and regardless of whether such mortgage loan has a primary servicer other than the master servicer) or (ii) are not routine and/or customary escrow and reserve fundings or disbursements; |
· | any acceptance of an assumption agreement or any other agreement permitting a transfer of interests in a borrower, guarantor or other obligor, or releasing a borrower, guarantor or other obligor from liability under a mortgage loan other than pursuant to the specific terms of such mortgage loan and for which there is no lender discretion; |
· | any determination of an Acceptable Insurance Default; |
· | the modification, waiver, amendment, execution, termination or renewal of any lease, to the extent lender approval is required under the related loan documents (including entering into any related subordination, non-disturbance and attornment agreement) and if such lease (a) involves a ground lease or lease of an outparcel or affects an area greater than or equal to the greater of (i) 10% of leasable space or (ii) 20,000 square feet, (b) is for over 50,000 square feet, or (c) otherwise constitutes a “major lease” or “material lease,” if applicable, under the related loan documents, subject to any deemed approval expressly set forth in the related lease; |
· | any adoption or implementation of a budget submitted by a borrower with respect to a mortgage loan (to the extent lender approval is required under the related mortgage loan documents), if (i) the mortgage loan for the related mortgaged property is on the CREFC®servicer “watch list” or (ii) such budget includes material (more than 25%) increases in operating expenses or payments to entities actually known by the master servicer to be affiliates of the related borrower (excluding affiliated managers paid at fee rates agreed to at the origination of the related mortgage loan), subject in each case to any deemed approval expressly set forth in the related mortgage loan documents; |
· | the voting on any plan of reorganization, restructuring or similar plan in the bankruptcy of a borrower; and |
· | the exercise of the rights and powers granted under the related Intercreditor Agreement or mezzanine loan intercreditor agreement to the “Note A Holder,” the “Note A Controlling Holder,” the “Senior Lender,” the “Senior Loan Controlling Holder” or such other similar term as may be set forth in any such Intercreditor Agreement or mezzanine loan intercreditor agreement, as applicable, and/or the “Servicer” referred to therein, if and to the extent such rights or powers affect the priority, payments, consent rights or security interest with respect to the “Note A Holder,” the “Note A Controlling Holder,” the “Senior Lender,” the “Senior Loan Controlling Holder” or such other similar term; |
provided, that references to a “mortgage loan” in this definition exclude any Non-Serviced Mortgage Loan but will include (and apply equally to) any related Loan Pair; provided,further, that if the special servicer or master servicer (if the master servicer is otherwise authorized by the Pooling and Servicing Agreement to take such action), as applicable, determines that immediate action, with respect to a Major Decision or any other matter requiring consent of the Controlling Class Representative, is necessary to protect the interests of the Certificateholders and, with respect to any A/B Whole Loan or Loan Pair, the holder of the related Serviced B Note or Serviced Companion Loan, the special servicer or master servicer, as applicable, may take any such action without waiting for such response.
Notwithstanding the foregoing, the special servicer is not required to obtain the consent of the Controlling Class Representative for any of the foregoing actions during any Collective Consultation Period or Senior Consultation Period;provided, that the special servicer will be required to consult, on a non-binding basis (and to consider alternative actions recommended by the subject party) (i) during any Collective Consultation Period and any Senior Consultation Period, with the trust advisor, as to any of the Major Decisions listed above, and (ii) during any Collective Consultation Period, with the Controlling Class Representative with respect to any of the Major Decisions listed above and any other matter as to which consent of the Controlling Class Representative would have been required if a Subordinate Control Period were then in effect. No consultation will be binding on the special servicer.
“Acceptable Insurance Default” means, with respect to any mortgage loan (other than any Non-Serviced Mortgage Loan), A/B Whole Loan or Loan Pair, any default arising when the related mortgage loan documents require that the related mortgagor must maintain all risk casualty insurance or other insurance that covers damages or losses arising from acts of terrorism and the special servicer has determined, in its reasonable judgment in accordance with the Servicing Standard, but subject to the provisions of the Pooling and Servicing Agreement and the terms and conditions of any related Intercreditor Agreement, that (i) such insurance is not available at commercially reasonable rates and the subject hazards are not commonly insured against by prudent owners of similar real properties located in or near the
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geographic region in which the related mortgaged property is located (but only by reference to such insurance that has been obtained by such owners at current market rates), or (ii) such insurance is not available at any rate.
In addition, during any Subordinate Control Period, the Controlling Class Representative may direct the special servicer to take, or to refrain from taking, such other actions with respect to a mortgage loan (other than any Non-Serviced Mortgage Loan or Non-Serviced Loan Combination, and other than any A/B Whole Loan or Loan Pair as long as the holder of the related Serviced B Note or Serviced Companion Loan is the Directing Holder of such A/B Whole Loan or Loan Pair) as the Controlling Class Representative may deem advisable. The holder of the related Serviced B Note or Serviced Companion Loan will have such rights with respect to the related A/B Whole Loan or Loan Pair, as set forth in the applicable Intercreditor Agreement and without regard to the existence of any Subordinate Control Period, Collective Consultation Period or Senior Consultation Period. Notwithstanding the foregoing, neither the master servicer nor the special servicer will be required to take or refrain from taking any action pursuant to instructions or objections from the Controlling Class Representative, Serviced B Note holder or Serviced Companion Loan holder that would cause it to violate applicable law, the related Mortgage Loan Documents, the Pooling and Servicing Agreement, including the Servicing Standard, or the REMIC provisions of the Code. In addition to the foregoing, both the Controlling Class Representative and the holder of a Serviced Companion Loan, with respect to a Loan Pair, may have certain consultation rights with respect to material servicing decisions in connection with any Serviced B Note or Serviced Companion Loan to the extent set forth in the related Intercreditor Agreement. See “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” in this prospectus supplement.
The “Controlling Class Representative” is the representative appointed by more than 50% of the Holders of the Controlling Class, by Certificate Principal Balance, as determined by the certificate registrar from time to time;provided, that (1) absent that selection, or (2) until a Controlling Class Representative is so selected or (3) upon receipt of a notice from a majority of the Holders of the Controlling Class, by Certificate Principal Balance, that a Controlling Class Representative is no longer designated, the Holder of the Controlling Class that owns the largest aggregate Certificate Principal Balance of the Controlling Class will be the Controlling Class Representative;provided,further, that if such Holder elects or has elected to not be the Controlling Class Representative, the Holder of the next largest aggregate Certificate Principal Balance will be the Controlling Class Representative. Notwithstanding anything to the contrary herein, (i) neither the depositor nor any affiliate thereof may serve as Controlling Class Representative, and solely for purposes of determining the identity of or selecting the Controlling Class Representative as described above, any Control Eligible Certificates held by the depositor or any affiliate thereof will be deemed not to be outstanding, and (ii) a borrower or affiliate thereof will not be permitted to serve as the Controlling Class Representative, and any Controlling Class Certificates owned by such borrower or borrower affiliate will be disregarded for purposes of the determination described above.
The “Controlling Class” means, as of any time of determination, the most subordinate class of Control Eligible Certificates then outstanding that has an aggregate Certificate Principal Balance (taking into account the application of any Appraisal Reductions to notionally reduce the aggregate Certificate Principal Balance of such class) at least equal to 25% of the initial Certificate Principal Balance of such class;provided that if no class of Control Eligible Certificates has an aggregate Certificate Principal Balance (taking into account the application of any Appraisal Reductions to notionally reduce the aggregate Certificate Principal Balance of such class) at least equal to 25% of the initial aggregate Certificate Principal Balance of such class, then the Controlling Class shall be the most senior class of Control Eligible Certificates. The Controlling Class as of the Closing Date will be the Class G Certificates. In no event will any class of Certificates that does not constitute a Control Eligible Class as of the Closing Date be entitled to constitute a Controlling Class or appoint a Controlling Class Representative.
A “Subordinate Control Period” means any period when the Certificate Principal Balance of the Class E Certificates (taking into account the application of Appraisal Reductions to notionally reduce the Certificate Principal Balance of such Class) is at least 25% of the initial Certificate Principal Balance of the Class E Certificates.
A “Collective Consultation Period” means any period when both (i) the Certificate Principal Balance of the Class E Certificates (taking into account the application of Appraisal Reductions to notionally reduce the Certificate Principal Balance of such Class), is less than 25% of the initial Certificate Principal Balance of the Class E Certificates and (ii) the Certificate Principal Balance of the Class E Certificates (without regard to any Appraisal Reductions allocable to such Class), is at least 25% of the initial Certificate Principal Balance of the Class E Certificates.
A “Senior Consultation Period” means a period when the Certificate Principal Balance of the Class E Certificates (without regard to any Appraisal Reductions allocable to such Class) is less than 25% of the initial Certificate Principal Balance of the Class E Certificates. During any Senior Consultation Period, the Controlling Class Representative will have no consent or consultation rights under the Pooling and Servicing Agreement except for such rights available to it as a Certificateholder, or such other rights that are available during the Senior Consultation Period in accordance with the Pooling and Servicing Agreement.
The “Control Eligible Certificates” will be any of the Class E, Class F and Class G Certificates.
In addition, during any Subordinate Control Period, subject to the satisfaction of certain conditions and the rights of any Directing Holder in respect of any A/B Whole Loan or Loan Pair as described above under “—Replacement of the Special Servicer Without Cause,” the Controlling Class Representative will have the right to remove the special servicer with respect to the mortgage loans at any time, with or without cause, upon the appointment and acceptance of such appointment by a successor special servicer appointed by the Controlling Class Representative;providedthat, prior to the effectiveness of any such appointment the trustee has provided each Rating Agency with a Rating Agency Communication. The Controlling Class Representative will be required to pay costs and expenses incurred in connection with the removal and appointment of a special servicer (unless such removal is based on certain events or circumstances specified in the Pooling and Servicing Agreement).
The majority of the Holders of the Controlling Class may elect the Controlling Class Representative. The majority of the Holders of the Controlling Class may remove and replace the Controlling Class Representative at any time by written vote, with or without cause, and a copy of the results of such vote must be delivered to each of the parties to the Pooling and Servicing Agreement.
The Controlling Class Representative will be responsible for its own expenses.
During any Senior Consultation Period, the Controlling Class Representative will have no consultation rights under the Pooling and Servicing Agreement and will have no right to receive any notices, reports or information (other than notices, reports or information required to be delivered to all Certificateholders) or any other rights as Controlling Class Representative set forth in the Pooling and Servicing Agreement.
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Notwithstanding anything to the contrary in this prospectus supplement, the Controlling Class Representative will not have any rights to consent to or direct the special servicer or master servicer with respect to any Major Decision or any other material action involving an A/B Whole Loan or Loan Pair, or to remove, replace or appoint the special servicer with respect to any such A/B Whole Loan or Loan Pair, for so long as the holder of the related Serviced B Note or Serviced Companion Loan (or applicable portion thereof) is the related Directing Holder. See “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs,” “Risk Factors—Risks Related to the Offered Certificates—Realization on a Mortgage Loan That Is Part of an A/B Whole Loan or Loan Pair May Be Adversely Affected by the Rights of the Related Directing Holder” and “Servicing of the Mortgage Loans—The Controlling Class Representative” in this prospectus supplement. The Controlling Class Representative will also not have any consent or consultation rights with respect to any Non-Serviced Mortgage Loan except for the non-binding consultation rights set forth in the related Intercreditor Agreement. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations” and “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs.”
Limitation on Liability of the Controlling Class Representative
The Controlling Class Representative will not be liable to the Issuing Entity or the Certificateholders for any action taken, or for refraining from the taking of any action.
Each Certificateholder (by its acceptance of its Certificates) acknowledges and agrees that (i) the Controlling Class Representative, the Directing Holders and/or the Holders of the Control Eligible Certificates may each have special relationships and interests that conflict with those of Holders of the other classes of Certificates; (ii) the Controlling Class Representative and/or the Holders of the Control Eligible Certificates may act solely in the interests of the Holders of the Control Eligible Certificates (or any of them) and any Directing Holder may act solely in its own interests; (iii) the Controlling Class Representative, the Holders of the Control Eligible Certificates and the Directing Holders do not have any duties to the Holders of any class of Certificates; (iv) the Controlling Class Representative and/or the Holders of the Control Eligible Certificates may take actions that favor interests of the Holders of the Control Eligible Certificates (or any of them), and any Directing Holder may take actions that favor its interests, in each case, over the interests of the Holders of one or more other classes of Certificates; (v) none of the Controlling Class Representative, the Holders of the Control Eligible Certificates and/or the Directing Holders will have any liability whatsoever to the Issuing Entity, the other parties to the Pooling and Servicing Agreement, the Certificateholders or any other person (including any borrower under a mortgage loan) for having acted or refrained from acting in accordance with or as permitted under the terms of the Pooling and Servicing Agreement; and (vi) the Certificateholders may not take any action whatsoever against the Controlling Class Representative, the Controlling Class, any Holder of a Control Eligible Certificate, any Directing Holder or any of the respective affiliates, directors, officers, shareholders, members, partners, agents or principals thereof as a result of the Controlling Class Representative, the Controlling Class, the Holders of the Control Eligible Certificates and/or any Directing Holder, as applicable, for having acted or refrained from acting in accordance with the terms of and as permitted under the Pooling and Servicing Agreement.
Under circumstances where it is authorized or required to do so by the Pooling and Servicing Agreement, the taking, or refraining from taking, of any action by the master servicer or the special servicer in accordance with the direction of or approval of the Controlling Class Representative, which does not violate any law, REMIC provisions or the Servicing Standard or the provisions of the Pooling and Servicing Agreement, the related mortgage loan documents or any Intercreditor Agreement, will not result in any liability on the part of the master servicer or the special servicer.
The Trust Advisor
General Obligations
The trust advisor, as an independent contractor, will be required to review the special servicer’s operational practices in respect of Specially Serviced Mortgage Loans and REO Properties, consult (on a non-binding basis) with the special servicer and perform each other obligation of the trust advisor as described in this section and as set forth in the Pooling and Servicing Agreement in accordance with the Trust Advisor Standard. The “Trust Advisor Standard” means the trust advisor is required to act solely on behalf of the Issuing Entity and in the best interest of, and for the benefit of, all of the Certificateholders (as a collective whole as if such Certificateholders constituted a single lender), and not any particular class of those Certificateholders (as determined by the trust advisor in the exercise of its good faith and reasonable judgment). The trust advisor will not owe any fiduciary duty to the master servicer, the special servicer, the certificate administrator, the trustee, any Holder of a Certificate or any other person in connection with the Pooling and Servicing Agreement.
The trust advisor will be required to promptly review all information available to Privileged Persons on the certificate administrator’s website related to any Specially Serviced Mortgage Loan or REO Property and included as part of the CREFC® investor reporting package and each Asset Status Report delivered to the trust advisor by the special servicer (provided that during any Subordinate Control Period, the trust advisor may only review Final Asset Status Reports).
The trust advisor will be required to keep all Privileged Information confidential and may not disclose any Privileged Information to any other person (including any Certificateholders), other than to the other parties to the Pooling and Servicing Agreement, to the extent expressly required by the Pooling and Servicing Agreement, which parties, in turn, if they have been advised that such information is Privileged Information, may not without the prior written consent of the special servicer and the Controlling Class Representative and any related Directing Holder (with respect to an A/B Whole Loan or Loan Pair as to which the holder of the related Serviced B Note or Serviced Companion Loan, as applicable, or its designee is the related Directing Holder), as applicable, disclose such information to any other person, except that such parties and the trust advisor may disclose such information to the extent that (a) such Privileged Information becomes generally available and known to the public other than as a result of a disclosure directly or indirectly by such parties or the trust advisor, as applicable, (b) it is reasonable and necessary for such parties or the trust advisor, as applicable, to do so in working with legal counsel, auditors, taxing authorities or other governmental agencies, (c) such Privileged Information was already known to such party or the trust advisor, as applicable, and not otherwise subject to a confidentiality obligation and/or (d) such disclosure is required by applicable law, as evidenced by an opinion of counsel (which, in the case of any opinion of counsel for the trust advisor, will be a Trust Advisor Expense) delivered to the trust advisor, the special servicer, the Controlling Class Representative, the related Directing Holder (with respect to an A/B Whole Loan or Loan Pair as to which the holder of the related Serviced B Note or Serviced Companion Loan, as applicable, or its designee is the related Directing Holder), the certificate administrator and the trustee. Notwithstanding the foregoing, the trust advisor will be permitted to share Privileged Information with its affiliates and any subcontractors of the trust advisor to the extent reasonably necessary to perform the trust advisor’s obligations under the Pooling and Servicing Agreement and provided such trust advisor affiliates and
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subcontractors agree in writing prior to their receipt of such Privileged Information to be bound by the same confidentiality provisions applicable to the trust advisor.
“Asset Status Report” means, with respect to any Specially Serviced Mortgage Loan, a report recommending the taking of certain actions for each Specially Serviced Mortgage Loan prepared by the special servicer not later than forty-five (45) days after the servicing of such Specially Serviced Mortgage Loan is transferred to the special servicer, and containing the following information to the extent reasonably determinable: (i) a summary of the status of such Specially Serviced Mortgage Loan and any negotiations with the related borrower; (ii) a discussion of the legal and environmental considerations reasonably known to the special servicer (including without limitation by reason of any environmental assessments), consistent with the Servicing Standard, that are applicable to the exercise of remedies or enforcement of rights for such Specially Serviced Mortgage Loan; (iii) the most current rent roll and income or operating statement available for the related mortgaged properties; (iv) a summary of the special servicer’s recommended action with respect to such Specially Serviced Mortgage Loan; (v) the appraised value of the related mortgaged properties, together with the assumptions used in the calculation thereof; and (vi) such other information as the Special Servicer deems relevant in light of the Servicing Standard.
“Final Asset Status Report” means, with respect to any Specially Serviced Mortgage Loan, each related Asset Status Report, together with such other data or supporting information provided by the special servicer to the Controlling Class Representative or any related Directing Holder, in each case, which does not include any communications (other than the related Final Asset Status Report) between the special servicer and Controlling Class Representative, or any related Directing Holder, as applicable, with respect to such Specially Serviced Mortgage Loan;providedthat no asset status report will be considered to be a Final Asset Status Report unless (i) the Controlling Class Representative (during any Subordinate Control Period) or any related Directing Holder (with respect to any A/B Whole Loan or Loan Pair), has either finally approved of and consented to the actions proposed to be taken in connection therewith, or has exhausted all of its rights of approval or consent, or has been deemed to approve or consent to such action or (ii) the asset status report is otherwise implemented by the special servicer in accordance with the terms of the Pooling and Servicing Agreement.
“Privileged Information” means (i) any correspondence or other communications between the Controlling Class Representative or any related Directing Holder with respect to an A/B Whole Loan or Loan Pair, on the one hand, and the special servicer (or the master servicer, the certificate administrator, the custodian and/or the trustee), on the other hand, related to any Specially Serviced Mortgage Loan or the exercise of the consent or consultation rights of the Controlling Class Representative or any related Directing Holder under the Pooling and Servicing Agreement; (ii) any correspondence or communications between the Controlling Class Representative and the related Non-Serviced Mortgage Loan Master Servicer, Non-Serviced Mortgage Loan Special Servicer or other party related to the exercise of any consultation rights with respect to a Non-Serviced Mortgage Loan; (iii) any strategically sensitive information that the special servicer has reasonably determined could compromise the Issuing Entity’s position in any ongoing or future negotiations with the related borrower or other interested party; and (iv) legally privileged information.
Annual Meeting; Annual Report
During any Collective Consultation Period and any Senior Consultation Period, within sixty (60) days after the end of each calendar year during which any mortgage loan was a Specially Serviced Mortgage Loan or any mortgaged property was an REO Property, the trust advisor will be required to meet with representatives of the special servicer to perform a review of the special servicer’s operational practices in light of the Servicing Standard and the requirements of the Pooling and Servicing Agreement and will be required to discuss the special servicer’s stated policies and procedures, operational controls and protocols, risk management systems, intellectual resources, the special servicer’s reasoning for believing it is in compliance with the Pooling and Servicing Agreement and other pertinent information the trust advisor may consider relevant, in each case, insofar as such information relates to the resolution or liquidation of Specially Serviced Mortgage Loans and REO Properties.
The trust advisor must provide the special servicer at least thirty (30) days’ prior written notice of the date proposed for any annual meeting. The trust advisor and the special servicer will be required to determine a mutually acceptable date for the annual meeting, and the trust advisor will be required to deliver, at least fourteen (14) days prior to such annual meeting, a proposed written agenda to the special servicer identifying the Asset Status Reports to be discussed. The trust advisor and the special servicer may discuss any of the Asset Status Reports produced and any Specially Serviced Mortgage Loan and any REO Property as part of the trust advisor’s annual assessment of the special servicer’s performance under the Pooling and Servicing Agreement. The special servicer will be required to make available senior staff with relevant knowledge regarding the applicable Specially Serviced Mortgage Loans and REO Properties and the related platform level information for each annual meeting.
During any Collective Consultation Period and any Senior Consultation Period, based on the trust advisor’s meeting with the special servicer, the trust advisor’s review of any Asset Status Reports and other information delivered to the trust advisor by the special servicer (other than any communications between the Controlling Class Representative or a Directing Holder and the special servicer that would be Privileged Information) and any other information available to Privileged Persons on the certificate administrator’s website, the trust advisor will be required, in each case, to deliver an annual report within 120 days of the end of the prior calendar year to the certificate administrator, which will be required to make such report available to Privileged Persons via its website. Each of the special servicer and, during any Collective Consultation Period, the Controlling Class Representative will be given an opportunity to review any such annual report at least five (5) Business Days prior to its delivery to the certificate administrator. Such annual report will set forth the trust advisor’s assessment of the special servicer’s performance of its duties under the Pooling and Servicing Agreement during the prior calendar year on a platform-level basis with respect to the resolution or liquidation of Specially Serviced Mortgage Loans and REO Properties. Such annual report will also be required to (A) identify any material deviations (i) from the Servicing Standard and (ii) from the special servicer’s obligations under the Pooling and Servicing Agreement with respect to the resolution or liquidation of Specially Serviced Mortgage Loans and REO Properties and (B) comply with all of the confidentiality requirements set forth in the Pooling and Servicing Agreement regarding Privileged Information. No such annual report will be required to be prepared or delivered with respect to any calendar year as to which no annual meeting is required to be held or with respect to any calendar year during which no asset status reports have been prepared.
Only as used in connection with the trust advisor’s annual report, the term “platform-level basis” refers to the special servicer’s performance of its duties as they relate to the resolution and liquidation of Specially Serviced Mortgage Loans, taking into account the special servicer’s specific duties under the Pooling and Servicing Agreement as well as the extent to which those duties were performed in accordance with the Servicing Standard, with reasonable consideration by the trust advisor of any annual compliance statement, assessment of compliance report, attestation report, Asset Status Report and other information delivered to the trust advisor by the special servicer (other
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than any communications between the Controlling Class Representative or any related Directing Holder, as applicable, and the special servicer that would be Privileged Information) pursuant to the provisions of the Pooling and Servicing Agreement.
During any Subordinate Control Period there will be no annual meeting with the special servicer or annual report prepared and the trust advisor’s obligations will be limited to the review described under “—General Obligations” above.
Consultation Duties of the Trust Advisor
During any Subordinate Control Periodwith respect to each mortgage loan, the special servicer will be required to forward any Appraisal Reduction and net present value calculations used in the special servicer’s determination of what course of action to take in connection with the workout or liquidation of a Specially Serviced Mortgage Loan to the trust advisor after such calculations have been finalized. The trust advisor will be required to review such calculations but may not take any affirmative action with respect to such Appraisal Reduction calculations and/or net present value calculations.
During any Collective Consultation Period and any Senior Consultation Period, after the calculation but prior to the utilization by the special servicer of any of the calculations related to (i) Appraisal Reductions or (ii) net present value, the special servicer will be required to promptly forward such calculations, and the special servicer will also be required to promptly forward any supporting material or additional information necessary in support thereof (including such additional information reasonably requested by the trust advisor to confirm the mathematical accuracy of such calculations, but not including any Privileged Information), to the trust advisor but in any event no later than two (2) Business Days after preparing such calculations. The trust advisor will be required promptly, but no later than three (3) Business Days after receipt of such calculations and any supporting or additional materials, to recalculate and verify the accuracy of the mathematical calculations and the corresponding application of the non-discretionary portions of the applicable formulas required to be utilized in connection with any such calculation prior to utilization by the special servicer; provided, that, with respect to any A/B Whole Loan and any Loan Pair, the trust advisor will not be permitted to recalculate or verify any such calculation performed by the special servicer with respect to any Serviced B Note or Serviced Companion Loan for so long as the holder of the related Serviced B Note or Serviced Companion Loan, as applicable, is the related Directing Holder. The trust advisor may not opine on or call into question these calculations, other than with respect to mathematical errors and the corresponding application of the non-discretionary portions of the applicable formulas required to be utilized in connection with any such calculation prior to utilization by the special servicer. If the trust advisor does not agree with the mathematical calculations or the application of the applicable non-discretionary portions of the formula required to be utilized for such calculation, the trust advisor and the special servicer will be required to consult with each other in order to resolve any disagreement within five (5) Business Days of delivery of such calculations. If the trust advisor and special servicer are not able to resolve such disagreement prior to the end of such 5-Business Day period, the trust advisor will be required to promptly notify the trustee of such disagreement, and the trustee will be required to determine which calculation is to apply. In making such determination, the trustee may hire an independent third-party to assist with any such calculation at the expense of the Issuing Entity.
During any Collective Consultation Period and any Senior Consultation Period, the special servicer will be required to consult (on a non-binding basis) with the trust advisor in connection with any Major Decision involving any mortgage loan, A/B Whole Loan, Loan Pair or any related REO Property and consider alternative actions recommended by the trust advisor; provided, that with respect to matters relating to any A/B Whole Loan and any Loan Pair, the special servicer will only be required to consult with the trust advisor in respect of such A/B Whole Loan or Loan Pair, as applicable, if the holder of the related Serviced B Note or Serviced Companion Loan, as applicable, is not, or has ceased to be, the related Directing Holder. The trust advisor will have no consultation rights or obligations with respect to any Non-Serviced Mortgage Loan (which will be serviced pursuant to the applicable Non-Serviced Mortgage Loan Pooling and Servicing Agreement) or any related REO Property.
The trust advisor will not review the activities of any other special servicer with respect to the securitization of any Non-Serviced Companion Loan, and as a result will not provide a review of any special servicing actions in respect of any Non-Serviced Pari Passu Mortgage Loan. The entity acting as trust advisor or operating advisor with respect to any separate securitization of a Non-Serviced Companion Loan will act as trust advisor with respect to the related Non-Serviced Pari Passu Mortgage Loan pursuant to the related pooling and servicing agreement or trust and servicing agreement, as applicable.
The trust advisor is not a servicer and will not be obligated to change the outcome on any particular Specially Serviced Mortgage Loan. Certificateholders will be deemed to have acknowledged and agreed that there could be multiple strategies to resolve any Specially Serviced Mortgage Loan and the objective of the trust advisor’s participation in any resolution process is to provide additional oversight relating to the special servicer’s compliance with the Servicing Standard in making its determinations as to which strategy to execute. Potential investors should note that the trust advisor is not an “advisor” for any purpose other than as specifically set forth in the Pooling and Servicing Agreement and is not an advisor to any person, including without limitation any Certificateholder. See “Risk Factors—Risks Related to the Offered Certificates—Your Lack of Control Over the Issuing Entity Can Create Risks” in this prospectus supplement.
The ability to perform the duties of the trust advisor and the quality and the depth of any trust advisor annual report will be dependent upon the timely receipt of information required to be delivered to the trust advisor and the accuracy and the completeness of such information. In addition, in no event will the trust advisor have the power to compel any transaction party to take, or refrain from taking, any action. In addition, it is possible that the lack of access to Privileged Information may limit or prohibit the trust advisor from performing its duties under the Pooling and Servicing Agreement, in which case any annual report may describe any resulting limitations.
Trust Advisor Fees
The trust advisor will be entitled to a trust advisor fee (the “Trust Advisor Fee”) equal to the Trust Advisor Fee Rate applied to the outstanding principal balance of each mortgage loan (other than any Non-Serviced Mortgage Loan), including if such mortgage loan becomes an REO Mortgage Loan, which fee will be calculated on the same interest accrual basis as the related mortgage loan and will be prorated for any partial periods. The “Trust Advisor Fee Rate” means a rate equal to (i) 0.0027%per annum with respect to each such mortgage loan (other than the TKG 3 Retail Portfolio Mortgage Loan) and (ii) 0.0064%per annumwith respect to the TKG 3 Retail Portfolio Mortgage Loan. The Trust Advisor Fee will be payable monthly from amounts received in respect of each mortgage loan (other than any Non-Serviced Mortgage Loan) and any successor REO Mortgage Loan, as applicable.
A consulting fee (the “Trust Advisor Consulting Fee”) equal to $10,000, or such lesser amount as the related borrower agrees to pay with respect to any mortgage loan (other than a Non-Serviced Mortgage Loan) or related A/B Whole Loan or Loan Pair, as applicable, will be
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payable to the trust advisor with respect to each Major Decision as to which the trust advisor has consultation rights;provided, that the aggregate amount of such Trust Advisor Consulting Fees with respect to any such mortgage loan, A/B Whole Loan or Loan Pair may not exceed $10,000 in any calendar year;provided,further, that the trust advisor may in its sole discretion reduce the Trust Advisor Consulting Fee with respect to any Major Decision.
Except as described above, the trust advisor and any of its affiliates may not accept any fees or other compensation or other consideration (x) in respect of the trust advisor’s obligations under the Pooling and Servicing Agreement or the performance thereof or (y) in connection with the appointment of a successor special servicer or the recommendation by the trust advisor for a replacement special servicer to become the special servicer under the Pooling and Servicing Agreement.
The Trust Advisor Fee and Trust Advisor Consulting Fee will be payable from funds on deposit in the Collection Account out of amounts otherwise available to make distributions on the Certificates as described in “Servicing of the Mortgage Loans—Withdrawals from the Collection Account” in this prospectus supplement, but with respect to the Trust Advisor Consulting Fee, only to the extent that such fee is actually received from the related borrower. If the Trust Advisor has consultation rights with respect to a Major Decision, the Pooling and Servicing Agreement will require the master servicer or the special servicer, as applicable, to use commercially reasonable efforts consistent with the Servicing Standard to collect the applicable Trust Advisor Consulting Fee from the related borrower in connection with such Major Decision, but only to the extent not prohibited by the related mortgage loan documents. The master servicer or special servicer, as applicable, will each be permitted to waive or reduce the amount of any such Trust Advisor Consulting Fee payable by the related borrower if it determines that such full or partial waiver is in accordance with the Servicing Standard but in no event shall take any enforcement action with respect to the collection of such Trust Advisor Consulting Fee other than requests for collection;provided, that the master servicer or the special servicer, as applicable, will be required to consult with the Trust Advisor prior to any such waiver or reduction. In addition to the Trust Advisor Fee and any Trust Advisor Consulting Fee, the trust advisor will be entitled to reimbursement of Trust Advisor Expenses in accordance with the terms of the Pooling and Servicing Agreement.
Resignation of the Trust Advisor
The trust advisor will have the right to resign from its obligations and duties under the Pooling and Servicing Agreement and recommend the replacement of the trust advisor,provided that the trust advisor (i) pays or reimburses the certificate administrator or the Issuing Entity, as applicable, for all of the reasonable costs and expenses to be incurred by the certificate administrator, the trust advisor and/or the Issuing Entity, as applicable, in connection with obtaining any vote to replace the trust advisor (and such fees and expenses will not constitute Additional Trust Fund Expenses), (ii) pays any amounts in the nature of Trust Advisor Fees, costs or expenses, to the extent such amounts are in excess of the amounts being paid to the trust advisor prior to its resignation, necessary to obtain or payable to a replacement trust advisor, (iii) except in the case of a recommended replacement that is an Eligible Trust Advisor, obtains the consent of the Controlling Class Representative (which consent shall be obtained prior to any solicitation of votes described below) during any Subordinate Control Period and any Collective Consultation Period, which consent will be deemed to have been granted if no objection is made within thirty (30) days following the Controlling Class Representative’s receipt of the request for consent and, if granted or deemed granted, such consent cannot thereafter be revoked or withdrawn and (iv) except in the case of a recommended replacement that is an Eligible Trust Advisor, obtains the requisite vote of Certificateholders as provided below. In the event of its resignation, the trust advisor will be required to deliver to the certificate administrator, with a copy to the trustee, the 17g-5 Information Provider and the special servicer, a written recommendation (along with relevant information justifying its recommendation) of a suggested replacement trust advisor. The certificate administrator will be required to post such written recommendation to its website. Except in the case of a recommended replacement that is an Eligible Trust Advisor, the trust advisor’s recommendation of a successor trust advisor must be confirmed by an affirmative vote of Holders of Principal Balance Certificates evidencing at least 66 2/3% of the aggregate Voting Rights of all Principal Balance Certificates;provided, that if any Holder of a Principal Balance Certificate does not affirmatively object to such written recommendation within 180 days of the posting of such recommendation, then such Holder will be deemed to have consented to the recommended replacement trust advisor. If so confirmed, the trustee will then be required to terminate all of the rights and obligations of the trust advisor under the Pooling and Servicing Agreement and to appoint the successor trust advisor approved by the Certificateholders (provided that such successor trust advisor is an Eligible Trust Advisor). Such termination shall be subject to the terminated trust advisor’s rights to indemnification, payment of outstanding fees, reimbursement of expenses and other rights set forth in the Pooling and Servicing Agreement that survive termination.
In addition, the trust advisor shall be permitted to resign from its obligations and duties under the Pooling and Servicing Agreement if it determines that its duties under the Pooling and Servicing Agreement 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. Any such determination permitting the resignation of the trust advisor must be evidenced by an opinion of counsel to such effect delivered to the master servicer, the certificate administrator, the depositor and the trustee. No such resignation will become effective until a successor trust advisor meeting the eligibility requirements described in this prospectus supplement has assumed the trust advisor’s responsibilities and obligations under the Pooling and Servicing Agreement.
Trust Advisor Termination Events
The following constitute trust advisor termination events under the Pooling and Servicing Agreement (each, a “Trust Advisor Termination Event”) whether any such event is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body:
• | any failure by the trust advisor to observe or perform in any material respect any of its covenants or agreements or the material breach of its representations or warranties under the Pooling and Servicing Agreement, which failure continues unremedied for a period of thirty (30) days after the date on which written notice of such failure is given to the trust advisor by the trustee or the certificate administrator or to the trust advisor and the certificate administrator by the Holders of Certificates having greater than 25% of the aggregate Voting Rights of all then outstanding Certificates;provided, that with respect to any such failure which is not curable within such 30-day period, the trust advisor will have an additional cure period of thirty (30) days to effect such cure so long as it has commenced to cure such failure within the initial 30-day period and has provided the trustee and the certificate administrator with an officer’s certificate certifying that it has diligently pursued, and is continuing to pursue, such cure; |
• | any failure by the trust advisor to perform in accordance with the Trust Advisor Standard which failure continues unremedied for a period of thirty (30) days; |
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• | any failure by the trust advisor to be an Eligible Trust Advisor, which failure continues unremedied for a period of thirty (30) days; |
• | a decree or order of a court or agency or supervisory authority having jurisdiction in the premises in an involuntary case under any present or future federal or state bankruptcy, insolvency or similar law for the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, shall have been entered against the trust advisor, and such decree or order shall have remained in force undischarged or unstayed for a period of sixty (60) days; |
• | the trust advisor consents to the appointment of a conservator or receiver or liquidator or liquidation committee in any insolvency, readjustment of debt, marshaling of assets and liabilities, voluntary liquidation, or similar proceedings of or relating to the trust advisor or of or relating to all or substantially all of its property; |
• | the trust advisor admits in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors, or voluntarily suspend payment of its obligations; or |
• | if and for so long as the Issuing Entity is subject to the reporting requirements of the Exchange Act, any failure by the trust advisor to deliver any reporting items required to be delivered under Regulation AB and the Exchange Act by the time required under the Pooling and Servicing Agreement after any applicable grace period. |
Upon receipt by the certificate administrator of notice of the occurrence of any Trust Advisor Termination Event, the certificate administrator will be required to promptly post such notice on its internet website, unless the certificate administrator is notified that such Trust Advisor Termination Event has been remedied.
“Eligible Trust Advisor”means an entity that (i) (A) is (or as to which each of the personnel responsible for supervising the obligations of the Trust Advisor is) (I) regularly engaged in the business of analyzing and advising clients in commercial mortgage-backed securities matters and has at least five (5) years of experience in collateral analysis and loss projections, and (II) has (or as to which each of the personnel responsible for supervising the obligations of the Trust Advisor has) at least five (5) years of experience in commercial real estate asset management and in the workout and management of distressed commercial real estate assets or (B) is the special servicer or trust advisor/operating advisor on a commercial mortgage-backed securities transaction rated by DBRS, Fitch, KBRA, Moody’s, Morningstar Credit Ratings, LLC (“Morningstar”) or Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business (“S&P“) (including, in the case of Park Bridge Lender Services, this transaction) but has not been special servicer on a transaction for which DBRS, Fitch, KBRA, Moody’s, Morningstar or S&P has qualified, downgraded or withdrawn its rating or ratings of one or more classes of certificates for such transaction citing servicing concerns with the special servicer as the sole or material factor in such rating action, (ii) is not the depositor, the mortgage loan seller, the master servicer, the special servicer or an affiliate of any of the foregoing, (iii) can and will make the representations and warranties set forth in the Pooling and Servicing Agreement, (iv) is not the Controlling Class Representative, a Directing Holder or an affiliate of the Controlling Class Representative or a Directing Holder and (v) has not been paid by the special servicer or successor special servicer any fees, compensation or other remuneration (x) in respect of its obligations under the Pooling and Servicing Agreement or (y) for the appointment or recommendation for replacement of a successor special servicer to become the special servicer.
Rights Upon Trust Advisor Termination Event
If a Trust Advisor Termination Event occurs then, and in each and every such case, so long as such Trust Advisor Termination Event has not been remedied, either (i) the trustee may, or (ii) upon the written direction of Holders of Certificates evidencing at least 25% of the aggregate Voting Rights of all Certificates, the trustee will be required to, terminate all of the rights and obligations of the trust advisor under the Pooling and Servicing Agreement, other than the right to receive accrued and unpaid fees and expense reimbursements and the right to indemnification under the Pooling and Servicing Agreement.
As soon as practicable, but in no event later than fifteen (15) Business Days (or such longer period of time as may be reasonably necessary to find a willing successor trust advisor if no willing successor trust advisor can be identified in such fifteen (15) Business Day period) after the trustee or the certificate administrator delivers written notice of termination to the trust advisor, the trustee will be required to appoint a successor trust advisor that is an Eligible Trust Advisor (which successor trust advisor may be an affiliate of the trustee). If the trustee is the successor master servicer or the successor special servicer, neither the trustee nor any of its affiliates will be the successor trust advisor. The appointment of the successor trust advisor will not be subject to the vote, consent or approval of the Holder of any class of Certificates;provided, that during any Subordinate Control Period and any Collective Consultation Period, the Controlling Class Representative will have the right to consent, such consent not to be unreasonably withheld, to any replacement trust advisor;provided,further, that such consent will be deemed to have been granted if no objection is made within ten (10) Business Days following the Controlling Class Representative’s receipt of the request for consent and, if granted or deemed granted, such consent cannot thereafter be revoked or withdrawn. The trustee shall not have liability for any failure to find a suitable Eligible Trust Advisor to serve as a successor trust advisor.
Upon any termination of the trust advisor and appointment of a successor to the trust advisor, the trustee will, as soon as possible, be required to give written notice of the termination and appointment to the special servicer, the master servicer, the certificate administrator, the 17g-5 Information Provider, the depositor, the Controlling Class Representative (but only during any Subordinate Control Period and any Collective Consultation Period) and the Certificateholders. If no Eligible Trust Advisor has been appointed in accordance with the Pooling and Servicing Agreement, no party will act as successor trust advisor.
If the trust advisor is terminated for any reason, it will remain entitled to any accrued and unpaid fees and trust advisor expenses, as well as indemnification in respect of the period during which it acted as trust advisor, which will be payable in accordance with the priorities and subject to the limitations described in this prospectus supplement and set forth in the Pooling and Servicing Agreement.
Termination of the Trust Advisor Without Cause
Upon (i) the written direction of Certificateholders evidencing not less than 25% of the Voting Rights of the Certificates requesting a vote to terminate and replace the trust advisor with a proposed successor trust advisor that is an Eligible Trust Advisor, (ii) payment by such holders to the certificate administrator, the trust advisor and the Issuing Entity, as applicable, of the reasonable fees and expenses to be incurred by the certificate administrator, the trust advisor and/or the Issuing Entity, as applicable, in connection with such vote (and such fees
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and expenses will not constitute Additional Trust Fund Expenses), and (iii) obtaining the consent (which will be obtained prior to any solicitation of votes as set forth in the Pooling and Servicing Agreement) of the Controlling Class Representative during any Subordinate Control Period or any Collective Consultation Period (such consent not to be unreasonably withheld, and such consent deemed to have been granted if no objection is made within ten (10) business days following the Controlling Class Representative’s receipt of the request for consent and, if granted or deemed granted, such consent cannot thereafter be revoked or withdrawn, the certificate administrator will be required to promptly provide written notice to all Certificateholders of such request by posting such notice on its internet website and by mailing it to their addresses appearing in the certificate register. The Holders of more than 75% of the Voting Rights of the Certificates may direct the trustee to either (i) terminate (in which case the trustee shall terminate) all of the rights and obligations of the trust advisor under the Pooling and Servicing Agreement by written notice to the trust advisor, and appoint (and the trustee shall so appoint) the proposed successor trust advisor, unless such direction is not given within one hundred eighty (180) days of the initial request in which case such direction will have no force or effect, or (ii) terminate (in which case the trustee shall terminate) all of the rights and obligations of the trust advisor under the Pooling and Servicing Agreement by written notice to the trust advisor and not appoint a successor trust advisor (and no trust advisor shall be appointed), in which case all references to trust advisor in the Pooling and Servicing Agreement will be of no force and effect;provided, if the Holders of at least 25% of the Voting Rights of the Certificates subsequently request a vote to reinstate the role of trust advisor and appoint a new trust advisor under the Pooling and Servicing Agreement, and the Holders of at least 75% of the Voting Rights of the Certificates vote in favor of such reinstatement and appointment, then a new trust advisor will be appointed and references to trust advisor in the Pooling and Servicing Agreement will again be applicable. During any Subordinate Control Period and any Collective Consultation Period, the Controlling Class Representative will have the right to consent, such consent not to be unreasonably withheld, to any replacement of an existing trust advisor;provided, that such consent will be deemed granted if no objection is made within ten (10) Business Days following the Controlling Class Representative’s receipt of the request for consent and, if granted, such consent cannot thereafter be revoked or withdrawn. Any such consent will be required to be solicited from the Controlling Class Representative before any related vote. If a successor trust advisor is not appointed, and until such time as a new trust advisor may be appointed in accordance with the foregoing provisions, all references to trust advisor in the Pooling and Servicing Agreement will be of no force and effect, and all Trust Advisor Fees otherwise payable to the terminated trust advisor in accordance with the Pooling and Servicing Agreement will be deposited into the TA Unused Fees Account, for application in accordance with “Description of the Offered Certificates—Distributions—Subordination; Allocation of Collateral Support Deficit” in this prospectus supplement. Any replacement trust advisor appointed by the Certificateholders in accordance with this paragraph and the Pooling and Servicing Agreement is required to be an Eligible Trust Advisor and such termination shall be subject to the terminated trust advisor’s rights to indemnification, payment of outstanding fees, reimbursement of expenses and other rights set forth in the Pooling and Servicing Agreement that survive termination.
In addition, if there are no classes of Principal Balance Certificates outstanding other than the Control Eligible Certificates, the Holders of a majority of the junior-most Class of such Classes of Certificates outstanding may elect to terminate the trust advisor without payment of any termination fee by notice delivered to the depositor and the trust advisor.
In addition to the foregoing, the trust advisor may resign from its obligations and duties under the Pooling and Servicing Agreement, without payment of any penalty, cost or expense to the trust advisor, at any time when (A) the certificate principal balances of the classes of Principal Balance Certificates senior to the Class E Certificates have been reduced to zero or (B) the aggregate Stated Principal Balance of the mortgage loans is equal to or less than 1% of the Initial Pool Balance. No successor trust advisor will be required to be appointed in connection with, or as a condition to, such resignation.
If the trust advisor resigns or is terminated for any reason it will remain entitled to any accrued and unpaid fees and Trust Advisor Expenses which shall be payable in accordance with the priorities and subject to the limitations set forth in this prospectus supplement and in the Pooling and Servicing Agreement (i.e., no Trust Advisor Expenses will be payable out of any amounts due and owing with respect to the Control Eligible Certificates).
Certain Matters Regarding the Parties to the Pooling and Servicing Agreement
Subject to certain conditions set forth in the Pooling and Servicing Agreement, each of the master servicer and the special servicer may assign its rights and delegate its duties and obligations under the Pooling and Servicing Agreement.
The master servicer or special servicer may resign from the obligations and duties imposed on it under the Pooling and Servicing Agreement, subject to certain limitations as described in “Servicing of the Mortgage Loans—General.”The trust advisor may resign from its obligations and duties as trust advisor subject to certain conditions described under “—The Trust Advisor—Resignation of the Trust Advisor” and “—Termination of the Trust Advisor Without Cause” above in this prospectus supplement. The trustee or any other successor master servicer, special servicer or trust advisor assuming the obligations of the master servicer, the special servicer or the trust advisor under the Pooling and Servicing Agreement will be entitled to the compensation to which the master servicer, special servicer or trust advisor being replaced would have been entitled after the date of assumption of such obligations (other than certain Workout Fees which the prior special servicer will be entitled to retain). If no successor master servicer, special servicer or trust advisor can be retained to perform such obligations for such compensation, additional amounts payable to such successor master servicer, special servicer or trust advisor will result in shortfalls in distributions on the Certificates.
The Pooling and Servicing Agreement also provides that none of the depositor, the master servicer, the special servicer, the trust advisor, or any affiliate, director, officer, employee, member, manager or agent of the depositor, the master servicer, the special servicer or the trust advisor will be under any liability to the Issuing Entity or the Holders of the Certificates for any action taken, or for refraining from the taking of any action, in good faith pursuant to the Pooling and Servicing Agreement and using reasonable business judgment. However, none of the depositor, the master servicer, the special servicer, the trust advisor nor any such person will be protected against any liability which would otherwise be imposed by reason of (i) any breach of warranty or representation in the Pooling and Servicing Agreement, or (ii) any willful misfeasance, bad faith or negligence in the performance of their duties under the Pooling and Servicing Agreement or by reason of negligent disregard of obligations or duties under the Pooling and Servicing Agreement. The Pooling and Servicing Agreement further provides that the depositor, the master servicer, the special servicer, the trust advisor and any affiliate, director, officer, employee, member, manager or agent of the depositor, the master servicer, the special servicer or the trust advisor will be entitled to indemnification by the Issuing Entity (provided that the trust advisor shall not be entitled to be indemnified for any amounts (other than Trust Advisor Fees) out of any amounts due and owing with respect to the Control Eligible Certificates) for any loss, liability or expense incurred in connection with any legal action or claim relating to the Pooling and Servicing Agreement or the Certificates, other than any such loss, liability or expense: (i) specifically required to be borne by the party seeking indemnification, without right of reimbursement pursuant to the terms of the Pooling
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and Servicing Agreement; (ii) which constitutes a Servicing Advance that is otherwise reimbursable under the Poolingand Servicing Agreement; (iii) incurred in connection with any legal action or claim against the party seeking indemnification, resulting from any breach on the part of that party of a representation or warranty made in the Pooling and Servicing Agreement; or (iv) incurred in connection with any legal action or claim against the party seeking indemnification, resulting from any willful misfeasance, bad faith or negligence on the part of that party in the performance of its obligations or duties under the Pooling and Servicing Agreement or negligent disregard of such obligations or duties.
In addition, the Pooling and Servicing Agreement provides that no party thereto will be under any obligation to appear in, prosecute or defend any legal action that is not incidental to its duties under the Pooling and Servicing Agreement. The depositor, the master servicer, the special servicer, the certificate administrator, the trustee, the custodian or the trust advisor may, however, in its discretion undertake any such action which it may deem necessary or desirable with respect to the Pooling and Servicing Agreement and the rights and duties of the parties to the Pooling and Servicing Agreement and the interests of the Holders of Certificates under the Pooling and Servicing Agreement. In such event, the legal expenses and costs of such action and any liability resulting from such action will be expenses, costs and liabilities of the Issuing Entity, and the depositor, the master servicer, the special servicer, the certificate administrator, the trustee, the custodian and the trust advisor will be entitled to be reimbursed for those amounts from the Collection Account.
The depositor is not obligated to monitor or supervise the performance of the master servicer, the special servicer, the trust advisor, the certificate administrator, the trustee or the custodian under the Pooling and Servicing Agreement. The depositor may, but is not obligated to, enforce the obligations of the master servicer or the special servicer under the Pooling and Servicing Agreement and may, but is not obligated to, perform or cause a designee to perform any defaulted obligation of the master servicer or the special servicer or exercise any right of the master servicer or the special servicer under the Pooling and Servicing Agreement. In the event the depositor undertakes any such action, it will be reimbursed and indemnified by the Issuing Entity to the extent not recoverable from the master servicer or special servicer, as applicable. Any such action by the depositor will not relieve the master servicer or the special servicer of its obligations under the Pooling and Servicing Agreement.
Asset Status Reports
The special servicer (if a Servicing Transfer Event exists) will be required to prepare an Asset Status Report that is consistent with the Servicing Standard within forty-five (45) days after the occurrence of a Servicing Transfer Event.
Each Asset Status Report will be delivered to the Controlling Class Representative (but only during any Subordinate Control Period and any Collective Consultation Period), the trust advisor (but only during any Collective Consultation Period and any Senior Consultation Period), the master servicer, the certificate administrator, any Directing Holder (if and for so long as such party or its designee is the Directing Holder with respect to the related A/B Whole Loan or Loan Pair, as applicable) and the 17g-5 Information Provider (which will be required to promptly post the report to the 17g-5 Information Provider’s Website). If the Controlling Class Representative (during any Subordinate Control Period) or a Directing Holder (with respect to an A/B Whole Loan or Loan Pair) does not disapprove of an Asset Status Report within ten (10) Business Days after receipt of such Asset Status Report together with any information in the possession of the special servicer that is necessary to make a decision regarding the subject Asset Status Report, such person will be deemed to have approved the Asset Status Report and the special servicer will implement the recommended action as outlined in such Asset Status Report;provided, that the special servicer may not take any actions that are contrary to applicable law, the Servicing Standard or the terms of the applicable mortgage loan documents. In addition, the Controlling Class Representative (during any Subordinate Control Period) or a Directing Holder (with respect to an A/B Whole Loan or Loan Pair) may object to any Asset Status Report within ten (10) Business Days of receipt;provided, that, following the occurrence of an extraordinary event with respect to the related mortgaged property, or if a failure to take any such action at such time would be inconsistent with the Servicing Standard, the special servicer may take actions with respect to the related mortgaged property before the expiration of the ten (10) Business Day period if the special servicer reasonably determines in accordance with the Servicing Standard that failure to take such action before the expiration of the ten (10) Business Day period would materially and adversely affect the interest of the Certificateholders and the holders of any related Serviced B Note or Serviced Companion Loan, and, during any Subordinate Control Period, the special servicer has made a reasonable effort to contact the Controlling Class Representative or the Directing Holder, as applicable. The foregoing will not relieve the special servicer of its duties to comply with the Servicing Standard.
During any Subordinate Control Period, if the Controlling Class Representative disapproves such Asset Status Report and the special servicer has not made the affirmative determination described above, the special servicer will revise such Asset Status Report as soon as practicable thereafter, but in no event later than thirty (30) days after such disapproval. During any Subordinate Control Period with respect to any such mortgage loan, the special servicer will revise such Asset Status Report until the Controlling Class Representative fails to disapprove such revised Asset Status Report as described above or until the special servicer makes a determination, consistent with the Servicing Standard, that such objection is not in the best interests of all the Certificateholders and the holder of any related Serviced B Note or Serviced Companion Loan, if applicable. In any event, during any Subordinate Control Period, if the Controlling Class Representative does not approve an Asset Status Report within ninety (90) days from the first submission of an Asset Status Report, the special servicer is required to take such action as directed by the Controlling Class Representative,provided such action does not violate the Servicing Standard.
During any Collective Consultation Period, each of the trust advisor and the Controlling Class Representative, and during any Senior Consultation Period, the trust advisor, will be entitled to consult with the special servicer and propose alternative courses of action in respect of any Asset Status Report. During any Collective Consultation Period and any Senior Consultation Period, the special servicer will be obligated to consider such alternative courses of action and any other feedback provided by the trust advisor or the Controlling Class Representative, as applicable. The special servicer may revise the Asset Status Reports as it deems reasonably necessary in accordance with the Servicing Standard to take into account any input and/or recommendations of the trust advisor (and, during any Collective Consultation Period, the Controlling Class Representative).
The Asset Status Report is not intended to replace or satisfy any specific consent or approval right which the Controlling Class Representative may have.
Notwithstanding the foregoing, the special servicer will not be permitted to follow any advice or consultation provided by the trust advisor or advice, direction or consultation of the Controlling Class Representative that would require or cause the special servicer to violate any applicable law, be inconsistent with the Servicing Standard, require or cause the special servicer to violate provisions of the Pooling and Servicing Agreement, require or cause the special servicer to violate the terms of any mortgage loan, expose any Certificateholder or any
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party to the Pooling and Servicing Agreement or their affiliates, officers, directors or agents to any claim, suit or liability, result in the imposition of a tax upon any REMIC or the loss of REMIC status or materially expand the scope of the master servicer’s or special servicer’s responsibilities under the Pooling and Servicing Agreement.
Notwithstanding the foregoing, in the case of an A/B Whole Loan or Loan Pair, if and for so long as the related Serviced B Note holder or Serviced Companion Loan holder or its designee is the Directing Holder with respect to such A/B Whole Loan or Loan Pair, only such holder may exercise the rights of the Controlling Class Representative described in this “—Asset Status Reports” section to the extent set forth in the related Intercreditor Agreement (without regard to whether a Subordinate Control Period, a Collective Consultation Period or a Senior Consultation Period is then in effect). Neither the Controlling Class Representative nor the trust advisor will have any of the above described consultation rights or will exercise them in conjunction with the holder of such Serviced B Note or Serviced Companion Loan except to the extent set forth in the related Intercreditor Agreement. See “Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs” in this prospectus supplement.
Mortgage Loan Modifications
The master servicer may amend any term (other than a Money Term) of a mortgage loan (other than a Non-Serviced Mortgage Loan), Serviced B Note or Serviced Companion Loan that is not a Specially Serviced Mortgage Loan and may extend the maturity date of any Balloon Loan, other than a Specially Serviced Mortgage Loan or a Non-Serviced Mortgage Loan, to a date not more than sixty (60) days beyond the original maturity date, if in the master servicer’s sole judgment exercised in good faith, a default in the payment of the Balloon Payment is reasonably foreseeable and such extension is reasonably likely to produce a greater recovery to the Certificateholders and the holder of the related Serviced B Note or Serviced Companion Loan, as applicable (as a collective whole), on a net present value basis (with the relevant discounting to be performed at the applicable NPV Calculation Rate) than liquidation of such mortgage loan, and the borrower has obtained an executed written commitment (subject only to satisfaction of conditions set forth therein) for refinancing of the mortgage loan or purchase of the related mortgaged property.
The master servicer’s power to amend a mortgage loan is subject to any restrictions applicable to REMICs, and to limitations imposed by the Pooling and Servicing Agreement and any applicable Intercreditor Agreement or co-lender agreement (including the rights of the Controlling Class Representative during any Subordinate Control Period and any Collective Consultation Period and the trust advisor during any Collective Consultation Period and any Senior Consultation Period, and the holder of any Serviced B Note or Serviced Companion Loan, as applicable).
Subject to any restrictions applicable to REMICs, the special servicer will be permitted to enter into a modification, waiver or amendment of the terms of any Specially Serviced Mortgage Loan, including any modification, waiver or amendment to:
• | reduce the amounts owing under any Specially Serviced Mortgage Loan by forgiving principal, accrued interest and/or any Prepayment Premium or Yield Maintenance Charge; |
• | reduce the amount of the Scheduled Payment on any Specially Serviced Mortgage Loan, including by way of a reduction in the related mortgage rate; |
• | forbear in the enforcement of any right granted under any mortgage note or mortgage relating to a Specially Serviced Mortgage Loan; |
• | extend the maturity date of any Specially Serviced Mortgage Loan; and/or |
• | accept a Principal Prepayment during any Lock-out Period; |
providedin each case that (1) the related borrower is in default with respect to the Specially Serviced Mortgage Loan or, in the reasonable judgment of the special servicer, such default is reasonably foreseeable, and (2) in the reasonable judgment of the special servicer, such modification, waiver or amendment would result in a recovery to Certificateholders, the holder of the related Serviced B Note and the holder of the related Serviced Companion Loan (as a collective whole) on a net present value basis that would be equal to or greater than the recovery that would result if the applicable Specially Serviced Mortgage Loan were liquidated, as demonstrated in writing by the special servicer to the trustee and the certificate administrator;provided, that the foregoing rights of the special servicer are subject to the consent and/or consultation rights of the Controlling Class Representative, the trust advisor and the holder of any related Serviced B Note or Serviced Companion Loan, as applicable, to the extent described in this prospectus supplement.
In no event, however, will the special servicer be permitted to:
• | extend the maturity date of a Specially Serviced Mortgage Loan beyond a date that is five (5) years prior to the Distribution Date in May 2048; or |
• | if the Specially Serviced Mortgage Loan is secured by a ground lease, extend the maturity date of such Specially Serviced Mortgage Loan unless the special servicer gives due consideration to the remaining term of such ground lease. |
The special servicer will also not be permitted to extend the maturity date of any mortgage loan secured by a mortgaged property covered by a group secured creditor impaired property environmental insurance policy for more than five years beyond such mortgage loan’s maturity date unless a new phase I environmental report indicates that there is no environmental condition or the borrower obtains, at its expense, an extension of such policy on the same material terms and conditions to cover the period through five years past the extended maturity date,provided that, if such mortgage loan is secured by a ground lease, the special servicer will be required to give due consideration to the remaining term of the ground lease.
The consent of the special servicer is required to any modification, waiver or amendment (including any Major Decision in connection with a defeasance) with regard to any mortgage loan that is not a Specially Serviced Mortgage Loan or a Non-Serviced Mortgage Loan (other than certain non-material modifications, waivers or amendments). When the special servicer’s consent is required, the master servicer will be required to promptly provide the special servicer with written notice of any request for modification, waiver or amendment accompanied by the master servicer’s recommendation and analysis and any and all information in the master servicer’s possession that the
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special servicer may reasonably request to grant or withhold its consent to such action. Such consent will be deemed given fifteen (15) Business Days after receipt (unless earlier objected to) by the special servicer from the master servicer of the master servicer’s written analysis and recommendation with respect to such proposed action together with such other information reasonably required by the special servicer.
With respect to any Mortgage Loan (other than with respect to any Non-Serviced Mortgage Loans and other than a Mortgage Loan that is part of an A/B Whole Loan or a Loan Pair as to which the holder of a related Serviced B Note or Serviced Companion Loan is the Directing Holder), the special servicer will be required to obtain, prior to consenting to such a proposed action of the master servicer, and prior to itself taking such an action, the written consent of the Controlling Class Representative, which consent will be deemed given ten (10) Business Days after receipt (unless earlier objected to) by the Controlling Class Representative of the master servicer’s and/or special servicer’s written analysis and recommendation with respect to such waiver together with such other information reasonably required by the Controlling Class Representative. See “—The Controlling Class Representative” in this prospectus supplement.
Modifications that forgive principal or interest of a mortgage loan will result in realized losses on such mortgage loan and such realized losses will be allocated among the various classes of Certificates in the manner described under “Description of the Offered Certificates—Distributions—Subordination; Allocation of Collateral Support Deficit” in this prospectus supplement.
The modification of a mortgage loan may tend to reduce prepayments by avoiding liquidations and therefore may extend the weighted average life of the Certificates beyond that which might otherwise be the case. See “Yield, Prepayment and Maturity Considerations” in this prospectus supplement.
Sale of Defaulted Mortgage Loans and REO Properties
Sale of Defaulted Mortgage Loans
The provisions described under this section “Sale of Defaulted Mortgage Loans” do not apply to any Non-Serviced Mortgage Loan, and as used in this section, the term “mortgage loan” will not refer to any Non-Serviced Mortgage Loan unless otherwise indicated.
Promptly upon a mortgage loan becoming a defaulted mortgage loan and if the special servicer determines in accordance with the Servicing Standard that it would be in the best interests of the Certificateholders (as a collective whole as if such Certificateholders constituted a single lender) to attempt to sell such mortgage loan, the special servicer will be required to use reasonable efforts to solicit offers for the defaulted mortgage loan on behalf of the Certificateholders and the related Serviced B Note holder or Serviced Companion Loan holder in such manner as will be reasonably likely to realize a fair price. The special servicer shall give the trustee, the certificate administrator, the custodian, the 17g-5 Information Provider, the master servicer, the Controlling Class Representative (during any Subordinate Control Period and any Collective Consultation Period), the trust advisor (during any Collective Consultation Period and any Senior Consultation Period), and the holder of any related Serviced B Note or Serviced Companion Loan not less than five (5) Business Days’ prior written notice of its intention to sell any such defaulted mortgage loan. The special servicer will be required to accept the first (and, if multiple offers are contemporaneously received, the highest) cash offer received from any person that constitutes a fair price for the defaulted mortgage loan, subject to any consent or consultation rights of the Controlling Class Representative and, with respect to any mortgage loan that is part of an A/B Whole Loan or Loan Pair, the consent rights of the related Serviced B Note holder or Serviced Companion Loan holder, to the extent set forth in the related Intercreditor Agreement and for so long as such holder is the related Directing Holder.
The special servicer will be required to determine whether any cash offer constitutes a fair price for any defaulted mortgage loan if the highest offer is from a person other than an Interested Person. In determining whether any offer from a person other than an Interested Person constitutes a fair price for any defaulted mortgage loan, the special servicer will be required to take into account, and in determining whether any offer from an Interested Person constitutes a fair price for any defaulted mortgage loan, any Appraiser will be instructed to take into account, as applicable, among other factors, the period and amount of any delinquency on the affected mortgage loan, A/B Whole Loan or Loan Pair, the occupancy level and physical condition of the related mortgaged property and the state of the local economy. The special servicer will be required to take into account any appraisal, updated appraisal or narrative appraisal that it may have obtained pursuant to the Pooling and Servicing Agreement within the prior nine (9) months.
If the highest offer is from an Interested Person, then the trustee will be required to determine whether the cash offer constitutes a fair price, either itself or by retaining an independent third party as set forth in the following paragraph. However, no offer from an Interested Person will constitute a fair price unless (i) it is the highest offer received and (ii) at least one other offer is received from an independent third party. In determining whether any offer received from an Interested Person represents a fair price for any such defaulted mortgage loan, the trustee, if making such determination itself, will be supplied with and will be required to rely on the most recent appraisal or updated appraisal conducted in accordance with the Pooling and Servicing Agreement within the preceding nine (9) month period or, in the absence of any such appraisal, on a new appraisal. The cost of any appraisal will be covered by, and will be reimbursable as, a Servicing Advance. If any Interested Person is among those making an offer with respect to a defaulted mortgage loan, the special servicer will require that all offers be submitted to the trustee in writing.
Notwithstanding anything contained in the preceding paragraph to the contrary, if the trustee is required to determine whether a cash offer by an Interested Person constitutes a fair price, the trustee may (at its option and at the expense of the Issuing Entity) designate an independent third party expert in real estate or commercial mortgage loan matters with at least 5 years’ experience in valuing loans similar to the subject mortgage loan, that has been selected with reasonable care by the trustee to determine if such cash offer constitutes a fair price for such mortgage loan. If the trustee designates such a third party to make such determination, the trustee will be entitled to rely conclusively upon such third party’s determination. The reasonable costs of all appraisals, inspection reports and broker opinions of value incurred by any such third party pursuant to this paragraph will be covered by, and will be reimbursable as, a Servicing Advance;provided that, the trustee will not engage a third party expert whose fees exceed a commercially reasonable amount as determined by the trustee.
Notwithstanding any of the foregoing paragraphs, but subject to any consent or consultation rights of the Controlling Class Representative or consultation rights of the trust advisor, as applicable, the special servicer will not be required to accept the highest cash offer if the special servicer determines, in accordance with the Servicing Standard, that rejection of such offer would be in the best interests of the Certificateholders, and the special servicer may accept a lower cash offer (from any person other than itself or an affiliate) if it determines, in its reasonable and good faith judgment, that acceptance of such offer would be in the best interests of the Certificateholders.
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Additionally, to the extent set forth in the related Intercreditor Agreement or mezzanine intercreditor agreement, as applicable, each holder of a B Note, Serviced Companion Loan, Non-Serviced Companion Loan or a mezzanine loan may have a purchase option with respect to defaulted mortgage loans under the related Intercreditor Agreement. Subject to the rights of any such B Note holder, Serviced Companion Loan holder or mezzanine loan holder under the respective Intercreditor Agreement, unless and until a defaulted mortgage loan is sold pursuant to the terms of the Pooling and Servicing Agreement, the special servicer shall continue to service and administer such mortgage loan in accordance with the Servicing Standard and the terms of the Pooling and Servicing Agreement and shall pursue such other resolutions or recovery strategies including workout, foreclosure or sale of such mortgage loan, as is consistent with the terms of the Pooling and Servicing Agreement and the Servicing Standard.
Matters Relating to Loan Pairs
In the case of a defaulted mortgage loan that is part of a Loan Pair, if the special servicer determines to attempt to sell such mortgage loan it will be required to sell such defaulted mortgage loan together with the related Serviced Companion Loan as a whole loan pursuant to the Pooling and Servicing Agreement and the terms of the related Intercreditor Agreement.
With respect to any such defaulted mortgage loan, the special servicer will be required to solicit offers for such defaulted mortgage loan together with the related Serviced Companion Loan as a whole loan and will require that all offers be submitted to the trustee in writing. Whether any cash offer constitutes a fair price for such Loan Pair will be determined by the special servicer unless the offeror is an Interested Person, in which case, the trustee will make such determination;provided, that no offer from the depositor, the master servicer, the special servicer or certain other Interested Persons enumerated in the related Intercreditor Agreement for a Loan Pair will constitute a fair price unless (i) it is the highest offer received and (ii) at least two bona fide other offers are received from independent third parties. In determining whether any offer received represents a fair price for such Loan Pair, the trustee will be supplied with and will rely on the most recent appraisal or updated appraisal conducted within the preceding nine (9)-month period or, in the absence of any such appraisal, on a new appraisal. The trustee will be required to select the appraiser conducting any such new appraisal. The cost of any such appraisal will be reimbursable as a Servicing Advance. In determining whether any such offer constitutes a fair price, the trustee will be required to instruct the appraiser to take into account, among other factors, the period and amount of any delinquency on the affected Loan Pair, the occupancy level and physical condition of the related mortgaged property and the state of the local economy. The trustee may conclusively rely on the opinion of an independent appraiser or other independent expert in real estate matters selected with reasonable care and retained by the trustee at the expense of the Issuing Entity and the holder of the related Serviced Companion Loan in connection with making such determination. Notwithstanding the foregoing, the special servicer will not be permitted to sell the Loan Pair without the written consent of the related Serviced Companion Loan holder unless the special servicer has delivered to such holder: (a) at least fifteen (15) Business Days prior written notice of any decision to attempt to sell the Loan Pair; (b) at least ten (10) days prior to the proposed sale, a copy of each bid package (together with any amendments to such bid packages) received by the special servicer in connection with any such proposed sale, (c) at least ten (10) days prior to the proposed sale, a copy of the most recent appraisal for the Loan Pair, and any documents in the servicer mortgage file requested by the Serviced Companion Loan holder and (d) until the sale is completed, and a reasonable period of time (but no less time than is afforded to other offerors and the controlling class representative) prior to the proposed sale date, all information and other documents being provided to other offerors and all leases or other documents that are approved by the master servicer or the special servicer in connection with the proposed sale;provided, that the related Serviced Companion Loan holder may waive any of the delivery or timing requirements set forth in this sentence. Subject to the foregoing, each of the controlling class representative, the Serviced Companion Loan holder or a representative thereof shall be permitted to submit an offer at any sale of a Loan Pair.
Notwithstanding anything contained in the preceding paragraph to the contrary, if the trustee is required to determine whether a cash offer by any Interested Person constitutes a fair price, the trustee may (at its option and at the expense of the Issuing Entity) designate an independent third party expert in real estate or commercial mortgage loan matters with at least five (5) years’ experience in valuing loans similar to the subject mortgage loan, that has been selected with reasonable care by the trustee, to determine if such cash offer constitutes a fair price for such mortgage loan. If the trustee designates such a third party to make such determination, the trustee will be entitled to rely conclusively upon such third party’s determination. The reasonable costs of all appraisals, inspection reports and broker opinions of value incurred by any such third party pursuant to this paragraph will be covered by, and will be reimbursable from, the Collection Account to the extent of thepro rata portion allocable to the related mortgage loan, and the related sub-accounts of the Collection Account related to any Serviced Companion Loan to the extent of the portion allocable to the related Serviced Companion Loan in accordance with the related intercreditor agreement;provided, that, the trustee may not engage a third party expert whose fees exceed a commercially reasonable amount as determined by the trustee.
Sale of REO Properties
If title to any REO Property (other than any REO Property relating to the Non-Serviced Mortgage Loan) is acquired by the Issuing Entity or its nominee in respect of any Specially Serviced Mortgage Loan, the special servicer is required to use its reasonable best efforts to sell such REO Property for cash as soon as practicable consistent with the requirement to maximize proceeds for all Certificateholders (and, with respect to a Serviced B Note or Serviced Companion Loan, for the Certificateholders and the holder of such Serviced B Note or Serviced Companion Loan, as a collective whole) but in no event later than three (3) years after the end of the year in which it was acquired, and in any event prior to the Distribution Date in May 2048 or earlier to the extent necessary to comply with REMIC provisions, unless (i) the trustee or the special servicer, on behalf of the applicable REMIC (A) has been granted an extension of time (which extension must be applied for at least sixty (60) days prior to the expiration of the period specified above) by the IRS for the orderly liquidation of such REO Property or (B) is permitted under the REMIC provisions to continue to hold such REO Property during the period in which an application for an extension is pending, in either of which cases the special servicer may continue to attempt to sell such REO Property for cash, or (ii) the special servicer receives an opinion of counsel that holding such REO Property beyond the period specified above will not result in the imposition of taxes on “prohibited transactions” under the REMIC provisions of the Code or cause any REMIC to fail to qualify as a REMIC;provided, that in no event may the Issuing Entity hold any REO Property (other than any REO Property relating to the Non-Serviced Mortgage Loan) beyond the end of the sixth (6th) calendar year following the end of the year of such REO Property’s acquisition. If the special servicer is unable to sell such REO Property for cash within such time period (as it may be extended as described above), the special servicer shall, after consultation with the Controlling Class Representative (during any Subordinate Control Period and any Collective Consultation Period) or the Directing Holder (with respect to a Serviced B Note or Serviced Companion Loan), as applicable, before the end of such period or extended period, as the case may be, auction the REO Property to the person that makes the highest cash offer (which may be the special servicer or another Interested Person) in accordance with the Servicing Standard;provided that if the special servicer, any other Interested Person or any of their respective affiliated entities intends to make an offer on or otherwise purchase any REO Property (other than any REO Property relating to the Non-
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Serviced Mortgage Loan): (i) the special servicer will be required to notify the trustee of such intent, (ii) the trustee will be required to promptly obtain an appraisal of such REO Property at the expense of the Issuing Entity and (iii) the applicable Interested Person will not be permitted to offer less than the fair market value set forth in such appraisal. Neither the trustee nor any affiliate thereof may purchase an REO Property.
Within thirty (30) days of the sale of the REO Property, the special servicer will be required to provide to the trustee, the certificate administrator, the custodian, the 17g-5 Information Provider, the master servicer (and with respect to an A/B Whole Loan or Loan Pair, the holder of the related Serviced B Note or Serviced Companion Loan), the Controlling Class Representative (during any Subordinate Control Period and any Collective Consultation Period) and the trust advisor (during any Collective Consultation Period and any Senior Consultation Period) a statement of accounting for such REO Property, including without limitation, (i) the acquisition date for the REO Property, (ii) the date of disposition of the REO Property, (iii) the sale price and related selling and other expenses, (iv) accrued interest (including interest deemed to have accrued) on the Specially Serviced Mortgage Loan to which the REO Property related, calculated from the acquisition date to the disposition date, (v) final property operating statements, and (vi) such other information as the trustee or the certificate administrator (and with respect to a Serviced B Note or Serviced Companion Loan, any Directing Holder) may reasonably request in writing. The liquidation proceeds from the final disposition of the REO Property will be required to be deposited in the Collection Account within one (1) Business Day of receipt.
“Interested Person” means, as of any date of determination, the depositor, the master servicer, the special servicer, the trust advisor, a Holder of 50% or more of the Controlling Class, the Controlling Class Representative, the holder of a Serviced B Note or Serviced Companion Loan, the mortgage loan seller, the sponsor, any borrower, any manager of a mortgaged property, any independent contractor engaged by the master servicer or the special servicer pursuant to the Pooling and Servicing Agreement, or any person actually known to a responsible officer of the trustee or the certificate administrator to be an affiliate of any of the preceding entities.
Foreclosures
Except in the case of a Non-Serviced Mortgage Loan, the special servicer may at any time (with notification to and consent of the Controlling Class Representative during any Subordinate Control Period, upon consultation with the Controlling Class Representative during any Subordinate Control Period and any Collective Consultation Period, and upon consultation with the trust advisor during any Collective Consultation Period and any Senior Consultation Period, and in the case of mortgaged property that secures an A/B Whole Loan or Loan Pair, with the consent of the holder of the related Serviced B Note or Serviced Companion Loan to the extent set forth in the related Intercreditor Agreement and for so long as such holder is the related Directing Holder) institute foreclosure proceedings, exercise any power of sale contained in any mortgage, accept a deed in lieu of foreclosure or otherwise acquire title to a mortgaged property by operation of law or otherwise, if such action is consistent with the Servicing Standard and a default on the related mortgage loan has occurred but subject, in all cases, to limitations concerning environmental matters and, in specified situations, the receipt of an opinion of counsel relating to REMIC requirements. The special servicer may consult counsel to determine when an acquisition date shall be deemed to occur under the REMIC provisions of the Code with respect to the related mortgaged property, the expense of such consultation being treated as a Servicing Advance related to the foreclosure.
The special servicer will not, on behalf of the Issuing Entity, be permitted to obtain title to a mortgaged property as a result of or in lieu of foreclosure or otherwise, and will not otherwise be permitted to acquire possession of, or take any other action with respect to, any mortgaged property, if, as a result of any such action, the Issuing Entity would be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such mortgaged property within the meaning of the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, or any applicable comparable federal, state or local law, or a “discharger” or “responsible party” thereunder, unless the special servicer has also previously determined in accordance with the Servicing Standard, based on an updated environmental assessment report prepared by a person (who may be an employee or affiliate of the master servicer or the special servicer) who regularly conducts environmental site assessments, which report shall be delivered to the trustee, the certificate administrator and the 17g-5 Information Provider, that (i) such mortgaged property is in compliance with applicable environmental laws or, if not, after consultation with an environmental expert, that taking such actions as are necessary to bring the mortgaged property in compliance therewith is reasonably likely to produce a greater recovery on a net present value basis (with the relevant discounting to be performed at the applicable NPV Calculation Rate) than not taking such actions; (ii) taking such actions as are necessary to bring the mortgaged property in compliance with applicable environmental laws is reasonably likely to produce a greater recovery on a net present value basis (with the relevant discounting to be performed at the applicable NPV Calculation Rate) than pursuing a claim under the existing environmental insurance policy; and (iii) there are no circumstances or conditions present or threatened at such mortgaged property relating to the use, management, disposal or release of any hazardous substances, hazardous materials, hazardous wastes, or petroleum-based materials for which investigation, testing, monitoring, removal, clean-up or remediation could be required under any federal, state or local law or regulation, or that, if any such materials are present for which such action could be required, after consultation with an environmental expert, that taking such actions with respect to the affected mortgaged property is reasonably likely to produce a greater recovery on a net present value basis (with the relevant discounting to be performed at the applicable NPV Calculation Rate) than not taking such actions (after taking into account the projected costs of such actions). If the special servicer determines that taking such actions as are necessary to bring any mortgaged property into compliance with applicable environmental laws, or taking such actions with respect to the containment, removal, clean-up or remediation of hazardous substances, hazardous materials, hazardous wastes, or petroleum-based materials affecting any such mortgaged property, is not reasonably likely to produce a greater recovery on a net present value basis (with the relevant discounting to be performed at the applicable NPV Calculation Rate) than not taking such actions (after taking into account the projected costs of such actions) or than not pursuing a claim under the existing environmental insurance policy, then the special servicer shall take such action as it deems to be in the best economic interest of the Issuing Entity (and the holder of the related Serviced B Note or Serviced Companion Loan, as applicable), including, without limitation, releasing the lien of the related mortgage.
If the Issuing Entity (or its nominee) acquires a mortgaged property by foreclosure or deed in lieu of foreclosure upon a default of a mortgage loan, the Pooling and Servicing Agreement provides that the special servicer, on behalf of the trustee, must administer such mortgaged property so that it qualifies at all times as “foreclosure property” within the meaning of Code Section 860G(a)(8). The Pooling and Servicing Agreement also requires that any such mortgaged property be managed and operated by an “independent contractor,” within the meaning of applicable Treasury regulations, who furnishes or renders services to the tenants of such mortgaged property. Pursuant to the terms of the Pooling and Servicing Agreement, the special servicer shall not rent, lease, or otherwise earn income on behalf of the Issuing Entity or the beneficial owners thereof with respect to REO Property which might cause the REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (without giving effect to the final sentence thereof) or result in the receipt by any REMIC of any “income from nonpermitted assets” within the meaning of Section 860F(a)(2) of the Code or any “net income from
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foreclosure property” which is subject to tax under the REMIC provisions of the Code unless (i) the trustee and the special servicer have received an opinion of counsel (at the sole expense of the Issuing Entity) to the effect that, under the REMIC provisions of the Code and any relevant proposed legislation, any income generated for a REMIC by the REO Property would not result in the imposition of a tax upon the REMIC or (ii) in accordance with the Servicing Standard, the special servicer determines the income or earnings with respect to such REO Property will offset any tax under the REMIC provisions of the Code relating to such income or earnings and will maximize the net recovery from the REO Property to the Certificateholders. The special servicer shall notify the trustee, the certificate administrator and the master servicer of any election by it to incur such tax, and the special servicer (i) shall hold in escrow in an eligible account an amount equal to the tax payable thereby from revenues collected from the related REO Property, (ii) provide the certificate administrator with all information for the certificate administrator to file the necessary tax returns in connection therewith and (iii) upon request from the certificate administrator, pay from such account to the certificate administrator the amount of the applicable tax.
Generally, no REMIC will be taxable on income received with respect to a mortgaged property to the extent that it constitutes “rents from real property,” within the meaning of Code Section 856(c)(3)(A) and Treasury regulations under the Code. “Rents from real property” do not include the portion of any rental based on the net profits derived by any person from such property. 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 a Issuing Entity, would not constitute “rents from real property,” or that all of the rental income would not so qualify if the non-customary services are not provided by an independent contractor or a separate charge is not stated. In addition to the foregoing, any net income from a trade or business operated or managed by an independent contractor on a mortgaged property allocated to a REMIC, such as a hotel, or rental income attributable to personal property leased in connection with a lease of real property if the rent attributable to the personal property exceeds 15% of the total rent for the taxable year, will not constitute “rents from real property.” Any of the foregoing types of income may instead constitute “net income from foreclosure property,” which would be taxable to a REMIC at the highest marginal federal corporate rate — currently 35% — and may also be subject to state or local taxes. Any such taxes would be chargeable against the related income for purposes of determining the amount of the proceeds available for distribution to Holders of Certificates. Under the Pooling and Servicing Agreement, the special servicer is required to determine whether the earning of such income taxable to a REMIC would result in a greater recovery to Certificateholders on a net after-tax basis than a different method of operation of such property. Prospective investors are advised to consult their own tax advisers regarding the possible imposition of taxes on “net income from foreclosure property” within the meaning of the REMIC provisions of the Code in connection with the operation of commercial REO Properties by REMICs.
Additional Matters Relating to the Servicing of the Non-Serviced Mortgage Loans
The 300 South Riverside Plaza Fee Mortgage Loan, the Waterfront at Port Chester Mortgage Loan and the Hilton Garden Inn W 54th Street Mortgage Loan
The 300 South Riverside Plaza Fee Mortgage Loan, the Waterfront at Port Chester Mortgage Loan and the Hilton Garden Inn W 54th Street Mortgage Loan will be initially serviced pursuant to the pooling and servicing agreement for the MSBAM 2015-C22 securitization, dated as of April 1, 2015 (the “MSBAM 2015-C22 PSA”), between Morgan Stanley Capital I Inc., as depositor, Wells Fargo Bank, National Association, as master servicer, Midland Loan Services, a Division of PNC Bank, National Association, as special servicer, Park Bridge Lender Services LLC, as trust advisor, Wilmington Trust, National Association, as trustee, and Wells Fargo Bank, National Association, as certificate administrator, certificate registrar, authenticating agent and custodian. The servicing terms of the MSBAM 2015-C22 PSA (including, but not limited to, terms governing limitations on servicer liability and retention of loan collections), insofar as those terms apply to the applicable Non-Serviced Loan Combinations serviced under the MSBAM 2015-C22 PSA, will be substantially similar to the servicing terms of the Pooling and Servicing Agreement applicable to Loan Pairs; however, the servicing arrangements under such agreements differ in certain respects. For example:
• | The MSBAM 2015-C22 PSA reflects that the 300 South Riverside Plaza Fee Mortgage Loan, the Waterfront at Port Chester Mortgage Loan and the Hilton Garden Inn W 54th Street Mortgage Loan must be serviced in accordance with the 300 South Riverside Plaza Fee Intercreditor Agreement, the Waterfront at Port Chester Intercreditor Agreement and the Hilton Garden Inn W 54th Street Intercreditor Agreement, respectively, which may modify certain servicing arrangements in the MSBAM 2015-C22 PSA otherwise applicable to the MSBAM 2015-C22 mortgage pool in general. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The 300 South Riverside Plaza Fee Non-Serviced Loan Combination,” “—The Waterfront at Port Chester Non-Serviced Loan Combination” and—The Hilton Garden Inn W 54th Street Non-Serviced Loan Combination”in this prospectus supplement. |
• | The Pari Passu Loan Primary Servicing Fee Rate payable to the related Non-Serviced Mortgage Loan Master Servicer (Wells Fargo Bank, National Association) under the MSBAM 2015-C22 PSA is 0.005%per annum. |
• | The specific types of actions constituting major decisions under the MSBAM 2015-C22 PSA may differ in certain respects from those actions that constitute Major Decisions under the Pooling and Servicing Agreement, and therefore the specific types of servicer actions with respect to which the applicable controlling class representative will be permitted to consent will correspondingly differ. |
In addition, the MSBAM 2015-C22 PSA differs in certain respects relating to one or more of the following: timing, control or consultation triggers or thresholds, terminology, allocation of ministerial duties between multiple servicers or other service providers or certificateholder or investor voting or consent thresholds, master servicer and special servicer termination events, rating requirements for accounts and permitted investments, eligibility requirements applicable to servicers and other service providers, and the circumstances under which approvals, consents, consultation, notices or rating agency confirmations may be required.
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The 32 Old Slip Fee Mortgage Loan
The 32 Old Slip Fee Mortgage Loan will be initially serviced pursuant to the pooling and servicing agreement for the MSBAM 2015-C23 securitization, dated as of June 1, 2015 (the “MSBAM 2015-C23 PSA”), between Morgan Stanley Capital I Inc., as depositor, Wells Fargo Bank, National Association, as master servicer, LNR Partners, LLC, as general special servicer, Wilmington Trust, National Association, as trustee, Wells Fargo Bank, National Association, as certificate administrator, certificate registrar, authenticating agent and custodian, Pentalpha Surveillance LLC, as trust advisor, and Wells Fargo Bank, National Association, as special servicer with respect to any mortgage loan with respect to which LNR Partners, LLC is an affiliate of a borrower or a property manager of the related mortgaged property (any such mortgage loan, an “Excluded Mortgage Loan”). The servicing terms of the MSBAM 2015-C23 PSA (including, but not limited to, terms governing limitations on servicer liability and retention of loan collections), insofar as those terms apply to the 32 Old Slip Fee Non-Serviced Loan Combination, are substantially similar to the servicing terms of the Pooling and Servicing Agreement applicable to Loan Pairs; however, the servicing arrangements under such agreements are expected to differ in certain respects. For example:
• | The controlling class representative under the MSBAM 2015-C23 PSA will have certain consent and consultation rights with respect to the special servicing of the 32 Old Slip Fee Non-Serviced Mortgage Loan, which are similar (but not identical) to those rights of the Controlling Class Representative under the Pooling and Servicing Agreement with respect to mortgage loans other than Non-Serviced Mortgage Loans. The MSBAM 2015-C23 PSA also provides for the removal of the special servicer by the controlling class representative under the MSBAM 2015-C23 PSA under certain conditions that are different than the conditions under which the Controlling Class Representative under the Pooling and Servicing Agreement is permitted to replace the special servicer with respect to mortgage loans other than Non-Serviced Mortgage Loans; including that any such replacement of the special servicer under the MSBAM 2015-C23 PSA without cause may only occur if (i) LNR Partners, LLC or its affiliate is no longer the special servicer under the MSBAM 2015-C23 PSA or (ii) LNR Securities Holdings, LLC or its affiliate owns less than 15% of the then controlling class of certificates issued in connection with the MSBAM 2015-C23 securitization transaction. |
• | Under the MSBAM 2015-C23 PSA, the related controlling class representative may be a borrower or property manager under an Excluded Mortgage Loan (or an affiliate thereof), and the certificates of an entity that is the borrower or property manager under an Excluded Mortgage Loan (or an affiliate thereof) will be deemed to remain outstanding and will be taken into account in determining whether the requisite percentage of voting rights necessary to effect any consent or take any action has been obtained;provided, that there will be deemed to be no controlling class representative under the MSBAM 2015-C23 PSA with respect to any Excluded Mortgage Loan and no such borrower or property manager affiliate will be permitted to consent with respect to a related Excluded Mortgage Loan. In contrast, the Controlling Class Representative under the Pooling and Servicing Agreement for this transaction is in no event permitted to be a borrower or property manager under a mortgage loan (or any affiliate thereof), and the Certificates of any entity that is a borrower, property manager or any affiliate thereof will be deemed not to be outstanding and the Voting Rights to which they are entitled will not be taken into account in determining whether the requisite percentage of Voting Rights necessary to effect any consent or take any action has been obtained. |
• | The Pari Passu Loan Primary Servicing Fee Rate payable to the related Non-Serviced Mortgage Loan Master Servicer (Wells Fargo Bank, National Association) under the MSBAM 2015-C23 PSA is 0.005%per annum (which, for the avoidance of doubt, is paid in connection with such Non-Serviced Mortgage Loan Master Servicer’s primary servicing obligations for the 32 Old Slip Fee Mortgage Loan). |
• | The special servicer under the MSBAM 2015-C23 PSA will be entitled to a minimum monthly special servicing fee of $2000 in respect of specially serviced mortgage loans. |
• | The special servicer under the MSBAM 2015-C23 PSA, rather than the master servicer thereunder, will be required to process major decisions, borrower requests for loan modifications and requests for waivers of “due-on-sale” or “due-on-encumbrance” provisions with respect to non-specially serviced mortgage loans. The specific types of actions constituting major decisions under the MSBAM 2015-C23 PSA also differ in certain respects from those actions that constitute Major Decisions under the Pooling and Servicing Agreement, and therefore the specific types of servicer actions with respect to which the applicable controlling class representative will be permitted to consent will correspondingly differ. |
• | Subject to certain limited exceptions, the special servicer under the MSBAM 2015-C23 PSA, rather than the master servicer thereunder, will be required to process (and will be entitled to consent to) certain loan-level decisions (that are not otherwise major decisions) with respect to non-specially serviced mortgage loans, including (i) certain waivers regarding receipt of financial statements, (ii) certain modifications and waivers of such mortgage loans in connection with a defeasance thereof, (iii) where no lender discretion is permitted other than confirming that the conditions in the related mortgage loan documents have been satisfied, certain incurrences of additional debt and releases of collateral and (iv) approval of material easements. |
• | With respect to non-specially serviced mortgage loans under the MSBAM 2015-C23 PSA, the special servicer thereunder, rather than the master servicer thereunder, will be required to direct, manage, prosecute and/or defend any action brought by a borrower, guarantor or other obligor under the related mortgage loan documents or any affiliates thereof against the MSBAM 2015-C23 trust and represent the interests of the MSBAM 2015-C23 trust in any litigation relating to the rights and obligations of a borrower, guarantor or other obligor under the related mortgage loan documents, or with respect to the related mortgaged property or other collateral securing a mortgage loan, or of the MSBAM 2015-C23 trust or the enforcement of the obligations of a borrower, guarantor or other obligor under the related mortgage loan documents. |
In addition, the MSBAM 2015-C23 PSA differs in certain respects relating to one or more of the following: timing, control or consultation triggers or thresholds, terminology, allocation of ministerial duties between multiple servicers or other service providers or certificateholder or investor voting or consent thresholds, master servicer and special servicer termination events, rating requirements for accounts and permitted investments, eligibility requirements applicable to servicers and other service providers, and the circumstances under which approvals, consents, consultation, notices or rating agency confirmations may be required.
The Alderwood Mall Mortgage Loan
The Alderwood Mall Non-Serviced Loan Combination will be initially serviced pursuant to the MSCCG 2015-ALDR TSA. The servicing terms of the MSCCG 2015-ALDR TSA (including, but not limited to, terms governing limitations on servicer liability and retention of
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loan collections) are similar in all material respects to the servicing terms of the Pooling and Servicing Agreement; however, the servicing arrangements under such agreements differ in certain respects. For example:
• | The MSCCG 2015-ALDR TSA reflects that the Alderwood Mall Mortgage Loan must be serviced in accordance with the Alderwood Mall Intercreditor Agreement. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The Alderwood Mall Non-Serviced Loan Combination” in this prospectus supplement. |
• | There is no controlling class representative under the MSCCG 2015-ALDR TSA, and therefore (i) there is no party under the MSCCG 2015-ALDR TSA that is entitled to consent to, or consult regarding, any major servicing decisions with respect to the Alderwood Mall Non-Serviced Loan Combination, and (ii) there is no party that is permitted to unilaterally remove the related Non-Serviced Mortgage Loan Special Servicer, with or without cause, at any time. However, the Controlling Class Representative (during any Subordinate Control Period or Collective Consultation Period) and the holder of the portion of the Alderwood Mall Non-Serviced Companion Loan evidenced by Note A-1-4 will have consultation rights with respect to certain major servicing decisions with respect to the Alderwood Mall Non-Serviced Loan Combination. |
• | There is no Non-Serviced Mortgage Loan Trust Advisor (and therefore no Non-Serviced Mortgage Loan Trust Advisor fee) with respect to the MSCCG 2015-ALDR securitization. |
• | The Pari Passu Loan Primary Servicing Fee Rate payable to the related Non-Serviced Mortgage Loan Master Servicer (KeyBank National Association) under the MSCCG 2015-ALDR TSA is 0.005%per annum (which, for the avoidance of doubt, is paid in connection with such Non-Serviced Mortgage Loan Master Servicer’s primary servicing obligations for the Alderwood Mall Mortgage Loan). |
• | Special servicing fees (calculated at 0.25%per annum under the MSCCG 2015-ALDR TSA), work-out fees (calculated at 0.50% under the MSCCG 2015-ALDR TSA) and liquidation fees (calculated at 0.50% under the MSCCG 2015-ALDR TSA) payable under the MSCCG 2015-ALDR TSA with respect to the Alderwood Mall Non-Serviced Loan Combination are generally calculated in a manner similar, but not necessarily identical, to the corresponding fees under the Pooling and Servicing Agreement, except that the work-out and liquidation fee definitions do not include a cap on the total amount of work-out fees, liquidation fees and modification fees (other than assumption fees, consent fees, assumption application fees or defeasance fees) equal to the lesser of $1,000,000 or 1.00% as provided in the Pooling and Servicing Agreement, and the MSCCG 2015-ALDR TSA provides that all liquidation fees and work-out fees payable with respect to the Alderwood Mall Non-Serviced Loan Combination will be offset by any modification fees paid by or on behalf of the related borrower and received by the related Non-Serviced Mortgage Loan Special Servicer with respect to the Alderwood Mall Non-Serviced Loan Combination. |
• | In addition, any party to the MSCCG 2015-ALDR TSA that makes a property protection advance or administrative advance with respect to the Alderwood Mall Non-Serviced Loan Combination will be entitled to reimbursement for that advance, with interest at a prime rate, in a manner similar to the reimbursement of Servicing Advances under the Pooling and Servicing Agreement. However, the extent to which items that are the equivalent of Modification Fees or other fee items with respect to the Alderwood Mall Non-Serviced Loan Combination may be applied to offset servicing compensation, interest on advances and/or other servicer expenses will be less, if at all, in certain circumstances, than is the case under the Pooling and Servicing Agreement. |
• | Items with respect to the Alderwood Mall Non-Serviced Loan Combination that are the equivalent of Ancillary Fees, Consent Fees, Assumption Fees and/or Modification Fees and that are allocated as additional servicing compensation will be allocated between the related Non-Serviced Mortgage Loan Master Servicer and the related Non-Serviced Mortgage Loan Special Servicer in proportions that are different than the allocation between the Master Servicer and Special Servicer of such fees collected on mortgage loans serviced under the Pooling and Servicing Agreement. |
• | No items with respect to the Alderwood Mall Non-Serviced Loan Combination that are the equivalent of Ancillary Fees, Consent Fees, Assumption Fees, Modification Fees and/or Penalty Charges will be allocated to the master servicer or special servicer as additional servicing compensation or otherwise applied in accordance with the Pooling and Servicing Agreement except and solely to the extent that such items are received by the Issuing Entity with respect to the Alderwood Mall Mortgage Loan. |
• | The related Non-Serviced Mortgage Loan Master Servicer will not be obligated to cover prepayment interest shortfalls with respect to the Alderwood Mall Mortgage Loan. |
• | The parties to the MSCCG 2015-ALDR TSA and certain related persons are entitled to reimbursement and/or indemnification for losses, liabilities, claims, costs and expenses associated with the MSCCG 2015-ALDR TSA at least to the same extent that parties to the Pooling and Servicing Agreement and certain related persons are entitled to reimbursement and/or indemnification for losses, liabilities, claims, costs and expenses associated with the Pooling and Servicing Agreement. To the extent that such losses, liabilities, claims, costs and expenses relate to, or are otherwise allocable in accordance with the MSCCG 2015-ALDR TSA and/orthe Alderwood Mall Intercreditor Agreement to, the Alderwood Mall Non-Serviced Loan Combination or the related mortgaged property, the Issuing Entity as holder of the Alderwood Mall Mortgage Loan, will be responsible for itspro rata share of amounts allocable to the Alderwood Mall Senior Notes (including out of general collections on the MSC 2015-MS1 mortgage pool, if necessary, and notwithstanding that the MSCCG 2015-ALDR securitization trust will only be liable for such amounts to the extent of the principal balance of the Alderwood Mall promissory notes included in such trust). |
• | Although the matters to which notice or consent with respect to the rating agencies under the MSCCG 2015-ALDR TSA are similar in all material respects to, but not identical to, the matters with respect to the Rating Agencies under the Pooling and Servicing Agreement, the matters as to which notice or consent is required (and whether it is notice and/or consent that is required) will differ. In particular, such Non-Serviced Pooling and Servicing Agreement does not include the term “Rating Agency Communication” and it is possible that the equivalent of a Rating Agency Confirmation may be required for more or fewer actions than might be the case under the Pooling and Servicing Agreement. |
• | The provisions of the MSCCG 2015-ALDR TSA also vary from the Pooling and Servicing Agreement with respect to timing, control or consultation triggers or thresholds, terminology, allocation of ministerial duties between multiple servicers or other service providers or certificateholder or investor voting or consent thresholds, servicer and special servicer termination events, rating |
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requirements for accounts and permitted investments, eligibility requirements applicable to servicers and other service providers, and the circumstances under which approvals, consents, consultation, notices or rating agency confirmations may be required. |
• | The servicing transfer events of the MSCCG 2015-ALDR TSA that would cause the Alderwood Mall Non-Serviced Loan Combination to become specially serviced are similar to, but not identical to, the corresponding provisions under the Pooling and Servicing Agreement. |
The conditions of the MSCCG 2015-ALDR TSA that would require an appraisal are similar to, but differ in some respects from, the conditions that would result in an Appraisal Event under the Pooling and Servicing Agreement.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of certain anticipated material federal income tax consequences of the purchase, ownership and disposition of the Certificates. This discussion has been prepared with the advice of Sidley Austinllp, special counsel to the depositor (“Tax Counsel”). This discussion is based on authorities that are subject to change or different interpretations. Any such change or different interpretation can apply retroactively. No rulings have been or will be sought from the IRS with respect to any of the matters discussed below, and no assurance can be given that the views of the IRS with respect to those matters will agree with the views described below.
This discussion is directed solely to Certificateholders that purchase Certificates at issuance for the issue price and hold them as “capital assets” within the meaning of Section 1221 of the Code. This discussion does not purport to cover all federal income tax consequences applicable to particular investors, some of which may be subject to special rules. Investors subject to such special rules include dealers in securities, certain traders in securities, financial institutions, tax-exempt organizations, insurance companies, persons who hold Certificates as part of a hedging transaction or as a position in a straddle or conversion transaction, persons whose functional currency is not the U.S. dollar, or persons who elect to treat gain recognized on the disposition of a Certificate as investment income under Section 163(d)(4)(B)(iii) of the Code.
In addition, this discussion does not address the state, local or other tax consequences of the purchase, ownership, and disposition of the Certificates. We recommend that you consult your own tax advisor in determining the federal, state, local and other tax consequences of the purchase, ownership, and disposition of the Certificates under your particular circumstances.
In this discussion, when we use the term:
• | “AFR,” we mean the applicable federal rate, which is an average of current yields for U.S. Treasury securities with specified ranges of maturities and which is computed and published monthly by the IRS for use in various tax calculations; |
• | “Certificateholder,” we mean any person holding a beneficial ownership interest in a Certificate; |
• | “Code,” we mean the Internal Revenue Code of 1986; |
• | “Excess Interest,” we mean, in respect of each ARD Loan that does not repay on its Anticipated Repayment Date, the excess, if any, of interest accrued on such mortgage loan at the Revised Rate over interest accrued on such mortgage loan at the Initial Rate, together with interest thereon at the Revised Rate from the date accrued to the date such interest is payable (generally, after payment in full of the outstanding principal balance of such loan); |
• | “Foreign Person,” we mean any person other than a U.S. Person; |
• | “IRS,” we mean the Internal Revenue Service; and |
• | “U.S. Person,” we mean (i) a citizen or resident of the United States; (ii) a corporation (or entity treated as a corporation for tax purposes) created or organized in the United States or under the laws of the United States or of any state thereof, including, for this purpose, the District of Columbia; (iii) an estate whose income is includible in gross income for United States income tax purposes regardless of its source; or (iv) a trust, if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. Persons have authority to control all substantial decisions of the trust. Notwithstanding the preceding clause, to the extent provided in Treasury regulations, certain trusts that were in existence on August 20, 1996, that were treated as U.S. Persons prior to such date, and that have elected to continue to be treated as U.S. Persons, also are U.S. Persons. |
If a partnership (or entity treated as a partnership for federal income tax purposes) is a Certificateholder, the tax treatment of a partner in the partnership will depend on the status of the partner and the activities of the partnership. A partnership that holds a Certificate is encouraged to consult its tax advisor concerning the consequences of investing in a Certificate under the partnership’s particular circumstances.
Tax Classification of the Issuing Entity
For federal income tax purposes, the Issuing Entity will consist of a grantor trust and one or more real estate mortgage investment conduits, each a “REMIC,” arranged in a tiered structure. The highest REMIC will be referred to as the “Upper-Tier REMIC” and each REMIC below theUpper-Tier REMIC (if any) will be referred to as a “Lower-Tier REMIC”. Each Lower-Tier REMIC (if any) will issue multiple classes of uncertificated, regular interests that will be held by another REMIC above it in the tiered structure. The assets of the lowest Lower-Tier REMIC in this tiered structure (or the Upper-Tier REMIC if there is no Lower-Tier REMIC) will consist of the mortgage loans (other than the Excess Interest) and any other assets designated in the Pooling and Servicing Agreement.
The Certificates (other than the Exchangeable Certificates and the Class V and Class R Certificates) will represent only regular interests issued by the Upper-Tier REMIC. The Class V Certificates will represent an interest in the Excess Interest held through the grantor trust. The Certificates (other than the Exchangeable Certificates and the Class V and Class R Certificates) are referred to in this prospectus supplement as the “REMIC Regular Certificates”.
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The Class A-S, Class B and Class C Trust Components will also represent regular interests issued by the Upper Tier REMIC. Each Exchangeable Certificate will represent either (1) a beneficial ownership interest in its corresponding Trust Component (such as the Class A-S Trust Component in the case of a Class A-S Certificate, the Class B Trust Component in the case of a Class B Certificate and the Class C Trust Component in the case of a Class C Certificate) or (2) a beneficial ownership interest in all of the Trust Components, as in the case of a Class PST Certificate. The Exchangeable Certificates will, therefore, represent beneficial ownership of regular interests issued by the Upper-Tier REMIC held through the grantor trust.
The Class R Certificates will represent ownership of the residual interest in each Lower-Tier REMIC (if any) and of the residual interest in the Upper-Tier REMIC.
On the Closing Date, Tax Counsel will deliver its opinion, based on certain assumptions, that for federal income tax purposes: (1) the grantor trust will qualify as a “grantor trust” under subpart E of subchapter J of the Code, (2) the Upper-Tier REMIC and each Lower-Tier REMIC (if any) will qualify as a REMIC under Section 860D of the Code, (3) the REMIC Regular Certificates and the Trust Components will qualify as “regular interests” in the Upper-Tier REMIC under Section 860G(a)(1) of the Code, (4) the Class V Certificates will represent an undivided beneficial ownership interest, held through the grantor trust, in Excess Interest in respect of any ARD Loans, (5) the Exchangeable Certificates will represent undivided beneficial ownership interests in the Class A-S, Class B and Class C Trust Components, held through the grantor trust, and (6) the Class R Certificates will represent the ownership of the sole class of “residual interests” in the Upper-Tier REMIC and in each Lower-Tier REMIC (if any) under Section 860G(a)(2) of the Code.
Taxation of the Exchangeable Certificates
For federal income tax purposes, the holders of the Exchangeable Certificates will be taxed as if they directly owned a proportionate interest in each REMIC regular interest underlying their Exchangeable Certificates.
No gain or loss will be realized upon surrendering the requisite proportions of the Class A-S, Class B and Class C Certificates in return for the Class PST Certificates or upon surrendering the Class PST Certificates for the requisite proportions of the Class A-S, Class B and Class C Certificates. Similarly, no such exchange will, by itself, change the basis allocated to such certificates.
Purchasers of Exchangeable Certificates are encouraged to consider carefully the tax consequences of an investment in the Exchangeable Certificates that are discussed in the accompanying prospectus and consult their tax advisors with respect to those consequences. See “Federal Income Tax Consequences—Taxation of Classes of Exchangeable Certificates” in the accompanying prospectus.
Taxation of the Offered Certificates
Basis For Discussion. This discussion is based on the regulations applicable to original issue discount (the “OID Regulations”) and on the provisions of the Tax Reform Act of 1986 (the “1986 Act”). Prospective purchasers should be aware, however, that the OID Regulations do not adequately address certain issues relevant to prepayable securities, such as the REMIC Regular Certificates and the Class A-S, Class B and Class C Trust Components. To the extent that those issues are not addressed in the OID Regulations, the Issuing Entity intends to apply the methodology described in the Conference Committee Report to the 1986 Act. No assurance can be provided that the IRS will take the same position on 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 if necessary or appropriate to ensure a reasonable tax result because of the applicable statutory provisions. A tax result will not be considered unreasonable under the anti-abuse rule, however, in the absence of a substantial effect on the present value of a taxpayer’s tax liability. Prospective purchasers are advised to consult their own tax advisors about the discussion therein and the appropriate method for reporting interest and original issue discount (“OID”) with respect to the REMIC Regular Certificates and the Class A-S, Class B and Class C Trust Components.
Treatment of the REMIC Regular Certificates. The REMIC Regular Certificates and the Class A-S, Class B and Class C Trust Components will generally be treated as debt instruments for federal income tax purposes.
Treatment of the Exchangeable Certificates.EachClass A-S, Class B and Class C Certificate will represent a beneficial ownership interest in the corresponding Trust Component, which will be a regular interest issued by the Upper-Tier REMIC. The income tax consequences to the holder of a Class A-S, Class B or Class C Certificate with respect to the Trust Component corresponding to that Certificate will be the same as the income tax consequences to any other holder of an individual REMIC Regular Certificate, as described herein.
Each Class PST Certificate will represent a beneficial ownership in all three Trust Components, but each Trust Component will be taxable as a separate regular interest. The income tax consequences of holding a Class PST Certificate with respect to each of the three Trust Components will be the same as the income tax consequences to any other holder of three corresponding, separate and individual REMIC Regular Certificates, as described herein.
Stated Interest. Stated interest on the Principal Balance Certificates (which, for purposes of this discussion, does not include pre-issuance interest) will be qualified stated interest (“Qualified Stated Interest”) if it is considered as unconditionally payable. Interest is “unconditionally payable” only if either (1) reasonable legal remedies exist to compel the timely payment of interest or (2) the terms or conditions under which the debt instrument is issued make the late payment or nonpayment of interest a remote likelihood. Qualified Stated Interest payable on a Principal Balance Certificate must be included in the income of the Certificateholder under an accrual method of accounting, regardless of the method otherwise used by the Certificateholder. Because a portion of the interest payable on the Principal Balance Certificates may be deferred, it is possible that some or all of such interest may not be treated as unconditionally payable, in which case it would be treated as additional OID. For tax information reporting purposes, the Issuing Entity or other person responsible for tax information reporting generally will treat all of the stated interest on any Class of Principal Balance Certificates as Qualified Stated Interest.
Original Issue Discount. It is anticipated that, among the Principal Balance Certificates, the Class B Certificates will be issued with ade minimisamount of original issue discount for federal income tax reporting purposes and that the Class C, Class D, Class E, Class F and Class G Certificates will be issued with more than ade minimisamount of original issue discount for federal income tax reporting purposes. A
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Holder of a REMIC Regular Certificate, therefore, will be required to report, as ordinary income, the daily portion of the OID attributable to each day that it holds the REMIC Regular Certificate. This requirement generally will result in the accrual of income before the receipt of cash attributable to that income.
In addition, it is anticipated that the Issuing Entity or other person responsible for tax information reporting will treat the Class X-A Certificates (the “IO Certificates”) as having no qualified stated interest. Accordingly, the IO 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 thereon over the related issue price. Any “negative” amounts of OID on the IO Certificates attributable to rapid prepayments with respect to the mortgage loans will not be deductible currently. The Holder of an IO Certificate may be entitled to a deduction for a loss, which may be a capital loss, to the extent it becomes certain that such Holder will not recover a portion of its basis in its IO Certificates even if there are no further prepayments on the mortgage loans.
The daily portion of OID will be determined on a constant yield to maturity basis in accordance with Section 1272(a)(6) of the Code (the “PAC Method”). Under the PAC Method, the amount of OID allocable to any accrual period for a Class of REMIC Regular Certificates will generally equal (1) the sum of (i) the adjusted issue price of that Class at the end of the accrual period and (ii) any payments made on that Class during the accrual period of amounts included in the stated redemption price at maturity of that Class, minus (2) the adjusted issue price of that Class at the beginning of the accrual period. The OID so determined is allocated ratably among the days in the accrual period to determine the daily portion for each such day. The Issuing Entity will treat the monthly period (or shorter period from the date of original issue) ending on the day before each Distribution Date as the accrual period.
The adjusted issue price of a Class of REMIC Regular Certificates at the beginning of its first accrual period will be its issue price. The adjusted issue price at the end of any accrual period (and, therefore, at the beginning of the subsequent accrual period) is generally determined by discounting the remaining payments due on that Class at its yield to maturity. The remaining payments due are determined based on the prepayment assumption made in pricing the Class, but are adjusted to take into account the effect of payments actually made on the REMIC’s assets.
Ordinarily, the issue price of a Class of Certificates is the first price at which a substantial amount of that Class of Certificates is sold to investors (excluding bond houses, brokers and underwriters) and includes any amount paid by an initial holder of such Class of Certificates for interest that is deemed to accrue before such Class of Certificates is issued. Certificateholders are encouraged to consult their tax advisors regarding alternative treatment of pre-issuance interest.
For this purpose, the yield to maturity of each Class of REMIC Regular Certificates is determined by projecting payments due on that Class based on a prepayment assumption made with respect to the REMIC’s assets. The yield to maturity of a Class of REMIC Regular Certificates is the discount rate that, when applied to the stream of payments projected to be made on that Class as of the issue date, produces a present value equal to the issue price of that Class. The Code requires that the prepayment assumption be determined in the manner prescribed in Treasury Department regulations. To date, no such regulations have been issued. The legislative history of this Code provision indicates that the regulations will provide that the assumed prepayment rate must be the rate used by the parties in pricing the particular transaction. The prepayment assumption to be used for tax reporting purposes with respect to the REMIC Regular Certificates is 0% CPR. No representation, however, is made of the rate at which prepayments on the mortgage loans will occur.
Under the PAC Method, accruals of OID will increase or decrease (but never below zero) to reflect the fact that prepayments on the REMIC’s assets are occurring at a rate that is faster or slower than that assumed under the prepayment assumption. If the OID accruing on a Class of REMIC Regular Certificates is negative for any period, a Certificateholder with respect to that Class will be entitled to offset such negative accruals only against future positive OID accruals on that Certificate.
For purposes of accruing OID (or any Qualified Stated Interest) with respect to a REMIC Regular Certificate, the amount of interest payable on the Certificate will be determined without regard to any defaults or delinquencies on the mortgage loans. For a discussion of the treatment of defaults and delinquencies, see “—Treatment of Losses” below.
Acquisition Premium. If a Certificateholder is treated as having purchased the REMIC Regular Certificate for a price that is greater than its adjusted issue price but less than its stated redemption price at maturity, the Certificateholder will have acquired the REMIC Regular Certificate at an “acquisition premium” as that term is defined in Section 1272(a)(7) of the Code. The Certificateholder must reduce future accruals of OID on the REMIC Regular Certificate by the amount of the acquisition premium. Specifically, a Certificateholder must reduce each future accrual of OID on the REMIC Regular Certificate by an amount equal to the product of the OID accrual and a fixed fraction, the numerator of which is the amount of the acquisition premium and the denominator of which is the OID remaining to be accrued on the REMIC Regular Certificate at the time the Certificateholder purchased the Certificate.
Market Discount. If a Certificateholder is treated as having acquired the REMIC Regular Certificate at a discount from its adjusted issue price, the Certificateholder will acquire the REMIC Regular Certificate with market discount (a “market discount bond”). If the market discount is less than a statutorily definedde minimis amount (presumably equal to the product of (i) 0.25 percent, (ii) the stated redemption price at maturity of the REMIC Regular Certificate and (iii) the remaining weighted average maturity of that Certificate), then the market discount will be considered to be zero. It appears that less thande minimismarket discount should be treated as capital gains and reported,pro rata, as payments (other than payments of OID and stated interest) are made on a REMIC Regular Certificate.
Unless the beneficial owner of a market discount bond elects under Section 1278(b) of the Code to include market discount in income as it accrues, any principal payment (whether a scheduled payment or a prepayment) or any gain on disposition of the market discount bond will be treated as ordinary income to the extent that it does not exceed the accrued market discount at the time of such payment. If the beneficial owner makes the election under Section 1278(b) of the Code, the election will apply to all market discount bonds acquired by the beneficial owner at the beginning of the first taxable year to which the election applies and all market discount bonds thereafter acquired by it. The election may be revoked only with the consent of the IRS.
The Code grants the Treasury Department authority to issue regulations providing for the computation of accrued market discount on debt instruments, such as REMIC regular interests, the principal of which is payable in more than one installment, but no regulations have been issued. The relevant legislative history provides that, until such regulations are issued, the beneficial owner of a market discount bond may elect to accrue market discount either on the basis of a constant interest rate or according to a ratable accrual method described in the legislative history. Under the ratable accrual method, the amount of market discount that accrues in any accrual period in the case of a
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REMIC regular interest issued with OID equals the product of (i) the market discount that remains to be accrued as of the beginning of the accrual period and (ii) a fraction, the numerator of which is the OID accrued during the accrual period and the denominator of which is the sum of the OID accrued during the accrual period and the amount of OID remaining to be accrued as of the end of the accrual period. In the case of a REMIC regular interest that was issued without OID, the amount of market discount that accrues in any accrual period will equal the product of (i) the market discount that remains to be accrued as of the beginning of the accrual period and (ii) a fraction, the numerator of which is the amount of stated interest paid during the accrual period and the denominator of which is the total amount of stated interest remaining to be paid at the beginning of the accrual period. For purposes of determining the amount of OID or interest remaining to be accrued with respect to a REMIC regular interest, the prepayment assumption applicable to calculating the accrual of OID on such REMIC regular interest applies.
If a beneficial owner of a REMIC regular interest incurred or continues indebtedness to purchase or hold REMIC regular interests with market discount, the beneficial owner may be required to defer a portion of its interest deductions for the taxable year attributable to any such indebtedness. Any such deferred interest expense would not exceed the market discount that accrues during such taxable year and is, in general, allowed as a deduction not later than the year in which such market discount is includible in income. If such beneficial owner elects to include market discount in income currently as it accrues under Section 1278(b) of the Code, the interest deferral rule will not apply.
Because Treasury regulations interpreting the market discount rules have not yet been issued, prospective purchasers are encouraged to consult their tax advisors regarding the application of those rules and the advisability of making any of the elections described above.
Amortizable Bond Premium. It is anticipated that the Class A-1, Class A-2, Class A-SB, Class A-3, Class A-4 and Class A-S Certificates will be issued at a premium for federal income tax reporting purposes. A purchaser of a REMIC Regular Certificate that purchases the REMIC Regular Certificate for an amount (net of accrued interest) greater than its stated redemption price at maturity will have premium with respect to that REMIC Regular Certificate in the amount of the excess. Such a purchaser need not include in income any remaining OID with respect to that REMIC Regular Certificate and may elect to amortize the premium under Section 171 of the Code. If a Certificateholder makes this election, the amount of any interest payment that must be included in the Certificateholder’s income for each period will be reduced by a portion of the premium allocable to the period based on a constant yield method. In addition, the relevant legislative history states that premium should be amortized in the same manner as market discount. The election under Section 171 of the Code also will apply to all debt instruments (the interest on which is not excludable from gross income) held by the Certificateholder at the beginning of the first taxable year to which the election applies and to all such taxable debt instruments thereafter acquired by it. The election may be revoked only with the consent of the IRS.
Election to Treat All Interest as OID. The OID Regulations permit a Certificateholder to elect to accrue all interest, discount (includingde minimis OID andde minimis market discount), and premium with respect to a REMIC Regular Certificate in income as interest, based on a constant yield method (a “constant yield election”). 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 Certificateholder’s acquisition would apply. A constant yield election may be revoked only with the consent of the IRS. In addition, if a constant yield election were made and the Certificateholder were treated as having acquired the REMIC Regular Certificate with market discount, then the Certificateholder would also be deemed to have made the election in Section 1278(b) of the Code, which is described above and which may be revoked only with the consent of the IRS. Similarly, if a constant yield election were made and the Certificateholder were treated as having acquired the REMIC Regular Certificate at a premium, then the Certificateholder would also be deemed to have made an election to amortize bond premium under Section 171 of the Code, which is described above and which may be revoked only with the consent of the IRS.
Treatment of Losses. Certificateholders will be required to report income with respect to the REMIC Regular Certificates on the accrual method without giving effect to delays and reductions in distributions attributable to defaults or delinquencies on any of the REMIC’s assets. In addition, potential 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 any OID must continue to be accrued in spite of its uncollectibility until the REMIC Regular Certificate is disposed of in a taxable transaction or becomes worthless in accordance with the rules of Section 166 of the Code. As a result, the amount of income required to be reported by a Certificateholder in any period could exceed the amount of cash distributed to such Certificateholder in that period. Holders of Class X-A Certificates may not be entitled to a “bad debt” deduction under Section 166 of the Code.
Although not entirely clear, it appears that: (1) a Certificateholder who holds the REMIC Regular Certificate in the course of a trade or business or a Certificateholder that is a corporation, generally should be allowed to deduct as an ordinary loss any loss sustained on account of the REMIC Regular Certificate’s partial or complete worthlessness and (2) a noncorporate Certificateholder who does not hold the REMIC Regular Certificate in the course of a trade or business generally should be allowed to deduct as a short-term capital loss any loss sustained on account of the REMIC Regular Certificate’s complete worthlessness. Certificateholders are encouraged to consult their tax advisors regarding the appropriate timing, character and amount of any loss sustained with respect to a REMIC Regular Certificate. Any loss with respect to the Class X-A Certificates will generally be treated as a capital loss. Holders of Class X-A Certificates may be entitled to a deduction for a loss, which may be a capital loss, to the extent it becomes certain that such Certificateholder will not recover a portion of its basis in such Class even if there were no further prepayments on the mortgage loans.
Sale or Other Disposition. If a Certificateholder sells, exchanges or otherwise disposes of a REMIC Regular Certificate, or if a REMIC Regular Certificate is redeemed, then the Certificateholder will recognize gain or loss in an amount equal to the difference between the amount realized by the Certificateholder upon the sale, exchange, redemption or other disposition and the Certificateholder’s adjusted tax basis in the REMIC Regular Certificate. The adjusted tax basis of a REMIC Regular Certificate to a particular Certificateholder generally will equal the Certificateholder’s cost for the REMIC Regular Certificate, (1) increased by any market discount and OID previously included by such beneficial owner in income with respect to that Certificate and (2) decreased by any premium amortized by the Certificateholder and by the amount of payments that are part of the REMIC Regular Certificate’s stated redemption price at maturity previously received by such Certificateholder. Any such gain or loss will be capital gain or loss if the REMIC Regular Certificate was held as a capital asset, except for gain representing accrued interest and accrued market discount not previously included in income. Capital losses generally may be used only to offset capital gains.
Gain from the sale of a REMIC Regular Certificate that might otherwise be treated as capital gain will be treated as ordinary income to the extent that such gain does not exceed the excess of (1) the amount that would have been includible in the Certificateholder’s income had the income accrued at a rate equal to 110 percent of the AFR as of the date of purchase, over (2) the amount actually includible in such Certificateholder’s income.
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Foreign Persons. Interest (including OID) paid to or accrued by a Certificateholder who is a Foreign Person generally will not be subject to United States federal income tax or withholding tax, provided that (1) the interest (or OID) from the REMIC Regular Certificate is not effectively connected with the conduct of a trade or business within the United States by the Foreign Person, (2) the Foreign Person does not actually or constructively own 10 percent or more of the Class R Certificates, (3) the Foreign Person is not a controlled foreign corporation with respect to which a Holder of the Class R Certificates is a related person (all within the meaning of the Code) and (4) the Foreign Person provides the trustee or other person who is otherwise required to withhold U.S. tax with respect to the REMIC Regular Certificates (the “withholding agent”) with an appropriate statement on Form W-8BEN (in the case of an individual that is eligible for the benefits of the portfolio interest exemption or an exemption from (or reduced rate of) withholding tax, based on an income tax treaty) or Form W-8BEN-E (in the case of an entity, such as a corporation, that is eligible for the benefits of the portfolio interest exemption or an exemption from (or reduced rate of) withholding tax based on an income tax treaty). If a REMIC Regular Certificate is held through a securities clearing organization or certain other financial institutions, the organization or institution may provide the relevant signed statement to the withholding agent; in that case, however, the signed statement must be accompanied by a Form W-8BEN or Form W-8BEN-E provided by the Foreign Person that owns the REMIC Regular Certificate. If the information shown on Form W-8BEN or Form W-8BEN-E changes, a new Form W-8BEN or Form W-8BEN-E must be filed. If the foregoing requirements are not met, then interest (including OID) on the REMIC Regular Certificates will be subject to United States federal income and withholding tax at a rate of 30 percent, unless reduced or eliminated pursuant to an applicable income tax treaty.
Under Treasury regulations relating to withholding obligations, a payment to a foreign partnership is treated, with some exceptions, as a payment directly to the partners, so that the partners are required to provide any required certifications. We encourage Foreign Persons that intend to hold a REMIC Regular Certificate through a partnership or other pass-through entity to consult their tax advisors regarding the application of those Treasury regulations to an investment in a REMIC Regular Certificate through a partnership.
Any capital gain realized on the sale, redemption, retirement or other taxable disposition of a REMIC Regular Certificate by a Foreign Person will be exempt from United States federal income and withholding tax, provided that (1) such gain is not effectively connected with the conduct of a trade or business in the United States by the Foreign Person and (2) in the case of a Foreign Person who is an individual, the Foreign Person is not present in the United States for 183 days or more in the taxable year.
FATCA.The Foreign Account Tax Compliance Act (“FATCA”) imposes a 30% withholding tax on interest payments on REMIC regular interests and on payments of gross proceeds from the disposition of REMIC regular interests made to certain Foreign Persons that are entities or intermediaries, unless they comply with reporting obligations that require them to identify to the IRS, accounts and investments held for U.S. persons. The 30% FATCA withholding tax applies to interest on the REMIC regular interests payable currently, and will apply to gross proceeds from the disposition of REMIC regular interests payable on and after January 1, 2017.
Medicare Contribution Tax.U.S. Persons that are individuals, estates or trusts are generally required to pay a new 3.8% Medicare contribution tax on their net investment income (including interest on and gains from the sale or other disposition of the Offered Certificates), or in the case of estates and trusts on their undistributed net investment income, in each case to the extent that their total adjusted income exceeds applicable thresholds.
Information Reporting. Payments of interest (including OID, if any) on a REMIC Regular Certificate held by a U.S. Person other than a corporation or other exempt holder are required to be reported to the IRS. Moreover, the Issuing Entity is required to make available to Certificateholders information concerning the amount of OID accrued with respect to the REMIC Regular Certificates for each accrual period for which the REMIC Regular Certificates are outstanding, the adjusted issue price of the REMIC Regular Certificates as of the end of each accrual period, and information to enable a Certificateholder to compute accruals of market discount or bond premium using the ratable accrual method described under “—Market Discount” above.
Payments of interest (including OID, if any) on a REMIC Regular Certificate held by a Foreign Person are required to be reported annually on IRS Form 1042-S, which the withholding agent must file with the IRS and furnish to the recipient of the income.
Special Tax Attributes of the Certificates
Certificates (to the extent they represent a beneficial interest in a REMIC regular interest) held by a domestic building and loan association will constitute “regular interests in a REMIC” within the meaning of Section 7701(a)(19)(C)(xi) of the Code in proportion to the assets of the REMICs that are described in Section 7701(a)(19)(C)(i) through (x). If, however, at least 95 percent of the assets of the REMIC are described in Section 7701(a)(19)(C)(i) through (x), the entire such certificate will so qualify.
In addition, Certificates (to the extent they represent a beneficial interest in a REMIC regular interest) held by a REIT will constitute “real estate assets” within the meaning of Section 856(c)(5)(B) of the Code. If at any time during a calendar year less than 95 percent of the assets of the REMICs consist of “real estate assets,” then the portion of such certificates that are real estate assets under Section 856(c)(5)(B) during the calendar year will be limited to the portion of the assets of the REMICs that are real estate assets. Similarly, income on such certificates (exclusive of income on any non-REMIC asset represented by such certificate) will be treated as “interest on obligations secured by mortgages on real property” within the meaning of Section 856(c)(3)(B) of the Code, subject to the same limitation as set forth in the preceding sentence.
The certificates (to the extent they represent a beneficial interest in a REMIC regular interest) also will be “qualified mortgages” within the meaning of Section 860G(a)(3) of the Code with respect to another REMIC, provided they are transferred to such other REMIC within the periods required by the Code.
The determination of the percentage of a REMIC’s assets that constitute assets described in the foregoing sections of the Code will be made for each calendar quarter based on the average adjusted basis of each category of the assets held by the REMIC during that calendar quarter. The REMIC will report those determinations in the manner and at the times required by applicable Treasury regulations. 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 Section 593(d) of the Code for taxable years beginning after December 31, 1995. The requirements in the SBJPA of 1996 that these institutions must “recapture” a portion of their existing bad debt reserves is suspended if a certain portion of their assets are maintained in
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“residential loans” under Section 7701(a)(19)(C)(v) of the Code, 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 meeting this requirement, and no representation is made in this regard.
The certificates (to the extent they represent a beneficial interest in a REMIC regular interest) will be “evidences of indebtedness” within the meaning of Section 582(c)(1) of the Code, so that gain or loss recognized from the sale of such a certificate by a bank or thrift institution to which that section of the Code applies will be ordinary income or loss.
REMIC Administrative Provisions
Each underlying REMIC 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 the income tax return is Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return. The certificate administrator (or, if necessary, the trustee), on behalf of the Issuing Entity, will be required to sign the REMIC’s returns. Treasury regulations provide that, except where there is a single beneficial owner of a Class R Certificate (a “Residual Owner”) for an entire taxable year, a REMIC 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 certificate administrator will be obligated to act as “tax matters person,” as defined in applicable Treasury regulations, for each REMIC, either as a Holder of a Class R Certificate or as agent of the Residual Owners holding the largest Percentage Interest in the Class R Certificates. If the Code or applicable Treasury regulations do not permit the certificate administrator to act as tax matters person another Residual Owner or other person specified pursuant to Treasury regulations will be required to act as tax matters person. The tax matters person generally has responsibility for overseeing and providing notice to the other Residual Owners of certain administrative and judicial proceedings regarding a REMIC’s tax affairs, although the other Residual Owners would be able to participate in those proceedings in appropriate circumstances.
Taxes on a REMIC
A REMIC is subject to tax at a rate of 100 percent on the net income the REMIC derives from prohibited transactions. In general, a “prohibited transaction” means the disposition of a qualified mortgage other than pursuant to certain specified exceptions, the receipt of income from a source other than a qualified mortgage or certain other permitted investments, the receipt of compensation for services, or gain from the disposition of an asset purchased with the payments on the qualified mortgages for temporary investment pending distribution on the REMIC Regular Certificates. The Code also imposes a 100 percent tax on the value of any contribution of assets to the REMIC after the closing date other than pursuant to specified exceptions, and subjects “net income from foreclosure property” to tax at the highest corporate rate. We do not anticipate that any REMIC formed pursuant to the Pooling and Servicing Agreement will engage in any such transactions or receive any such income.
If an entity elects to be treated as a REMIC but fails to comply with one or more of the ongoing requirements of the Code for REMIC status during any taxable year, the entity will not qualify as a REMIC for such year and thereafter. In this event, the entity may be subject to taxation as a separate corporation, and the certificates issued by the entity may not be accorded the status described under “—Special Tax Attributes of the Certificates” above. In the case of an inadvertent termination of REMIC status, the Treasury Department has authority to issue regulations providing relief; however, sanctions, such as the imposition of a corporate tax on all or a portion of the entity’s income for the period during which the requirements for REMIC status are not satisfied, may accompany any such relief and no such regulations have been issued.
REMICs also are subject to federal income tax at the highest corporate rate on “net income from foreclosure property,” determined by reference to the rules applicable to REITs. “Net income from foreclosure property” generally means income from foreclosure property other than qualifying rents and other qualifying income for a REIT. The special servicer is authorized, when doing so is consistent with maximizing the Issuing Entity’s net after-tax proceeds from an REO Property, to incur taxes on the Issuing Entity in connection with the operation of such REO Property. Any such taxes imposed on the Issuing Entity would reduce the amount distributable to the Certificateholders. See “Servicing of the Mortgage Loans—Foreclosures” in this prospectus supplement. However, under no circumstance may a special servicer cause the acquired mortgaged property to cease to be a “permitted investment” under Section 860G(a)(5) of the Code.
It is not anticipated that any material state or local income or franchise tax will be imposed on the Upper-Tier REMIC or any Lower-Tier REMIC.
Any tax on prohibited transactions, certain contributions or “net income from foreclosure property,” and any state or local income or franchise tax, that may be imposed on any REMIC will generally be borne by the REMIC. However, such tax may be borne by the trustee, the master servicer or the special servicer, in any case out of its own funds; provided that the person has sufficient assets to do so, if the tax arises out of the willful misfeasance, bad faith or negligence in the performance of that person’s obligations under certain provisions of the Pooling and Servicing Agreement. Any tax not borne by one of these persons would be charged against the REMIC resulting in a reduction in amounts payable to Holders of the Certificates.
Backup Withholding
Distributions on the REMIC Regular Certificates, as well as payment of proceeds from the sale of REMIC Regular Certificates, may be subject to the backup withholding tax under Section 3406 of the Code if recipients fail to furnish certain information, including their taxpayer identification numbers, or otherwise fail to establish an exemption from such tax. Any amounts deducted and withheld from a recipient would be allowed as a credit against such recipient’s federal income tax. Furthermore, certain penalties may be imposed by the IRS on a recipient that is required to supply information but that does not do so in the manner required.
STATE AND LOCAL TAX CONSIDERATIONS
In addition to the federal income tax consequences described in “Material Federal Income Tax Consequences” in this prospectus supplement, potential investors should consider the state, local and other tax consequences of the acquisition, ownership, and disposition of
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the Certificates. State, local and other tax law may differ substantially from the corresponding federal tax law, and this discussion does not purport to describe any aspect of the income tax laws of any state, locality or other jurisdiction. Potential investors should consult their own tax advisors with respect to the various tax consequences of investments in the Certificates.
CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS
The following discussion summarizes certain legal aspects of mortgage loans secured by real property in New York and California, representing approximately 26.4% and 20.9%, respectively, of the Initial Pool Balance by allocated loan amount, which are general in nature.
Mortgage loans in New York are generally secured by mortgages on the related real estate. Foreclosure of a mortgage is usually accomplished in judicial proceedings. After an action for foreclosure is commenced, and if the lender secures a ruling that it is entitled to foreclosure ordinarily by motion for summary judgment, the court then appoints a referee to compute the amount owed together with certain costs, expenses and legal fees of the action. The lender then moves to confirm the referee’s report and enter a final judgment of foreclosure and sale. Public notice of the foreclosure sale, including the amount of the judgment, is given for a statutory period of time, after which the mortgaged real estate is sold by a referee at public auction. There is no right of redemption after the foreclosure sale. In certain circumstances, deficiency judgments may be obtained. Under mortgages containing a statutorily sanctioned covenant, the lender has a right to have a receiver appointed without notice and without regard to the adequacy of the mortgaged real estate as security for the amount owned.
Mortgage loans in California are generally secured by deeds of trust on the related real estate. Foreclosure of a deed of trust in California may be accomplished by a non-judicial trustee’s sale in accordance with the California Civil Code (so long as it is permitted under a specific provision in the deed of trust) or by judicial foreclosure in accordance with the California Code of Civil Procedure. Public notice of either the trustee’s sale or the judgment of foreclosure is given for a statutory period of time after which the mortgaged real estate may be sold by the trustee, if foreclosed pursuant to the trustee’s power of sale, or by court-appointed sheriff under a judicial foreclosure. Following a judicial foreclosure sale, the borrower or its successor in interest may, for a period of up to one year, redeem the property; however, there is no redemption following a trustee’s power of sale. California’s “security first” and “one action” rules require the lender to complete foreclosure of all real estate provided as security under the deed of trust in a single action in an attempt to satisfy the full debt before bringing a personal action (if otherwise permitted) against the borrower for recovery of the debt, except in certain cases involving environmentally impaired real property where foreclosure of the real property is not required before making a claim under the indemnity. California case law has held that acts such as an offset of an unpledged account constitute violations of such statutes. Violations of such statutes may result in the loss of some or all of the security under the mortgage loan and a loss of the ability to sue for the debt. A sale by the trustee under the deed of trust does not constitute an “action” for purposes of the “one action rule.” Other statutory provisions in California limit any deficiency judgment (if otherwise permitted) against the borrower following a judicial foreclosure to the amount by which the indebtedness exceeds the fair value at the time of the public sale and in no event greater than the difference between the foreclosure sale price and the amount of the indebtedness. Further, under California law, once a property has been sold pursuant to a power of sale clause contained in a deed of trust (and in the case of certain types of purchase money acquisition financings, under all circumstances), the lender is precluded from seeking a deficiency judgment from the borrower or, under certain circumstances, guarantors. On the other hand, under certain circumstances, California law permits separate and even contemporaneous actions against both the borrower and any guarantors. California statutory provisions regarding assignments of rents and leases require that a lender whose loan is secured by such an assignment must exercise a remedy with respect to rents as authorized by statute in order to establish its right to receive the rents after an event of default. Among the remedies authorized by statute is the lender’s right to have a receiver appointed under certain circumstances.
CERTAIN ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and the Code impose restrictions on Plans that are subject to ERISA and/or Section 4975 of the Code and on persons that are Parties in Interest with respect to such Plans. ERISA also imposes duties on persons who are fiduciaries of Plans subject to ERISA, including the duty of investment prudence and diversification and the requirement that a Plan’s investments be made in accordance with the documents governing the Plan. Under ERISA, any person who exercises any authority or control respecting the management or disposition of the assets of a Plan, and any person who provides investment advice with respect to such assets for a fee, is a fiduciary of such Plan. ERISA and Section 4975 of the Code also prohibit certain transactions between a Plan and Parties in Interest with respect to such Plan. Governmental plans (as defined in Section 3(32) of ERISA) and most non-U.S. plans as described by Section 4(b)(4) of ERISA are not subject to the restrictions of ERISA and the Code. However, such plans may be subject to similar provisions of applicable federal, state, local or non-U.S. law.
“Plans” means (a) employee benefit plans as defined in Section 3(3) of ERISA that are subject to Title I of ERISA, (b) plans as defined in Section 4975 of the Code that are subject to Section 4975 of the Code and (c) entities whose underlying assets include plan assets by reason of an employee benefit plan’s or a plan’s investment in such entities.
“Parties in Interest” means persons who have specified relationships to Plans (“parties in interest” under Section 406 of ERISA or “disqualified persons” under Section 4975 of the Code).
Plan Assets and Prohibited Transactions
Under Section 3(42) of ERISA and the U.S. Department of Labor (“DOL”) regulation located at 29 C.F.R. Section 2510.3-101, as a general rule, the underlying assets and properties of corporations, partnerships, trusts and certain other entities in which a Plan makes an “equity” investment will be deemed for certain purposes, including the prohibited transaction provisions of ERISA and Section 4975 of the Code, to be assets of the investing Plan unless certain exceptions apply. We cannot predict in advance, nor can there be any continuing assurance, whether those exceptions may be applicable because of the factual nature of the regulations set forth by the DOL. For example, one of the exceptions in the regulations provides that the underlying assets of an entity will not be considered “plan assets” if less than 25% of the value of each class of equity interests is held by “benefit plan investors,” which include Plans, as well as entities holding “plan assets,” but this exception will be tested immediately after acquisition of a Certificate, whether upon initial issuance or in the secondary market. Because there are no relevant restrictions on the purchase and transfer of the Certificates by Plans, it cannot be assured that benefit plan investors will
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own less than 25% of each class of Certificates. If the assets of the Issuing Entity were deemed to constitute Plan assets by reason of a Plan��s investment in Certificates, such Plan asset would include an undivided interest in the mortgage loans and any other assets of the Issuing Entity. If the mortgage loans or other Issuing Entity assets constitute Plan assets, then any party exercising management or discretionary control regarding those assets may be deemed to be a “fiduciary” with respect to those assets, and thus subject to the fiduciary requirements and prohibited transaction provisions of ERISA and Section 4975 of the Code with respect to the mortgage loans and other Issuing Entity assets.
Affiliates of the depositor, the underwriter, the master servicer, the special servicer and certain of their respective affiliates might be considered or might become fiduciaries or other Parties in Interest with respect to investing Plans. Moreover, the trustee, the certificate administrator, the master servicer, the special servicer, the Controlling Class Representative or certain of their respective affiliates might be considered fiduciaries or other Parties in Interest with respect to investing Plans. In the absence of an applicable exemption, “prohibited transactions”— within the meaning of ERISA and Section 4975 of the Code — could arise if Certificates were acquired by, or with “plan assets” of, a Plan with respect to which any such person is a Party in Interest.
In addition, an insurance company proposing to acquire or hold the Certificates with assets of its general account should consider the extent to which such acquisition or holding would be subject to the requirements of ERISA and Section 4975 of the Code underJohn Hancock Mutual Life Insurance Co. v. Harris Trust and Savings Bank, 510 U.S. 86 (1993), and Section 401(c) of ERISA, as added by the Small Business Job Protection Act of 1996, Public Law No. 104-188, and subsequent DOL and judicial guidance. See “—Insurance Company General Accounts” below.
Further, Section 403 of ERISA requires that all Plan assets be held in trust by the Plan trustee or a duly authorized fiduciary. However, DOL regulations provide that even if the underlying assets of an entity are deemed to be assets of a Plan that invests in the entity, the trust requirement of Section 403 of ERISA will be satisfied if the indicia of ownership of the Plan’s interest in the entity are held in trust by the Plan trustee or fiduciary (29 C.F.R. Section 2550.403a-1(b)(3)). The possession by the Plan trustee or fiduciary of the Certificates should satisfy the trust requirement as to the underlying assets of the Issuing Entity.
Special Exemption Applicable to the Offered Certificates
With respect to the acquisition and holding of the Offered Certificates, the DOL has granted to the underwriter or a predecessor-in-interest thereto an individual prohibited transaction exemption (as amended by Prohibited Transaction Exemption 2013-08, the “Exemption”), which generally exempts from certain of the prohibited transaction rules of ERISA and Section 4975 of the Code transactions relating to:
• | the initial purchase, the holding, and the subsequent resale by Plans of Offered Certificates evidencing interests in pass-through trusts; and |
• | transactions in connection with the servicing, management and operation of such trusts,providedthat the assets of such trusts consist of certain secured receivables, loans and other obligations that meet the conditions and requirements of the Exemption. |
The assets covered by the Exemption include mortgage loans such as the mortgage loans held by the Issuing Entity and fractional undivided interests in such loans. The depositor expects that the Exemption generally will apply to the Offered Certificates.
The Exemption as applicable to the Offered Certificates (and as modified by Prohibited Transaction Exemption 2013-08) sets forth the following five general conditions which must be satisfied for exemptive relief:
• | the acquisition of the Offered Certificates by a Plan must be on terms, including the price for the Offered Certificates, that are at least as favorable to the Plan as they would be in an arm’s-length transaction with an unrelated party; |
• | the Offered Certificates acquired by the Plan must have received a rating at the time of such acquisition that is in one of the four highest generic rating categories by at least one NRSRO that meets the requirements in the Exemption (the “Exemption Rating Agencies”); |
• | the trustee cannot be an affiliate of any other member of the Restricted Group, other than the underwriter or an initial purchaser of the Privately Offered Certificates. The “Restricted Group” consists of the trustee, the underwriter, the initial purchasers of the Privately Offered Certificates, the depositor, the sponsor, the master servicer, the special servicer and any borrower with respect to mortgage loans constituting more than 5% of the aggregate unamortized principal balance of the mortgage loans as of the date of initial issuance of such classes of Offered Certificates, or any affiliate of any of these parties; |
• | the sum of all payments made to and retained by the underwriter in connection with the distribution of the Offered Certificates must represent not more than reasonable compensation for underwriting the Offered Certificates; the sum of all payments made to and retained by the depositor in consideration of the assignment of the mortgage loans to the Issuing Entity must represent not more than the fair market value of such mortgage loans; 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 such person’s services under the Pooling and Servicing Agreement or other relevant servicing agreement and reimbursement of such person’s reasonable expenses in connection therewith; and |
• | the Plan investing in the Offered Certificates must be an “accredited investor” as defined in Rule 501(a)(1) of Regulation D under the Securities Act of 1933. |
In order to meet the requirements to be an Exemption Rating Agency, the credit rating agency:
• | must be recognized by the SEC as a NRSRO; |
• | must have indicated on its most recently filed SEC Form NRSRO that it rates “issuers of asset-backed securities;” and |
• | must have had, within the twelve (12) months prior to the initial issuance of the securities, at least three (3) “qualified ratings engagements” which are defined as (A) a rating engagement requested by an issuer or underwriter in connection with the initial |
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offering of the securities, (B) which is made public to investors generally, (C) for which the rating agency is compensated, and (D) which involves the offering of securities of the type that would be granted relief under the Exemption. |
It is a condition of the issuance of the Offered Certificates that they have the ratings described above required by the Exemption and the depositor believes that each of the Rating Agencies qualifies as an Exemption Rating Agency. Consequently, the second general condition set forth above will be satisfied with respect to the Offered Certificates as of the Closing Date. As of the Closing Date, the third general condition set forth above will be satisfied with respect to the Offered Certificates. In addition, the depositor believes that the fourth general condition set forth above will be satisfied with respect to the Offered Certificates. A fiduciary of a Plan contemplating purchasing an Offered Certificate in the secondary market must make its own determination that, at the time of purchase, the Offered Certificates continue to satisfy the second general condition set forth above. A fiduciary of a Plan contemplating purchasing an Offered Certificate, whether in the initial issuance of the Offered Certificates or in the secondary market, must make its own determination that the first and fifth general conditions set forth above will be satisfied with respect to the related Offered Certificate.
The Exemption also requires that the Issuing Entity meet the following requirements:
• | the corpus of the Issuing Entity must consist solely of assets of a type that have been included in other investment pools; |
• | certificates in such other investment pools must have been rated in one of the four highest generic rating categories from an Exemption Rating Agency for at least one year prior to the Plan’s acquisition of Offered Certificates; and |
• | certificates evidencing interests in such other investment pools must have been purchased by investors other than Plans for at least one year prior to any Plan’s acquisition of Offered Certificates. |
The depositor believes that the conditions to the applicability of the Exemption will generally be met with respect to the Offered Certificates, other than possibly those conditions which are dependent on facts unknown to the depositor or which it cannot control, such as those relating to the circumstances of the Plan purchaser or the Plan fiduciary making the decision to purchase any such Offered Certificates.
Some of the relief provided by the Exemption does not apply to Plans sponsored by any member of the Restricted Group.
In addition to making its own determination as to the availability of the exemptive relief provided in the Exemption, the Plan fiduciary should consider the availability of other prohibited transaction exemptions. The fiduciary of a plan not subject to ERISA or Section 4975 of the Code, such as a governmental plan, should make its own determination as to the need for the availability of any exemptive relief under applicable law. Each purchaser of Offered Certificates that is a Plan or a governmental plan will be deemed to have represented that its acquisition, holding and disposition of such Offered Certificates will not constitute or otherwise result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Code (or a similar non-exempt violation of applicable law).
Moreover, the Exemption provides relief from certain self-dealing/conflict of interest prohibited transactions, but only if, among other requirements:
• | the investing Plan fiduciary or its affiliates is an obligor with respect to 5% or less of the fair market value of the obligations contained in the Issuing Entity; |
• | the Plan’s investment in each class of Offered Certificates does not exceed 25% of all of the Offered Certificates outstanding of that class at the time of the acquisition; and |
• | immediately after the acquisition, no more than 25% of the assets of the Plan are invested in certificates representing an interest in one or more trusts containing assets sold or serviced by the same entity. |
If certain additional conditions are satisfied, the Exemption may provide an exemption from certain of the prohibited transaction rules of ERISA and the Code with respect to transactions in connection with the servicing, management and operation of the Issuing Entity. The depositor expects that these additional conditions will be satisfied.
Insurance Company General Accounts
Based on the reasoning of the United States Supreme Court inJohn Hancock Mutual Life Ins. Co. v. Harris Trust and Savings Bank, an insurance company’s general account may be deemed to include assets of the Plans investing in the general account (e.g., through the purchase of an annuity contract), and the insurance company might be treated as a Party in Interest with respect to a Plan by virtue of such investment. Any investor that is an insurance company using the assets of an insurance company general account should note that the Small Business Job Protection Act of 1996 added Section 401(c) of ERISA relating to the status of the assets of insurance company general accounts under ERISA and Section 4975 of the Code. Pursuant to Section 401(c), the Department of Labor issued final regulations effective January 5, 2000 with respect to insurance policies issued on or before December 31, 1998 that are supported by an insurer’s general account. As a result of these regulations, assets of an insurance company general account will not be treated as “plan assets” for purposes of the fiduciary responsibility provisions of ERISA and Section 4975 of the Code to the extent such assets relate to contracts issued to employee benefit plans on or before December 31, 1998 and the insurer satisfied various conditions.
Any assets of an insurance company general account which support insurance policies or annuity contracts issued to Plans after December 31, 1998, or on or before that date for which the insurer does not comply with the final regulations issued by the DOL under Section 401(c) of ERISA clarifying the application of ERISA to Insurance Company General Accounts (the “401(c) Regulations”), may be treated as “plan assets” of such Plans. Because Section 401(c) does not relate to insurance company separate accounts, separate account assets continue to be treated as “plan assets” of any Plan that is invested in such separate account. Insurance companies contemplating the investment of general account assets in the Offered Certificates should consult their legal counsel with respect to the applicability of Section 401(c).
Accordingly, any insurance company that acquires or holds any Offered Certificate shall be deemed to have represented and warranted to the depositor, the underwriter, the trustee, the certificate administrator and the master servicer that (1) such acquisition and holding is permissible under applicable law, including the Exemption, will not constitute or result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Code, and will not subject the depositor, the trustee, the certificate administrator, the underwriter or the master
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servicer to any obligation in addition to those undertaken in the Pooling and Servicing Agreement, or (2) the source of funds used to acquire and hold such Offered Certificates is an “insurance company general account,” as defined in DOL Prohibited Transaction Class Exemption (“PTCE”) 95-60, and the applicable conditions set forth in PTCE 95-60 have been satisfied.
General Investment Considerations
Prospective Plan or governmental or non-U.S. plan investors should consult their legal counsel concerning the impact of ERISA, Section 4975 of the Code or any corresponding provisions of applicable federal, state, local or non-U.S. law, the applicability of the Exemption, or other exemptive relief, and the potential consequences to their specific circumstances, prior to making an investment in the Certificates. Moreover, each Plan fiduciary should determine whether, under the general fiduciary standards of ERISA regarding prudent investment procedure and diversification, 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 sale of Offered Certificates to a Plan is in no respect a representation or warranty by the depositor, the underwriter, the trustee, the certificate administrator, the custodian, the special servicer or the master servicer that this investment meets all relevant legal requirements with respect to investments by Plans generally or any particular Plan, that the Exemption would apply to the acquisition of this investment by Plans in general or any particular Plan, or that this investment is appropriate for Plans generally or for any particular Plan.
LEGAL INVESTMENT
The Offered Certificates willnot constitute “mortgage related securities” for purposes of the Secondary Mortgage Market Enhancement Act of 1984, as amended (“SMMEA”). The appropriate characterization of the Offered Certificates under various legal investment restrictions, and thus the ability of investors subject to these restrictions to purchase Offered Certificates, is subject to significant interpretive uncertainties.
No representations are made as to the proper characterization of the Offered Certificates for legal investment, financial institution regulatory, or other purposes, or as to the ability of particular investors to purchase the Offered Certificates under applicable legal investment restrictions. Further, any ratings downgrade of any class of Offered Certificates by an NRSRO to a less than “investment grade” rating (i.e., lower than the top four rating categories) may adversely affect the ability of an investor to purchase or retain, or otherwise impact the liquidity, market value and regulatory characteristics of, that class. The uncertainties described above (and any unfavorable future determinations concerning the legal investment or financial institution regulatory characteristics of the Offered Certificates) may adversely affect the liquidity, market value and regulatory characteristics 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 their own legal advisors in determining whether and to what extent the Offered Certificates will constitute legal investments for them or are subject to investment, capital, or other regulatory restrictions.
The Issuing Entity will not be registered under the Investment Company Act. The Issuing Entity will be relying on an exclusion or exemption from the definition of “investment company” under the Investment Company Act contained in Section 3(c)(5) of the Investment Company Act or Rule 3a-7 under the Investment Company Act, although there may be additional exclusions or exemptions available to the Issuing Entity. The Issuing Entity will not be relying upon Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act as a basis for not registering under the Investment Company Act. The Issuing Entity is being structured so as not to constitute a “covered fund” for purposes of the Volcker Rule (as defined in this prospectus supplement) under the Dodd-Frank Act.
See “Legal Investment” in the accompanying prospectus.
USE OF PROCEEDS
We will apply the net proceeds of the offering of the Offered Certificates towards the simultaneous purchase of the mortgage loans from the mortgage loan seller and to the payment of expenses in connection with the issuance of the Offered Certificates.
PLAN OF DISTRIBUTION (CONFLICTS OF INTEREST)
We have entered into an Underwriting Agreement, dated as of the date of this prospectus supplement (the “Underwriting Agreement”), with Morgan Stanley & Co. LLC (the “Underwriter”). Subject to the terms and conditions set forth in the Underwriting Agreement, we have agreed to sell to the Underwriter, and the Underwriter has agreed to purchase from us, 100% of the aggregate Certificate Principal Balance or Notional Amount of each class of Offered Certificates.
Morgan Stanley & Co. LLC will act as lead manager and sole bookrunner with respect to the Offered Certificates.
The Underwriting Agreement provides that the obligations of the Underwriter are subject to conditions precedent, and that the Underwriter will be obligated to purchase all of the Offered Certificates if any are purchased. The depositor expects to receive from this offering approximately $809,033,012, plus accrued interest from July 1, 2015, before deducting expenses of the offering.
The Underwriter has advised us that it will propose to offer the Offered Certificates from time to time for sale in one or more negotiated transactions or otherwise at varying prices to be determined at the time of sale. The Underwriter may effect such transactions by selling such classes of Offered Certificates to or through dealers and such dealers may receive compensation in the form of underwriting discounts, concessions or commissions from the Underwriter and any purchasers of such classes of Offered Certificates for whom they may act as agent.
One or more affiliates of the Underwriter have entered into and may, in the future, enter into other financing arrangements with affiliates of some or all of the borrowers. Affiliates of the Underwriter, including Morgan Stanley Mortgage Capital Holdings LLC, engage in, and intend to continue to engage in, the acquisition, development, operation, financing and disposition of real estate-related assets in the
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ordinary course of their business, and are not prohibited in any way from engaging in business activities similar to or competitive with those of the borrowers. See “Risk Factors—Risks Related to Conflicts of Interest” in this prospectus supplement.
The Underwriter has represented and agreed, that:
(a) in the United Kingdom, it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the “FSMA”)) received by it in connection with the issue or sale of any Offered Certificates in circumstances in which Section 21(1) of the FSMA does not apply to the Issuing Entity or the depositor; and
(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Offered Certificates in, from or otherwise involving the United Kingdom.
In relation to each member state of the European Economic Area which has implemented the EU Prospectus Directive (each, a “Relevant Member State”), the Underwriter has represented and agreed that, with effect from and including the date on which the EU Prospectus Directive is implemented in that Relevant Member State, it has not made and will not make an offer of the Offered Certificates which are the subject of the offering contemplated by this prospectus supplement to the public in that Relevant Member State other than:
(a) to any legal entity which is a “qualified investor” as defined in the EU Prospectus Directive;
(b) to fewer than 150 natural or legal persons (other than “qualified investors” as defined in the EU Prospectus Directive) subject to obtaining the prior consent of the underwriter, in the event it is nominated by the depositor for any such offer; or
(c) in any other circumstances falling within article 3(2) of the EU Prospectus Directive;
provided, that no such offer of the Offered Certificates above shall require the Issuing Entity, the depositor or the Underwriter to publish a prospectus pursuant to Article 3 of the EU Prospectus Directive.
For the purposes of the prior paragraph, (1) the expression an “offer of the Offered Certificates which are the subject of the offering contemplated by this prospectus supplement to the public” in relation to any Offered Certificate in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Certificates to be offered so as to enable an investor to decide to purchase or subscribe to the Offered Certificates, as the same may be varied in that Relevant Member State by any measure implementing the EU Prospectus Directive in that Relevant Member State and (2) the expression “EU Prospectus Directive” means Directive 2003/71/EC (as amended, including by Directive 2010/73/EU) and includes any relevant implementing measure in the Relevant Member State.
The Underwriter has agreed that it will not offer or sell any Offered Certificates, directly or indirectly, in Japan or to, or for the benefit of, any Japanese Person, or to others for re-offering or resale, directly or indirectly, in Japan or to any Japanese Person, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the FIEL and any other applicable laws and regulations. For the purposes of this paragraph, “Japanese Person” shall mean any person resident in Japan, including any corporation or other entity organized under the laws and regulations of Japan.
In connection with the offering, the Underwriter may purchase and sell the Offered Certificates in the open market. These transactions may include purchases to cover short positions created by the Underwriter in connection with the offering. Short positions created by the Underwriter involve the sale by the Underwriter of a greater number of Offered Certificates than it is required to purchase from the depositor in the offering. The Underwriter also may impose a penalty bid, whereby selling concessions allowed to broker-dealers in respect of the securities sold in the offering may be reclaimed by the Underwriter if the Offered Certificates are repurchased by the Underwriter in covering transactions. These activities may maintain or otherwise affect the market price of the Offered Certificates, which may be higher than the price that might otherwise prevail in the open market; and these activities, if commenced, may be discontinued at any time. These transactions may be effected in the over-the-counter market or otherwise.
The Offered Certificates are offered by the Underwriter when, as and if issued by the Issuing Entity and delivered to and accepted by the Underwriter and subject to their right to reject orders in whole or in part. It is expected that delivery of the Offered Certificates will be made in book-entry form through the facilities of DTC against payment therefor on or about July 8, 2015, which is the eighth (8th) business day following the first date of pricing of the Offered Certificates.
Pursuant to Rule 15c6-1 under the Exchange Act, trades in the secondary market generally are required to settle in three (3) business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade Offered Certificates in the secondary market prior to such delivery should specify a longer settlement cycle, or should refrain from specifying a shorter settlement cycle, to the extent that failing to do so would result in a settlement date that is earlier than the date of delivery of such Offered Certificates.
The Underwriter and any dealers that participate with the Underwriter in the distribution of the Offered Certificates may be deemed to be underwriters, and any discounts or commissions received by them and any profit on the resale of such classes of Offered Certificates by them may be deemed to be underwriting discounts or commissions, under the Securities Act of 1933, as amended.
We and the sponsor have agreed to indemnify the Underwriter against civil liabilities, including liabilities under the Securities Act of 1933, as amended, or contribute to payments the Underwriter may be required to make in respect of such liabilities.
The Underwriter currently intends to make a secondary market in the Offered Certificates, but it is not obligated to do so, and any market making effort may be discontinued at any time.
Morgan Stanley & Co. LLC, the Underwriter and the entity that is expected to be the initial holder of 20.3% of the Notional Amount of the Class X-A Certificates and 100% of the Percentage Interests in the Class V Certificates on the Closing Date, is an affiliate of Morgan Stanley Capital I Inc., the depositor, Morgan Stanley Mortgage Capital Holdings LLC, the mortgage loan seller and the sponsor, and Morgan Stanley Bank, N.A., the originator and the initial holder of a portion of the 32 Old Slip Fee Non-Serviced Companion Loan.
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A substantial portion of the net proceeds of this offering (after the payment of underwriting compensation and transaction expenses) are intended to be directed to affiliates of Morgan Stanley & Co. LLC, the Underwriter and the lead manager and sole bookrunner for this offering. That flow of funds will occur by means of the collective effect of the payment by the Underwriter to the depositor of the purchase price for the Offered Certificates and the payment by the depositor to Morgan Stanley Mortgage Capital Holdings LLC (an affiliate of Morgan Stanley & Co. LLC), in its capacity as a mortgage loan seller, of the purchase price for the mortgage loans. As a result of the circumstances described above, Morgan Stanley & Co. LLC has a “conflict of interest” within the meaning of Rule 5121 of the consolidated rules of The Financial Industry Regulatory Authority, Inc. In addition, other circumstances exist that result in the Underwriter or its affiliates having conflicts of interest, notwithstanding that such circumstances may not constitute a “conflict of interest” within the meaning of such Rule 5121. See “Risk Factors—Risks Related to Conflicts of Interest—Conflicts of Interest of the Underwriter” in this prospectus supplement.
LEGAL MATTERS
The legality of the Offered Certificates and the material federal income tax consequences of investing in the Offered Certificates will be passed upon for Morgan Stanley Capital I Inc. by Sidley Austinllp, New York, New York. Certain legal matters with respect to the Offered Certificates will be passed upon for the underwriter by Orrick, Herrington & Sutcliffe LLP, New York, New York.
RATINGS
The depositor expects that the Offered Certificates will, in the case of each Class thereof, receive investment grade credit ratings from one or more NRSROs engaged by the depositor to rate the Offered Certificates (the “Rating Agencies” ).
It is expected that each of the Rating Agencies will perform ratings surveillance with respect to its ratings for so long as the Offered Certificates remain outstanding, except that a Rating Agency may stop performing ratings surveillance at any time, if, among other reasons, that Rating Agency does not have sufficient information to allow it to continue to perform ratings surveillance on the Offered Certificates. The depositor has no ability to ensure that any Rating Agencies will perform ratings surveillance. MSMCH has informed us that fees for such ratings surveillance will be paid on an ongoing basis by MSMCH. The ratings of the Offered Certificates address the likelihood of the timely payment of interest and the ultimate payment of principal, if any, due on the Offered Certificates by the Distribution Date in May 2048. 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, qualification or withdrawal at any time by the assigning Rating Agency.
Any ratings of the Offered Certificates do not represent any assessment of (1) the likelihood or frequency of Principal Prepayments, voluntary or involuntary, on the mortgage loans, (2) the degree to which such prepayments might differ from those originally anticipated, (3) whether and to what extent Prepayment Premiums, Yield Maintenance Charges, Excess Interest or default interest will be received, (4) the allocation of Net Aggregate Prepayment Interest Shortfalls or (5) the tax treatment of the Offered Certificates or of the Issuing Entity.
A security rating on mortgage pass-through certificates does not represent any assessment of the yield to maturity that investors may experience or the possibility that the Holders of the Class X-A Certificates might not fully recover their initial investments in the event of delinquencies or defaults or rapid prepayments on the mortgage loans (including both voluntary and involuntary prepayments) or the application of any realized losses. In general, the ratings thus address credit risk and not prepayment risk. As described herein, the amounts payable with respect to the Class X-A Certificates consist only of interest. If all of the mortgage loans were to prepay in the initial month, with the result that Holders of the Class X-A Certificates receive only a single month’s interest and thus suffer a nearly complete loss of their investment, all amounts “due” to such Certificateholders would nevertheless have been paid, and such result will be consistent with the securities ratings assigned to such Certificates. The Notional Amount of the Class X-A Certificates may be reduced by the allocation of realized losses and prepayments, whether voluntary or involuntary. The securities ratings do not address the timing or magnitude of reductions of such Notional Amount, but only the obligation to distribute interest timely on such Notional Amount as so reduced from time to time. Therefore, the securities ratings of the Class X-A Certificates should be evaluated independently from similar ratings on other types of certificates.
Other NRSROs that we have not engaged to rate the Offered Certificates may nevertheless issue unsolicited credit ratings on one or more classes of Offered Certificates and any one or more of the rating agencies engaged by the depositor to rate certain classes of Certificates may issue unsolicited credit ratings on one or more classes of Certificates that it was not engaged to rate upon initial issuance, relying on information they receive pursuant to Rule 17g-5 under the Exchange Act or otherwise. If any such unsolicited ratings are issued with respect to any particular class of Certificates, we cannot assure you that they will not be lower than the ratings assigned by the Rating Agencies engaged by the depositor to rate that class of Certificates on the Closing Date. The issuance of any such unsolicited ratings with respect to any particular class of Certificates that are lower than the rating(s) assigned to it by the Rating Agencies on the Closing Date may negatively impact the liquidity, market value and regulatory characteristics of that class of Certificates. Although unsolicited ratings may be issued by any rating agency, a rating agency might be more likely to issue an unsolicited rating if it was not selected after having provided preliminary feedback to the depositor. Furthermore, the SEC may determine that one or more of the Rating Agencies no longer qualifies as an NRSRO, or is no longer qualified to rate the Offered Certificates, and that determination may also have an adverse effect on the liquidity, market value and regulatory characteristics of the Offered Certificates.
As part of the process of obtaining ratings for the Certificates, the depositor had initial discussions with and submitted certain materials to five (5) rating agencies. Based on preliminary feedback from those rating agencies at that time, the depositor selected three (3) of them to rate some or all of the classes of Offered Certificates and certain classes of the privately offered Certificates (although each such engaged rating agency may not ultimately issue ratings on all classes of Certificates). The decision not to engage certain rating agencies to rate any of the Certificates was due, in part, to those agencies’ initial subordination levels for the various classes of rated Certificates. Likewise, the decision to engage one or more of the engaged rating agencies to only rate certain classes of Certificates, but not others, was also due, in part, to those engaged rating agencies’ initial subordination levels for such classes of Certificates. Had the depositor selected rating agencies (other than the engaged rating agencies) to rate any one or more classes of the Certificates or had it engaged all of the engaged rating agencies to rate all classes of the Certificates, the depositor cannot assure you as to the ratings that such rating agencies would have ultimately assigned to those classes of Certificates. In addition, the decision not to engage one or more of the engaged rating agencies in the rating of certain classes of Certificates to be issued in connection with this transaction, may negatively impact the liquidity,
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market value and regulatory characteristics of those classes of Certificates. Neither the depositor nor any other person or entity will have any duty to notify you if any other nationally recognized statistical rating organization issues, or delivers notice of its intention to issue, unsolicited ratings on one or more classes of the Offered Certificates after the date of this prospectus supplement.
See “Risk Factors—Risks Related to the Offered Certificates—Ratings of the Offered Certificates Do Not Represent Any Assessment of the Yield to Maturity That a Certificateholder May Experience and Such Ratings May Be Reviewed, Revised, Suspended, Downgraded, Qualified or Withdrawn By the Applicable Rating Agency” in this prospectus supplement.
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INDEX OF SIGNIFICANT TERMS
17g-5 Information Provider | S-131 | Balloon Payment | S-121 | |
17g-5 Information Provider’s Website | S-200 | Bankruptcy Code | S-94 | |
1986 Act | S-220 | Base Interest Fraction | S-114 | |
300 South Riverside Plaza Fee | Business Day | S-107 | ||
Intercreditor Agreement | S-162 | CBE | S-146 | |
300 South Riverside Plaza Fee Major | Certificate Administrator | S-13 | ||
Decision | S-162 | Certificate Administrator Fee | S-135 | |
300 South Riverside Plaza Fee | Certificate Administrator Fee Rate | S-135 | ||
Mortgage Loan | S-161 | Certificate Owner | S-101 | |
300 South Riverside Plaza Fee | Certificate Principal Balance | S-101 | ||
Mortgaged Property | S-161 | Certificateholder | S-134, S-219 | |
300 South Riverside Plaza Fee Non- | Certificates | S-100 | ||
Controlling Note Holder | S-163 | Class | S-100 | |
300 South Riverside Plaza Fee Non- | Class A Senior Certificates | S-100 | ||
Serviced Companion Loan | S-161 | Class A-S Percentage Interest | S-101 | |
300 South Riverside Plaza Fee Non- | Class A-S Trust Component | S-102 | ||
Serviced Loan Combination | S-161 | Class A-S-PST Percentage Interest | S-102 | |
32 Old Slip Fee Intercreditor Agreement | S-164 | Class B Percentage Interest | S-102 | |
32 Old Slip Fee Major Decision | S-164 | Class B Trust Component | S-102 | |
32 Old Slip Fee Mortgage Loan | S-163 | Class B-PST Percentage Interest | S-102 | |
32 Old Slip Fee Mortgaged Property | S-163 | Class C Percentage Interest | S-102 | |
32 Old Slip Fee Non-Controlling Note | Class C Trust Component | S-102 | ||
Holder | S-165 | Class C-PST Percentage Interest | S-102 | |
32 Old Slip Fee Non-Serviced | Class PST Component | S-102 | ||
Companion Loan | S-163 | Class PST Component A-S | S-102 | |
32 Old Slip Fee Non-Serviced Loan | Class PST Component B | S-102 | ||
Combination | S-163 | Class PST Component C | S-102 | |
401(c) Regulations | S-227 | Class X Certificates | S-100 | |
A/B Whole Loan | S-188 | Class X Strip Rate | S-102 | |
Acceptable Insurance Default | S-203 | Class X YM Distribution Amount | S-114 | |
Accrued Certificate Interest | S-109 | Clearstream | S-101 | |
additional documents | S-129 | Closing Date | S-18 | |
Additional Servicer | S-194 | Code | S-219 | |
Additional Trust Fund Expense | S-108 | Collateral Support Deficit | S-117 | |
Administrative Fee Rate | S-103 | Collection Account | S-105 | |
ADR | S-180 | Collection Period | S-19, S-103 | |
Advance Rate | S-121 | Collective Consultation Period | S-204 | |
Advances | S-121 | Compensating Interest | S-108 | |
Affected Loan(s) | S-187 | Compensating Interest Payment | S-192 | |
AFR | S-219 | Complaint | S-95 | |
Alderwood Mall B Note | S-167 | Condemnation Proceeds | S-106 | |
Alderwood Mall Intercreditor Agreement | S-167 | Consent Fees | S-192 | |
Alderwood Mall Major Decisions | S-171 | Constant Prepayment Rate | S-141 | |
Alderwood Mall Mortgage Loan | S-167 | constant yield election | S-222 | |
Alderwood Mall Mortgaged Property | S-167 | Control Eligible Certificates | S-204 | |
Alderwood Mall Non-Controlling Senior | Controlling Class | S-204 | ||
Note Holders | S-172 | Controlling Class Representative | S-204 | |
Alderwood Mall Non-Serviced | CPR | S-141 | ||
Companion Loan | S-167 | CRE Loans | S-88 | |
Alderwood Mall Non-Serviced Loan | CREFC® | S-130 | ||
Combination | S-167 | CREFC® License Fee | S-103 | |
Alderwood Mall Senior Notes | S-167 | CREFC® License Fee Rate | S-103 | |
Alderwood Mall Triggering Event of | CREFC® Reports | S-130 | ||
Default | S-170 | Cross Over Date | S-113 | |
Allocable Modification Fees | S-192 | Crossed Mortgage Loans | S-187 | |
Ancillary Fees | S-193 | Custodian Fee | S-138 | |
Annual Debt Service | S-180 | Cut-off Date | S-18 | |
Anticipated Repayment Date | S-159 | Cut-off Date LTV Ratio | S-180 | |
Appraisal Event | S-124 | Cut-off Date Balance | S-150 | |
Appraisal Reduction | S-125 | Cut-off Date Loan-to-Value | S-180 | |
Appraised Value | S-180 | Cut-off Date LTV | S-180 | |
Appraised-Out Class | S-126 | DBRS | S-134 | |
ARD | S-159 | deal documents | S-129 | |
ARD Loan | S-159 | Debt Service Coverage Ratio | S-182 | |
Asset Status Report | S-206 | Defective Mortgage Loan | S-187 | |
Assumed Scheduled Payment | S-121 | Demand Entities | S-89 | |
Assumption Fees | S-192 | Depositor | S-10 | |
Available Distribution Amount | S-107 | Determination Date | S-18, S-107 | |
B Note | S-188 | Directing Holder | S-188 | |
Balloon Loans | S-121 | Disclosable Special Servicer Fees | S-197 | |
Balloon LTV | S-181 | Discount Rate | S-114 |
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Distributable Certificate Interest | S-108 | Initial Rate | S-159 | |
Distribution Account | S-106 | In-Place Cash Management | S-160 | |
Distribution Date | S-18, S-107 | Insurance Proceeds | S-105 | |
Distribution Date Statement | S-127 | Intercreditor Agreement | S-188 | |
Document Defect | S-186 | Interest Accrual Period | S-19, S-103 | |
Dodd-Frank Act | S-3 | Interest Only Certificates | S-100 | |
DOL | S-225 | Interest Reserve Account | S-106 | |
DSCR | S-182 | Interest Reserve Amount | S-106 | |
DTC | S-100 | Interest Reserve Loan | S-106 | |
Due Date | S-100 | Interested Person | S-215 | |
EC Trust | S-102 | Investment Company Act | S-3 | |
Eligible Trust Advisor | S-209 | Investor Certification | S-130 | |
ERISA | S-225 | IO | S-181 | |
Escrow Account | S-125 | IO Certificates | S-221 | |
EU Prospectus Directive | S-3, S-229 | IO Period UW NCF DSCR | S-181 | |
Euroclear | S-101 | IRS | S-219 | |
Excess Interest | S-219 | Issuing Entity | S-10 | |
Excess Liquidation Proceeds | S-106 | KBRA | S-134 | |
Excess Liquidation Proceeds Account | S-106 | Liquidation Fee | S-196 | |
Excess Modification Fees | S-193 | Liquidation Proceeds | S-106 | |
Excess Penalty Charges | S-193 | Loan Pair | S-188 | |
Excess Trust Advisor Expenses | S-110 | Loan Per Unit | S-181 | |
Exchange Act | S-94 | Loan-to-Value Ratio | S-181 | |
Exchange Proportion | S-104 | Lock-out Period | S-153 | |
Exchangeable Certificates | S-100 | Lower-Tier REMIC | S-219 | |
Excluded Mortgage Loan | S-217 | LTV | S-181 | |
Exemption | S-226 | LTV Ratio at Maturity | S-181 | |
Exemption Rating Agencies | S-226 | MAI | S-124 | |
Expected Final Distribution Date | S-132 | Major Decision | S-202 | |
FATCA | S-223 | market discount bond | S-221 | |
FDIC Safe Harbor | S-79 | Master Servicer | S-10 | |
FIEL | S-4 | Master Servicer Remittance Date | S-120 | |
filings | S-129 | Master Servicer Termination Event | S-193 | |
Final Asset Status Report | S-206 | Master Servicing Fee | S-192 | |
Foreign Person | S-219 | Master Servicing Fee Rate | S-192 | |
Form 8-K | S-187 | Material Breach | S-186 | |
FSMA | S-229 | Material Document Defect | S-186 | |
GLA | S-180 | Maturity Date LTV Ratio | S-181 | |
Government Securities | S-155 | Midland | S-96 | |
Grace Period | S-181 | Modification Fees | S-192 | |
Hard Lockbox | S-159 | Money Term | S-125 | |
Hilton Garden Inn W 54th Street A/B | Moody’s | S-134 | ||
Intercreditor Agreement | S-172 | Morgan Stanley Bank | S-90 | |
Hilton Garden Inn W 54th Street B Note | S-172 | Morningstar | S-209 | |
Hilton Garden Inn W 54th Street Control | Mortgage File | S-185 | ||
Appraisal Event | S-178 | Mortgage Loan Purchase Agreement | S-151 | |
Hilton Garden Inn W 54th Street | Mortgage Loan Seller | S-17 | ||
Controlling Holder | S-178 | Mortgage Pool | S-9 | |
Hilton Garden Inn W 54th Street Lead | Mortgage Rate | S-181 | ||
Note | S-173 | MSBAM 2015-C22 PSA | S-162, S-216 | |
Hilton Garden Inn W 54th Street Major | MSBAM 2015-C23 PSA | S-163, S-217 | ||
Decisions | S-176 | MSCCG 2015-ALDR TSA | S-167 | |
Hilton Garden Inn W 54th Street | MSMCH | S-83 | ||
Mortgage Loan | S-172 | MSMCH Data File | S-87 | |
Hilton Garden Inn W 54th Street | MSMCH Securitization Database | S-87 | ||
Mortgaged Property | S-172 | MTA | S-49 | |
Hilton Garden Inn W 54th Street Non- | Net Aggregate Prepayment Interest | |||
Controlling Senior Note Holder | S-179 | Shortfall | S-109 | |
Hilton Garden Inn W 54th Street Non- | Net Mortgage Rate | S-103 | ||
Serviced Companion Loan | S-172 | Net Operating Income | S-181 | |
Hilton Garden Inn W 54th Street Non- | NOI | S-181 | ||
Serviced Loan Combination | S-172 | NOI Date | S-181 | |
Hilton Garden Inn W 54th Street Pari | Non-30/360 Loan | S-106 | ||
Passu Intercreditor Agreement | S-172 | None | S-160 | |
Hilton Garden Inn W 54th Street Senior | Nonrecoverable Advance | S-122 | ||
Note | S-172 | Non-Serviced Companion Loan | S-189 | |
Hilton Garden Inn W 54th Street Senior | Non-Serviced Loan Combination | S-189 | ||
Note Control Period | S-178 | Non-Serviced Mortgage Loan | S-189 | |
Hilton Garden Inn W 54th Street | Non-Serviced Mortgage Loan Certificate | |||
Threshold Event Collateral | S-178 | Administrator | S-189 | |
Hilton Garden Inn W 54th Street | Non-Serviced Mortgage Loan Master | |||
Triggering Event of Default | S-175 | Servicer | S-189 | |
Holder | S-134 | Non-Serviced Mortgage Loan Pooling | ||
Initial Pool Balance | S-150 | and Servicing Agreement | S-189 |
S-233 |
Non-Serviced Mortgage Loan Service | Requesting Party | S-200 | ||
Providers | S-189 | Residual Owner | S-224 | |
Non-Serviced Mortgage Loan Special | Restricted Group | S-226 | ||
Servicer | S-189 | Revised Rate | S-159 | |
Non-Serviced Mortgage Loan Trust | RevPAR | S-182 | ||
Advisor | S-189 | RMBS | S-95 | |
Non-Serviced Mortgage Loan Trustee | S-189 | Rooms | S-182 | |
Note Reverse Sequential Order | S-170 | Rule | S-79 | |
Notional Amount | S-101 | S&P | S-209 | |
NPV Calculation Rate | S-188 | SBJPA of 1996 | S-223 | |
NRA | S-181 | Scheduled Payment | S-100 | |
NRSRO | S-130 | SEC | S-131 | |
Occupancy Rate | S-181 | Senior Certificates | S-100 | |
Occupancy Rate As-of Date | S-181 | Senior Consultation Period | S-204 | |
Offered Certificates | S-100 | Serviced B Note | S-188 | |
OID | S-220 | Serviced Companion Loan | S-189 | |
OID Regulations | S-220 | Serviced Pari Passu Mortgage Loan | S-189 | |
Order | S-4 | Servicing Advances | S-121 | |
Originator | S-17 | Servicing Criteria | S-194 | |
Outside Master Servicer | S-97 | Servicing Function Participant | S-194 | |
P&I Advance | S-121 | Servicing Standard | S-187 | |
PAC Method | S-221 | Servicing Transfer Event | S-190 | |
Pads | S-182 | SF | S-182 | |
Pari Passu Loan Primary Servicing Fee | SFA | S-4 | ||
Rate | S-189 | Significant Obligors | S-17 | |
Park Bridge Financial | S-96 | SMMEA | S-228 | |
Park Bridge Lender Services | S-96 | Soft Lockbox | S-160 | |
Participants | S-101 | special notices | S-129 | |
Parties in Interest | S-225 | Special Servicer | S-11 | |
Pass-Through Rate | S-102 | Special Servicer Compensation | S-195 | |
Penalty Charges | S-193 | Special Servicer Termination Event | S-197 | |
Percentage Interest | S-107 | Special Servicing Fee | S-195 | |
periodic reports | S-129 | Specially Serviced Mortgage Loan | S-190 | |
Permitted Cure Period | S-186 | Sponsor | S-16 | |
Permitted Special Servicer/Affiliate Fees | S-197 | Springing Cash Management | S-160 | |
Planned Principal Balance | S-114 | Springing Lockbox | S-159 | |
Plans | S-225 | Sq. Ft. | S-182 | |
Pooling and Servicing Agreement | S-187 | Square Feet | S-182 | |
PRC | S-4 | Stated Principal Balance | S-103 | |
Prepayment Interest Excess | S-119 | static pool information | S-43 | |
Prepayment Interest Shortfall | S-119 | Structuring Assumptions | S-141 | |
Prepayment Premium | S-114 | Subordinate Certificates | S-100 | |
Principal Balance Certificates | S-100 | Subordinate Control Period | S-204 | |
Principal Distribution Amount | S-109 | TA Unused Fees | S-106 | |
Principal Prepayments | S-114 | TA Unused Fees Account | S-106 | |
Private Placement Memorandum | S-100 | Tax Counsel | S-219 | |
Privately Offered Certificates | S-100 | Term to Maturity | S-182 | |
Privileged Information | S-206 | TIA | S-133 | |
Privileged Person | S-130 | TIA Applicability Determination | S-133 | |
Pro Rata and Pari Passu Basis | S-170 | TKG 3 Retail Portfolio Intercreditor | ||
Prohibited Party | S-136 | Agreement | S-160 | |
prohibited transaction | S-224 | TKG 3 Retail Portfolio Loan Pair | S-160 | |
PTCE | S-228 | TKG 3 Retail Portfolio Major Decision | S-161 | |
Purchase Price | S-186 | TKG 3 Retail Portfolio Mortgage Loan | S-160 | |
Qualified Replacement Special Servicer | S-199 | TKG 3 Retail Portfolio Mortgaged | ||
Qualified Stated Interest | S-220 | Property | S-160 | |
Qualifying Substitute Mortgage Loan | S-186 | TKG 3 Retail Portfolio Non-Controlling | ||
Rating Agencies | S-230 | Note Holder | S-161 | |
Rating Agency Communication | S-200 | TKG 3 Retail Portfolio Serviced | ||
Rating Agency Confirmation | S-200 | Companion Loan | S-160 | |
Record Date | S-18, S-107 | Treasury Rate | S-114 | |
Regulation AB | S-130 | TRIPRA | S-61 | |
Rehabilitated Mortgage Loan | S-191 | Trust Advisor | S-14, S-96 | |
Relevant Member State | S-3, S-229 | Trust Advisor Consulting Fee | S-207 | |
REMIC | S-219 | Trust Advisor Expenses | S-110 | |
REMIC Regular Certificates | S-219 | Trust Advisor Fee | S-207 | |
REO Account | S-106 | Trust Advisor Fee Rate | S-207 | |
REO Income | S-110 | Trust Advisor Standard | S-205 | |
REO Mortgage Loan | S-103 | Trust Advisor Termination Event | S-208 | |
REO Property | S-115 | Trust Component | S-102 | |
REO Serviced B Note | S-103 | Trustee | S-13 | |
REO Serviced Companion Loan | S-103 | Trustee Fee | S-137 | |
Reporting Servicer | S-194 | U.S. Person | S-219 | |
Requesting Holders | S-126 | Unallocable Modification Fees | S-193 |
S-234 |
Underwriter | S-17, S-228 | Voting Rights | S-134 | |
Underwriter Entities | S-70 | WAC | S-103 | |
Underwriting Agreement | S-228 | Wachovia | S-97 | |
Underwritten EGI | S-183 | Waterfront at Port Chester Intercreditor | ||
Underwritten Expenses | S-182 | Agreement | S-165 | |
Underwritten NCF | S-183 | Waterfront at Port Chester Major | ||
Underwritten NCF DSCR | S-182 | Decision | S-166 | |
Underwritten Net Cash Flow | S-183 | Waterfront at Port Chester Mortgage | ||
Underwritten Net Operating Income | S-183 | Loan | S-165 | |
Underwritten NOI Debt Yield | S-183 | Waterfront at Port Chester Mortgaged | ||
Underwritten Revenue | S-184 | Property | S-165 | |
Units | S-182 | Waterfront at Port Chester Non- | ||
Unpaid Interest | S-118 | Controlling Note Holder | S-166 | |
Upper-Tier Distribution Account | S-106 | Waterfront at Port Chester Non- | ||
Upper-Tier REMIC | S-219 | Serviced Companion Loan | S-165 | |
UW DSCR | S-182 | Waterfront at Port Chester Non- | ||
UW EGI | S-183 | Serviced Loan Combination | S-165 | |
UW NCF | S-183 | Weighted Average Net Mortgage Rate | S-103 | |
UW NCF Debt Yield | S-184 | Wells Fargo | S-97 | |
UW NCF DSCR | S-182 | Wells Fargo Bank | S-95 | |
UW NOI | S-183 | withholding agent | S-223 | |
UW NOI Debt Yield | S-183 | Workout Fee | S-195 | |
UW NOI DSCR | S-184 | Workout-Delayed Reimbursement | ||
UW Revenue | S-184 | Amount | S-122 | |
Volcker Rule | S-82 | Yield Maintenance Charge | S-114 |
S-235 |
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APPENDIX I
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
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APPENDIX I - CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS | ||||||||||||||||||||||||||
Property Flag | Footnotes | Loan ID | Property Name | % of Initial Pool Balance | Mortgage Loan Originator(1) | Mortgage Loan Seller(1) | Original Balance | Cut-off Date Balance | Maturity/ARD Balance | Cut-off Date Balance per SF/ Units/Rooms/Pads | Loan Purpose | Sponsor | Non-Recourse Carveout Guarantor | |||||||||||||
Loan | 3, 4, 5, 6 | 1 | TKG 3 Retail Portfolio | 9.0% | MSBNA | MSMCH | $80,000,000 | $80,000,000 | $80,000,000 | $112.76 | Refinance | E. Stanley Kroenke | E. Stanley Kroenke | |||||||||||||
Property | 1.01 | Riverside Center, NY | MSBNA | MSMCH | $24,395,641 | $24,395,641 | $24,395,641 | |||||||||||||||||||
Property | 1.02 | Norwichtown Commons, CT | MSBNA | MSMCH | $15,205,679 | $15,205,679 | $15,205,679 | |||||||||||||||||||
Property | 1.03 | Coral North, IA | MSBNA | MSMCH | $13,224,072 | $13,224,072 | $13,224,072 | |||||||||||||||||||
Property | 1.04 | Grant Creek Town Center, MT | MSBNA | MSMCH | $12,373,023 | $12,373,023 | $12,373,023 | |||||||||||||||||||
Property | 1.05 | Manhattan Marketplace, KS | MSBNA | MSMCH | $10,143,464 | $10,143,464 | $10,143,464 | |||||||||||||||||||
Property | 1.06 | Riverside Crossing, CO | MSBNA | MSMCH | $4,658,121 | $4,658,121 | $4,658,121 | |||||||||||||||||||
Loan | 7 | 2 | 300 South Riverside Plaza Fee | 7.6% | MSBNA | MSMCH | $67,000,000 | $67,000,000 | $67,000,000 | $158.25 | Acquisition | James Stanton; David Lowenfeld | World-Wide Holdings Corporation | |||||||||||||
Loan | 8 | 3 | 32 Old Slip Fee | 6.8% | MSBNA | MSMCH | $60,000,000 | $60,000,000 | $60,000,000 | $155.29 | Acquisition | Leon Melohn | Leon Melohn | |||||||||||||
Loan | 6, 9, 10 | 4 | Waterfront at Port Chester | 6.0% | MSBNA | MSMCH | $53,500,000 | $53,500,000 | $53,500,000 | $381.71 | Refinance | Gregg Wasser | Gregg Wasser | |||||||||||||
Loan | 11 | 5 | Alderwood Mall | 5.7% | MSBNA | MSMCH | $50,400,000 | $50,275,604 | $33,182,607 | $393.67 | Refinance | GGP/Homart II L.L.C. | GGP/Homart II L.L.C. | |||||||||||||
Loan | 6 | 841-853 Broadway | 5.6% | MSBNA | MSMCH | $50,000,000 | $50,000,000 | $50,000,000 | $199.27 | Refinance | Jeffrey J. Feil | Jeffrey J. Feil | ||||||||||||||
Loan | 7 | Shoppes at Westlake Village | 5.6% | MSBNA | MSMCH | $50,000,000 | $50,000,000 | $50,000,000 | $473.79 | Refinance | Daniel F. Selleck; Chet Huffman | Daniel F. Selleck; Chet Huffman | ||||||||||||||
Loan | 12 | 8 | Hilton Garden Inn W 54th Street | 4.5% | MSBNA | MSMCH | $40,000,000 | $40,000,000 | $40,000,000 | $386,533.67 | Refinance | Joseph Moinian; Morad Ghadamian | Joseph Moinian; Morad Ghadamian | |||||||||||||
Loan | 9 | Premier Apartments | 3.8% | MSBNA | MSMCH | $33,250,000 | $33,250,000 | $30,648,829 | $207,812.50 | Refinance | GR Holding LLLP | GR Holding LLLP | ||||||||||||||
Loan | 10 | West Valley Medical Center | 3.0% | MSBNA | MSMCH | $27,000,000 | $27,000,000 | $27,000,000 | $262.12 | Refinance | Mark Hamermesh; Gary Grabel | Mark Hamermesh; Gary Grabel | ||||||||||||||
Loan | 11 | Northeastern Apartments | 2.7% | MSBNA | MSMCH | $24,350,000 | $24,208,794 | $19,254,802 | $295,229.20 | Refinance | Anwar N. Faisal | Anwar N. Faisal | ||||||||||||||
Loan | 12 | Preferred Freezer - Vernon, CA | 2.2% | MSBNA | MSMCH | $19,200,000 | $19,200,000 | $19,200,000 | $186.41 | Refinance | Bernard Huberman; Daniel Rosenthal | Bernard Huberman; Daniel Rosenthal | ||||||||||||||
Loan | 13 | Saticoy Plaza | 2.1% | MSBNA | MSMCH | $19,000,000 | $19,000,000 | $19,000,000 | $308.70 | Refinance | Nasser Moradian | Nasser Moradian | ||||||||||||||
Loan | 14 | Grapevine Town Center | 2.1% | MSBNA | MSMCH | $18,320,000 | $18,294,326 | $14,672,335 | $88.38 | Refinance | The Weitzman Group | Herbert D. Weitzman | ||||||||||||||
Loan | 15 | Campus Quarters | 2.0% | MSBNA | MSMCH | $18,000,000 | $18,000,000 | $17,004,738 | $109,090.91 | Acquisition | Michael P. Wheeler | Michael P. Wheeler | ||||||||||||||
Loan | 16 | HSBC - Brandon, FL | 2.0% | MSBNA | MSMCH | $17,800,000 | $17,753,439 | $14,331,049 | $147.28 | Refinance | Mary Ellen Costa | Mary Ellen Costa | ||||||||||||||
Loan | 17 | Signature Apartments | 1.8% | MSBNA | MSMCH | $16,250,000 | $16,122,077 | $253,331 | $80,209.34 | Refinance | John P. Walsh | John P. Walsh | ||||||||||||||
Loan | 6, 13 | 18 | XL Self Storage Portfolio - Rancho Cucamonga | 1.0% | MSBNA | MSMCH | $9,000,000 | $8,966,039 | $7,317,200 | $62.99 | Refinance | Paul R. Hatch; Kenneth L. Hatch | Paul R. Hatch; Kenneth L. Hatch | |||||||||||||
Loan | 6, 13 | 19 | XL Self Storage Portfolio - Salt Lake City | 0.7% | MSBNA | MSMCH | $6,300,000 | $6,275,572 | $5,097,704 | $62.99 | Refinance | Paul R. Hatch; Kenneth L. Hatch | Paul R. Hatch; Kenneth L. Hatch | |||||||||||||
Loan | 20 | The Park on Waters | 1.7% | MSBNA | MSMCH | $14,615,000 | $14,615,000 | $13,287,675 | $54,737.83 | Acquisition | Roderick R. Hubbard | Roderick R. Hubbard | ||||||||||||||
Loan | 21 | Crown Valley Center | 1.5% | MSBNA | MSMCH | $13,000,000 | $13,000,000 | $10,998,605 | $306.84 | Refinance | HAMC Properties Group, LLC | Fujishige Children Trust; Joyce Tomi Yada | ||||||||||||||
Loan | 22 | Homewood Suites Chester | 1.4% | MSBNA | MSMCH | $12,400,000 | $12,366,045 | $9,902,151 | $104,796.99 | Refinance | Shamin Hotels, Inc. | Neil P. Amin | ||||||||||||||
Loan | 23 | Holiday Inn Express - Santa Barbara | 1.2% | MSBNA | MSMCH | $10,500,000 | $10,500,000 | $10,500,000 | $172,131.15 | Refinance | Somera Capital Management, LLC | Somera Capital Management, LLC | ||||||||||||||
Loan | 24 | San Marcos Civic Center | 1.1% | MSBNA | MSMCH | $9,700,000 | $9,700,000 | $8,831,963 | $160.19 | Acquisition | Eric P. Webb | Eric P. Webb | ||||||||||||||
Loan | 25 | Ashleye Village Apartments | 1.1% | MSBNA | MSMCH | $9,500,000 | $9,500,000 | $8,208,474 | $51,630.43 | Refinance | Bernard Englard; Joseph Hoch | Bernard Englard; Joseph Hoch | ||||||||||||||
Loan | 26 | Oaks of Westchase | 1.1% | MSBNA | MSMCH | $9,350,000 | $9,350,000 | $8,342,356 | $51,373.63 | Acquisition | 37th Parallel Properties Investment Group | Chad Doty; Dan Chamberlain; Josh Burnham; John Jones; Brady McClellan; Andrew McClellan | ||||||||||||||
Loan | 27 | Holiday Inn Express & Suites Richmond | 1.0% | MSBNA | MSMCH | $9,300,000 | $9,274,534 | $7,426,613 | $96,609.73 | Refinance | Shamin Hotels, Inc. | Neil P. Amin | ||||||||||||||
Loan | 28 | The Chase Bank and International Rescue Buildings | 1.0% | MSBNA | MSMCH | $8,950,000 | $8,950,000 | $7,536,059 | $197.21 | Refinance | Ralph J. Cimmarusti; Lawrence P. Cimmarusti | Ralph J. Cimmarusti; Lawrence P. Cimmarusti | ||||||||||||||
Loan | 29 | Longston Place | 0.9% | MSBNA | MSMCH | $8,000,000 | $7,968,407 | $6,452,139 | $119.73 | Refinance | Greg D. Zaser | Greg D. Zaser | ||||||||||||||
Loan | 30 | Club at Springlake Apartments | 0.8% | MSBNA | MSMCH | $7,429,500 | $7,429,500 | $6,419,459 | $37,147.50 | Refinance | Bernard Englard; Joseph Hoch | Bernard Englard; Joseph Hoch | ||||||||||||||
Loan | 31 | Tate Boulevard IV | 0.8% | MSBNA | MSMCH | $7,250,000 | $7,221,341 | $5,846,240 | $129.16 | Refinance | C. Hunt Shuford, Jr. | C. Hunt Shuford, Jr. | ||||||||||||||
Loan | 32 | Weston Town Center Shoppes | 0.8% | MSBNA | MSMCH | $7,100,000 | $7,090,253 | $5,709,321 | $196.21 | Refinance | Norman Egozi | Norman Egozi | ||||||||||||||
Loan | 33 | Gateway Centre | 0.8% | MSBNA | MSMCH | $6,700,000 | $6,700,000 | $5,797,355 | $181.04 | Refinance | James E. Archer; Sheldon L. Schreiberg | James E. Archer; Sheldon L. Schreiberg; | ||||||||||||||
Loan | 34 | Legacy of Dalton | 0.7% | MSBNA | MSMCH | $6,200,000 | $6,200,000 | $5,131,140 | $39,240.51 | Refinance | Prominent Realty Group of GA | Douglas P. Foppe; Richard K. Stetzer | ||||||||||||||
Loan | 35 | Walgreens - Midlothian, IL | 0.7% | MSBNA | MSMCH | $6,150,000 | $6,125,689 | $4,959,223 | $413.34 | Acquisition | Weiner Investment Properties | Victor J. Weiner; Robert M. Weiner | ||||||||||||||
Loan | 36 | Stony Island Retail Center | 0.7% | MSBNA | MSMCH | $6,080,000 | $6,080,000 | $5,060,035 | $207.28 | Acquisition | Michael Laub | Michael Laub | ||||||||||||||
Loan | 37 | Stonebriar Shops | 0.6% | MSBNA | MSMCH | $5,700,000 | $5,700,000 | $5,183,729 | $152.19 | Acquisition | Monticello Asset Management | Tim L. Cantrell | ||||||||||||||
Loan | 38 | 58 E 56th Street | 0.6% | MSBNA | MSMCH | $5,632,000 | $5,617,268 | $4,534,408 | $719.24 | Refinance | Dr. Alfonso A. Costa | Dr. Alfonso A. Costa | ||||||||||||||
Loan | 39 | Walgreens - Birmingham | 0.6% | MSBNA | MSMCH | $5,500,000 | $5,500,000 | $4,656,516 | $379.57 | Acquisition | Kenneth Shimm | Kenneth Shimm | ||||||||||||||
Loan | 40 | Holiday Inn Express Springfield | 0.6% | MSBNA | MSMCH | $5,100,000 | $5,078,944 | $4,079,905 | $57,715.27 | Refinance | Lawrence N. Kasser | Lawrence N. Kasser | ||||||||||||||
Loan | 41 | Chino Hills Shopping Center | 0.6% | MSBNA | MSMCH | $5,000,000 | $5,000,000 | $4,560,967 | $133.13 | Refinance | Gary Grabel | Gary Grabel | ||||||||||||||
Loan | 42 | Miramar Crossings | 0.6% | MSBNA | MSMCH | $5,000,000 | $5,000,000 | $4,531,079 | $167.31 | Refinance | Daniel Baumgard; Ralph Sheppard | Daniel Baumgard; Ralph Sheppard | ||||||||||||||
Loan | 43 | Burbank Whitsett Plaza | 0.6% | MSBNA | MSMCH | $5,000,000 | $4,990,757 | $3,662,895 | $126.51 | Refinance | Jack Yadegar | Jack Yadegar | ||||||||||||||
Loan | 44 | 70 Federal Street | 0.6% | MSBNA | MSMCH | $5,000,000 | $4,990,133 | $3,599,747 | $80.37 | Refinance | Diana Lee Coles | Diana Lee Coles | ||||||||||||||
Loan | 45 | Bixby Point, Long Beach | 0.5% | MSBNA | MSMCH | $4,500,000 | $4,500,000 | $4,500,000 | $396.86 | Refinance | Omid Bolour | Omid Bolour | ||||||||||||||
Loan | 46 | Douglas Park Plaza | 0.5% | MSBNA | MSMCH | $4,100,000 | $4,091,973 | $2,958,167 | $446.92 | Acquisition | Eric Yan; Alice Yan | Eric Yan; Alice Yan | ||||||||||||||
Loan | 47 | Westgate Plaza | 0.4% | MSBNA | MSMCH | $3,725,000 | $3,725,000 | $3,090,139 | $72.74 | Refinance | Hubert G. Tolson, III | Hubert G. Tolson, III | ||||||||||||||
Loan | 48 | Spring Green at Cinco Terrace | 0.4% | MSBNA | MSMCH | $3,734,000 | $3,723,476 | $2,966,021 | $197.01 | Refinance | Excel Commercial Real Estate, LLC | H. Blake Tartt III | ||||||||||||||
Loan | 49 | Mesquite Bluffs Apartments | 0.4% | MSBNA | MSMCH | $3,500,000 | $3,491,553 | $2,856,644 | $19,838.37 | Refinance | Joseph Markowicz | Market 8 Trust | ||||||||||||||
Loan | 50 | Walgreens - Panama City Beach | 0.4% | MSBNA | MSMCH | $3,475,000 | $3,475,000 | $3,475,000 | $229.83 | Acquisition | Eve Gordon-Ramek | Eve Gordon-Ramek | ||||||||||||||
Loan | 51 | Vintage Pads | 0.3% | MSBNA | MSMCH | $3,000,000 | $3,000,000 | $2,560,196 | $42,857.14 | Refinance | Iconic Investors LLC | William M. Bennett | ||||||||||||||
Loan | 52 | Zen Apartments | 0.3% | MSBNA | MSMCH | $2,676,000 | $2,676,000 | $2,283,695 | $46,137.93 | Refinance | Iconic Investors LLC | William M. Bennett | ||||||||||||||
Loan | 53 | Shakopee Commons | 0.2% | MSBNA | MSMCH | $2,050,000 | $2,050,000 | $1,742,258 | $160.80 | Refinance | George Daniels | George Daniels | ||||||||||||||
Loan | 54 | CVS - West Columbia, SC | 0.2% | MSBNA | MSMCH | $1,900,000 | $1,900,000 | $1,900,000 | $187.65 | Acquisition | Eve Gordon-Ramek | Eve Gordon-Ramek |
I-1 |
APPENDIX I - CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS | |||||||||||||||||||||||||||||||||||||
MORTGAGED PROPERTY CHARACTERISTICS | |||||||||||||||||||||||||||||||||||||
Property Flag | Footnotes | Loan ID | Property Name | % of Initial Pool Balance | No. of Properties | General Property Type | Detailed Property Type | Title Type | Ground Lease Initial Lease Expiration Date | Address | City | County | State | Zip Code | Year Built | Year Renovated | Size | Units of Measure | |||||||||||||||||||
Loan | 3, 4, 5, 6 | 1 | TKG 3 Retail Portfolio | 9.0% | 6 | Various | Various | 1,416,414 | SF | ||||||||||||||||||||||||||||
Property | 1.01 | Riverside Center, NY | Retail | Anchored | Fee | N/A | 710 Horatio Street | Utica | Oneida | NY | 13502 | 1973 | 1993; 2003; 2015 | 692,658 | SF | ||||||||||||||||||||||
Property | 1.02 | Norwichtown Commons, CT | Retail | Anchored | Fee | N/A | 42 Town Street | Norwich | New London | CT | 6360 | 1966 | 2013 | 168,753 | SF | ||||||||||||||||||||||
Property | 1.03 | Coral North, IA | Retail | Anchored | Fee | N/A | 2515-2530 Corridor Way | Coralville | Johnson | IA | 52241 | 2006 | N/A | 208,406 | SF | ||||||||||||||||||||||
Property | 1.04 | Grant Creek Town Center, MT | Retail | Anchored | Fee | N/A | 3055-3275 North Reserve Street | Missoula | Missoula | MT | 59808 | 1999 | 2002 | 163,420 | SF | ||||||||||||||||||||||
Property | 1.05 | Manhattan Marketplace, KS | Retail | Anchored | Fee | N/A | 401 3rd Place | Manhattan | Riley | KS | 66502 | 2006-2011 | N/A | 148,173 | SF | ||||||||||||||||||||||
Property | 1.06 | Riverside Crossing, CO | Retail | Unanchored | Fee | N/A | 2502 and 2504 Highway 6 & 50 | Grand Junction | Mesa | CO | 81505 | 2006-2008 | N/A | 35,004 | SF | ||||||||||||||||||||||
Loan | 7 | 2 | 300 South Riverside Plaza Fee | 7.6% | 1 | Leased Fee | Leased Fee | Fee | N/A | 300 South Riverside Plaza | Chicago | Cook | IL | 60606 | 1983 | 2012 | 1,055,273 | SF | |||||||||||||||||||
Loan | 8 | 3 | 32 Old Slip Fee | 6.8% | 1 | Leased Fee | Leased Fee | Fee | N/A | 32 Old Slip | New York | New York | NY | 10005 | 1987 | N/A | 1,133,361 | SF | |||||||||||||||||||
Loan | 6, 9, 10 | 4 | Waterfront at Port Chester | 6.0% | 1 | Retail | Anchored | Fee | N/A | 5-40 Westchester Avenue | Port Chester | Westchester | NY | 10573 | 2005-2007 | N/A | 349,743 | SF | |||||||||||||||||||
Loan | 11 | 5 | Alderwood Mall | 5.7% | 1 | Retail | Super Regional Mall | Fee | N/A | 3000 184th Street Southwest | Lynnwood | Snohomish | WA | 98037 | 1979 | 1995; 2003; 2009 | 575,704 | SF | |||||||||||||||||||
Loan | 6 | 841-853 Broadway | 5.6% | 1 | Mixed Use | Office/Retail | Fee | N/A | 841-853 Broadway | New York | New York | NY | 10003 | 1913; 1926 | 2015 | 250,921 | SF | ||||||||||||||||||||
Loan | 7 | Shoppes at Westlake Village | 5.6% | 1 | Retail | Shadow Anchored | Fee | N/A | 30770 Russell Ranch Road | Westlake Village | Los Angeles | CA | 91362 | 2014 | N/A | 105,532 | SF | ||||||||||||||||||||
Loan | 12 | 8 | Hilton Garden Inn W 54th Street | 4.5% | 1 | Hospitality | Select Service | Fee | N/A | 237 West 54th Street | New York | New York | NY | 10019 | 2013 | N/A | 401 | Rooms | |||||||||||||||||||
Loan | 9 | Premier Apartments | 3.8% | 1 | Multifamily | High Rise | Fee | N/A | 8711 Georgia Avenue | Silver Spring | Montgomery | MD | 20910 | 2014 | N/A | 160 | Units | ||||||||||||||||||||
Loan | 10 | West Valley Medical Center | 3.0% | 1 | Office | Medical | Fee | N/A | 5353-5363 Balboa Boulevard | Encino | Los Angeles | CA | 91316 | 1964; 1986 | 1995; 2002 | 103,008 | SF | ||||||||||||||||||||
Loan | 11 | Northeastern Apartments | 2.7% | 1 | Multifamily | Student Housing | Fee | N/A | 132-136 Hemenway Street & 97 Saint Stephen Street | Boston | Suffolk | MA | 2115 | 1900 | 2000; 2009-2014 | 82 | Units | ||||||||||||||||||||
Loan | 12 | Preferred Freezer - Vernon, CA | 2.2% | 1 | Industrial | Warehouse | Fee | N/A | 2050 East 55th Street | Vernon | Los Angeles | CA | 90058 | 2001 | N/A | 103,000 | SF | ||||||||||||||||||||
Loan | 13 | Saticoy Plaza | 2.1% | 1 | Retail | Shadow Anchored | Fee | N/A | 17200-17288 Saticoy Street | Van Nuys | Los Angeles | CA | 91406 | 1986 | 2005 | 61,548 | SF | ||||||||||||||||||||
Loan | 14 | Grapevine Town Center | 2.1% | 1 | Retail | Anchored | Fee | N/A | 1217, 1219, 1317, 1319, 1419, and 1469 West State Highway 114 | Grapevine | Tarrant | TX | 76051 | 1995; 1996; 1997 | N/A | 207,004 | SF | ||||||||||||||||||||
Loan | 15 | Campus Quarters | 2.0% | 1 | Multifamily | Student Housing | Fee | N/A | 112 South University Boulevard | Mobile | Mobile | AL | 36608 | 2012 | N/A | 165 | Units | ||||||||||||||||||||
Loan | 16 | HSBC - Brandon, FL | 2.0% | 1 | Office | Suburban | Fee | N/A | 636 Grand Regency Boulevard | Brandon | Hillsborough | FL | 33510 | 2000 | 2012-2014 | 120,543 | SF | ||||||||||||||||||||
Loan | 17 | Signature Apartments | 1.8% | 1 | Multifamily | Garden | Fee | N/A | 2033 NW Bob White Lane & 12441 Chickadee Lane NW | Silverdale | Kitsap | WA | 98383 | 1990 | 2012-2014 | 201 | Units | ||||||||||||||||||||
Loan | 6, 13 | 18 | XL Self Storage Portfolio - Rancho Cucamonga | 1.0% | 1 | Self Storage | Self Storage | Fee | N/A | 8530 Hellman Avenue | Rancho Cucamonga | San Bernardino | CA | 91730 | 2007 | N/A | 120,914 | SF | |||||||||||||||||||
Loan | 6, 13 | 19 | XL Self Storage Portfolio - Salt Lake City | 0.7% | 1 | Self Storage | Self Storage | Fee | N/A | 1880 S 500 W | Salt Lake City | Salt Lake | UT | 84115 | 2008 | N/A | 121,056 | SF | |||||||||||||||||||
Loan | 20 | The Park on Waters | 1.7% | 1 | Multifamily | Garden | Fee | N/A | 2701 West Waters Avenue | Tampa | Hillsborough | FL | 33614 | 1984 | N/A | 267 | Units | ||||||||||||||||||||
Loan | 21 | Crown Valley Center | 1.5% | 1 | Retail | Unanchored | Fee | N/A | 27620-27680 Marguerite Parkkway | Mission Viejo | Orange | CA | 92692 | 1985 | N/A | 42,367 | SF | ||||||||||||||||||||
Loan | 22 | Homewood Suites Chester | 1.4% | 1 | Hospitality | Extended Stay | Fee | N/A | 12810 Old Stage Road | Chester | Chesterfield | VA | 23836 | 2001 | 2013 | 118 | Rooms | ||||||||||||||||||||
Loan | 23 | Holiday Inn Express - Santa Barbara | 1.2% | 1 | Hospitality | Limited Service | Fee | N/A | 17 West Haley Street | Santa Barbara | Santa Barbara | CA | 93101 | 1916 | 1999; 2004 | 61 | Rooms | ||||||||||||||||||||
Loan | 24 | San Marcos Civic Center | 1.1% | 1 | Retail | Unanchored | Leasehold | 3/14/2062 | 125-157 North Twin Oaks Valley Road | San Marcos | San Diego | CA | 92069 | 2008 | N/A | 60,552 | SF | ||||||||||||||||||||
Loan | 25 | Ashleye Village Apartments | 1.1% | 1 | Multifamily | Garden | Fee | N/A | 155 West Overly Drive | Lake Dallas | Denton | TX | 75065 | 1987 | 2008 | 184 | Units | ||||||||||||||||||||
Loan | 26 | Oaks of Westchase | 1.1% | 1 | Multifamily | Garden | Fee | N/A | 2851 Wallingford Drive | Houston | Harris | TX | 77042 | 1980 | 2013 | 182 | Units | ||||||||||||||||||||
Loan | 27 | Holiday Inn Express & Suites Richmond | 1.0% | 1 | Hospitality | Limited Service | Fee | N/A | 5030 West Village Green Drive | Midlothian | Chesterfield | VA | 23112 | 2003 | 2014 | 96 | Rooms | ||||||||||||||||||||
Loan | 28 | The Chase Bank and International Rescue Buildings | 1.0% | 1 | Mixed Use | Office/Retail | Fee | N/A | 620 North Brand Boulevard & 625 North Maryland Avenue | Glendale | Los Angeles | CA | 91203 | 1968; 1979 | 2002 | 45,384 | SF | ||||||||||||||||||||
Loan | 29 | Longston Place | 0.9% | 1 | Retail | Unanchored | Fee | N/A | 13315 Meridian Avenue East | Puyallup | Pierce | WA | 98373 | 1999 | N/A | 66,552 | SF | ||||||||||||||||||||
Loan | 30 | Club at Springlake Apartments | 0.8% | 1 | Multifamily | Garden | Fee | N/A | 5201 Springlake Parkway | Haltom City | Tarrant | TX | 76117 | 1985 | 2008 | 200 | Units | ||||||||||||||||||||
Loan | 31 | Tate Boulevard IV | 0.8% | 1 | Office | Medical | Fee | N/A | 1501 Tate Boulevard SE | Hickory | Catawba | NC | 28602 | 2004 | N/A | 55,911 | SF | ||||||||||||||||||||
Loan | 32 | Weston Town Center Shoppes | 0.8% | 1 | Retail | Unanchored | Fee | N/A | 16600-16678 Saddle Club Road | Weston | Broward | FL | 33326 | 1981 | 2001 | 36,136 | SF | ||||||||||||||||||||
Loan | 33 | Gateway Centre | 0.8% | 1 | Mixed Use | Retail/Office | Fee | N/A | 2000 East Sample Road | Lighthouse Point | Broward | FL | 33064 | 2003 | N/A | 37,009 | SF | ||||||||||||||||||||
Loan | 34 | Legacy of Dalton | 0.7% | 1 | Multifamily | Garden | Fee | N/A | 2111 Club Drive | Dalton | Whitfield | GA | 30720 | 1972 | N/A | 158 | Units | ||||||||||||||||||||
Loan | 35 | Walgreens - Midlothian, IL | 0.7% | 1 | Retail | Free-Standing | Fee | N/A | 4800 148th Street | Midlothian | Cook | IL | 60445 | 2008 | N/A | 14,820 | SF | ||||||||||||||||||||
Loan | 36 | Stony Island Retail Center | 0.7% | 1 | Retail | Unanchored | Fee | N/A | 8721 South Stony Island Avenue | Chicago | Cook | IL | 60617 | 1971; 2004 | 2014 | 29,332 | SF | ||||||||||||||||||||
Loan | 37 | Stonebriar Shops | 0.6% | 1 | Retail | Anchored | Fee | N/A | 2595 Preston Road | Frisco | Collin | TX | 75034 | 2001 | N/A | 37,452 | SF | ||||||||||||||||||||
Loan | 38 | 58 E 56th Street | 0.6% | 1 | Mixed Use | Retail/Multifamily | Fee | N/A | 58 E 56th Street | New York | New York | NY | 10022 | 1910 | 2014 | 7,810 | SF | ||||||||||||||||||||
Loan | 39 | Walgreens - Birmingham | 0.6% | 1 | Retail | Free-Standing | Fee | N/A | 1560 Montclair Road. | Birmingham | Jefferson | AL | 35210 | 2002 | N/A | 14,490 | SF | ||||||||||||||||||||
Loan | 40 | Holiday Inn Express Springfield | 0.6% | 1 | Hospitality | Limited Service | Fee | N/A | 818 Charleston Road | Springfield | Windsor | VT | 5156 | 1968; 1978 | 2011 | 88 | Rooms | ||||||||||||||||||||
Loan | 41 | Chino Hills Shopping Center | 0.6% | 1 | Retail | Unanchored | Fee | N/A | 14850-14858 Pipeline Avenue & 4000-4082 Chino Hills Parkway | Chino Hills | San Bernardino | CA | 91709 | 1973-1978 | N/A | 37,558 | SF | ||||||||||||||||||||
Loan | 42 | Miramar Crossings | 0.6% | 1 | Retail | Unanchored | Fee | N/A | 11508 Miramar Parkway | Hollywood | Broward | FL | 33025 | 2005 | 2013; 2014 | 29,884 | SF | ||||||||||||||||||||
Loan | 43 | Burbank Whitsett Plaza | 0.6% | 1 | Retail | Unanchored | Fee | N/A | 12411-12451 Burbank Boulevard | Valley Village | Los Angeles | CA | 91607 | 1961 | 2002 | 39,450 | SF | ||||||||||||||||||||
Loan | 44 | 70 Federal Street | 0.6% | 1 | Office | CBD | Fee | N/A | 70 Federal Street | Boston | Suffolk | MA | 2110 | 1966 | 2004 | 62,090 | SF | ||||||||||||||||||||
Loan | 45 | Bixby Point, Long Beach | 0.5% | 1 | Retail | Unanchored | Fee | N/A | 4000-4040 Atlantic Avenue | Long Beach | Los Angeles | CA | 90807 | 2008 | N/A | 11,339 | SF | ||||||||||||||||||||
Loan | 46 | Douglas Park Plaza | 0.5% | 1 | Retail | Unanchored | Fee | N/A | 3801 & 3821 Lakewood Boulevard | Long Beach | Los Angeles | CA | 90808 | 2013 | N/A | 9,156 | SF | ||||||||||||||||||||
Loan | 47 | Westgate Plaza | 0.4% | 1 | Retail | Unanchored | Fee | N/A | 4150 W Vernon Avenue | Kinston | Lenoir | NC | 28405 | 1988; 2009 | 2013 | 51,212 | SF | ||||||||||||||||||||
Loan | 48 | Spring Green at Cinco Terrace | 0.4% | 1 | Retail | Unanchored | Fee | N/A | 9727 Spring Green Boulevard | Katy | Fort Bend | TX | 77494 | 2013 | N/A | 18,900 | SF | ||||||||||||||||||||
Loan | 49 | Mesquite Bluffs Apartments | 0.4% | 1 | Multifamily | Garden | Fee | N/A | 100 North Grapevine Road | Mesquite | Clark | NV | 89027 | 1997 | 2014 | 176 | Units | ||||||||||||||||||||
Loan | 50 | Walgreens - Panama City Beach | 0.4% | 1 | Retail | Free-Standing | Fee | N/A | 9998 Front Beach Road | Panama City Beach | Bay | FL | 32407 | 1999 | N/A | 15,120 | SF | ||||||||||||||||||||
Loan | 51 | Vintage Pads | 0.3% | 1 | Multifamily | Student Housing | Fee | N/A | 212 South Cooper Street | Arlington | Tarrant | TX | 76013 | 1962 | 2013 | 70 | Units | ||||||||||||||||||||
Loan | 52 | Zen Apartments | 0.3% | 1 | Multifamily | Student Housing | Fee | N/A | 805 South Center Street | Arlington | Tarrant | TX | 76010 | 1968 | 2013 | 58 | Units | ||||||||||||||||||||
Loan | 53 | Shakopee Commons | 0.2% | 1 | Retail | Unanchored | Fee | N/A | 1329 Heather Street | Shakopee | Scott | MN | 55379 | 2000 | N/A | 12,749 | SF | ||||||||||||||||||||
Loan | 54 | CVS - West Columbia, SC | 0.2% | 1 | Retail | Free-Standing | Fee | N/A | 2908 Emanuel Church Road | West Columbia | Lexington | SC | 29170 | 1998 | 2011 | 10,125 | SF |
I-2 |
APPENDIX I - CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS | |||||||||||||||||||||||||||||||||||||||||
MORTGAGED PROPERTY CHARACTERISTICS | MORTGAGE LOAN CHARACTERISTICS | ||||||||||||||||||||||||||||||||||||||||
Property Flag | Footnotes | Loan ID | Property Name | % of Initial Pool Balance | Occupancy Rate | Occupancy Rate As-of Date | Appraised Value | Appraisal As-of Date | Mortgage Rate | Administrative Fee Rate(2) | Master Servicing Fee Rate | Primary Servicing Fee Rate | Pari Passu Loan Primary Servicing Fee Rate | Trustee Fee Rate | Trust Advisor Fee Rate | CREFC Fee Rate | Interest Accrual Basis | Seasoning (mos.) | ARD (Yes/No) | Original Term to Maturity (mos.) | Remaining Term to Maturity (mos.) | ||||||||||||||||||||
Loan | 3, 4, 5, 6 | 1 | TKG 3 Retail Portfolio | 9.0% | 96.3% | $212,945,000 | 4.240% | 0.02140% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00640% | 0.00050% | Actual/360 | 1 | No | 120 | 119 | ||||||||||||||||||||||
Property | 1.01 | Riverside Center, NY | 95.6% | 3/17/2015 | $66,120,000 | 2/26/2015 | |||||||||||||||||||||||||||||||||||
Property | 1.02 | Norwichtown Commons, CT | 96.7% | 3/17/2015 | $39,600,000 | 2/23/2015 | |||||||||||||||||||||||||||||||||||
Property | 1.03 | Coral North, IA | 98.4% | 3/17/2015 | $35,200,000 | 2/6/2015 | |||||||||||||||||||||||||||||||||||
Property | 1.04 | Grant Creek Town Center, MT | 92.8% | 3/17/2015 | $32,400,000 | 2/19/2015 | |||||||||||||||||||||||||||||||||||
Property | 1.05 | Manhattan Marketplace, KS | 98.9% | 3/17/2015 | $27,000,000 | 2/19/2015 | |||||||||||||||||||||||||||||||||||
Property | 1.06 | Riverside Crossing, CO | 100.0% | 3/17/2015 | $12,625,000 | 2/13/2015 | |||||||||||||||||||||||||||||||||||
Loan | 7 | 2 | 300 South Riverside Plaza Fee | 7.6% | N/A | N/A | $229,000,000 | 11/12/2014 | 3.950% | 0.01500% | 0.00500% | 0.00000% | 0.00500% | 0.00450% | 0.00000% | 0.00050% | Actual/360 | 4 | Yes | 120 | 116 | ||||||||||||||||||||
Loan | 8 | 3 | 32 Old Slip Fee | 6.8% | N/A | N/A | $225,000,000 | 12/1/2014 | 3.708% | 0.01500% | 0.00500% | 0.00000% | 0.00500% | 0.00450% | 0.00000% | 0.00050% | Actual/360 | 2 | Yes | 120 | 118 | ||||||||||||||||||||
Loan | 6, 9, 10 | 4 | Waterfront at Port Chester | 6.0% | 95.6% | 3/1/2015 | $178,000,000 | 12/8/2014 | 4.130% | 0.01500% | 0.00500% | 0.00000% | 0.00500% | 0.00450% | 0.00000% | 0.00050% | Actual/360 | 3 | No | 120 | 117 | ||||||||||||||||||||
Loan | 11 | 5 | Alderwood Mall | 5.7% | 96.4% | 2/28/2015 | $693,500,000 | 3/17/2015 | 3.479% | 0.01500% | 0.00500% | 0.00000% | 0.00500% | 0.00450% | 0.00000% | 0.00050% | Actual/360 | 1 | No | 120 | 119 | ||||||||||||||||||||
Loan | 6 | 841-853 Broadway | 5.6% | 91.7% | 2/28/2015 | $280,000,000 | 2/1/2015 | 3.350% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 3 | No | 120 | 117 | |||||||||||||||||||||
Loan | 7 | Shoppes at Westlake Village | 5.6% | 97.6% | 4/13/2015 | $78,000,000 | 12/3/2014 | 4.200% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 2 | No | 120 | 118 | |||||||||||||||||||||
Loan | 12 | 8 | Hilton Garden Inn W 54th Street | 4.5% | 94.6% | 2/28/2015 | $251,000,000 | 11/24/2014 | 4.013% | 0.01500% | 0.00500% | 0.00000% | 0.00500% | 0.00450% | 0.00000% | 0.00050% | Actual/360 | 4 | No | 120 | 116 | ||||||||||||||||||||
Loan | 9 | Premier Apartments | 3.8% | 95.6% | 6/2/2015 | $55,700,000 | 3/19/2015 | 4.855% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 0 | No | 120 | 120 | |||||||||||||||||||||
Loan | 10 | West Valley Medical Center | 3.0% | 100.0% | 3/4/2015 | $50,250,000 | 12/30/2014 | 4.000% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 3 | No | 120 | 117 | |||||||||||||||||||||
Loan | 11 | Northeastern Apartments | 2.7% | 100.0% | 5/13/2015 | $40,000,000 | 1/15/2015 | 3.790% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 4 | No | 120 | 116 | |||||||||||||||||||||
Loan | 12 | Preferred Freezer - Vernon, CA | 2.2% | 100.0% | 3/30/2015 | $32,500,000 | 2/12/2015 | 4.220% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 2 | No | 120 | 118 | |||||||||||||||||||||
Loan | 13 | Saticoy Plaza | 2.1% | 100.0% | 6/3/2015 | $33,000,000 | 3/18/2015 | 4.370% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 0 | No | 120 | 120 | |||||||||||||||||||||
Loan | 14 | Grapevine Town Center | 2.1% | 87.5% | 3/10/2015 | $31,000,000 | 2/25/2015 | 4.155% | 0.04770% | 0.00500% | 0.03500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 1 | No | 120 | 119 | |||||||||||||||||||||
Loan | 15 | Campus Quarters | 2.0% | 94.6% | 5/12/2015 | $24,400,000 | 12/15/2014 | 4.570% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 1 | No | 84 | 83 | |||||||||||||||||||||
Loan | 16 | HSBC - Brandon, FL | 2.0% | 100.0% | 7/1/2015 | $27,500,000 | 1/29/2015 | 4.300% | 0.04770% | 0.00500% | 0.03500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 2 | No | 120 | 118 | |||||||||||||||||||||
Loan | 17 | Signature Apartments | 1.8% | 95.0% | 3/4/2015 | $26,680,000 | 2/26/2015 | 4.229% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 2 | No | 180 | 178 | |||||||||||||||||||||
Loan | 6, 13 | 18 | XL Self Storage Portfolio - Rancho Cucamonga | 1.0% | 96.9% | 4/30/2015 | $12,000,000 | 1/27/2015 | 4.590% | 0.07270% | 0.00500% | 0.06000% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 3 | No | 120 | 117 | ||||||||||||||||||||
Loan | 6, 13 | 19 | XL Self Storage Portfolio - Salt Lake City | 0.7% | 93.7% | 5/11/2015 | $8,400,000 | 1/26/2015 | 4.450% | 0.07270% | 0.00500% | 0.06000% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 3 | No | 120 | 117 | ||||||||||||||||||||
Loan | 20 | The Park on Waters | 1.7% | 97.8% | 2/24/2015 | $19,500,000 | 2/13/2015 | 4.000% | 0.05270% | 0.00500% | 0.04000% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 3 | No | 120 | 117 | |||||||||||||||||||||
Loan | 21 | Crown Valley Center | 1.5% | 92.2% | 4/1/2015 | $23,500,000 | 4/12/2015 | 4.075% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 1 | No | 120 | 119 | |||||||||||||||||||||
Loan | 22 | Homewood Suites Chester | 1.4% | 70.5% | 2/28/2015 | $18,700,000 | 1/23/2015 | 4.068% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 2 | No | 120 | 118 | |||||||||||||||||||||
Loan | 23 | Holiday Inn Express - Santa Barbara | 1.2% | 94.9% | 12/31/2014 | $22,800,000 | 1/12/2015 | 3.800% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 4 | No | 120 | 116 | |||||||||||||||||||||
Loan | 24 | San Marcos Civic Center | 1.1% | 97.1% | 2/1/2015 | $14,350,000 | 2/2/2015 | 4.080% | 0.05770% | 0.00500% | 0.04500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 2 | No | 120 | 118 | |||||||||||||||||||||
Loan | 25 | Ashleye Village Apartments | 1.1% | 95.7% | 2/12/2015 | $14,850,000 | 2/3/2015 | 3.853% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 4 | No | 120 | 116 | |||||||||||||||||||||
Loan | 26 | Oaks of Westchase | 1.1% | 98.9% | 4/14/2015 | $12,600,000 | 3/25/2015 | 4.200% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 2 | No | 120 | 118 | |||||||||||||||||||||
Loan | 27 | Holiday Inn Express & Suites Richmond | 1.0% | 60.8% | 2/28/2015 | $12,700,000 | 1/23/2015 | 4.068% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 2 | No | 120 | 118 | |||||||||||||||||||||
Loan | 28 | The Chase Bank and International Rescue Buildings | 1.0% | 100.0% | 2/28/2015 | $12,350,000 | 2/25/2015 | 3.899% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 2 | No | 120 | 118 | |||||||||||||||||||||
Loan | 29 | Longston Place | 0.9% | 97.6% | 4/1/2015 | $14,200,000 | 1/30/2015 | 4.355% | 0.07270% | 0.00500% | 0.06000% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 3 | No | 120 | 117 | |||||||||||||||||||||
Loan | 30 | Club at Springlake Apartments | 0.8% | 97.0% | 1/31/2015 | $11,430,000 | 12/19/2014 | 3.853% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 4 | No | 120 | 116 | |||||||||||||||||||||
Loan | 31 | Tate Boulevard IV | 0.8% | 100.0% | 4/1/2015 | $9,775,000 | 1/15/2015 | 4.350% | 0.07270% | 0.00500% | 0.06000% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 3 | No | 120 | 117 | |||||||||||||||||||||
Loan | 32 | Weston Town Center Shoppes | 0.8% | 96.2% | 4/1/2015 | $9,600,000 | 1/22/2015 | 4.270% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 1 | No | 120 | 119 | |||||||||||||||||||||
Loan | 33 | Gateway Centre | 0.8% | 92.6% | 1/1/2015 | $9,600,000 | 1/28/2015 | 3.925% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 3 | No | 120 | 117 | |||||||||||||||||||||
Loan | 34 | Legacy of Dalton | 0.7% | 90.5% | 2/10/2015 | $8,300,000 | 1/26/2015 | 4.250% | 0.07270% | 0.00500% | 0.06000% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 4 | No | 120 | 116 | |||||||||||||||||||||
Loan | 35 | Walgreens - Midlothian, IL | 0.7% | 100.0% | 7/1/2015 | $8,580,000 | 1/30/2015 | 4.350% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 3 | No | 120 | 117 | |||||||||||||||||||||
Loan | 36 | Stony Island Retail Center | 0.7% | 100.0% | 5/7/2015 | $8,450,000 | 1/15/2015 | 4.440% | 0.07270% | 0.00500% | 0.06000% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 2 | No | 120 | 118 | |||||||||||||||||||||
Loan | 37 | Stonebriar Shops | 0.6% | 100.0% | 1/1/2015 | $7,850,000 | 1/23/2015 | 3.995% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 4 | No | 120 | 116 | |||||||||||||||||||||
Loan | 38 | 58 E 56th Street | 0.6% | 100.0% | 4/15/2015 | $8,500,000 | 3/12/2015 | 4.300% | 0.07770% | 0.00500% | 0.06500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 2 | No | 120 | 118 | |||||||||||||||||||||
Loan | 39 | Walgreens - Birmingham | 0.6% | 100.0% | 7/1/2015 | $7,600,000 | 1/28/2015 | 4.100% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 3 | No | 120 | 117 | |||||||||||||||||||||
Loan | 40 | Holiday Inn Express Springfield | 0.6% | 64.2% | 12/31/2014 | $7,800,000 | 2/9/2015 | 4.123% | 0.05770% | 0.00500% | 0.04500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 3 | No | 120 | 117 | |||||||||||||||||||||
Loan | 41 | Chino Hills Shopping Center | 0.6% | 91.9% | 2/1/2015 | $8,300,000 | 2/10/2015 | 4.200% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 3 | No | 120 | 117 | |||||||||||||||||||||
Loan | 42 | Miramar Crossings | 0.6% | 83.9% | 3/31/2015 | $10,200,000 | 3/3/2015 | 3.800% | 0.09770% | 0.00500% | 0.08500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 2 | No | 120 | 118 | |||||||||||||||||||||
Loan | 43 | Burbank Whitsett Plaza | 0.6% | 100.0% | 3/23/2015 | $9,900,000 | 2/19/2015 | 4.350% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 1 | No | 120 | 119 | |||||||||||||||||||||
Loan | 44 | 70 Federal Street | 0.6% | 76.4% | 2/1/2015 | $24,300,000 | 2/4/2015 | 3.900% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 1 | No | 120 | 119 | |||||||||||||||||||||
Loan | 45 | Bixby Point, Long Beach | 0.5% | 88.3% | 3/13/2015 | $7,200,000 | 3/16/2015 | 4.430% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 1 | No | 120 | 119 | |||||||||||||||||||||
Loan | 46 | Douglas Park Plaza | 0.5% | 100.0% | 2/28/2015 | $8,000,000 | 4/2/2015 | 3.955% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 1 | No | 120 | 119 | |||||||||||||||||||||
Loan | 47 | Westgate Plaza | 0.4% | 100.0% | 2/1/2015 | $4,975,000 | 1/3/2015 | 4.340% | 0.08270% | 0.00500% | 0.07000% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 3 | No | 120 | 117 | |||||||||||||||||||||
Loan | 48 | Spring Green at Cinco Terrace | 0.4% | 100.0% | 3/25/2015 | $6,200,000 | 3/17/2015 | 3.920% | 0.01770% | 0.00500% | 0.00500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 2 | No | 120 | 118 | |||||||||||||||||||||
Loan | 49 | Mesquite Bluffs Apartments | 0.4% | 92.6% | 3/31/2015 | $6,150,000 | 3/2/2015 | 4.700% | 0.07770% | 0.00500% | 0.06500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 2 | No | 120 | 118 | |||||||||||||||||||||
Loan | 50 | Walgreens - Panama City Beach | 0.4% | 100.0% | 7/1/2015 | $5,000,000 | 1/16/2015 | 4.100% | 0.08270% | 0.00500% | 0.07000% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 3 | No | 120 | 117 | |||||||||||||||||||||
Loan | 51 | Vintage Pads | 0.3% | 100.0% | 2/24/2015 | $4,000,000 | 1/27/2015 | 4.393% | 0.05770% | 0.00500% | 0.04500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 3 | No | 120 | 117 | |||||||||||||||||||||
Loan | 52 | Zen Apartments | 0.3% | 96.6% | 3/2/2015 | $3,850,000 | 1/27/2015 | 4.393% | 0.05770% | 0.00500% | 0.04500% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 3 | No | 120 | 117 | |||||||||||||||||||||
Loan | 53 | Shakopee Commons | 0.2% | 100.0% | 2/20/2015 | $2,950,000 | 2/6/2015 | 4.225% | 0.09270% | 0.00500% | 0.08000% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 4 | No | 120 | 116 | |||||||||||||||||||||
Loan | 54 | CVS - West Columbia, SC | 0.2% | 100.0% | 7/1/2015 | $3,050,000 | 2/16/2015 | 4.270% | 0.08270% | 0.00500% | 0.07000% | 0.00000% | 0.00450% | 0.00270% | 0.00050% | Actual/360 | 2 | No | 120 | 118 |
I-3 |
APPENDIX I - CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS | ||||||||||||||||||||||||||||||||||||||||||
MORTGAGE LOAN CHARACTERISTICS | ||||||||||||||||||||||||||||||||||||||||||
Property Flag | Footnotes | Loan ID | Property Name | % of Initial Pool Balance | Original Interest-Only Period (mos.) | Remaining Interest-Only Period (mos.) | Original Amortization Term (mos.) | Remaining Amortization Term (mos.) | Note Date | First Payment Date | First P&I Payment Date (Partial IO Loans) | Maturity Date | ARD Loan Stated Maturity Date | Monthly Debt Service (P&I) | Monthly Debt Service (IO) | Annual Debt Service (P&I) | Annual Debt Service (IO) | Lockbox Type | Cash Management Status | Crossed With Other Loans | Related-Borrower Loans | |||||||||||||||||||||
Loan | 3, 4, 5, 6 | 1 | TKG 3 Retail Portfolio | 9.0% | 120 | 119 | 0 | 0 | 5/15/2015 | 7/1/2015 | N/A | 6/1/2025 | N/A | $0.00 | $286,592.59 | $0 | $3,439,111 | Springing | Springing | No | N/A | |||||||||||||||||||||
Property | 1.01 | Riverside Center, NY | ||||||||||||||||||||||||||||||||||||||||
Property | 1.02 | Norwichtown Commons, CT | ||||||||||||||||||||||||||||||||||||||||
Property | 1.03 | Coral North, IA | ||||||||||||||||||||||||||||||||||||||||
Property | 1.04 | Grant Creek Town Center, MT | ||||||||||||||||||||||||||||||||||||||||
Property | 1.05 | Manhattan Marketplace, KS | ||||||||||||||||||||||||||||||||||||||||
Property | 1.06 | Riverside Crossing, CO | ||||||||||||||||||||||||||||||||||||||||
Loan | 7 | 2 | 300 South Riverside Plaza Fee | 7.6% | 120 | 116 | 0 | 0 | 2/10/2015 | 4/5/2015 | N/A | 3/5/2025 | 3/5/2045 | $0.00 | $223,604.75 | $0 | $2,683,257 | Hard | Springing | No | N/A | |||||||||||||||||||||
Loan | 8 | 3 | 32 Old Slip Fee | 6.8% | 120 | 118 | 0 | 0 | 4/14/2015 | 6/5/2015 | N/A | 5/5/2025 | 5/5/2045 | $0.00 | $187,949.65 | $0 | $2,255,396 | Hard | In Place | No | N/A | |||||||||||||||||||||
Loan | 6, 9, 10 | 4 | Waterfront at Port Chester | 6.0% | 120 | 117 | 0 | 0 | 3/24/2015 | 5/1/2015 | N/A | 4/1/2025 | N/A | $0.00 | $186,686.52 | $0 | $2,240,238 | Hard | Springing | No | N/A | |||||||||||||||||||||
Loan | 11 | 5 | Alderwood Mall | 5.7% | 0 | 0 | 360 | 359 | 5/5/2015 | 7/1/2015 | N/A | 6/1/2025 | N/A | $269,134.00 | $0.00 | $3,229,608 | $0 | Hard | Springing | No | N/A | |||||||||||||||||||||
Loan | 6 | 841-853 Broadway | 5.6% | 120 | 117 | 0 | 0 | 3/10/2015 | 5/1/2015 | N/A | 4/1/2025 | N/A | $0.00 | $141,521.99 | $0 | $1,698,264 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 7 | Shoppes at Westlake Village | 5.6% | 120 | 118 | 0 | 0 | 4/15/2015 | 6/1/2015 | N/A | 5/1/2025 | N/A | $0.00 | $177,430.56 | $0 | $2,129,167 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 12 | 8 | Hilton Garden Inn W 54th Street | 4.5% | 120 | 116 | 0 | 0 | 2/6/2015 | 4/1/2015 | N/A | 3/1/2025 | N/A | $0.00 | $135,621.27 | $0 | $1,627,455 | Soft | Springing | No | N/A | |||||||||||||||||||||
Loan | 9 | Premier Apartments | 3.8% | 60 | 60 | 360 | 360 | 6/10/2015 | 8/1/2015 | 8/1/2020 | 7/1/2025 | N/A | $175,553.08 | $136,385.04 | $2,106,637 | $1,636,621 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 10 | West Valley Medical Center | 3.0% | 120 | 117 | 0 | 0 | 3/5/2015 | 5/1/2015 | N/A | 4/1/2025 | N/A | $0.00 | $91,250.00 | $0 | $1,095,000 | Springing | Springing | No | Group 1 | ||||||||||||||||||||||
Loan | 11 | Northeastern Apartments | 2.7% | 0 | 0 | 360 | 356 | 2/18/2015 | 4/1/2015 | N/A | 3/1/2025 | N/A | $113,322.04 | $0.00 | $1,359,864 | $0 | N/A | N/A | No | N/A | ||||||||||||||||||||||
Loan | 12 | Preferred Freezer - Vernon, CA | 2.2% | 120 | 118 | 0 | 0 | 5/1/2015 | 6/1/2015 | N/A | 5/1/2025 | N/A | $0.00 | $68,457.78 | $0 | $821,493 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 13 | Saticoy Plaza | 2.1% | 120 | 120 | 0 | 0 | 6/3/2015 | 8/1/2015 | N/A | 7/1/2025 | N/A | $0.00 | $70,152.66 | $0 | $841,832 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 14 | Grapevine Town Center | 2.1% | 0 | 0 | 360 | 359 | 5/7/2015 | 7/1/2015 | N/A | 6/1/2025 | N/A | $89,107.44 | $0.00 | $1,069,289 | $0 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 15 | Campus Quarters | 2.0% | 42 | 41 | 360 | 360 | 5/26/2015 | 7/1/2015 | 1/1/2019 | 6/1/2022 | N/A | $91,953.55 | $69,502.08 | $1,103,443 | $834,025 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 16 | HSBC - Brandon, FL | 2.0% | 0 | 0 | 360 | 358 | 5/1/2015 | 6/1/2015 | N/A | 5/1/2025 | N/A | $88,087.12 | $0.00 | $1,057,045 | $0 | Hard | In Place | No | N/A | ||||||||||||||||||||||
Loan | 17 | Signature Apartments | 1.8% | 0 | 0 | 180 | 178 | 4/13/2015 | 6/1/2015 | N/A | 5/1/2030 | N/A | $122,072.60 | $0.00 | $1,464,871 | $0 | N/A | N/A | No | N/A | ||||||||||||||||||||||
Loan | 6, 13 | 18 | XL Self Storage Portfolio - Rancho Cucamonga | 1.0% | 0 | 0 | 360 | 357 | 3/13/2015 | 5/1/2015 | N/A | 4/1/2025 | N/A | $46,084.22 | $0.00 | $553,011 | $0 | Soft | Springing | Yes | Group 4 | |||||||||||||||||||||
Loan | 6, 13 | 19 | XL Self Storage Portfolio - Salt Lake City | 0.7% | 0 | 0 | 360 | 357 | 3/25/2015 | 5/1/2015 | N/A | 4/1/2025 | N/A | $31,734.28 | $0.00 | $380,811 | $0 | Hard | Springing | Yes | Group 4 | |||||||||||||||||||||
Loan | 20 | The Park on Waters | 1.7% | 60 | 57 | 360 | 360 | 3/30/2015 | 5/1/2015 | 5/1/2020 | 4/1/2025 | N/A | $69,774.25 | $49,393.29 | $837,291 | $592,719 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 21 | Crown Valley Center | 1.5% | 24 | 23 | 360 | 360 | 5/27/2015 | 7/1/2015 | 7/1/2017 | 6/1/2025 | N/A | $62,627.40 | $44,758.97 | $751,529 | $537,108 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 22 | Homewood Suites Chester | 1.4% | 0 | 0 | 360 | 358 | 4/13/2015 | 6/1/2015 | N/A | 5/1/2025 | N/A | $59,686.64 | $0.00 | $716,240 | $0 | Springing | Springing | No | Group 2 | ||||||||||||||||||||||
Loan | 23 | Holiday Inn Express - Santa Barbara | 1.2% | 120 | 116 | 0 | 0 | 2/6/2015 | 4/1/2015 | N/A | 3/1/2025 | N/A | $0.00 | $33,711.81 | $0 | $404,542 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 24 | San Marcos Civic Center | 1.1% | 60 | 58 | 360 | 360 | 4/2/2015 | 6/1/2015 | 6/1/2020 | 5/1/2025 | N/A | $46,757.77 | $33,438.06 | $561,093 | $401,257 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 25 | Ashleye Village Apartments | 1.1% | 36 | 32 | 360 | 360 | 2/27/2015 | 4/1/2015 | 4/1/2018 | 3/1/2025 | N/A | $44,550.35 | $30,922.55 | $534,604 | $371,071 | Springing | Springing | No | Group 3 | ||||||||||||||||||||||
Loan | 26 | Oaks of Westchase | 1.1% | 48 | 46 | 360 | 360 | 4/30/2015 | 6/1/2015 | 6/1/2019 | 5/1/2025 | N/A | $45,723.11 | $33,179.51 | $548,677 | $398,154 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 27 | Holiday Inn Express & Suites Richmond | 1.0% | 0 | 0 | 360 | 358 | 4/13/2015 | 6/1/2015 | N/A | 5/1/2025 | N/A | $44,764.98 | $0.00 | $537,180 | $0 | Springing | Springing | No | Group 2 | ||||||||||||||||||||||
Loan | 28 | The Chase Bank and International Rescue Buildings | 1.0% | 24 | 22 | 360 | 360 | 4/7/2015 | 6/1/2015 | 6/1/2017 | 5/1/2025 | N/A | $42,209.18 | $29,483.93 | $506,510 | $353,807 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 29 | Longston Place | 0.9% | 0 | 0 | 360 | 357 | 3/10/2015 | 5/1/2015 | N/A | 4/1/2025 | N/A | $39,848.50 | $0.00 | $478,182 | $0 | Soft | In Place | No | N/A | ||||||||||||||||||||||
Loan | 30 | Club at Springlake Apartments | 0.8% | 36 | 32 | 360 | 360 | 2/27/2015 | 4/1/2015 | 4/1/2018 | 3/1/2025 | N/A | $34,840.72 | $24,183.07 | $418,089 | $290,197 | Springing | Springing | No | Group 3 | ||||||||||||||||||||||
Loan | 31 | Tate Boulevard IV | 0.8% | 0 | 0 | 360 | 357 | 4/1/2015 | 5/1/2015 | N/A | 4/1/2025 | N/A | $36,091.35 | $0.00 | $433,096 | $0 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 32 | Weston Town Center Shoppes | 0.8% | 0 | 0 | 360 | 359 | 5/7/2015 | 7/1/2015 | N/A | 6/1/2025 | N/A | $35,010.91 | $0.00 | $420,131 | $0 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 33 | Gateway Centre | 0.8% | 36 | 33 | 360 | 360 | 3/19/2015 | 5/1/2015 | 5/1/2018 | 4/1/2025 | N/A | $31,697.81 | $22,218.95 | $380,374 | $266,627 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 34 | Legacy of Dalton | 0.7% | 12 | 8 | 360 | 360 | 2/25/2015 | 4/1/2015 | 4/1/2016 | 3/1/2025 | N/A | $30,500.27 | $22,263.31 | $366,003 | $267,160 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 35 | Walgreens - Midlothian, IL | 0.7% | 0 | 0 | 360 | 357 | 3/30/2015 | 5/1/2015 | N/A | 4/1/2025 | N/A | $30,615.43 | $0.00 | $367,385 | $0 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 36 | Stony Island Retail Center | 0.7% | 12 | 10 | 360 | 360 | 4/24/2015 | 6/1/2015 | 6/1/2016 | 5/1/2025 | N/A | $30,590.09 | $22,808.44 | $367,081 | $273,701 | N/A | N/A | No | N/A | ||||||||||||||||||||||
Loan | 37 | Stonebriar Shops | 0.6% | 60 | 56 | 360 | 360 | 2/18/2015 | 4/1/2015 | 4/1/2020 | 3/1/2025 | N/A | $27,196.24 | $19,239.81 | $326,355 | $230,878 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 38 | 58 E 56th Street | 0.6% | 0 | 0 | 360 | 358 | 4/20/2015 | 6/1/2015 | N/A | 5/1/2025 | N/A | $27,871.16 | $0.00 | $334,454 | $0 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 39 | Walgreens - Birmingham | 0.6% | 24 | 21 | 360 | 360 | 3/24/2015 | 5/1/2015 | 5/1/2017 | 4/1/2025 | N/A | $26,575.91 | $19,052.66 | $318,911 | $228,632 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 40 | Holiday Inn Express Springfield | 0.6% | 0 | 0 | 360 | 357 | 3/2/2015 | 5/1/2015 | N/A | 4/1/2025 | N/A | $24,709.73 | $0.00 | $296,517 | $0 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 41 | Chino Hills Shopping Center | 0.6% | 60 | 57 | 360 | 360 | 3/30/2015 | 5/1/2015 | 5/1/2020 | 4/1/2025 | N/A | $24,450.86 | $17,743.06 | $293,410 | $212,917 | Springing | Springing | No | Group 1 | ||||||||||||||||||||||
Loan | 42 | Miramar Crossings | 0.6% | 60 | 58 | 360 | 360 | 4/29/2015 | 6/1/2015 | 6/1/2020 | 5/1/2025 | N/A | $23,297.87 | $16,053.24 | $279,574 | $192,639 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 43 | Burbank Whitsett Plaza | 0.6% | 0 | 0 | 300 | 299 | 5/14/2015 | 7/1/2015 | N/A | 6/1/2025 | N/A | $27,367.64 | $0.00 | $328,412 | $0 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 44 | 70 Federal Street | 0.6% | 0 | 0 | 300 | 299 | 5/18/2015 | 7/1/2015 | N/A | 6/1/2025 | N/A | $26,116.55 | $0.00 | $313,399 | $0 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 45 | Bixby Point, Long Beach | 0.5% | 120 | 119 | 0 | 0 | 5/8/2015 | 7/1/2015 | N/A | 6/1/2025 | N/A | $0.00 | $16,843.23 | $0 | $202,119 | Soft | Springing | No | N/A | ||||||||||||||||||||||
Loan | 46 | Douglas Park Plaza | 0.5% | 0 | 0 | 300 | 299 | 5/8/2015 | 7/1/2015 | N/A | 6/1/2025 | N/A | $21,539.57 | $0.00 | $258,475 | $0 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 47 | Westgate Plaza | 0.4% | 12 | 9 | 360 | 360 | 3/19/2015 | 5/1/2015 | 5/1/2016 | 4/1/2025 | N/A | $18,521.56 | $13,659.20 | $222,259 | $163,910 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 48 | Spring Green at Cinco Terrace | 0.4% | 0 | 0 | 360 | 358 | 4/17/2015 | 6/1/2015 | N/A | 5/1/2025 | N/A | $17,654.90 | $0.00 | $211,859 | $0 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 49 | Mesquite Bluffs Apartments | 0.4% | 0 | 0 | 360 | 358 | 4/14/2015 | 6/1/2015 | N/A | 5/1/2025 | N/A | $18,152.32 | $0.00 | $217,828 | $0 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 50 | Walgreens - Panama City Beach | 0.4% | 120 | 117 | 0 | 0 | 3/9/2015 | 5/1/2015 | N/A | 4/1/2025 | N/A | $0.00 | $12,037.82 | $0 | $144,454 | Springing | Springing | No | Group 6 | ||||||||||||||||||||||
Loan | 51 | Vintage Pads | 0.3% | 24 | 21 | 360 | 360 | 3/5/2015 | 5/1/2015 | 5/1/2017 | 4/1/2025 | N/A | $15,009.54 | $11,133.77 | $180,114 | $133,605 | N/A | N/A | No | Group 5 | ||||||||||||||||||||||
Loan | 52 | Zen Apartments | 0.3% | 24 | 21 | 360 | 360 | 3/5/2015 | 5/1/2015 | 5/1/2017 | 4/1/2025 | N/A | $13,388.51 | $9,931.32 | $160,662 | $119,176 | N/A | N/A | No | Group 5 | ||||||||||||||||||||||
Loan | 53 | Shakopee Commons | 0.2% | 24 | 20 | 360 | 360 | 2/27/2015 | 4/1/2015 | 4/1/2017 | 3/1/2025 | N/A | $10,054.79 | $7,317.95 | $120,657 | $87,815 | Springing | Springing | No | N/A | ||||||||||||||||||||||
Loan | 54 | CVS - West Columbia, SC | 0.2% | 120 | 118 | 0 | 0 | 4/7/2015 | 6/1/2015 | N/A | 5/1/2025 | N/A | $0.00 | $6,854.73 | $0 | $82,257 | Springing | Springing | No | Group 6 |
I-4 |
APPENDIX I - CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS | ||||||||||||||||||||||||||||||||||||||||
MORTGAGE LOAN CHARACTERISTICS | MORTGAGED PROPERTY UNDERWRITTEN CASH FLOWS | |||||||||||||||||||||||||||||||||||||||
Property Flag | Footnotes | Loan ID | Property Name | % of Initial Pool Balance | UW NOI DSCR (P&I) | UW NOI DSCR (IO) | UW NCF DSCR (P&I) | UW NCF DSCR (IO) | Cut-Off Date LTV Ratio | Maturity Date LTV Ratio | Grace Period to Late Charge (Days) | Grace Period to Default (Days) | Due Date | Prepayment Provisions (No. of Payments) | YM Formula | Third Most Recent Revenues | Third Most Recent Expenses | Third Most Recent NOI | Third Most Recent NOI Date | Third Most Recent NOI Debt Yield | ||||||||||||||||||||
Loan | 3, 4, 5, 6 | 1 | TKG 3 Retail Portfolio | 9.0% | N/A | 2.07x | N/A | 1.90x | 75.0% | 75.0% | 0 | 5 | First | LO(23);YM1(93);O(4) | A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||
Property | 1.01 | Riverside Center, NY | ||||||||||||||||||||||||||||||||||||||
Property | 1.02 | Norwichtown Commons, CT | ||||||||||||||||||||||||||||||||||||||
Property | 1.03 | Coral North, IA | ||||||||||||||||||||||||||||||||||||||
Property | 1.04 | Grant Creek Town Center, MT | ||||||||||||||||||||||||||||||||||||||
Property | 1.05 | Manhattan Marketplace, KS | ||||||||||||||||||||||||||||||||||||||
Property | 1.06 | Riverside Crossing, CO | ||||||||||||||||||||||||||||||||||||||
Loan | 7 | 2 | 300 South Riverside Plaza Fee | 7.6% | N/A | 1.48x | N/A | 1.48x | 72.9% | 72.9% | 0 | 1 | Fifth | LO(28);DEF(85);O(7) | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||
Loan | 8 | 3 | 32 Old Slip Fee | 6.8% | N/A | 1.28x | N/A | 1.28x | 78.2% | 78.2% | 0 | 0 | Fifth | LO(26);DEF(87);O(7) | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||
Loan | 6, 9, 10 | 4 | Waterfront at Port Chester | 6.0% | N/A | 1.70x | N/A | 1.66x | 75.0% | 75.0% | 0 | 5 | First | LO(27);DEF(88);O(5) | $12,690,898 | $2,655,741 | $10,035,157 | 12/31/2012 | 7.5% | |||||||||||||||||||||
Loan | 11 | 5 | Alderwood Mall | 5.7% | 2.34x | N/A | 2.24x | N/A | 32.7% | 21.6% | 0 | 0 | First | LO(25);DEF(88);O(7) | $37,528,421 | $8,197,087 | $29,331,334 | 12/31/2012 | 12.9% | |||||||||||||||||||||
Loan | 6 | 841-853 Broadway | 5.6% | N/A | 7.04x | N/A | 5.97x | 17.9% | 17.9% | 5 | 5 | First | LO(27);DEF(88);O(5) | $12,600,436 | $5,052,394 | $7,548,042 | 12/31/2012 | 15.1% | ||||||||||||||||||||||
Loan | 7 | Shoppes at Westlake Village | 5.6% | N/A | 1.94x | N/A | 1.85x | 64.1% | 64.1% | 5 | 5 | First | LO(26);DEF(90);O(4) | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||
Loan | 12 | 8 | Hilton Garden Inn W 54th Street | 4.5% | N/A | 2.87x | N/A | 2.64x | 61.8% | 61.8% | 0 | 5 | First | LO(28);DEF(88);O(4) | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||||||
Loan | 9 | Premier Apartments | 3.8% | 1.17x | 1.51x | 1.15x | 1.48x | 59.7% | 55.0% | 0 | 5 | First | LO(24);DEF(92);O(4) | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||
Loan | 10 | West Valley Medical Center | 3.0% | N/A | 2.56x | N/A | 2.25x | 53.7% | 53.7% | 0 | 5 | First | LO(27);DEF(87);O(6) | $3,881,742 | $1,387,029 | $2,494,713 | 12/31/2012 | 9.2% | ||||||||||||||||||||||
Loan | 11 | Northeastern Apartments | 2.7% | 1.38x | N/A | 1.37x | N/A | 60.5% | 48.1% | 0 | 5 | First | LO(28);DEF(88);O(4) | $1,945,980 | $370,670 | $1,575,310 | 12/13/2012 | 6.5% | ||||||||||||||||||||||
Loan | 12 | Preferred Freezer - Vernon, CA | 2.2% | N/A | 2.28x | N/A | 2.11x | 59.1% | 59.1% | 5 | 5 | First | LO(26);DEF(87);O(7) | $1,825,690 | $1,746 | $1,823,944 | 12/31/2012 | 9.5% | ||||||||||||||||||||||
Loan | 13 | Saticoy Plaza | 2.1% | N/A | 1.89x | N/A | 1.76x | 57.6% | 57.6% | 0 | 5 | First | LO(24);DEF(89);O(7) | $1,589,270 | $322,745 | $1,266,525 | 12/31/2012 | 6.7% | ||||||||||||||||||||||
Loan | 14 | Grapevine Town Center | 2.1% | 1.97x | N/A | 1.79x | N/A | 59.0% | 47.3% | 0 | 5 | First | LO(25);DEF(91);O(4) | $3,345,045 | $1,124,880 | $2,220,165 | 12/31/2012 | 12.1% | ||||||||||||||||||||||
Loan | 15 | Campus Quarters | 2.0% | 1.55x | 2.05x | 1.48x | 1.95x | 73.8% | 69.7% | 0 | 5 | First | LO(25);DEF/YM1(55);O(4) | B | $2,792,276 | $1,388,267 | $1,404,009 | 12/31/2013 | 7.8% | |||||||||||||||||||||
Loan | 16 | HSBC - Brandon, FL | 2.0% | 1.68x | N/A | 1.52x | N/A | 64.6% | 52.1% | 5 | 5 | First | LO(26);DEF(90);O(4) | $1,737,184 | $3,019 | $1,734,165 | 12/31/2012 | 9.8% | ||||||||||||||||||||||
Loan | 17 | Signature Apartments | 1.8% | 1.20x | N/A | 1.17x | N/A | 60.4% | 0.9% | 0 | 5 | First | LO(23);YM1(153);O(4) | C | $2,357,284 | $1,134,939 | $1,222,345 | 12/31/2012 | 7.6% | |||||||||||||||||||||
Loan | 6, 13 | 18 | XL Self Storage Portfolio - Rancho Cucamonga | 1.0% | 1.32x | N/A | 1.28x | N/A | 74.7% | 60.9% | 5 | 5 | First | LO(27);DEF(89);O(4) | $1,265,313 | $214,121 | $1,051,192 | 12/31/2012 | 9.8% | |||||||||||||||||||||
Loan | 6, 13 | 19 | XL Self Storage Portfolio - Salt Lake City | 0.7% | 1.32x | N/A | 1.28x | N/A | 74.7% | 60.9% | 0 | 5 | First | LO(27);DEF(89);O(4) | $579,024 | $135,586 | $443,438 | 12/31/2012 | 9.8% | |||||||||||||||||||||
Loan | 20 | The Park on Waters | 1.7% | 1.48x | 2.09x | 1.40x | 1.98x | 74.9% | 68.1% | 0 | 5 | First | LO(27);DEF(89);O(4) | $2,230,365 | $1,140,955 | $1,089,410 | 12/31/2012 | 7.5% | ||||||||||||||||||||||
Loan | 21 | Crown Valley Center | 1.5% | 1.85x | 2.58x | 1.75x | 2.45x | 55.3% | 46.8% | 0 | 5 | First | LO(25);DEF(91);O(4) | $1,823,798 | $426,570 | $1,397,228 | 12/31/2013 | 10.7% | ||||||||||||||||||||||
Loan | 22 | Homewood Suites Chester | 1.4% | 2.04x | N/A | 1.85x | N/A | 66.1% | 53.0% | 5 | 5 | First | LO(26);DEF(90);O(4) | $3,106,375 | $1,818,874 | $1,287,501 | 12/31/2012 | 10.4% | ||||||||||||||||||||||
Loan | 23 | Holiday Inn Express - Santa Barbara | 1.2% | N/A | 4.41x | N/A | 4.02x | 46.1% | 46.1% | 0 | 5 | First | LO(23);YM1(93);O(4) | D | $3,889,266 | $2,132,786 | $1,756,480 | 12/31/2012 | 16.7% | |||||||||||||||||||||
Loan | 24 | San Marcos Civic Center | 1.1% | 1.59x | 2.22x | 1.46x | 2.04x | 67.6% | 61.5% | 5 | 5 | First | LO(26);DEF(81);O(13) | $1,414,325 | $747,093 | $667,232 | 12/31/2012 | 6.9% | ||||||||||||||||||||||
Loan | 25 | Ashleye Village Apartments | 1.1% | 1.91x | 2.75x | 1.82x | 2.62x | 64.0% | 55.3% | 5 | 5 | First | LO(23);YM1(93);O(4) | C | $1,383,075 | $580,643 | $802,432 | 12/31/2012 | 8.4% | |||||||||||||||||||||
Loan | 26 | Oaks of Westchase | 1.1% | 1.58x | 2.17x | 1.49x | 2.06x | 74.2% | 66.2% | 0 | 5 | First | LO(26);DEF(90);O(4) | $1,455,027 | $944,500 | $510,527 | 12/31/2013 | 5.5% | ||||||||||||||||||||||
Loan | 27 | Holiday Inn Express & Suites Richmond | 1.0% | 2.08x | N/A | 1.91x | N/A | 73.0% | 58.5% | 5 | 5 | First | LO(26);DEF(90);O(4) | $2,310,561 | $1,190,230 | $1,120,331 | 12/31/2012 | 12.1% | ||||||||||||||||||||||
Loan | 28 | The Chase Bank and International Rescue Buildings | 1.0% | 1.58x | 2.27x | 1.45x | 2.07x | 72.5% | 61.0% | 5 | 5 | First | LO(26);DEF(90);O(4) | $1,246,254 | $562,597 | $683,657 | 12/31/2012 | 7.6% | ||||||||||||||||||||||
Loan | 29 | Longston Place | 0.9% | 2.16x | N/A | 2.00x | N/A | 56.1% | 45.4% | 5 | 5 | First | LO(27);DEF(89);O(4) | $1,277,859 | $243,259 | $1,034,600 | 12/31/2012 | 13.0% | ||||||||||||||||||||||
Loan | 30 | Club at Springlake Apartments | 0.8% | 1.96x | 2.82x | 1.84x | 2.65x | 65.0% | 56.2% | 5 | 5 | First | LO(23);YM1(93);O(4) | C | $1,310,989 | $638,090 | $672,899 | 12/31/2012 | 9.1% | |||||||||||||||||||||
Loan | 31 | Tate Boulevard IV | 0.8% | 1.69x | N/A | 1.47x | N/A | 73.9% | 59.8% | 0 | 5 | First | LO(24);YM1(3);DEF/YM1(89);O(4) | B | $1,176,611 | $413,499 | $763,112 | 12/31/2012 | 10.6% | |||||||||||||||||||||
Loan | 32 | Weston Town Center Shoppes | 0.8% | 1.56x | N/A | 1.45x | N/A | 73.9% | 59.5% | 5 | 5 | First | LO(25);DEF(91);O(4) | $913,735 | $403,711 | $510,024 | 12/31/2012 | 7.2% | ||||||||||||||||||||||
Loan | 33 | Gateway Centre | 0.8% | 1.84x | 2.63x | 1.66x | 2.36x | 69.8% | 60.4% | 0 | 5 | First | LO(27);DEF(89);O(4) | $1,023,824 | $313,725 | $710,099 | 12/31/2012 | 10.6% | ||||||||||||||||||||||
Loan | 34 | Legacy of Dalton | 0.7% | 1.54x | 2.10x | 1.43x | 1.96x | 74.7% | 61.8% | 5 | 5 | First | LO(23);YM1(4);DEF/YM1(89);O(4) | C | $1,226,869 | $808,542 | $418,327 | 12/31/2012 | 6.7% | |||||||||||||||||||||
Loan | 35 | Walgreens - Midlothian, IL | 0.7% | 1.24x | N/A | 1.24x | N/A | 71.4% | 57.8% | 5 | 5 | First | LO(27);DEF(89);O(4) | $471,000 | N/A | $471,000 | 12/31/2012 | 7.7% | ||||||||||||||||||||||
Loan | 36 | Stony Island Retail Center | 0.7% | 1.42x | 1.90x | 1.33x | 1.78x | 72.0% | 59.9% | 5 | 5 | First | LO(23);YM1(93);O(4) | C | $619,871 | $140,525 | $479,346 | 12/31/2012 | 7.9% | |||||||||||||||||||||
Loan | 37 | Stonebriar Shops | 0.6% | 1.70x | 2.41x | 1.65x | 2.33x | 72.6% | 66.0% | 5 | 5 | First | LO(28);DEF(88);O(4) | $709,924 | $216,711 | $493,213 | 12/31/2012 | 8.7% | ||||||||||||||||||||||
Loan | 38 | 58 E 56th Street | 0.6% | 1.20x | N/A | 1.17x | N/A | 66.1% | 53.3% | 0 | 5 | First | LO(26);DEF(90);O(4) | $451,639 | $148,998 | $302,641 | 12/31/2013 | 5.4% | ||||||||||||||||||||||
Loan | 39 | Walgreens - Birmingham | 0.6% | 1.38x | 1.93x | 1.38x | 1.92x | 72.4% | 61.3% | 5 | 5 | First | LO(27);DEF(88);O(5) | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||
Loan | 40 | Holiday Inn Express Springfield | 0.6% | 2.50x | N/A | 2.18x | N/A | 65.1% | 52.3% | 5 | 5 | First | LO(27);DEF(89);O(4) | $2,413,663 | $1,640,174 | $773,489 | 12/31/2012 | 15.2% | ||||||||||||||||||||||
Loan | 41 | Chino Hills Shopping Center | 0.6% | 1.67x | 2.30x | 1.55x | 2.13x | 60.2% | 55.0% | 5 | 5 | First | LO(27);DEF(86);O(7) | $674,751 | $208,309 | $466,442 | 12/31/2012 | 9.3% | ||||||||||||||||||||||
Loan | 42 | Miramar Crossings | 0.6% | 2.29x | 3.32x | 2.15x | 3.12x | 49.0% | 44.4% | 5 | 5 | First | LO(23);YM1(93);O(4) | C | $944,782 | $334,045 | $610,736 | 12/31/2012 | 12.2% | |||||||||||||||||||||
Loan | 43 | Burbank Whitsett Plaza | 0.6% | 1.77x | N/A | 1.55x | N/A | 50.4% | 37.0% | 5 | 5 | First | LO(25);DEF(91);O(4) | N/A | N/A | N/A | 12/31/2012 | N/A | ||||||||||||||||||||||
Loan | 44 | 70 Federal Street | 0.6% | 2.67x | N/A | 2.20x | N/A | 20.5% | 14.8% | 5 | 5 | First | LO(25);DEF(91);O(4) | $1,795,154 | $1,095,601 | $699,553 | 12/31/2012 | 14.0% | ||||||||||||||||||||||
Loan | 45 | Bixby Point, Long Beach | 0.5% | N/A | 2.04x | N/A | 1.95x | 62.5% | 62.5% | 5 | 5 | First | LO(25);DEF(90);O(5) | $519,023 | $105,524 | $413,499 | 12/31/2012 | 9.2% | ||||||||||||||||||||||
Loan | 46 | Douglas Park Plaza | 0.5% | 1.38x | N/A | 1.33x | N/A | 51.1% | 37.0% | 5 | 5 | First | LO(25);DEF(91);O(4) | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||
Loan | 47 | Westgate Plaza | 0.4% | 1.92x | 2.60x | 1.71x | 2.31x | 74.9% | 62.1% | 5 | 5 | First | LO(23);YM1(4);DEF/YM1(89);O(4) | B | $507,628 | $105,445 | $402,184 | 12/31/2012 | 10.8% | |||||||||||||||||||||
Loan | 48 | Spring Green at Cinco Terrace | 0.4% | 2.25x | N/A | 2.05x | N/A | 60.1% | 47.8% | 5 | 5 | First | LO(26);DEF(90);O(4) | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||
Loan | 49 | Mesquite Bluffs Apartments | 0.4% | 2.18x | N/A | 1.98x | N/A | 56.8% | 46.4% | 5 | 5 | First | LO(26);DEF(90);O(4) | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||
Loan | 50 | Walgreens - Panama City Beach | 0.4% | N/A | 1.95x | N/A | 1.92x | 69.5% | 69.5% | 5 | 5 | First | LO(27);DEF(89);O(4) | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||
Loan | 51 | Vintage Pads | 0.3% | 1.70x | 2.30x | 1.61x | 2.17x | 75.0% | 64.0% | 5 | 5 | First | LO(27);DEF(89);O(4) | $422,612 | $195,301 | $227,311 | 12/31/2012 | 7.6% | ||||||||||||||||||||||
Loan | 52 | Zen Apartments | 0.3% | 1.66x | 2.24x | 1.57x | 2.12x | 69.5% | 59.3% | 5 | 5 | First | LO(27);DEF(89);O(4) | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||
Loan | 53 | Shakopee Commons | 0.2% | 1.79x | 2.46x | 1.63x | 2.23x | 69.5% | 59.1% | 5 | 5 | First | LO(28);DEF(87);O(5) | $295,400 | $115,690 | $179,710 | 12/31/2012 | 8.8% | ||||||||||||||||||||||
Loan | 54 | CVS - West Columbia, SC | 0.2% | N/A | 1.97x | N/A | 1.97x | 62.3% | 62.3% | 5 | 5 | First | LO(26);DEF(90);O(4) | N/A | N/A | N/A | N/A | N/A |
I-5 |
APPENDIX I - CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS | ||||||||||||||||||||||||||||||||||||||||||||||
MORTGAGED PROPERTY UNDERWRITTEN CASH FLOWS | ||||||||||||||||||||||||||||||||||||||||||||||
Property Flag | Footnotes | Loan ID | Property Name | % of Initial Pool Balance | Second Most Recent Revenues | Second Most Recent Expenses | Second Most Recent NOI | Second Most Recent NOI Date | Second Most Recent NOI Debt Yield | Most Recent Revenues | Most Recent Expenses | Most Recent NOI | Most Recent NOI Date | Most Recent NOI Debt Yield | UW Occupancy | UW EGI | UW Expenses | UW NOI | UW NOI Debt Yield | UW Replacement Reserves | UW TI/LC | UW NCF | UW NCF Debt Yield | |||||||||||||||||||||||
Loan | 3, 4, 5, 6 | 1 | TKG 3 Retail Portfolio | 9.0% | N/A | N/A | N/A | N/A | N/A | $20,388,482 | $5,815,646 | $14,572,836 | 12/31/2014 | 9.1% | 94.4% | $21,686,289 | $7,501,483 | $14,184,806 | 8.9% | $293,535 | $843,862 | $13,047,409 | 8.2% | |||||||||||||||||||||||
Property | 1.01 | Riverside Center, NY | $6,965,520 | $2,356,726 | $4,608,794 | 12/31/2014 | 95.0% | $7,513,576 | $2,599,684 | $4,913,892 | $103,899 | $304,770 | $4,505,224 | |||||||||||||||||||||||||||||||||
Property | 1.02 | Norwichtown Commons, CT | $2,694,428 | $950,580 | $1,743,849 | 12/31/2014 | 94.1% | $3,382,612 | $1,061,085 | $2,321,526 | $65,647 | $133,315 | $2,122,565 | |||||||||||||||||||||||||||||||||
Property | 1.03 | Coral North, IA | $3,808,013 | $814,041 | $2,993,972 | 12/31/2014 | 95.0% | $4,055,985 | $1,820,488 | $2,235,497 | $31,261 | $147,968 | $2,056,267 | |||||||||||||||||||||||||||||||||
Property | 1.04 | Grant Creek Town Center, MT | $2,635,118 | $534,190 | $2,100,928 | 12/31/2014 | 90.8% | $2,615,910 | $622,459 | $1,993,451 | $63,617 | $88,083 | $1,841,750 | |||||||||||||||||||||||||||||||||
Property | 1.05 | Manhattan Marketplace, KS | $3,068,726 | $1,001,344 | $2,067,382 | 12/31/2014 | 95.0% | $3,003,062 | $1,130,319 | $1,872,743 | $22,226 | $120,020 | $1,730,497 | |||||||||||||||||||||||||||||||||
Property | 1.06 | Riverside Crossing, CO | $1,216,676 | $158,764 | $1,057,912 | 12/31/2014 | 95.0% | $1,115,144 | $267,447 | $847,698 | $6,886 | $49,706 | $791,106 | |||||||||||||||||||||||||||||||||
Loan | 7 | 2 | 300 South Riverside Plaza Fee | 7.6% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 100.0% | $9,900,000 | $0 | $9,900,000 | 5.9% | $0 | $0 | $9,900,000 | 5.9% | |||||||||||||||||||||||
Loan | 8 | 3 | 32 Old Slip Fee | 6.8% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 100.0% | $8,500,000 | $0 | $8,500,000 | 4.8% | $0 | $0 | $8,500,000 | 4.8% | |||||||||||||||||||||||
Loan | 6, 9, 10 | 4 | Waterfront at Port Chester | 6.0% | $13,069,140 | $2,557,288 | $10,511,852 | 12/31/2013 | 7.9% | $12,418,420 | $2,668,847 | $9,749,573 | 12/31/2014 | 7.3% | 95.2% | $12,546,407 | $3,023,714 | $9,522,693 | 7.1% | $52,632 | $168,423 | $9,301,637 | 7.0% | |||||||||||||||||||||||
Loan | 11 | 5 | Alderwood Mall | 5.7% | $39,585,451 | $7,941,621 | $31,643,830 | 12/31/2013 | 14.0% | $40,058,601 | $7,890,005 | $32,168,596 | 2/28/2015 TTM | 14.2% | 100.0% | $41,736,151 | $7,605,321 | $34,130,830 | 15.1% | $86,356 | $1,434,194 | $32,610,281 | 14.4% | |||||||||||||||||||||||
Loan | 6 | 841-853 Broadway | 5.6% | $10,868,533 | $5,604,939 | $5,263,594 | 12/31/2013 | 10.5% | $9,951,876 | $5,994,949 | $3,956,927 | 12/31/2014 | 7.9% | 90.2% | $18,726,559 | $6,773,389 | $11,953,170 | 23.9% | $52,863 | $1,760,338 | $10,139,969 | 20.3% | ||||||||||||||||||||||||
Loan | 7 | Shoppes at Westlake Village | 5.6% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 95.0% | $5,253,660 | $1,114,623 | $4,139,036 | 8.3% | $15,924 | $187,197 | $3,935,915 | 7.9% | ||||||||||||||||||||||||
Loan | 12 | 8 | Hilton Garden Inn W 54th Street | 4.5% | $31,834,953 | $15,268,197 | $16,566,756 | 12/31/2014 | 10.7% | $34,204,812 | $17,349,472 | $16,855,340 | 2/28/2015 TTM | 10.9% | 94.6% | $36,508,694 | $18,395,077 | $18,113,617 | 11.7% | $1,460,348 | $0 | $16,653,269 | 10.7% | |||||||||||||||||||||||
Loan | 9 | Premier Apartments | 3.8% | N/A | N/A | N/A | N/A | N/A | $2,600,937 | $2,023,289 | $577,648 | 4/30/2015 TTM | 1.7% | 95.0% | $3,784,945 | $1,321,096 | $2,463,849 | 7.4% | $36,000 | $0 | $2,427,849 | 7.3% | ||||||||||||||||||||||||
Loan | 10 | West Valley Medical Center | 3.0% | $3,851,298 | $1,358,961 | $2,492,337 | 12/31/2013 | 9.2% | $4,150,037 | $1,473,511 | $2,676,526 | 12/31/2014 | 9.9% | 94.9% | $4,357,512 | $1,555,453 | $2,802,059 | 10.4% | $20,570 | $320,889 | $2,460,601 | 9.1% | ||||||||||||||||||||||||
Loan | 11 | Northeastern Apartments | 2.7% | $2,103,300 | $385,709 | $1,717,591 | 12/31/2013 | 7.1% | $2,339,963 | $410,768 | $1,929,195 | 12/31/2014 | 8.0% | 95.0% | $2,320,398 | $439,336 | $1,881,062 | 7.8% | $24,600 | $0 | $1,856,462 | 7.7% | ||||||||||||||||||||||||
Loan | 12 | Preferred Freezer - Vernon, CA | 2.2% | $1,825,690 | $1,833 | $1,823,857 | 12/31/2013 | 9.5% | $1,825,690 | $7,087 | $1,818,603 | 12/31/2014 | 9.5% | 95.0% | $2,174,435 | $300,906 | $1,873,529 | 9.8% | $22,280 | $116,390 | $1,734,860 | 9.0% | ||||||||||||||||||||||||
Loan | 13 | Saticoy Plaza | 2.1% | $1,504,073 | $329,768 | $1,174,305 | 12/31/2013 | 6.2% | $1,750,545 | $340,712 | $1,409,833 | 12/31/2014 | 7.4% | 95.0% | $2,100,152 | $511,979 | $1,588,173 | 8.4% | $15,297 | $95,399 | $1,477,476 | 7.8% | ||||||||||||||||||||||||
Loan | 14 | Grapevine Town Center | 2.1% | $3,171,286 | $1,236,171 | $1,935,115 | 12/31/2013 | 10.6% | $3,184,471 | $1,030,520 | $2,153,951 | 2/28/2015 TTM | 11.8% | 84.7% | $3,228,474 | $1,119,012 | $2,109,462 | 11.5% | $36,840 | $161,463 | $1,911,159 | 10.4% | ||||||||||||||||||||||||
Loan | 15 | Campus Quarters | 2.0% | $2,958,094 | $1,557,595 | $1,400,499 | 12/31/2014 | 7.8% | $3,209,026 | $1,482,603 | $1,726,423 | 4/30/2015 TTM | 9.6% | 93.0% | $3,263,200 | $1,556,243 | $1,706,957 | 9.5% | $78,300 | $0 | $1,628,657 | 9.0% | ||||||||||||||||||||||||
Loan | 16 | HSBC - Brandon, FL | 2.0% | $1,603,552 | $5,933 | $1,597,619 | 12/31/2013 | 9.0% | $1,715,448 | $6,869 | $1,708,579 | 12/31/2014 | 9.6% | 95.0% | $2,818,121 | $1,037,694 | $1,780,427 | 10.0% | $24,463 | $151,884 | $1,604,080 | 9.0% | ||||||||||||||||||||||||
Loan | 17 | Signature Apartments | 1.8% | $2,481,029 | $1,078,692 | $1,402,337 | 12/31/2013 | 8.7% | $2,789,000 | $1,064,251 | $1,724,749 | 12/31/2014 | 10.7% | 95.0% | $2,875,179 | $1,113,487 | $1,761,692 | 10.9% | $50,250 | $0 | $1,711,442 | 10.6% | ||||||||||||||||||||||||
Loan | 6, 13 | 18 | XL Self Storage Portfolio - Rancho Cucamonga | 1.0% | $1,288,766 | $223,819 | $1,064,947 | 12/31/2013 | 10.4% | $994,811 | $204,937 | $789,874 | 12/31/2014 | 8.9% | 95.0% | $989,493 | $284,264 | $705,229 | 8.1% | $18,137 | $0 | $687,092 | 7.9% | |||||||||||||||||||||||
Loan | 6, 13 | 19 | XL Self Storage Portfolio - Salt Lake City | 0.7% | $666,266 | $141,500 | $524,766 | 12/31/2013 | 10.4% | $703,495 | $144,031 | $559,464 | 12/31/2014 | 8.9% | 90.7% | $703,497 | $175,620 | $527,877 | 8.1% | $17,049 | $0 | $510,829 | 7.9% | |||||||||||||||||||||||
Loan | 20 | The Park on Waters | 1.7% | $2,309,781 | $1,127,345 | $1,182,436 | 12/31/2013 | 8.1% | $2,423,530 | $1,158,431 | $1,265,099 | 12/31/2014 | 8.7% | 95.0% | $2,495,512 | $1,255,613 | $1,239,898 | 8.5% | $66,750 | $0 | $1,173,148 | 8.0% | ||||||||||||||||||||||||
Loan | 21 | Crown Valley Center | 1.5% | $1,890,903 | $451,926 | $1,438,977 | 12/31/2014 | 11.1% | $1,889,451 | $435,170 | $1,454,281 | 3/31/2015 TTM | 11.2% | 89.9% | $1,821,342 | $433,754 | $1,387,588 | 10.7% | $6,775 | $62,279 | $1,318,534 | 10.1% | ||||||||||||||||||||||||
Loan | 22 | Homewood Suites Chester | 1.4% | $2,891,239 | $1,833,517 | $1,057,722 | 12/31/2013 | 8.6% | $3,303,199 | $1,845,600 | $1,457,599 | 2/28/2015 TTM | 11.8% | 70.5% | $3,303,199 | $1,845,600 | $1,457,599 | 11.8% | $132,128 | $0 | $1,325,471 | 10.7% | ||||||||||||||||||||||||
Loan | 23 | Holiday Inn Express - Santa Barbara | 1.2% | $4,006,419 | $2,146,570 | $1,859,849 | 12/31/2013 | 17.7% | $4,233,443 | $2,255,335 | $1,978,108 | 12/31/2014 | 18.8% | 89.0% | $3,969,587 | $2,185,670 | $1,783,917 | 17.0% | $158,783 | $0 | $1,625,134 | 15.5% | ||||||||||||||||||||||||
Loan | 24 | San Marcos Civic Center | 1.1% | $2,119,580 | $968,443 | $1,151,137 | 12/31/2013 | 11.9% | $2,016,176 | $1,006,819 | $1,009,358 | 12/31/2014 | 10.4% | 92.4% | $1,962,526 | $1,071,898 | $890,628 | 9.2% | $9,083 | $64,185 | $817,360 | 8.4% | ||||||||||||||||||||||||
Loan | 25 | Ashleye Village Apartments | 1.1% | $1,488,385 | $551,753 | $936,632 | 12/31/2013 | 9.9% | $1,546,640 | $552,061 | $994,579 | 12/31/2014 | 10.5% | 94.5% | $1,596,443 | $576,754 | $1,019,689 | 10.7% | $46,000 | $0 | $973,689 | 10.2% | ||||||||||||||||||||||||
Loan | 26 | Oaks of Westchase | 1.1% | $1,764,198 | $933,746 | $830,452 | 12/31/2014 | 8.9% | $1,782,656 | $947,859 | $834,797 | 2/28/2015 TTM | 8.9% | 93.5% | $1,835,166 | $970,487 | $864,679 | 9.2% | $45,500 | $0 | $819,179 | 8.8% | ||||||||||||||||||||||||
Loan | 27 | Holiday Inn Express & Suites Richmond | 1.0% | $2,128,146 | $1,190,031 | $938,115 | 12/31/2013 | 10.1% | $2,403,450 | $1,283,590 | $1,119,860 | 2/28/2015 TTM | 12.1% | 60.8% | $2,403,450 | $1,283,590 | $1,119,860 | 12.1% | $96,138 | $0 | $1,023,722 | 11.0% | ||||||||||||||||||||||||
Loan | 28 | The Chase Bank and International Rescue Buildings | 1.0% | $1,326,088 | $524,941 | $801,147 | 12/31/2013 | 9.0% | $1,389,661 | $534,947 | $854,714 | 12/31/2014 | 9.5% | 95.0% | $1,405,246 | $603,283 | $801,963 | 9.0% | $12,451 | $56,737 | $732,774 | 8.2% | ||||||||||||||||||||||||
Loan | 29 | Longston Place | 0.9% | $1,040,132 | $231,938 | $808,193 | 12/31/2013 | 10.1% | $1,310,538 | $194,926 | $1,115,612 | 12/31/2014 | 14.0% | 95.0% | $1,319,127 | $287,249 | $1,031,878 | 12.9% | $9,982 | $65,886 | $956,010 | 12.0% | ||||||||||||||||||||||||
Loan | 30 | Club at Springlake Apartments | 0.8% | $1,402,569 | $643,045 | $759,524 | 12/31/2013 | 10.2% | $1,493,019 | $677,470 | $815,549 | 12/31/2014 | 11.0% | 93.4% | $1,537,379 | $718,706 | $818,673 | 11.0% | $50,000 | $0 | $768,673 | 10.3% | ||||||||||||||||||||||||
Loan | 31 | Tate Boulevard IV | 0.8% | $1,132,710 | $422,636 | $710,074 | 12/31/2013 | 9.8% | $1,194,533 | $419,486 | $775,047 | 12/31/2014 | 10.7% | 95.0% | $1,159,855 | $430,041 | $729,814 | 10.1% | $13,978 | $79,953 | $635,883 | 8.8% | ||||||||||||||||||||||||
Loan | 32 | Weston Town Center Shoppes | 0.8% | $1,001,374 | $396,260 | $605,114 | 12/31/2013 | 8.5% | $997,243 | $420,234 | $577,009 | 12/31/2014 | 8.1% | 93.0% | $1,086,675 | $430,459 | $656,216 | 9.3% | $7,174 | $38,304 | $610,738 | 8.6% | ||||||||||||||||||||||||
Loan | 33 | Gateway Centre | 0.8% | $1,022,196 | $276,518 | $745,678 | 12/31/2013 | 11.1% | $1,016,365 | $304,035 | $712,329 | 12/31/2014 | 10.6% | 92.1% | $1,061,403 | $359,859 | $701,544 | 10.5% | $6,055 | $65,876 | $629,613 | 9.4% | ||||||||||||||||||||||||
Loan | 34 | Legacy of Dalton | 0.7% | $1,299,395 | $731,230 | $568,165 | 12/31/2013 | 9.2% | $1,322,500 | $779,493 | $543,007 | 12/31/2014 | 8.8% | 92.5% | $1,323,393 | $761,355 | $562,038 | 9.1% | $39,500 | $0 | $522,538 | 8.4% | ||||||||||||||||||||||||
Loan | 35 | Walgreens - Midlothian, IL | 0.7% | $471,000 | N/A | $471,000 | 12/31/2013 | 7.7% | $471,000 | N/A | $471,000 | 12/31/2014 | 7.7% | 100.0% | $471,000 | $14,130 | $456,870 | 7.5% | $2,223 | $0 | $454,647 | 7.4% | ||||||||||||||||||||||||
Loan | 36 | Stony Island Retail Center | 0.7% | $625,826 | $157,870 | $467,956 | 12/31/2013 | 7.7% | $691,503 | $154,587 | $536,916 | 12/31/2014 | 8.8% | 95.0% | $730,631 | $210,713 | $519,918 | 8.6% | $4,400 | $27,572 | $487,946 | 8.0% | ||||||||||||||||||||||||
Loan | 37 | Stonebriar Shops | 0.6% | $757,991 | $225,517 | $532,474 | 12/31/2013 | 9.3% | $801,173 | $226,710 | $574,463 | 12/31/2014 | 10.1% | 95.0% | $787,179 | $231,309 | $555,870 | 9.8% | $5,618 | $11,713 | $538,539 | 9.4% | ||||||||||||||||||||||||
Loan | 38 | 58 E 56th Street | 0.6% | $514,623 | $154,906 | $359,717 | 12/31/2014 | 6.4% | $552,127 | $171,713 | $380,413 | 3/1/2015 TTM | 6.8% | 95.0% | $571,696 | $171,259 | $400,437 | 7.1% | $1,852 | $7,588 | $390,997 | 7.0% | ||||||||||||||||||||||||
Loan | 39 | Walgreens - Birmingham | 0.6% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 100.0% | $492,342 | $50,701 | $441,641 | 8.0% | $2,174 | $0 | $439,468 | 8.0% | ||||||||||||||||||||||||
Loan | 40 | Holiday Inn Express Springfield | 0.6% | $2,282,652 | $1,600,477 | $682,175 | 12/31/2013 | 13.4% | $2,358,658 | $1,616,519 | $742,139 | 12/31/2014 | 14.6% | 64.2% | $2,358,658 | $1,617,048 | $741,610 | 14.6% | $94,346 | $0 | $647,264 | 12.7% | ||||||||||||||||||||||||
Loan | 41 | Chino Hills Shopping Center | 0.6% | $649,905 | $187,809 | $462,096 | 12/31/2013 | 9.2% | $666,991 | $163,929 | $503,062 | 12/31/2014 | 10.1% | 88.7% | $725,486 | $236,130 | $489,356 | 9.8% | $5,634 | $29,671 | $454,051 | 9.1% | ||||||||||||||||||||||||
Loan | 42 | Miramar Crossings | 0.6% | $961,815 | $302,834 | $658,981 | 12/31/2013 | 13.2% | $927,854 | $310,504 | $617,350 | 2/28/2015 | 12.3% | 85.0% | $955,970 | $317,062 | $638,909 | 12.8% | $4,483 | $34,039 | $600,387 | 12.0% | ||||||||||||||||||||||||
Loan | 43 | Burbank Whitsett Plaza | 0.6% | $710,279 | $188,993 | $521,286 | 12/31/2013 T-7 Ann. | 10.4% | $800,021 | $212,265 | $587,756 | 12/31/2014 | 11.8% | 95.0% | $802,012 | $219,784 | $582,227 | 11.7% | $8,285 | $65,882 | $508,061 | 10.2% | ||||||||||||||||||||||||
Loan | 44 | 70 Federal Street | 0.6% | $1,875,920 | $982,660 | $893,260 | 12/31/2013 | 17.9% | $1,973,902 | $954,359 | $1,019,543 | 12/31/2014 | 20.4% | 76.0% | $1,893,230 | $1,055,099 | $838,131 | 16.8% | $13,660 | $134,114 | $690,357 | 13.8% | ||||||||||||||||||||||||
Loan | 45 | Bixby Point, Long Beach | 0.5% | $525,751 | $125,887 | $399,864 | 12/31/2013 | 8.9% | $550,448 | $127,708 | $422,740 | 12/31/2014 | 9.4% | 90.1% | $538,992 | $126,379 | $412,613 | 9.2% | $1,134 | $17,122 | $394,357 | 8.8% | ||||||||||||||||||||||||
Loan | 46 | Douglas Park Plaza | 0.5% | N/A | N/A | N/A | N/A | N/A | $358,132 | $109,508 | $248,624 | 12/31/2014 | 6.1% | 95.0% | $564,130 | $206,356 | $357,774 | 8.7% | $1,190 | $13,185 | $343,399 | 8.4% | ||||||||||||||||||||||||
Loan | 47 | Westgate Plaza | 0.4% | $388,576 | $143,912 | $244,664 | 12/31/2013 | 6.6% | $470,637 | $155,504 | $315,133 | 12/31/2014 | 8.5% | 93.0% | $567,054 | $140,116 | $426,937 | 11.5% | $7,682 | $39,945 | $379,310 | 10.2% | ||||||||||||||||||||||||
Loan | 48 | Spring Green at Cinco Terrace | 0.4% | $429,629 | $162,365 | $267,264 | 12/31/2014 | 7.2% | $492,101 | $163,511 | $328,590 | 2/28/2015 TTM | 8.8% | 95.0% | $669,622 | $193,953 | $475,669 | 12.8% | $2,835 | $37,989 | $434,845 | 11.7% | ||||||||||||||||||||||||
Loan | 49 | Mesquite Bluffs Apartments | 0.4% | $684,152 | $463,219 | $220,933 | 12/31/2013 | 6.3% | $825,692 | $437,985 | $387,707 | 12/31/2014 | 11.1% | 90.0% | $914,975 | $440,129 | $474,846 | 13.6% | $44,000 | $0 | $430,846 | 12.3% | ||||||||||||||||||||||||
Loan | 50 | Walgreens - Panama City Beach | 0.4% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 100.0% | $290,854 | $8,726 | $282,128 | 8.1% | $4,376 | $0 | $277,752 | 8.0% | ||||||||||||||||||||||||
Loan | 51 | Vintage Pads | 0.3% | $469,875 | $220,672 | $249,202 | 12/31/2013 | 8.3% | $525,294 | $251,324 | $273,970 | 1/31/2015 TTM | 9.1% | 95.0% | $559,383 | $252,591 | $306,792 | 10.2% | $17,500 | $0 | $289,292 | 9.6% | ||||||||||||||||||||||||
Loan | 52 | Zen Apartments | 0.3% | $382,487 | $201,152 | $181,335 | 12/31/2013 T-8 (Ann.) | 6.8% | $413,525 | $241,085 | $172,440 | 1/31/2015 TTM | 6.4% | 92.5% | $508,915 | $241,988 | $266,927 | 10.0% | $14,500 | $0 | $252,427 | 9.4% | ||||||||||||||||||||||||
Loan | 53 | Shakopee Commons | 0.2% | $321,728 | $108,607 | $213,121 | 12/31/2013 | 10.4% | $364,625 | $139,494 | $225,131 | 12/31/2014 | 11.0% | 94.5% | $341,328 | $125,735 | $215,593 | 10.5% | $3,445 | $15,908 | $196,240 | 9.6% | ||||||||||||||||||||||||
Loan | 54 | CVS - West Columbia, SC | 0.2% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | 100.0% | $167,000 | $5,010 | $161,990 | 8.5% | $0 | $0 | $161,990 | 8.5% |
I-6 |
APPENDIX I - CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS | ||||||||||||||||||||||||||||||||
LARGEST TENANT INFORMATION | 2ND LARGEST TENANT INFORMATION | 3RD LARGEST TENANT INFORMATION | ||||||||||||||||||||||||||||||
Property Flag | Footnotes | Loan ID | Property Name | % of Initial Pool Balance | Largest Tenant | Largest Tenant Lease Expiration | Largest Tenant NSF | Largest Tenant % of NSF | 2nd Largest Tenant | 2nd Largest Tenant Lease Expiration | 2nd Largest Tenant NSF | 2nd Largest Tenant % of NSF | 3rd Largest Tenant | 3rd Largest Tenant Lease Expiration | 3rd Largest Tenant NSF | 3rd Largest Tenant % of NSF | ||||||||||||||||
Loan | 3, 4, 5, 6 | 1 | TKG 3 Retail Portfolio | 9.0% | ||||||||||||||||||||||||||||
Property | 1.01 | Riverside Center, NY | Walmart | 2/28/2020 | 204,235 | 29.5% | Lowe’s | 11/30/2027 | 130,019 | 18.8% | BJ’s Wholesale Club | 1/31/2019 | 114,489 | 16.5% | ||||||||||||||||||
Property | 1.02 | Norwichtown Commons, CT | Stop & Shop | 2/28/2023 | 73,239 | 43.4% | Big Lots | 1/31/2021 | 33,494 | 19.8% | Planet Fitness | 9/30/2034 | 17,000 | 10.1% | ||||||||||||||||||
Property | 1.03 | Coral North, IA | Gordmans | 2/28/2018 | 50,071 | 24.0% | TJ Maxx | 5/31/2021 | 25,000 | 12.0% | Bed Bath & Beyond | 1/31/2019 | 23,028 | 11.0% | ||||||||||||||||||
Property | 1.04 | Grant Creek Town Center, MT | Ross | 1/31/2018 | 29,974 | 18.3% | TJ Maxx | 4/30/2017 | 28,000 | 17.1% | REI | 5/31/2020 | 23,535 | 14.4% | ||||||||||||||||||
Property | 1.05 | Manhattan Marketplace, KS | Dick’s Sporting Goods | 1/31/2022 | 45,000 | 30.4% | Best Buy | 1/31/2017 | 30,000 | 20.2% | Bed Bath & Beyond | 1/31/2020 | 20,000 | 13.5% | ||||||||||||||||||
Property | 1.06 | Riverside Crossing, CO | Grand International Buffet | 9/30/2018 | 8,045 | 23.0% | USA Recruiting | 10/31/2017 | 4,949 | 14.1% | Verizon Wireless | 12/31/2017 | 4,108 | 11.7% | ||||||||||||||||||
Loan | 7 | 2 | 300 South Riverside Plaza Fee | 7.6% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||
Loan | 8 | 3 | 32 Old Slip Fee | 6.8% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||
Loan | 6, 9, 10 | 4 | Waterfront at Port Chester | 6.0% | Super Stop & Shop | 8/31/2030 | 70,216 | 20.1% | AMC Loews Theater | 12/31/2030 | 70,000 | 20.0% | Bed Bath & Beyond | 1/31/2022 | 36,068 | 10.3% | ||||||||||||||||
Loan | 11 | 5 | Alderwood Mall | 5.7% | Loews Cineplex | 12/31/2025 | 79,330 | 13.8% | REI | 1/31/2020 | 25,543 | 4.4% | Forever 21 | 1/31/2022 | 24,320 | 4.2% | ||||||||||||||||
Loan | 6 | 841-853 Broadway | 5.6% | Centro, Inc | 8/31/2025 | 26,234 | 10.5% | Capital One | 8/31/2025 | 15,990 | 6.4% | Chelsea Hotels Management | 7/31/2025 | 13,292 | 5.3% | |||||||||||||||||
Loan | 7 | Shoppes at Westlake Village | 5.6% | Total Woman Gym + Spa | 7/31/2029 | 13,591 | 12.9% | Guitar Center | 4/29/2025 | 9,397 | 8.9% | Tilly’s | 3/30/2025 | 9,066 | 8.6% | |||||||||||||||||
Loan | 12 | 8 | Hilton Garden Inn W 54th Street | 4.5% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||
Loan | 9 | Premier Apartments | 3.8% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
Loan | 10 | West Valley Medical Center | 3.0% | Prime Surgical Affiliates | 5/15/2025 | 9,047 | 8.8% | Radnet Management | 9/30/2018 | 7,090 | 6.9% | Keith Brookenthal M.D. | 12/31/2024 | 7,054 | 6.8% | |||||||||||||||||
Loan | 11 | Northeastern Apartments | 2.7% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
Loan | 12 | Preferred Freezer - Vernon, CA | 2.2% | Preferred Freezer | 6/30/2030 | 103,000 | 100.0% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
Loan | 13 | Saticoy Plaza | 2.1% | Rite Aid | 5/31/2017 | 17,200 | 27.9% | House of Champions | 8/31/2025 | 6,254 | 10.2% | Chase Bank | 11/30/2023 | 5,850 | 9.5% | |||||||||||||||||
Loan | 14 | Grapevine Town Center | 2.1% | Office Depot | 8/31/2020 | 30,845 | 14.9% | Big Lots | 1/31/2020 | 30,390 | 14.7% | Ross Dress for Less | 1/31/2019 | 28,400 | 13.7% | |||||||||||||||||
Loan | 15 | Campus Quarters | 2.0% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
Loan | 16 | HSBC - Brandon, FL | 2.0% | HSBC Card Services, Inc. | 6/30/2020 | 120,543 | 100.0% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
Loan | 17 | Signature Apartments | 1.8% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
Loan | 6, 13 | 18 | XL Self Storage Portfolio - Rancho Cucamonga | 1.0% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||
Loan | 6, 13 | 19 | XL Self Storage Portfolio - Salt Lake City | 0.7% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||
Loan | 20 | The Park on Waters | 1.7% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
Loan | 21 | Crown Valley Center | 1.5% | DaVita, Inc. | 8/2/2018 | 10,000 | 23.6% | Palm Beach Tan | 8/4/2016 | 3,500 | 8.3% | One West bank | 3/17/2024 | 3,010 | 7.1% | |||||||||||||||||
Loan | 22 | Homewood Suites Chester | 1.4% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
Loan | 23 | Holiday Inn Express - Santa Barbara | 1.2% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
Loan | 24 | San Marcos Civic Center | 1.1% | LA Fitness | 7/31/2022 | 43,000 | 71.0% | Pizza Nova | 12/31/2018 | 3,618 | 6.0% | FedEx Kinko’s | 7/31/2016 | 1,801 | 3.0% | |||||||||||||||||
Loan | 25 | Ashleye Village Apartments | 1.1% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
Loan | 26 | Oaks of Westchase | 1.1% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
Loan | 27 | Holiday Inn Express & Suites Richmond | 1.0% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
Loan | 28 | The Chase Bank and International Rescue Buildings | 1.0% | Chase Bank | 3/14/2021 | 6,810 | 15.0% | Lanair Group, LLC | 8/31/2016 | 6,702 | 14.8% | Gamblit Gaming | 11/30/2015 | 6,702 | 14.8% | |||||||||||||||||
Loan | 29 | Longston Place | 0.9% | Regal Cinemas | 5/19/2019 | 47,552 | 71.5% | Buffalo Wild Wings (ground lease) | 11/30/2022 | 6,000 | 9.0% | IHOP | 7/31/2022 | 4,875 | 7.3% | |||||||||||||||||
Loan | 30 | Club at Springlake Apartments | 0.8% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
Loan | 31 | Tate Boulevard IV | 0.8% | Catawba Women’s Center | 3/31/2020 | 18,736 | 33.5% | Catawba Valley Medical Center - Imaging | 12/31/2024 | 15,398 | 27.5% | Catawba Valley Medical Center - Non Imaging | 12/31/2024 | 8,098 | 14.5% | |||||||||||||||||
Loan | 32 | Weston Town Center Shoppes | 0.8% | True Value Hardware | 1/28/2020 | 4,897 | 13.6% | Weston Learning Academy | 8/31/2020 | 4,000 | 11.1% | Nudu & Associates Inc. | 7/31/2020 | 2,500 | 6.9% | |||||||||||||||||
Loan | 33 | Gateway Centre | 0.8% | Bone Fish Grill | 2/28/2020 | 5,932 | 16.0% | Body & Soul | 4/30/2019 | 3,200 | 8.6% | One Investment Group | 8/31/2025 | 3,000 | 8.1% | |||||||||||||||||
Loan | 34 | Legacy of Dalton | 0.7% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
Loan | 35 | Walgreens - Midlothian, IL | 0.7% | Walgreens | 5/31/2033 | 14,820 | 100.0% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
Loan | 36 | Stony Island Retail Center | 0.7% | Dollar Tree | 5/31/2025 | 16,128 | 55.0% | DaVita Inc | 2/28/2029 | 11,204 | 38.2% | Dunkin Donuts | 10/31/2024 | 2,000 | 6.8% | |||||||||||||||||
Loan | 37 | Stonebriar Shops | 0.6% | Casual Living | 10/31/2018 | 15,024 | 40.1% | Texas Republic Bank | 6/30/2017 | 8,214 | 21.9% | Peeks Carpet | 1/31/2020 | 7,916 | 21.1% | |||||||||||||||||
Loan | 38 | 58 E 56th Street | 0.6% | Roast Kitchen | 1/31/2029 | 4,016 | 51.4% | MultiFamily | Various | 3,794 | 48.6% | N/A | N/A | N/A | N/A | |||||||||||||||||
Loan | 39 | Walgreens - Birmingham | 0.6% | Walgreens | 8/31/2027 | 14,490 | 100.0% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
Loan | 40 | Holiday Inn Express Springfield | 0.6% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
Loan | 41 | Chino Hills Shopping Center | 0.6% | Line Drive Baseball/Softball Academy | 1/31/2019 | 12,696 | 33.8% | Shamrock Pub and Restaurant | 12/31/2019 | 5,388 | 14.3% | API Prep. Institute | 2/28/2019 | 2,250 | 6.0% | |||||||||||||||||
Loan | 42 | Miramar Crossings | 0.6% | Precious Years Christian Learning Center | 9/30/2023 | 6,000 | 20.1% | IHOP | 5/31/2020 | 3,600 | 12.0% | Dickey’s Barbecue Pit | 6/16/2021 | 2,400 | 8.0% | |||||||||||||||||
Loan | 43 | Burbank Whitsett Plaza | 0.6% | Cambridge Farms Market | 3/28/2028 | 25,000 | 63.4% | 7 Days Food Store | 7/31/2016 (2,550 SF); 8/31/2018 (900 SF) | 3,450 | 8.7% | El Pollo Loco | 6/30/2017 | 2,080 | 5.3% | |||||||||||||||||
Loan | 44 | 70 Federal Street | 0.6% | Fidelity | 1/31/2022 | 22,342 | 36.0% | Massachusettes Housing | 9/30/2017 | 8,957 | 14.4% | Cabot Wellington | 7/31/2016 | 5,985 | 9.6% | |||||||||||||||||
Loan | 45 | Bixby Point, Long Beach | 0.5% | Wells Fargo (First Bank) | 5/31/2018 | 3,557 | 31.4% | The Factory | 10/31/2019 | 1,891 | 16.7% | FedEx Kinko’s | 3/31/2020 | 1,763 | 15.5% | |||||||||||||||||
Loan | 46 | Douglas Park Plaza | 0.5% | Habit Burger Grill | 2/28/2024 | 2,606 | 28.5% | California Fish Grill | 10/31/2024 | 2,428 | 26.5% | Starbucks | 7/31/2023 | 1,676 | 18.3% | |||||||||||||||||
Loan | 47 | Westgate Plaza | 0.4% | Badcock Furniture | 4/11/2023 | 19,792 | 38.6% | Gold’s Gym | 4/30/2020 | 10,901 | 21.3% | Sleepy’s | 11/30/2020 | 8,119 | 15.9% | |||||||||||||||||
Loan | 48 | Spring Green at Cinco Terrace | 0.4% | Lights & Things | 1/31/2019 | 4,200 | 22.2% | Texas Childrens Urgent Care | 5/31/2024 | 2,800 | 14.8% | Drystyle (Blowpink) | 12/31/2021 | 2,800 | 14.8% | |||||||||||||||||
Loan | 49 | Mesquite Bluffs Apartments | 0.4% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
Loan | 50 | Walgreens - Panama City Beach | 0.4% | Walgreens | 1/31/2030 | 15,120 | 100.0% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
Loan | 51 | Vintage Pads | 0.3% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
Loan | 52 | Zen Apartments | 0.3% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |||||||||||||||||
Loan | 53 | Shakopee Commons | 0.2% | Von Hanson Meats | 2/28/2017 | 3,220 | 25.3% | Caribou Coffee | 10/31/2023 | 1,900 | 14.9% | USA Karate | 9/30/2018 | 1,890 | 14.8% | |||||||||||||||||
Loan | 54 | CVS - West Columbia, SC | 0.2% | CVS | 4/30/2040 | 10,125 | 100.0% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
I-7 |
APPENDIX I - CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS | ||||||||||||||||||||||||||||||||||
4TH LARGEST TENANT INFORMATION | 5TH LARGEST TENANT INFORMATION | MORTGAGE LOAN RESERVE INFORMATION | ||||||||||||||||||||||||||||||||
Property Flag | Footnotes | Loan ID | Property Name | % of Initial Pool Balance | 4th Largest Tenant | 4th Largest Tenant Lease Expiration | 4th Largest Tenant NSF | 4th Largest Tenant % of NSF | 5th Largest Tenant | 5th Largest Tenant Lease Expiration | 5th Largest Tenant NSF | 5th Largest Tenant % of NSF | Upfront Replacement Reserves | Monthly Replacement Reserves | Replacement Reserve Cap | Upfront TI/LC Reserves | Monthly TI/LC Reserves | |||||||||||||||||
Loan | 3, 4, 5, 6 | 1 | TKG 3 Retail Portfolio | 9.0% | $0 | $0 | $0 | $0 | $0 | |||||||||||||||||||||||||
Property | 1.01 | Riverside Center, NY | Burlington Coat Factory | 6/30/2024 | 70,000 | 10.1% | Bass Pro Shops | 8/31/2028 | 61,790 | 8.9% | ||||||||||||||||||||||||
Property | 1.02 | Norwichtown Commons, CT | Dollar Tree | 1/31/2018 | 9,000 | 5.3% | Dress Barn | 12/31/2017 | 7,600 | 4.5% | ||||||||||||||||||||||||
Property | 1.03 | Coral North, IA | Michaels | 2/28/2018 | 21,633 | 10.4% | Petco | 6/30/2018 | 15,050 | 7.2% | ||||||||||||||||||||||||
Property | 1.04 | Grant Creek Town Center, MT | St. Patrick Hospital | 8/31/2019 | 12,000 | 7.3% | Famous Footwear | 5/31/2017 | 10,000 | 6.1% | ||||||||||||||||||||||||
Property | 1.05 | Manhattan Marketplace, KS | Petco | 1/31/2020 | 16,500 | 11.1% | Longhorn Steakhouse (ground lease) | 1/31/2021 | 5,662 | 3.8% | ||||||||||||||||||||||||
Property | 1.06 | Riverside Crossing, CO | Eyemart Express | 10/31/2018 | 2,740 | 7.8% | Sleep Number | 6/30/2017 | 2,740 | 7.8% | ||||||||||||||||||||||||
Loan | 7 | 2 | 300 South Riverside Plaza Fee | 7.6% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $0 | $0 | $0 | $0 | |||||||||||||||||
Loan | 8 | 3 | 32 Old Slip Fee | 6.8% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $0 | $0 | $0 | $0 | |||||||||||||||||
Loan | 6, 9, 10 | 4 | Waterfront at Port Chester | 6.0% | Marshalls | 5/31/2020 | 30,105 | 8.6% | Crunch Fitness | 12/31/2025 | 23,404 | 6.7% | $0 | $4,386 | $250,000 | $0 | $29,240 | |||||||||||||||||
Loan | 11 | 5 | Alderwood Mall | 5.7% | H&M | 1/31/2023 | 18,000 | 3.1% | Claim Jumper | 10/31/2024 | 12,641 | 2.2% | $0 | $0 | $0 | $591,860 | $0 | |||||||||||||||||
Loan | 6 | 841-853 Broadway | 5.6% | EMC Corporation | 11/30/2020 | 12,813 | 5.1% | Jivamukti Yoga Center | 7/30/2021 | 12,700 | 5.1% | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 7 | Shoppes at Westlake Village | 5.6% | DaVita | 8/9/2030 | 8,342 | 7.9% | Jeannine’s | 4/26/2027 | 7,588 | 7.2% | $0 | $881 | $0 | $0 | $8,813 | ||||||||||||||||||
Loan | 12 | 8 | Hilton Garden Inn W 54th Street | 4.5% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $0 | $0 | $0 | $0 | |||||||||||||||||
Loan | 9 | Premier Apartments | 3.8% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $3,333 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 10 | West Valley Medical Center | 3.0% | Providence Tarzana Medical Center | 12/31/2016 | 5,100 | 5.0% | Valley Pediatric Medical Group | 2/29/2020 | 4,608 | 4.5% | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 11 | Northeastern Apartments | 2.7% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $300 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 12 | Preferred Freezer - Vernon, CA | 2.2% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 13 | Saticoy Plaza | 2.1% | AT&T Wireless | 7/31/2024 | 3,000 | 4.9% | Mid Valley Vet | 8/31/2024 | 2,500 | 4.1% | $0 | $0 | $0 | $100,000 | $0 | ||||||||||||||||||
Loan | 14 | Grapevine Town Center | 2.1% | Beall’s | 9/30/2020 | 25,027 | 12.1% | Cost Plus World Market | MTM | 19,089 | 9.2% | $0 | $3,070 | $0 | $0 | $4,167 | ||||||||||||||||||
Loan | 15 | Campus Quarters | 2.0% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $6,525 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 16 | HSBC - Brandon, FL | 2.0% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $0 | $0 | $0 | $32,144 | ||||||||||||||||||
Loan | 17 | Signature Apartments | 1.8% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 6, 13 | 18 | XL Self Storage Portfolio - Rancho Cucamonga | 1.0% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $1,511 | $54,400 | $0 | $0 | |||||||||||||||||
Loan | 6, 13 | 19 | XL Self Storage Portfolio - Salt Lake City | 0.7% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $1,421 | $51,200 | $0 | $0 | |||||||||||||||||
Loan | 20 | The Park on Waters | 1.7% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $5,563 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 21 | Crown Valley Center | 1.5% | Baja Fresh | 12/31/2017 | 2,650 | 6.3% | Massage Envy | 2/28/2019 | 2,250 | 5.3% | $0 | $0 | $0 | $0 | $5,296 | ||||||||||||||||||
Loan | 22 | Homewood Suites Chester | 1.4% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $11,032 | $661,935 | $0 | $0 | ||||||||||||||||||
Loan | 23 | Holiday Inn Express - Santa Barbara | 1.2% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 24 | San Marcos Civic Center | 1.1% | Sombrero Mexican Food | 1/31/2018 | 1,700 | 2.8% | Sushi | 1/31/2020 | 1,576 | 2.6% | $0 | $0 | $0 | $0 | $6,308 | ||||||||||||||||||
Loan | 25 | Ashleye Village Apartments | 1.1% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $3,833 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 26 | Oaks of Westchase | 1.1% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $3,792 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 27 | Holiday Inn Express & Suites Richmond | 1.0% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $8,012 | $480,690 | $0 | $0 | ||||||||||||||||||
Loan | 28 | The Chase Bank and International Rescue Buildings | 1.0% | International Rescue | 1/31/2016 | 5,297 | 11.7% | Coldwell Banker | 8/30/2017 | 3,883 | 8.6% | $0 | $1,037 | $0 | $245,000 | $0 | ||||||||||||||||||
Loan | 29 | Longston Place | 0.9% | Sunrise Dental | 8/31/2019 | 3,250 | 4.9% | Lifewise Chiro (sublease from Jubilee) | 1/31/2018 | 1,625 | 2.4% | $0 | $0 | $0 | $0 | $2,773 | ||||||||||||||||||
Loan | 30 | Club at Springlake Apartments | 0.8% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $4,167 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 31 | Tate Boulevard IV | 0.8% | Carolina Foot & Ankle Associates, PLLC | 11/30/2020 | 5,885 | 10.5% | Carolina Surgery and Cancer Center, PLLC | 6/30/2020 | 4,424 | 7.9% | $0 | $1,165 | $33,547 | $0 | $5,824 | ||||||||||||||||||
Loan | 32 | Weston Town Center Shoppes | 0.8% | American Tigers Inc. | 6/30/2015 | 2,300 | 6.4% | Viana & Carreno Inc. | 10/8/2016 | 2,267 | 6.3% | $0 | $598 | $0 | $50,000 | $0 | ||||||||||||||||||
Loan | 33 | Gateway Centre | 0.8% | Lighthouse Point Dental Group | 8/31/2019 | 2,736 | 7.4% | Awaken Yoga, LLC | 7/31/2017 | 2,725 | 7.4% | $0 | $505 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 34 | Legacy of Dalton | 0.7% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $3,292 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 35 | Walgreens - Midlothian, IL | 0.7% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 36 | Stony Island Retail Center | 0.7% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 37 | Stonebriar Shops | 0.6% | Vintage Stock of Texas, Inc. | 8/31/2018 | 6,298 | 16.8% | N/A | N/A | N/A | N/A | $17,500 | $0 | $17,500 | $150,000 | $0 | ||||||||||||||||||
Loan | 38 | 58 E 56th Street | 0.6% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $155 | $0 | $80,320 | $0 | ||||||||||||||||||
Loan | 39 | Walgreens - Birmingham | 0.6% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 40 | Holiday Inn Express Springfield | 0.6% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $9,828 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 41 | Chino Hills Shopping Center | 0.6% | Lario’s Meat Market | 8/31/2023 | 2,108 | 5.6% | James P. Fabozzi, DDS | 10/31/2019 | 1,440 | 3.8% | $0 | $469 | $16,901 | $0 | $2,848 | ||||||||||||||||||
Loan | 42 | Miramar Crossings | 0.6% | Ornella’s Seafood Pasta Grill | 7/25/2019 | 2,400 | 8.0% | Latin Flavor | 5/31/2020 | 1,800 | 6.0% | $0 | $374 | $0 | $75,000 | $0 | ||||||||||||||||||
Loan | 43 | Burbank Whitsett Plaza | 0.6% | Continental Kosher Bakery | 10/31/2016 | 1,950 | 4.9% | Coin Laundry | 6/30/2018 | 1,550 | 3.9% | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 44 | 70 Federal Street | 0.6% | Axis Technology | 11/30/2017 | 3,920 | 6.3% | US Professional Services | 4/30/2018 | 3,285 | 5.3% | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 45 | Bixby Point, Long Beach | 0.5% | Game Stop | 5/31/2018 | 1,488 | 13.1% | Tokyo Bento | 3/31/2018 | 1,310 | 11.6% | $0 | $0 | $0 | $0 | $1,181 | ||||||||||||||||||
Loan | 46 | Douglas Park Plaza | 0.5% | Jersey Mikes Subs | 1/31/2024 | 1,342 | 14.7% | The Flame Broiler | 11/30/2023 | 1,104 | 12.1% | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 47 | Westgate Plaza | 0.4% | Pet Sense | 4/30/2017 | 5,200 | 10.2% | Hwy 55 Burgers Shakes and Fries | 6/30/2024 | 2,400 | 4.7% | $0 | $640 | $23,000 | $0 | $4,268 | ||||||||||||||||||
Loan | 48 | Spring Green at Cinco Terrace | 0.4% | Floss | 11/30/2023 | 2,100 | 11.1% | Vision Eye Max | 12/31/2020 | 2,100 | 11.1% | $0 | $236 | $0 | $0 | $2,083 | ||||||||||||||||||
Loan | 49 | Mesquite Bluffs Apartments | 0.4% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 50 | Walgreens - Panama City Beach | 0.4% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $0 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 51 | Vintage Pads | 0.3% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $1,458 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 52 | Zen Apartments | 0.3% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $0 | $1,208 | $0 | $0 | $0 | ||||||||||||||||||
Loan | 53 | Shakopee Commons | 0.2% | ECIG Store | 12/31/2018 | 1,500 | 11.8% | Kims Nails | 4/30/2017 | 1,496 | 11.7% | $18,129 | $287 | $31,898 | $50,000 | $1,275 | ||||||||||||||||||
Loan | 54 | CVS - West Columbia, SC | 0.2% | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | $35,000 | $0 | $0 | $0 | $0 |
I-8 |
APPENDIX I - CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS | ||||||||||||||||||||||||||
MORTGAGE LOAN RESERVE INFORMATION | ||||||||||||||||||||||||||
Property Flag | Footnotes | Loan ID | Property Name | % of Initial Pool Balance | TI/LC Reserve Cap | Upfront Tax Reserves | Monthly Tax Reserves | Upfront Insurance Reserves | Monthly Insurance Reserves | Upfront Deferred Maint. Reserve | Initial Other Reserves | Ongoing Other Reserves | Other Reserves Description | |||||||||||||
Loan | 3, 4, 5, 6 | 1 | TKG 3 Retail Portfolio | 9.0% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | N/A | |||||||||||||
Property | 1.01 | Riverside Center, NY | ||||||||||||||||||||||||
Property | 1.02 | Norwichtown Commons, CT | ||||||||||||||||||||||||
Property | 1.03 | Coral North, IA | ||||||||||||||||||||||||
Property | 1.04 | Grant Creek Town Center, MT | ||||||||||||||||||||||||
Property | 1.05 | Manhattan Marketplace, KS | ||||||||||||||||||||||||
Property | 1.06 | Riverside Crossing, CO | ||||||||||||||||||||||||
Loan | 7 | 2 | 300 South Riverside Plaza Fee | 7.6% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | N/A | |||||||||||||
Loan | 8 | 3 | 32 Old Slip Fee | 6.8% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | N/A | |||||||||||||
Loan | 6, 9, 10 | 4 | Waterfront at Port Chester | 6.0% | $1,200,000 | $350,835 | $116,945 | $0 | $0 | $0 | $62,500 | $0 | Environmental | |||||||||||||
Loan | 11 | 5 | Alderwood Mall | 5.7% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | N/A | |||||||||||||
Loan | 6 | 841-853 Broadway | 5.6% | $0 | $628,469 | $209,490 | $0 | $0 | $0 | $3,266,667 | $0 | Capital One Outstanding LL Work; Capital One Free Rent | ||||||||||||||
Loan | 7 | Shoppes at Westlake Village | 5.6% | $250,000 | $51,668 | $25,834 | $38,440 | $4,805 | $0 | $3,167,300 | $0 | Rent and CAM; Outstanding TI/LC | ||||||||||||||
Loan | 12 | 8 | Hilton Garden Inn W 54th Street | 4.5% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | N/A | |||||||||||||
Loan | 9 | Premier Apartments | 3.8% | $0 | $278,920 | $27,892 | $0 | $0 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 10 | West Valley Medical Center | 3.0% | $0 | $22,735 | $22,735 | $0 | $0 | $0 | $473,806 | $0 | Outstanding Tenant Improvements & Rent; Free Rent | ||||||||||||||
Loan | 11 | Northeastern Apartments | 2.7% | $0 | $23,780 | $11,890 | $0 | $0 | $45,504 | $0 | $0 | N/A | ||||||||||||||
Loan | 12 | Preferred Freezer - Vernon, CA | 2.2% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 13 | Saticoy Plaza | 2.1% | $100,000 | $53,840 | $8,973 | $9,633 | $1,376 | $0 | $35,400 | $0 | Free Rent | ||||||||||||||
Loan | 14 | Grapevine Town Center | 2.1% | $250,000 | $252,385 | $50,477 | $0 | $0 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 15 | Campus Quarters | 2.0% | $0 | $128,226 | $18,318 | $13,890 | $6,945 | $0 | $100,000 | $0 | Debt Service | ||||||||||||||
Loan | 16 | HSBC - Brandon, FL | 2.0% | $1,928,688 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 17 | Signature Apartments | 1.8% | $0 | $17,323 | $17,323 | $0 | $0 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 6, 13 | 18 | XL Self Storage Portfolio - Rancho Cucamonga | 1.0% | $0 | $0 | $7,045 | $0 | $0 | $0 | $0 | $0 | N/A | |||||||||||||
Loan | 6, 13 | 19 | XL Self Storage Portfolio - Salt Lake City | 0.7% | $0 | $19,360 | $4,840 | $1,009 | $1,009 | $0 | $0 | $0 | N/A | |||||||||||||
Loan | 20 | The Park on Waters | 1.7% | $0 | $18,820 | $18,820 | $0 | $0 | $21,563 | $0 | $0 | N/A | ||||||||||||||
Loan | 21 | Crown Valley Center | 1.5% | $63,552 | $72,250 | $12,042 | $0 | $0 | $28,469 | $0 | $0 | N/A | ||||||||||||||
Loan | 22 | Homewood Suites Chester | 1.4% | $0 | $39,780 | $7,956 | $0 | $0 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 23 | Holiday Inn Express - Santa Barbara | 1.2% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 24 | San Marcos Civic Center | 1.1% | $151,380 | $34,479 | $17,240 | $1,133 | $1,133 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 25 | Ashleye Village Apartments | 1.1% | $0 | $14,241 | $14,241 | $0 | $0 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 26 | Oaks of Westchase | 1.1% | $0 | $55,630 | $9,272 | $0 | $0 | $31,250 | $0 | $0 | N/A | ||||||||||||||
Loan | 27 | Holiday Inn Express & Suites Richmond | 1.0% | $0 | $30,500 | $6,100 | $0 | $0 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 28 | The Chase Bank and International Rescue Buildings | 1.0% | $245,000 | $0 | $9,644 | $0 | $0 | $15,900 | $0 | $0 | N/A | ||||||||||||||
Loan | 29 | Longston Place | 0.9% | $145,000 | $42,072 | $13,831 | $0 | $0 | $6,750 | $0 | $0 | N/A | ||||||||||||||
Loan | 30 | Club at Springlake Apartments | 0.8% | $0 | $10,964 | $10,964 | $0 | $0 | $104,500 | $0 | $0 | N/A | ||||||||||||||
Loan | 31 | Tate Boulevard IV | 0.8% | $209,665 | $28,800 | $7,200 | $0 | $0 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 32 | Weston Town Center Shoppes | 0.8% | $50,000 | $114,520 | $14,315 | $15,309 | $5,103 | $117,853 | $212,500 | $0 | Environmental | ||||||||||||||
Loan | 33 | Gateway Centre | 0.8% | $0 | $8,663 | $8,663 | $0 | $0 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 34 | Legacy of Dalton | 0.7% | $0 | $29,571 | $7,393 | $31,980 | $6,396 | $125,500 | $0 | $0 | N/A | ||||||||||||||
Loan | 35 | Walgreens - Midlothian, IL | 0.7% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 36 | Stony Island Retail Center | 0.7% | $0 | $45,020 | $11,255 | $3,438 | $1,146 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 37 | Stonebriar Shops | 0.6% | $150,000 | $35,427 | $11,809 | $2,672 | $891 | $25,000 | $0 | $0 | N/A | ||||||||||||||
Loan | 38 | 58 E 56th Street | 0.6% | $80,320 | $61,170 | $12,234 | $0 | $0 | $0 | $29,149 | $0 | Free Rent | ||||||||||||||
Loan | 39 | Walgreens - Birmingham | 0.6% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 40 | Holiday Inn Express Springfield | 0.6% | $0 | $5,934 | $5,934 | $0 | $0 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 41 | Chino Hills Shopping Center | 0.6% | $102,533 | $7,564 | $7,564 | $0 | $0 | $27,500 | $55,036 | $0 | Shamrock Pub TI | ||||||||||||||
Loan | 42 | Miramar Crossings | 0.6% | $75,000 | $54,744 | $9,124 | $0 | $0 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 43 | Burbank Whitsett Plaza | 0.6% | $0 | $52,316 | $10,463 | $9,660 | $1,610 | $13,250 | $0 | $0 | N/A | ||||||||||||||
Loan | 44 | 70 Federal Street | 0.6% | $0 | $76,542 | $38,271 | $24,760 | $3,095 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 45 | Bixby Point, Long Beach | 0.5% | $56,695 | $20,202 | $5,051 | $3,173 | $529 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 46 | Douglas Park Plaza | 0.5% | $0 | $13,989 | $2,798 | $388 | $388 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 47 | Westgate Plaza | 0.4% | $153,000 | $17,900 | $4,475 | $23,266 | $1,790 | $0 | $0 | $1,799 | Sleepy’s Reserve | ||||||||||||||
Loan | 48 | Spring Green at Cinco Terrace | 0.4% | $100,000 | $40,509 | $6,752 | $0 | $0 | $0 | $123,299 | $0 | Comet Cleaners Lease Rent; Comet Dry Cleaners Lease TI; Rite Choice Lease | ||||||||||||||
Loan | 49 | Mesquite Bluffs Apartments | 0.4% | $0 | $3,422 | $1,711 | $0 | $0 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 50 | Walgreens - Panama City Beach | 0.4% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 51 | Vintage Pads | 0.3% | $0 | $20,000 | $5,000 | $7,428 | $1,486 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 52 | Zen Apartments | 0.3% | $0 | $20,000 | $5,000 | $16,288 | $1,737 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 53 | Shakopee Commons | 0.2% | $75,000 | $25,980 | $6,495 | $1,680 | $560 | $0 | $0 | $0 | N/A | ||||||||||||||
Loan | 54 | CVS - West Columbia, SC | 0.2% | $0 | $0 | $0 | $208 | $208 | $0 | $0 | $0 | N/A |
I-9 |
APPENDIX I - CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS | ||||||||||||||||||||||||||||||||||||||||
THIRD PARTY REPORTS | TOTAL MORTGAGE DEBT INFORMATION | TOTAL DEBT INFORMATION | ||||||||||||||||||||||||||||||||||||||
Property Flag | Footnotes | Loan ID | Property Name | % of Initial Pool Balance | Appraisal Report Date | Environmental Phase I Report Date | Environmental Phase II Report Date | Engineering Report Date | Seismic Report Date | Seismic Zone | PML % | Cut-off Date Pari Passu Mortgage Debt Balance | Cut-off Date Subord. Mortgage Debt Balance | Total Mortgage Debt Cut-off Date LTV Ratio | Total Mortgage Debt UW NCF DSCR | Total Mortgage Debt UW NOI Debt Yield | Cut-off Date Mezzanine Debt Balance | Total Debt Cut-off Date LTV Ratio | Total Debt UW NCF DSCR | Total Debt UW NOI Debt Yield | ||||||||||||||||||||
Loan | 3, 4, 5, 6 | 1 | TKG 3 Retail Portfolio | 9.0% | $79,708,750 | 75.0% | 1.90x | 8.9% | ||||||||||||||||||||||||||||||||
Property | 1.01 | Riverside Center, NY | 4/15/2015 | 2/18/2015 | N/A | 2/18/2015 | N/A | No | N/A | |||||||||||||||||||||||||||||||
Property | 1.02 | Norwichtown Commons, CT | 3/30/2015 | 2/25/2015 | N/A | 2/18/2015 | N/A | No | N/A | |||||||||||||||||||||||||||||||
Property | 1.03 | Coral North, IA | 3/10/2015 | 2/18/2015 | N/A | 2/18/2015 | N/A | No | N/A | |||||||||||||||||||||||||||||||
Property | 1.04 | Grant Creek Town Center, MT | 3/26/2015 | 2/18/2015 | N/A | 2/18/2015 | N/A | No | N/A | |||||||||||||||||||||||||||||||
Property | 1.05 | Manhattan Marketplace, KS | 3/13/2015 | 2/18/2015 | N/A | 2/18/2015 | N/A | No | N/A | |||||||||||||||||||||||||||||||
Property | 1.06 | Riverside Crossing, CO | 4/7/2015 | 2/18/2015 | N/A | 2/18/2015 | N/A | No | N/A | |||||||||||||||||||||||||||||||
Loan | 7 | 2 | 300 South Riverside Plaza Fee | 7.6% | 1/16/2015 | 12/16/2014 | N/A | N/A | N/A | No | N/A | $100,000,000 | 72.9% | 1.48x | 5.9% | |||||||||||||||||||||||||
Loan | 8 | 3 | 32 Old Slip Fee | 6.8% | 4/16/2015 | 12/9/2014 | N/A | N/A | N/A | No | N/A | $116,000,000 | 78.2% | 1.28x | 4.8% | |||||||||||||||||||||||||
Loan | 6, 9, 10 | 4 | Waterfront at Port Chester | 6.0% | 3/9/2015 | 12/30/2014 | N/A | 12/23/2014 | N/A | No | N/A | $80,000,000 | 75.0% | 1.66x | 7.1% | |||||||||||||||||||||||||
Loan | 11 | 5 | Alderwood Mall | 5.7% | 3/17/2015 | 3/23/2015 | N/A | 3/24/2015 | 3/24/2015 | Yes | 7.00% | $176,363,626 | $127,800,000 | 51.1% | 1.71x | 9.6% | ||||||||||||||||||||||||
Loan | 6 | 841-853 Broadway | 5.6% | 3/6/2015 | 1/28/2015 | N/A | 1/28/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 7 | Shoppes at Westlake Village | 5.6% | 12/22/2014 | 12/23/2014 | N/A | 12/23/2014 | 12/23/2014 | Yes | 8.00% | ||||||||||||||||||||||||||||||
Loan | 12 | 8 | Hilton Garden Inn W 54th Street | 4.5% | 2/5/2015 | 12/4/2014 | N/A | 12/4/2014 | N/A | No | N/A | $115,000,000 | $20,000,000 | 69.7% | 2.16x | 10.4% | $25,000,000 | 79.7% | 1.62x | 9.1% | ||||||||||||||||||||
Loan | 9 | Premier Apartments | 3.8% | 5/4/2015 | 5/7/2015 | N/A | 5/6/2015 | N/A | No | N/A | $5,250,000 | 69.1% | 0.94x | 6.4% | ||||||||||||||||||||||||||
Loan | 10 | West Valley Medical Center | 3.0% | 1/13/2015 | 12/30/2014 | N/A | 12/30/2014 | 12/30/2014 | Yes | 18.00% | ||||||||||||||||||||||||||||||
Loan | 11 | Northeastern Apartments | 2.7% | 2/3/2015 | 1/23/2015 | N/A | 1/21/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 12 | Preferred Freezer - Vernon, CA | 2.2% | 3/23/2015 | 2/17/2015 | N/A | 2/17/2015 | 2/17/2015 | Yes | 12.00% | ||||||||||||||||||||||||||||||
Loan | 13 | Saticoy Plaza | 2.1% | 5/1/2015 | 3/11/2015 | N/A | 3/10/2015 | 3/12/2015 | Yes | 11.00% | ||||||||||||||||||||||||||||||
Loan | 14 | Grapevine Town Center | 2.1% | 4/23/2015 | 3/2/2015 | N/A | 3/2/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 15 | Campus Quarters | 2.0% | 5/21/2015 | 2/27/2015 | N/A | 3/2/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 16 | HSBC - Brandon, FL | 2.0% | 2/12/2015 | 2/3/2015 | N/A | 2/3/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 17 | Signature Apartments | 1.8% | 3/4/2015 | 3/10/2015 | N/A | 3/10/2015 | 3/10/2015 | Yes | 8.00% | ||||||||||||||||||||||||||||||
Loan | 6, 13 | 18 | XL Self Storage Portfolio - Rancho Cucamonga | 1.0% | 2/26/2015 | 2/2/2015 | N/A | 1/30/2015 | 1/30/2015 | Yes | 11.00% | |||||||||||||||||||||||||||||
Loan | 6, 13 | 19 | XL Self Storage Portfolio - Salt Lake City | 0.7% | 6/10/2015 | 2/2/2015 | N/A | 1/30/2015 | 1/30/2015 | Yes | 11.00% | |||||||||||||||||||||||||||||
Loan | 20 | The Park on Waters | 1.7% | 3/4/2015 | 2/24/2015 | N/A | 2/24/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 21 | Crown Valley Center | 1.5% | 4/23/2015 | 4/21/2015 | N/A | 4/20/2015 | 4/21/2015 | Yes | 6.00% | ||||||||||||||||||||||||||||||
Loan | 22 | Homewood Suites Chester | 1.4% | 3/6/2015 | 1/27/2015 | N/A | 1/19/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 23 | Holiday Inn Express - Santa Barbara | 1.2% | 2/4/2015 | 1/15/2015 | N/A | 1/15/2015 | 1/15/2015 | Yes | 19.00% | ||||||||||||||||||||||||||||||
Loan | 24 | San Marcos Civic Center | 1.1% | 3/9/2015 | 2/6/2015 | N/A | 2/6/2015 | 2/6/2015 | Yes | 8.00% | ||||||||||||||||||||||||||||||
Loan | 25 | Ashleye Village Apartments | 1.1% | 2/13/2015 | 2/9/2015 | N/A | 2/9/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 26 | Oaks of Westchase | 1.1% | 4/14/2015 | 4/2/2015 | N/A | 4/2/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 27 | Holiday Inn Express & Suites Richmond | 1.0% | 4/8/2015 | 1/27/2015 | N/A | 1/27/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 28 | The Chase Bank and International Rescue Buildings | 1.0% | 3/26/2015 | 2/26/2015 | N/A | 2/26/2015 | 2/26/2015 | Yes | 21.00% | ||||||||||||||||||||||||||||||
Loan | 29 | Longston Place | 0.9% | 2/17/2015 | 2/9/2015 | N/A | 2/9/2015 | 2/9/2015 | Yes | 7.00% | ||||||||||||||||||||||||||||||
Loan | 30 | Club at Springlake Apartments | 0.8% | 3/11/2015 | 2/9/2015 | N/A | 2/9/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 31 | Tate Boulevard IV | 0.8% | 3/19/2015 | 1/16/2015 | N/A | 1/20/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 32 | Weston Town Center Shoppes | 0.8% | 3/4/2015 | 2/4/2015 | 3/23/2015 | 2/2/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 33 | Gateway Centre | 0.8% | 3/17/2015 | 2/23/2015 | N/A | 2/19/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 34 | Legacy of Dalton | 0.7% | 3/2/2015 | 2/12/2015 | N/A | 2/13/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 35 | Walgreens - Midlothian, IL | 0.7% | 2/10/2015 | 2/6/2015 | N/A | 2/6/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 36 | Stony Island Retail Center | 0.7% | 3/16/2015 | 1/22/2015 | N/A | 1/21/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 37 | Stonebriar Shops | 0.6% | 2/11/2015 | 1/28/2015 | N/A | 1/28/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 38 | 58 E 56th Street | 0.6% | 4/14/2015 | 3/19/2015 | N/A | 3/19/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 39 | Walgreens - Birmingham | 0.6% | 2/2/2015 | 12/26/2014 | N/A | 2/4/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 40 | Holiday Inn Express Springfield | 0.6% | 2/11/2015 | 2/11/2015 | N/A | 2/11/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 41 | Chino Hills Shopping Center | 0.6% | 2/17/2015 | 2/18/2015 | N/A | 2/18/2015 | 2/18/2015 | Yes | 18.00% | ||||||||||||||||||||||||||||||
Loan | 42 | Miramar Crossings | 0.6% | 3/11/2015 | 3/10/2015 | N/A | 3/11/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 43 | Burbank Whitsett Plaza | 0.6% | 3/30/2015 | 3/3/2015 | N/A | 3/3/2015 | 3/3/2015 | Yes | 12.00% | ||||||||||||||||||||||||||||||
Loan | 44 | 70 Federal Street | 0.6% | 2/20/2015 | 2/6/2015 | N/A | 2/6/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 45 | Bixby Point, Long Beach | 0.5% | 4/21/2015 | 4/13/2015 | N/A | 4/13/2015 | 4/13/2015 | Yes | 7.10% | ||||||||||||||||||||||||||||||
Loan | 46 | Douglas Park Plaza | 0.5% | 4/17/2015 | 5/5/2015 | N/A | 4/13/2015 | 4/8/2015 | Yes | 9.00% | ||||||||||||||||||||||||||||||
Loan | 47 | Westgate Plaza | 0.4% | 2/19/2015 | 2/5/2015 | N/A | 2/6/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 48 | Spring Green at Cinco Terrace | 0.4% | 4/2/2015 | 3/23/2015 | N/A | 3/23/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 49 | Mesquite Bluffs Apartments | 0.4% | 3/18/2015 | 3/10/2015 | N/A | 3/10/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 50 | Walgreens - Panama City Beach | 0.4% | 1/22/2015 | 1/21/2015 | N/A | 1/23/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 51 | Vintage Pads | 0.3% | 3/2/2015 | 2/4/2015 | N/A | 2/4/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 52 | Zen Apartments | 0.3% | 3/2/2015 | 2/4/2015 | N/A | 2/4/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 53 | Shakopee Commons | 0.2% | 2/23/2015 | 2/10/2015 | N/A | 2/10/2015 | N/A | No | N/A | ||||||||||||||||||||||||||||||
Loan | 54 | CVS - West Columbia, SC | 0.2% | 3/16/2015 | 2/24/2015 | N/A | 2/23/2015 | N/A | No | N/A |
I-10 |
MSC 2015-MS1
(1) | MSBNA—Morgan Stanley Bank, N.A.; MSMCH—Morgan Stanley Mortgage Capital Holdings LLC. Mortgage Loan No. 5, Alderwood Mall, was co-originated by MSBNA and Citigroup Global Markets Realty Corp. |
(2) | The Administrative Fee Rate includes the master servicing fee rate, trust advisor fee rate, trustee/certificate administrator fee rate, primary servicing fee rate, CREFC® license fee rate and, with respect to any non-serviced mortgage loan,pari passu loan primary servicing fee rate, in each case applicable to the related mortgage loan. |
(3) | Mortgage Loan No. 1, TKG 3 Retail Portfolio, is part of a $159,708,750 loan pair that is evidenced by fourpari passu promissory notes. The TKG 3 Retail Portfolio mortgage loan is evidenced by two of suchpari passu promissory notes (Note A-1 and Note A-4) with an aggregate Cut-off Date principal balance of $80,000,000. Thepari passu promissory notes not included in the Issuing Entity (Note A-2 and Note A-3) evidence the related serviced companion loan, which has a Cut-off Date principal balance of $79,708,750 and was contributed to the MSBAM 2015-C23 securitization trust. Unless otherwise indicated, all LTV, DSCR, Debt Yield and Cut-off Date Balance PSF/Unit calculations include the relatedpari passuserviced companion loan. See“Description of the Mortgage Pool—The A/B Whole Loans and the Loan Pairs—The TKG 3 Retail Portfolio Loan Pair” in this prospectus supplement. |
(4) | With respect to Mortgage Loan No. 1, TKG 3 Retail Portfolio, the Debt Service Payment Grace Period to Impose Late Charge is zero days, but five days once every 12 months. |
(5) | Mortgage Loan No. 1, TKG 3 Retail Portfolio, is secured by multiple properties. For purposes of the statistical information set forth in this prospectus supplement as to such mortgage loan, all LTV, DSCR, Debt Yield and Cut-off Date Balance per SF/Unit calculations are shown on an aggregate basis, and a portion of the Cut-off Date Balance has been allocated to each mortgaged property based on the respective Appraised Values and/or UW NCF, among other methods. |
(6) | With respect to Mortgage Loan Nos. 1, 4, 18 and 19, TKG 3 Retail Portfolio, Waterfront at Port Chester and XL Self Storage Portfolio, the related loan documents permit a partial collateral release subject to LTV, DSCR and/or Debt Yield tests, in connection with a partial defeasance or prepayment of the related mortgage loan. See“Description of the Mortgage Pool—Material Terms and Characteristics of the Mortgage Loans—Defeasance Loans” and“—Partial Releases Other Than in Connection with Defeasance” in this prospectus supplement. |
(7) | Mortgage Loan No. 2, 300 South Riverside Plaza Fee, is part of a $167,000,000 non-serviced loan combination that is evidenced by twopari passu promissory notes. The 300 South Riverside Plaza Fee mortgage loan is evidenced by one of suchpari passupromissory notes (Note A-2) with a Cut-off Date principal balance of $67,000,000. Thepari passu promissory note not included in the Issuing Entity (Note A-1) evidences the related non-serviced companion loan, which has a Cut-off Date principal balance of $100,000,000 and was contributed to the MSBAM 2015-C22 securitization trust. Unless otherwise indicated, all LTV, DSCR, Debt Yield and Cut-off Date Balance PSF/Unit calculations include the relatedpari passu non-serviced companion loan. See“Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The 300 South Riverside Plaza Fee Non-Serviced Loan Combination” in this prospectus supplement. |
(8) | Mortgage Loan No. 3, 32 Old Slip Fee, is part of a $176,000,000 non-serviced loan combination that is evidenced by five pari passu promissory notes. The 32 Old Slip Fee mortgage loan is evidenced by two of such pari passu promissory notes (Note A-2 and Note A-5) with an aggregate Cut-off Date principal balance of $60,000,000. The pari passu promissory notes not included in the Issuing Entity (Note A-1, Note A-3 and Note A-4) evidence the related non-serviced companion loan, which has a Cut-off Date principal balance of $116,000,000. A portion of the related non-serviced companion loan (represented by Note A-3 and Note A-4) was contributed to the MSBAM 2015-C23 securitization trust and the other portion of the related non-serviced companion loan (represented by Note A-1) is currently held by Morgan Stanley Bank, N.A. Unless otherwise indicated, all LTV, DSCR, Debt Yield and Cut-off Date Balance PSF/Unit calculations include the related pari passu non-serviced companion loan. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The 32 Old Slip Fee Non-Serviced Loan Combination” in this prospectus supplement. |
(9) | Mortgage Loan No. 4, Waterfront at Port Chester, is part of a $133,500,000 non-serviced loan combination that is evidenced by twopari passu promissory notes. The Waterfront at Port Chester mortgage loan is evidenced by one of suchpari passu promissory notes (Note A-2) with a Cut-off Date principal balance of $53,500,000. Thepari passu promissory note not included in the Issuing Entity (Note A-1) evidences the related non-serviced companion loan, which has a Cut-off Date principal balance of $80,000,000 and was contributed to the MSBAM 2015-C22 securitization trust. Unless otherwise indicated, all LTV, DSCR, Debt Yield and Cut-off Date Balance |
I-11 |
MSC 2015-MS1
PSF/Unit calculations include the relatedpari passu non-serviced companion loan. See“Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The Waterfront at Port Chester Non-Serviced Loan Combination” in this prospectus supplement. | |
(10) | With respect to Mortgage Loan No. 4, Waterfront at Port Chester, the related mortgaged property is subject to a ground lease whereby the ground lessor has provided its fee interest as collateral for the subject loan, and the Title Type is shown as Fee. |
(11) | Mortgage Loan No. 5, Alderwood Mall, is part of a non-serviced loan combination evidenced by (i) fourpari passu senior promissory notes in the aggregate original principal amount of $227,200,000 and (ii) two subordinate notes in the aggregate original principal amount of $127,800,000. The Alderwood Mall mortgage loan is evidenced by onepari passu promissory note (Note A-1-3) with a Cut-off Date principal balance of $50,275,604. Notes A-1-1, A-1-2 and A-1-4, in the aggregate original principal amount of $176,800,000, evidence the non-serviced companion loan. Notes A-2-1 and A-2-2, in the aggregate original principal amount of $127,800,000, collectively represent a B note, which is generally subordinate to the Alderwood Mall mortgage loan and the Alderwood Mall non-serviced companion loan. A portion of the Alderwood Mall non-serviced companion loan (Notes A-1-1 and A-1-2), in the aggregate original principal amount of $127,800,000, and the entire Alderwood Mall B note were contributed to the MSCCG 2015-ALDR securitization trust. The remaining portion of the Alderwood Mall non-serviced companion Loan (Note A-1-4), in the original principal amount of $49,000,000, is expected to be held by Citigroup Global Markets Realty Corp. or an affiliate thereof on the closing date and may be contributed to one or more future securitization transactions. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The Alderwood Mall Non-Serviced Loan Combination” and “Servicing of the Mortgage Loans” in this prospectus supplement. |
(12) | Mortgage Loan No. 8, Hilton Garden Inn W 54th Street, is part of a non-serviced loan combination evidenced by (i) three pari passu senior promissory notes: (a) Note A-1, representing the Hilton Garden Inn W 54th Street mortgage loan, with a Cut-off Date principal balance of $40,000,000, (b) Note A-2, which has a Cut-off Date principal balance of $75,000,000 and was contributed to the MSBAM 2015-C22 securitization trust and (c) Note A-3, which has a Cut-off Date principal balance of $40,000,000 and was contributed to the MSBAM 2015-C23 securitization trust, and (ii) one subordinate note (Note B), which has a Cut-off Date principal balance of $20,000,000 and is currently held by Aareal Capital Corporation. The promissory notes described in clauses (i)(b) and (i)(c) in the preceding sentence evidence the related non-serviced companion loan, which has a Cut-off Date principal balance of $115,000,000. Unless otherwise indicated, all LTV, DSCR, Debt Yield and Cut-off Date Balance per SF/Unit calculations include the related pari passu non-serviced companion loan but do not include the related subordinate note. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The Hilton Garden Inn W 54th Street Non-Serviced Loan Combination” in this prospectus supplement. |
(13) | Mortgage Loan Nos. 18 and 19, which comprise XL Self Storage Portfolio, are cross-collateralized and cross-defaulted. For the purpose of the statistical information set forth in this prospectus supplement as to such mortgage loans, all LTV, DSCR, Debt Yield and Cut-off Date Balance per SF/Unit calculations are shown on an aggregate basis. |
A. | “Yield Maintenance Premium” shall mean an amount equal to the greater of: (i) one percent (1%) of the principal amount of the Loan being prepaid or (ii) the present value as of the Prepayment Date of the Calculated Payments from the Prepayment Date through the Maturity Date determined by discounting such payments at the Discount Rate. As used in this definition, the term “Prepayment Date” shall mean the date on which prepayment is made. As used in this definition, the term “Calculated Payments” shall mean the monthly payments of interest only which would be due based on the principal amount of the Loan being prepaid on the Prepayment Date and assuming an interest rate per annum equal to the difference (if such difference is greater than zero) between (y) the Interest Rate and (z) the Yield Maintenance Treasury Rate. As used in this definition, the term “Discount Rate” shall mean the rate which, when compounded monthly, is equivalent to the Yield Maintenance Treasury Rate, when compounded semi-annually. As used in this definition, the term “Yield Maintenance Treasury Rate” shall mean the yield calculated by Lender by the linear interpolation of the yields, as reported in the Federal Reserve Statistical Release H.15-Selected Interest Rates under the heading U.S. Government Securities/Treasury Constant Maturities for the week ending prior to the Prepayment Date, of U.S. Treasury Constant Maturities with maturity dates (one longer or one shorter) most nearly approximating the Maturity Date. In the event Release H.15 is no longer published, Lender shall select a comparable publication to determine the Yield Maintenance Treasury Rate. In no event, however, shall Lender be required to reinvest any prepayment proceeds in U.S. Treasury obligations or otherwise. |
I-12 |
MSC 2015-MS1
B. | “Yield Maintenance Premium” shall mean an amount equal to the greater of (i) one percent (1%) of the amount prepaid and (ii) an amount equal to the present value as of the Prepayment Date of the Calculated Payments from the Prepayment Date through the Stated Maturity Date determined by discounting such payments at the Discount Rate. As used in this definition, the term “Prepayment Date” shall mean the date on which prepayment is made. As used in this definition, the term “Calculated Payments” shall mean the monthly payments of interest only which would be due based on the principal amount of the Loan being prepaid on the Prepayment Date and assuming an interest rate per annum equal to the difference (if such difference is greater than zero) between (y) the Interest Rate and (z) the Yield Maintenance Treasury Rate. As used in this definition, the term “Discount Rate” shall mean the rate which, when compounded monthly, is equivalent to the Yield Maintenance Treasury Rate, when compounded semi-annually. As used in this definition, the term “Yield Maintenance Treasury Rate” shall mean the yield calculated by Lender by the linear interpolation of the yields, as reported in the Federal Reserve Statistical Release H.15-Selected Interest Rates under the heading U.S. Government Securities/Treasury Constant Maturities for the week ending prior to the Prepayment Date, of U.S. Treasury Constant Maturities with maturity dates (one longer or one shorter) most nearly approximating the Stated Maturity Date. In the event Release H.15 is no longer published, Lender shall select a comparable publication to determine the Yield Maintenance Treasury Rate. In no event, however, shall Lender be required to reinvest any prepayment proceeds in U.S. Treasury obligations or otherwise. |
C. | “Yield Maintenance Premium” shall mean an amount equal to the greater of: (x) one percent (1%) of the principal amount of this Note being prepaid or (y) the present value as of the Prepayment Date (defined below) of the Calculated Payments (defined below) from the Prepayment Date through the Maturity Date determined by discounting such payments at the Discount Rate (defined below). As used in this definition, the term “Prepayment Date” shall mean the date on which prepayment is made. As used in this definition, the term “Calculated Payments” shall mean the monthly payments of interest only which would be due based on the principal amount of this Note being prepaid on the Prepayment Date and assuming an interest rate per annum equal to the difference (if such difference is greater than zero) between (1) the Applicable Interest Rate and (2) the Yield Maintenance Treasury Rate (defined below). As used in this definition, the term “Discount Rate” shall mean the rate which, when compounded monthly, is equivalent to the Yield Maintenance Treasury Rate, when compounded semi-annually. As used in this definition, the term “Yield Maintenance Treasury Rate” shall mean the yield calculated by Lender by the linear interpolation of the yields, as reported in the Federal Reserve Statistical Release H.15-Selected Interest Rates under the heading U.S. Government Securities/Treasury Constant Maturities for the week ending prior to the Prepayment Date, of U.S. Treasury Constant Maturities with maturity dates (one longer or one shorter) most nearly approximating the Maturity Date. In the event Release H.15 is no longer published, Lender shall select a comparable publication to determine the Yield Maintenance Treasury Rate. In no event, however, shall Lender be required to reinvest any prepayment proceeds in U.S. Treasury obligations or otherwise. |
D. | “Yield Maintenance Premium” shall mean an amount equal to the greater of (i) one percent (1%) of the amount prepaid and (ii) the present value as of the Prepayment Date of the Calculated Payments from the Prepayment Date through the Maturity Date determined by discounting such payments at the Discount Rate. As used in this definition, the term “Prepayment Date” shall mean the date on which prepayment is made. As used in this definition, the term “Calculated Payments” shall mean the monthly payments of interest only which would be due based on the principal amount of the Loan being prepaid on the Prepayment Date and assuming an interest rate per annum equal to the difference (if such difference is greater than zero) between (y) the Interest Rate and (z) the Yield Maintenance Treasury Rate. As used in this definition, the term “Discount Rate” shall mean the rate which, when compounded monthly, is equivalent to the Yield Maintenance Treasury Rate, when compounded semi-annually. As used in this definition, the term “Yield Maintenance Treasury Rate” shall mean the yield calculated by Lender by the linear interpolation of the yields, as reported in the Federal Reserve Statistical Release H.15-Selected Interest Rates under the heading U.S. Government Securities/Treasury Constant Maturities for the week ending prior to the Prepayment Date, of on the run U.S. Treasury Constant Maturities with maturity dates (one longer or one shorter) most nearly approximating the Maturity Date. In the event Release H.15 is no longer published, Lender shall select a comparable publication to determine the Yield Maintenance Treasury Rate. In no event, however, shall Lender be required to reinvest any prepayment proceeds in U.S. Treasury obligations or otherwise. |
I-13 |
(THIS PAGE INTENTIONALLY LEFT BLANK)
APPENDIX II
MORTGAGE POOL INFORMATION (TABLES)
(THIS PAGE INTENTIONALLY LEFT BLANK)
Appendix II | ||||||||||||||||||
Mortgage Pool Information |
Mortgage Loan Seller | ||||||||||||||||||
Percent by | Weighted | Weighted | Weighted | Weighted | Weighted | Weighted | ||||||||||||
Aggregate | Aggregate | Average | Average | Average | Average | Average | Average | |||||||||||
No. of | Cut-off Date | Cut-off Date | Mortgage | Remaining | U/W NCF | U/W NOI | Cut-off Date | Maturity Date | ||||||||||
Loan Seller | Mtg. Loans | Balance | Balance | Rate | Term (Mos.) | DSCR | Debt Yield | LTV | LTV | |||||||||
Morgan Stanley Mortgage Capital Holdings LLC | 54 | $885,426,724 | 100.0% | 4.054% | 118 | 1.98x | 10.1% | 62.5% | 57.0% | |||||||||
Total: | 54 | $885,426,724 | 100.0% | 4.054% | 118 | 1.98x | 10.1% | 62.5% | 57.0% | |||||||||
Cut-off Date Balances | ||||||||||||||||||
Percent by | Weighted | Weighted | Weighted | Weighted | Weighted | Weighted | ||||||||||||
Aggregate | Aggregate | Average | Average | Average | Average | Average | Average | |||||||||||
No. of | Cut-off Date | Cut-off Date | Mortgage | Remaining | U/W NCF | U/W NOI | Cut-off Date | Maturity Date | ||||||||||
Cut-off Date Balance ($) | Mtg. Loans | Balance | Balance | Rate | Term (Mos.) | DSCR | Debt Yield | LTV | LTV | |||||||||
1 - 10,000,000 | 33 | $191,341,439 | 21.6% | 4.177% | 117 | 1.63x | 10.2% | 66.5% | 56.3% | |||||||||
10,000,001 - 20,000,000 | 10 | $158,850,887 | 17.9% | 4.208% | 120 | 1.81x | 10.5% | 62.1% | 50.6% | |||||||||
20,000,001 - 30,000,000 | 2 | $51,208,794 | 5.8% | 3.901% | 117 | 1.83x | 9.1% | 56.9% | 51.1% | |||||||||
30,000,001 - 40,000,000 | 2 | $73,250,000 | 8.3% | 4.395% | 118 | 1.97x | 9.7% | 60.8% | 58.7% | |||||||||
40,000,001 - 50,000,000 | 2 | $100,000,000 | 11.3% | 3.775% | 118 | 3.91x | 16.1% | 41.0% | 41.0% | |||||||||
50,000,001 - 60,000,000 | 3 | $163,775,604 | 18.5% | 3.775% | 118 | 1.70x | 8.7% | 63.2% | 59.8% | |||||||||
60,000,001 - 70,000,000 | 1 | $67,000,000 | 7.6% | 3.950% | 116 | 1.48x | 5.9% | 72.9% | 72.9% | |||||||||
70,000,001 - 80,000,000 | 1 | $80,000,000 | 9.0% | 4.240% | 119 | 1.90x | 8.9% | 75.0% | 75.0% | |||||||||
Total: | 54 | $885,426,724 | 100.0% | 4.054% | 118 | 1.98x | 10.1% | 62.5% | 57.0% | |||||||||
Minimum: $1,900,000 | ||||||||||||||||||
Maximum: $80,000,000 | ||||||||||||||||||
Average: $16,396,791 |
II-1 |
Appendix II | ||||||||||||||||||
Mortgage Pool Information |
States | ||||||||||||||||||
Percent by | Weighted | Weighted | Weighted | Weighted | Weighted | Weighted | ||||||||||||
Aggregate | Aggregate | Average | Average | Average | Average | Average | Average | |||||||||||
No. of | Cut-off Date | Cut-off Date | Mortgage | Remaining | U/W NCF | U/W NOI | Cut-off Date | Maturity Date | ||||||||||
State | Mtg. Properties | Balance | Balance | Rate | Term (Mos.) | DSCR | Debt Yield | LTV | LTV | |||||||||
New York | 6 | $233,512,909 | 26.4% | 3.850% | 117 | 2.67x | 11.1% | 61.1% | 60.8% | |||||||||
California | 13 | $184,898,769 | 20.9% | 4.161% | 118 | 1.95x | 9.6% | 60.1% | 57.1% | |||||||||
Illinois | 3 | $79,205,689 | 8.9% | 4.019% | 116 | 1.45x | 6.2% | 72.7% | 70.8% | |||||||||
Washington | 3 | $74,366,088 | 8.4% | 3.735% | 132 | 1.98x | 13.9% | 41.2% | 19.7% | |||||||||
Texas | 8 | $59,673,301 | 6.7% | 4.069% | 117 | 1.74x | 10.8% | 65.6% | 55.8% | |||||||||
Florida | 6 | $54,633,692 | 6.2% | 4.111% | 118 | 1.58x | 9.7% | 68.1% | 58.8% | |||||||||
Maryland | 1 | $33,250,000 | 3.8% | 4.855% | 120 | 1.15x | 7.4% | 59.7% | 55.0% | |||||||||
Massachusetts | 2 | $29,198,927 | 3.3% | 3.809% | 117 | 1.51x | 9.3% | 53.7% | 42.4% | |||||||||
Alabama | 2 | $23,500,000 | 2.7% | 4.460% | 91 | 1.45x | 9.1% | 73.4% | 67.7% | |||||||||
Virginia | 2 | $21,640,578 | 2.4% | 4.068% | 118 | 1.87x | 11.9% | 69.1% | 55.3% | |||||||||
Connecticut | 1 | $15,205,679 | 1.7% | 4.240% | 119 | 1.90x | 8.9% | 75.0% | 75.0% | |||||||||
Iowa | 1 | $13,224,072 | 1.5% | 4.240% | 119 | 1.90x | 8.9% | 75.0% | 75.0% | |||||||||
Montana | 1 | $12,373,023 | 1.4% | 4.240% | 119 | 1.90x | 8.9% | 75.0% | 75.0% | |||||||||
North Carolina | 2 | $10,946,341 | 1.2% | 4.347% | 117 | 1.55x | 10.6% | 74.2% | 60.6% | |||||||||
Kansas | 1 | $10,143,464 | 1.1% | 4.240% | 119 | 1.90x | 8.9% | 75.0% | 75.0% | |||||||||
Utah | 1 | $6,275,572 | 0.7% | 4.450% | 117 | 1.28x | 8.1% | 74.7% | 60.9% | |||||||||
Georgia | 1 | $6,200,000 | 0.7% | 4.250% | 116 | 1.43x | 9.1% | 74.7% | 61.8% | |||||||||
Vermont | 1 | $5,078,944 | 0.6% | 4.123% | 117 | 2.18x | 14.6% | 65.1% | 52.3% | |||||||||
Colorado | 1 | $4,658,121 | 0.5% | 4.240% | 119 | 1.90x | 8.9% | 75.0% | 75.0% | |||||||||
Nevada | 1 | $3,491,553 | 0.4% | 4.700% | 118 | 1.98x | 13.6% | 56.8% | 46.4% | |||||||||
Minnesota | 1 | $2,050,000 | 0.2% | 4.225% | 116 | 1.63x | 10.5% | 69.5% | 59.1% | |||||||||
South Carolina | 1 | $1,900,000 | 0.2% | 4.270% | 118 | 1.97x | 8.5% | 62.3% | 62.3% | |||||||||
Total: | 59 | $885,426,724 | 100.0% | 4.054% | 118 | 1.98x | 10.1% | 62.5% | 57.0% | |||||||||
II-2 |
Appendix II | ||||||||||||||||||
Mortgage Pool Information |
Property Types | ||||||||||||||||||
Percent by | Weighted | Weighted | Weighted | Weighted | Weighted | Weighted | ||||||||||||
Aggregate | Aggregate | Average | Average | Average | Average | Average | Average | |||||||||||
No. of | Cut-off Date | Cut-off Date | Mortgage | Remaining | U/W NCF | U/W NOI | Cut-off Date | Maturity Date | ||||||||||
Mtg. Properties | Balance | Balance | Rate | Term (Mos.) | DSCR | Debt Yield | LTV | LTV | ||||||||||
Retail | ||||||||||||||||||
Anchored | 8 | $152,836,204 | 17.3% | 4.182% | 118 | 1.79x | 8.6% | 73.0% | 71.4% | |||||||||
Unanchored | 14 | $81,577,988 | 9.2% | 4.187% | 118 | 1.69x | 10.4% | 62.1% | 53.3% | |||||||||
Shadow Anchored | 2 | $69,000,000 | 7.8% | 4.247% | 119 | 1.82x | 8.3% | 62.3% | 62.3% | |||||||||
Super Regional Mall | 1 | $50,275,604 | 5.7% | 3.479% | 119 | 2.24x | 15.1% | 32.7% | 21.6% | |||||||||
Free-Standing | 4 | $17,000,689 | 1.9% | 4.209% | 117 | 1.50x | 7.9% | 70.3% | 61.8% | |||||||||
Subtotal: | 29 | $370,690,485 | 41.9% | 4.101% | 118 | 1.82x | 9.8% | 63.0% | 58.5% | |||||||||
Multifamily | ||||||||||||||||||
Garden | 7 | $66,708,131 | 7.5% | 4.106% | 132 | 1.50x | 10.1% | 67.7% | 46.7% | |||||||||
Student Housing | 4 | $47,884,794 | 5.4% | 4.155% | 104 | 1.43x | 8.7% | 66.9% | 57.9% | |||||||||
High Rise | 1 | $33,250,000 | 3.8% | 4.855% | 120 | 1.15x | 7.4% | 59.7% | 55.0% | |||||||||
Subtotal: | 12 | $147,842,925 | 16.7% | 4.290% | 120 | 1.40x | 9.0% | 65.6% | 52.2% | |||||||||
Leased Fee | ||||||||||||||||||
Leased Fee | 2 | $127,000,000 | 14.3% | 3.835% | 117 | 1.39x | 5.4% | 75.4% | 75.4% | |||||||||
Subtotal: | 2 | $127,000,000 | 14.3% | 3.835% | 117 | 1.39x | 5.4% | 75.4% | 75.4% | |||||||||
Hospitality | ||||||||||||||||||
Select Service | 1 | $40,000,000 | 4.5% | 4.013% | 116 | 2.64x | 11.7% | 61.8% | 61.8% | |||||||||
Limited Service | 3 | $24,853,477 | 2.8% | 3.966% | 117 | 2.85x | 14.7% | 60.0% | 52.0% | |||||||||
Extended Stay | 1 | $12,366,045 | 1.4% | 4.068% | 118 | 1.85x | 11.8% | 66.1% | 53.0% | |||||||||
Subtotal: | 5 | $77,219,522 | 8.7% | 4.007% | 117 | 2.58x | 12.7% | 61.9% | 57.2% | |||||||||
Mixed Use | ||||||||||||||||||
Office/Retail | 2 | $58,950,000 | 6.7% | 3.433% | 117 | 5.28x | 21.6% | 26.1% | 24.4% | |||||||||
Retail/Office | 1 | $6,700,000 | 0.8% | 3.925% | 117 | 1.66x | 10.5% | 69.8% | 60.4% | |||||||||
Retail/Multifamily | 1 | $5,617,268 | 0.6% | 4.300% | 118 | 1.17x | 7.1% | 66.1% | 53.3% | |||||||||
Subtotal: | 4 | $71,267,268 | 8.0% | 3.548% | 117 | 4.62x | 19.4% | 33.4% | 30.1% | |||||||||
Office | ||||||||||||||||||
Medical | 2 | $34,221,341 | 3.9% | 4.074% | 117 | 2.08x | 10.3% | 58.0% | 55.0% | |||||||||
Suburban | 1 | $17,753,439 | 2.0% | 4.300% | 118 | 1.52x | 10.0% | 64.6% | 52.1% | |||||||||
CBD | 1 | $4,990,133 | 0.6% | 3.900% | 119 | 2.20x | 16.8% | 20.5% | 14.8% | |||||||||
Subtotal: | 4 | $56,964,913 | 6.4% | 4.129% | 117 | 1.92x | 10.8% | 56.8% | 50.6% | |||||||||
Industrial | ||||||||||||||||||
Warehouse | 1 | $19,200,000 | 2.2% | 4.220% | 118 | 2.11x | 9.8% | 59.1% | 59.1% | |||||||||
Subtotal: | 1 | $19,200,000 | 2.2% | 4.220% | 118 | 2.11x | 9.8% | 59.1% | 59.1% | |||||||||
Self Storage | ||||||||||||||||||
Self Storage | 2 | $15,241,611 | 1.7% | 4.532% | 117 | 1.28x | 8.1% | 74.7% | 60.9% | |||||||||
Subtotal: | 2 | $15,241,611 | 1.7% | 4.532% | 117 | 1.28x | 8.1% | 74.7% | 60.9% | |||||||||
Total: | 59 | $885,426,724 | 100.0% | 4.054% | 118 | 1.98x | 10.1% | 62.5% | 57.0% | |||||||||
II-3 |
Appendix II | ||||||||||||||||||
Mortgage Pool Information |
Mortgage Rates | ||||||||||||||||||
Percent by | Weighted | Weighted | Weighted | Weighted | Weighted | Weighted | ||||||||||||
Aggregate | Aggregate | Average | Average | Average | Average | Average | Average | |||||||||||
No. of | Cut-off Date | Cut-off Date | Mortgage | Remaining | U/W NCF | U/W NOI | Cut-off Date | Maturity Date | ||||||||||
Mortgage Rate (%) | Mtg. Loans | Balance | Balance | Rate | Term (Mos.) | DSCR | Debt Yield | LTV | LTV | |||||||||
3.001 - 3.500 | 2 | $100,275,604 | 11.3% | 3.415% | 118 | 4.10x | 19.5% | 25.3% | 19.7% | |||||||||
3.501 - 4.000 | 15 | $259,408,877 | 29.3% | 3.869% | 117 | 1.66x | 8.0% | 67.4% | 63.9% | |||||||||
4.001 - 4.500 | 33 | $462,034,651 | 52.2% | 4.203% | 120 | 1.80x | 9.5% | 67.3% | 60.9% | |||||||||
4.501 - 5.000 | 4 | $63,707,592 | 7.2% | 4.729% | 109 | 1.31x | 8.4% | 65.6% | 59.5% | |||||||||
Total: | 54 | $885,426,724 | 100.0% | 4.054% | 118 | 1.98x | 10.1% | 62.5% | 57.0% | |||||||||
Minimum: 3.350% | ||||||||||||||||||
Maximum: 4.855% | ||||||||||||||||||
Weighted Average: 4.054% | ||||||||||||||||||
Original Terms to Maturity | ||||||||||||||||||
Percent by | Weighted | Weighted | Weighted | Weighted | Weighted | Weighted | ||||||||||||
Aggregate | Aggregate | Average | Average | Average | Average | Average | Average | |||||||||||
No. of | Cut-off Date | Cut-off Date | Mortgage | Remaining | U/W NCF | U/W NOI | Cut-off Date | Maturity Date | ||||||||||
Original Term to Maturity (mos.) | Mtg. Loans | Balance | Balance | Rate | Term (Mos.) | DSCR | Debt Yield | LTV | LTV | |||||||||
84 | 1 | $18,000,000 | 2.0% | 4.570% | 83 | 1.48x | 9.5% | 73.8% | 69.7% | |||||||||
120 | 52 | $851,304,646 | 96.1% | 4.039% | 118 | 2.01x | 10.1% | 62.3% | 57.8% | |||||||||
180 | 1 | $16,122,077 | 1.8% | 4.229% | 178 | 1.17x | 10.9% | 60.4% | 0.9% | |||||||||
Total: | 54 | $885,426,724 | 100.0% | 4.054% | 118 | 1.98x | 10.1% | 62.5% | 57.0% | |||||||||
Minimum: 84 mos. | ||||||||||||||||||
Maximum: 180 mos. | ||||||||||||||||||
Weighted Average: 120 mos. | ` |
II-4 |
Appendix II | ||||||||||||||||||
Mortgage Pool Information |
Remaining Terms to Maturity | ||||||||||||||||||
Percent by | Weighted | Weighted | Weighted | Weighted | Weighted | Weighted | ||||||||||||
Aggregate | Aggregate | Average | Average | Average | Average | Average | Average | |||||||||||
No. of | Cut-off Date | Cut-off Date | Mortgage | Remaining | U/W NCF | U/W NOI | Cut-off Date | Maturity Date | ||||||||||
Remaining Term to Maturity (mos.) | Mtg. Loans | Balance | Balance | Rate | Term (Mos.) | DSCR | Debt Yield | LTV | LTV | |||||||||
79 - 84 | 1 | $18,000,000 | 2.0% | 4.570% | 83 | 1.48x | 9.5% | 73.8% | 69.7% | |||||||||
115 - 120 | 52 | $851,304,646 | 96.1% | 4.039% | 118 | 2.01x | 10.1% | 62.3% | 57.8% | |||||||||
175 - 180 | 1 | $16,122,077 | 1.8% | 4.229% | 178 | 1.17x | 10.9% | 60.4% | 0.9% | |||||||||
Total: | 54 | $885,426,724 | 100.0% | 4.054% | 118 | 1.98x | 10.1% | 62.5% | 57.0% | |||||||||
Minimum: 83 mos. | ||||||||||||||||||
Maximum: 178 mos. | ||||||||||||||||||
Weighted Average: 118 mos. | ||||||||||||||||||
Original Amortization Terms | ||||||||||||||||||
Percent by | Weighted | Weighted | Weighted | Weighted | Weighted | Weighted | ||||||||||||
Aggregate | Aggregate | Average | Average | Average | Average | Average | Average | |||||||||||
No. of | Cut-off Date | Cut-off Date | Mortgage | Remaining | U/W NCF | U/W NOI | Cut-off Date | Maturity Date | ||||||||||
Original Amortization Term (mos.) | Mtg. Loans | Balance | Balance | Rate | Term (Mos.) | DSCR | Debt Yield | LTV | LTV | |||||||||
Interest Only | 14 | $486,075,000 | 54.9% | 3.990% | 117 | 2.28x | 9.8% | 63.7% | 63.7% | |||||||||
180 | 1 | $16,122,077 | 1.8% | 4.229% | 178 | 1.17x | 10.9% | 60.4% | 0.9% | |||||||||
300 | 3 | $14,072,864 | 1.6% | 4.076% | 119 | 1.72x | 12.6% | 40.0% | 29.1% | |||||||||
360 | 36 | $369,156,782 | 41.7% | 4.128% | 116 | 1.64x | 10.4% | 61.8% | 51.7% | |||||||||
Total: | 54 | $885,426,724 | 100.0% | 4.054% | 118 | 1.98x | 10.1% | 62.5% | 57.0% | |||||||||
Minimum: 180 mos. | ||||||||||||||||||
Maximum: 360 mos. | ||||||||||||||||||
Weighted Average: 351 mos. |
II-5 |
Appendix II | ||||||||||||||||||
Mortgage Pool Information |
Remaining Amortization Terms | ||||||||||||||||||
Percent by | Weighted | Weighted | Weighted | Weighted | Weighted | Weighted | ||||||||||||
Aggregate | Aggregate | Average | Average | Average | Average | Average | Average | |||||||||||
No. of | Cut-off Date | Cut-off Date | Mortgage | Remaining | U/W NCF | U/W NOI | Cut-off Date | Maturity Date | ||||||||||
Remaining Amortization Term (mos.) | Mtg. Loans | Balance | Balance | Rate | Term (Mos.) | DSCR | Debt Yield | LTV | LTV | |||||||||
Interest Only | 14 | $486,075,000 | 54.9% | 3.990% | 117 | 2.28x | 9.8% | 63.7% | 63.7% | |||||||||
171 - 180 | 1 | $16,122,077 | 1.8% | 4.229% | 178 | 1.17x | 10.9% | 60.4% | 0.9% | |||||||||
231 - 300 | 3 | $14,072,864 | 1.6% | 4.076% | 119 | 1.72x | 12.6% | 40.0% | 29.1% | |||||||||
351 - 360 | 36 | $369,156,782 | 41.7% | 4.128% | 116 | 1.64x | 10.4% | 61.8% | 51.7% | |||||||||
Total: | 54 | $885,426,724 | 100.0% | 4.054% | 118 | 1.98x | 10.1% | 62.5% | 57.0% | |||||||||
Minimum: 178 mos. | ||||||||||||||||||
Maximum: 360 mos. | ||||||||||||||||||
Weighted Average: 349 mos. | ||||||||||||||||||
Debt Service Coverage Ratios | ||||||||||||||||||
Percent by | Weighted | Weighted | Weighted | Weighted | Weighted | Weighted | ||||||||||||
Aggregate | Aggregate | Average | Average | Average | Average | Average | Average | |||||||||||
No. of | Cut-off Date | Cut-off Date | Mortgage | Remaining | U/W NCF | U/W NOI | Cut-off Date | Maturity Date | ||||||||||
Debt Service Coverage Ratio (x) | Mtg. Loans | Balance | Balance | Rate | Term (Mos.) | DSCR | Debt Yield | LTV | LTV | |||||||||
1.11 - 1.20 | 3 | $54,989,345 | 6.2% | 4.615% | 137 | 1.16x | 8.4% | 60.6% | 39.0% | |||||||||
1.21 - 1.30 | 4 | $81,367,300 | 9.2% | 3.910% | 118 | 1.28x | 5.6% | 77.1% | 73.4% | |||||||||
1.31 - 1.40 | 5 | $54,495,767 | 6.2% | 3.963% | 117 | 1.37x | 8.1% | 66.2% | 55.3% | |||||||||
1.41 - 1.50 | 8 | $133,511,594 | 15.1% | 4.110% | 112 | 1.47x | 7.6% | 72.9% | 68.5% | |||||||||
1.51 - 1.60 | 4 | $30,420,196 | 3.4% | 4.300% | 118 | 1.53x | 10.3% | 62.0% | 50.7% | |||||||||
1.61 - 1.70 | 5 | $70,950,000 | 8.0% | 4.114% | 117 | 1.66x | 7.9% | 74.2% | 72.0% | |||||||||
1.71 - 1.80 | 4 | $54,019,326 | 6.1% | 4.224% | 119 | 1.76x | 10.2% | 58.7% | 51.8% | |||||||||
1.81 - 1.90 | 5 | $159,295,545 | 18.0% | 4.173% | 118 | 1.87x | 9.1% | 69.8% | 67.8% | |||||||||
1.91 - 2.00 | 6 | $30,609,494 | 3.5% | 4.284% | 118 | 1.95x | 11.4% | 64.2% | 55.8% | |||||||||
2.01 - 2.10 | 1 | $3,723,476 | 0.4% | 3.920% | 118 | 2.05x | 12.8% | 60.1% | 47.8% | |||||||||
2.11 - 2.20 | 4 | $34,269,077 | 3.9% | 4.098% | 118 | 2.14x | 11.9% | 52.9% | 49.5% | |||||||||
2.21 - 2.30 | 2 | $77,275,604 | 8.7% | 3.661% | 118 | 2.24x | 13.4% | 40.0% | 32.8% | |||||||||
2.61 - 2.70 | 1 | $40,000,000 | 4.5% | 4.013% | 116 | 2.64x | 11.7% | 61.8% | 61.8% | |||||||||
4.01 - 4.10 | 1 | $10,500,000 | 1.2% | 3.800% | 116 | 4.02x | 17.0% | 46.1% | 46.1% | |||||||||
5.91 - 6.00 | 1 | $50,000,000 | 5.6% | 3.350% | 117 | 5.97x | 23.9% | 17.9% | 17.9% | |||||||||
Total: | 54 | $885,426,724 | 100.0% | 4.054% | 118 | 1.98x | 10.1% | 62.5% | 57.0% | |||||||||
Minimum: 1.15x | ||||||||||||||||||
Maximum: 5.97x | ||||||||||||||||||
Weighted Average: 1.98x |
II-6 |
Appendix II | ||||||||||||||||||
Mortgage Pool Information |
Cut-off Date Loan-to-Value Ratios | ||||||||||||||||||
Percent by | Weighted | Weighted | Weighted | Weighted | Weighted | Weighted | ||||||||||||
Aggregate | Aggregate | Average | Average | Average | Average | Average | Average | |||||||||||
No. of | Cut-off Date | Cut-off Date | Mortgage | Remaining | U/W NCF | U/W NOI | Cut-off Date | Maturity Date | ||||||||||
Cut-off Date Loan-to-Value Ratio (%) | Mtg. Loans | Balance | Balance | Rate | Term (Mos.) | DSCR | Debt Yield | LTV | LTV | |||||||||
10.1 - 20.0 | 1 | $50,000,000 | 5.6% | 3.350% | 117 | 5.97x | 23.9% | 17.9% | 17.9% | |||||||||
20.1 - 30.0 | 1 | $4,990,133 | 0.6% | 3.900% | 119 | 2.20x | 16.8% | 20.5% | 14.8% | |||||||||
30.1 - 40.0 | 1 | $50,275,604 | 5.7% | 3.479% | 119 | 2.24x | 15.1% | 32.7% | 21.6% | |||||||||
40.1 - 50.0 | 2 | $15,500,000 | 1.8% | 3.800% | 117 | 3.41x | 15.6% | 47.0% | 45.5% | |||||||||
50.1 - 60.0 | 10 | $150,287,016 | 17.0% | 4.335% | 119 | 1.76x | 9.8% | 57.0% | 52.2% | |||||||||
60.1 - 70.0 | 19 | $227,800,543 | 25.7% | 4.089% | 121 | 1.82x | 9.9% | 63.6% | 54.1% | |||||||||
70.1 - 80.0 | 20 | $386,573,428 | 43.7% | 4.101% | 116 | 1.56x | 7.6% | 74.7% | 71.3% | |||||||||
Total: | 54 | $885,426,724 | 100.0% | 4.054% | 118 | 1.98x | 10.1% | 62.5% | 57.0% | |||||||||
Minimum: 17.9% | ||||||||||||||||||
Maximum: 78.2% | ||||||||||||||||||
Weighted Average: 62.5% | ||||||||||||||||||
Maturity Date Loan-to-Value Ratios | ||||||||||||||||||
Percent by | Weighted | Weighted | Weighted | Weighted | Weighted | Weighted | ||||||||||||
Aggregate | Aggregate | Average | Average | Average | Average | Average | Average | |||||||||||
No. of | Cut-off Date | Cut-off Date | Mortgage | Remaining | U/W NCF | U/W NOI | Cut-off Date | Maturity Date | ||||||||||
Maturity Date Loan-to-Value Ratio (%) | Mtg. Loans | Balance | Balance | Rate | Term (Mos.) | DSCR | Debt Yield | LTV | LTV | |||||||||
0.1 - 10.0 | 1 | $16,122,077 | 1.8% | 4.229% | 178 | 1.17x | 10.9% | 60.4% | 0.9% | |||||||||
10.1 - 20.0 | 2 | $54,990,133 | 6.2% | 3.400% | 117 | 5.63x | 23.3% | 18.1% | 17.6% | |||||||||
20.1 - 30.0 | 1 | $50,275,604 | 5.7% | 3.479% | 119 | 2.24x | 15.1% | 32.7% | 21.6% | |||||||||
30.1 - 40.0 | 2 | $9,082,731 | 1.0% | 4.172% | 119 | 1.45x | 10.3% | 50.7% | 37.0% | |||||||||
40.1 - 50.0 | 8 | $86,186,555 | 9.7% | 4.007% | 117 | 2.00x | 11.4% | 56.4% | 47.0% | |||||||||
50.1 - 60.0 | 18 | $201,713,012 | 22.8% | 4.288% | 118 | 1.69x | 9.6% | 62.8% | 55.8% | |||||||||
60.1 - 70.0 | 18 | $206,556,611 | 23.3% | 4.181% | 114 | 1.81x | 9.4% | 68.4% | 63.8% | |||||||||
70.1 - 80.0 | 4 | $260,500,000 | 29.4% | 4.020% | 118 | 1.60x | 6.8% | 75.2% | 75.2% | |||||||||
Total: | 54 | $885,426,724 | 100.0% | 4.054% | 118 | 1.98x | 10.1% | 62.5% | 57.0% | |||||||||
Minimum: 0.9% | ||||||||||||||||||
Maximum: 78.2% | ||||||||||||||||||
Weighted Average: 57.0% |
II-7 |
Appendix II | ||||||||||||||||||
Mortgage Pool Information |
Amortization Type | ||||||||||||||||||
Percent by | Weighted | Weighted | Weighted | Weighted | Weighted | Weighted | ||||||||||||
Aggregate | Aggregate | Average | Average | Average | Average | Average | Average | |||||||||||
No. of | Cut-off Date | Cut-off Date | Mortgage | Remaining | U/W NCF | U/W NOI | Cut-off Date | Maturity Date | ||||||||||
Amortization Type | Mtg. Loans | Balance | Balance | Rate | Term (Mos.) | DSCR | Debt Yield | LTV | LTV | |||||||||
Interest Only | 14 | $486,075,000 | 54.9% | 3.990% | 117 | 2.28x | 9.8% | 63.7% | 63.7% | |||||||||
Amortizing Balloon | 19 | $207,804,146 | 23.5% | 4.007% | 118 | 1.76x | 11.5% | 55.8% | 43.6% | |||||||||
Partial Interest Only | 20 | $175,425,500 | 19.8% | 4.268% | 114 | 1.50x | 9.3% | 67.1% | 59.6% | |||||||||
Fully Amortizing | 1 | $16,122,077 | 1.8% | 4.229% | 178 | 1.17x | 10.9% | 60.4% | 0.9% | |||||||||
Total: | 54 | $885,426,724 | 100.0% | 4.054% | 118 | 1.98x | 10.1% | 62.5% | 57.0% | |||||||||
Underwritten NOI Debt Yield | ||||||||||||||||||
Percent by | Weighted | Weighted | Weighted | Weighted | Weighted | Weighted | ||||||||||||
Aggregate | Aggregate | Average | Average | Average | Average | Average | Average | |||||||||||
No. of | Cut-off Date | Cut-off Date | Mortgage | Remaining | U/W NCF | U/W NOI | Cut-off Date | Maturity Date | ||||||||||
Underwritten NOI Debt Yield (%) | Mtg. Loans | Balance | Balance | Rate | Term (Mos.) | DSCR | Debt Yield | LTV | LTV | |||||||||
4.6 - 5.0 | 1 | $60,000,000 | 6.8% | 3.708% | 118 | 1.28x | 4.8% | 78.2% | 78.2% | |||||||||
5.6 - 6.0 | 1 | $67,000,000 | 7.6% | 3.950% | 116 | 1.48x | 5.9% | 72.9% | 72.9% | |||||||||
7.1 - 7.5 | 4 | $98,492,957 | 11.1% | 4.398% | 118 | 1.44x | 7.2% | 69.1% | 66.0% | |||||||||
7.6 - 8.0 | 2 | $29,708,794 | 3.4% | 3.847% | 116 | 1.37x | 7.8% | 62.7% | 50.6% | |||||||||
8.1 - 8.5 | 7 | $104,231,611 | 11.8% | 4.249% | 118 | 1.69x | 8.3% | 66.1% | 63.2% | |||||||||
8.6 - 9.0 | 4 | $99,121,973 | 11.2% | 4.210% | 119 | 1.80x | 8.9% | 73.6% | 71.2% | |||||||||
9.1 - 9.5 | 6 | $54,840,253 | 6.2% | 4.334% | 106 | 1.51x | 9.3% | 71.9% | 64.9% | |||||||||
9.6 - 10.0 | 5 | $50,329,439 | 5.7% | 4.230% | 118 | 1.77x | 9.9% | 63.2% | 57.0% | |||||||||
10.1 - 10.5 | 5 | $45,971,341 | 5.2% | 4.080% | 117 | 1.97x | 10.3% | 61.3% | 56.6% | |||||||||
10.6 - 11.0 | 4 | $46,051,577 | 5.2% | 4.047% | 139 | 1.58x | 10.8% | 60.5% | 34.0% | |||||||||
11.1 - 11.5 | 2 | $22,019,326 | 2.5% | 4.186% | 119 | 1.77x | 11.5% | 61.7% | 49.8% | |||||||||
11.6 - 12.0 | 3 | $57,356,802 | 6.5% | 4.054% | 117 | 2.38x | 11.7% | 61.7% | 57.7% | |||||||||
12.1 - 12.5 | 1 | $9,274,534 | 1.0% | 4.068% | 118 | 1.91x | 12.1% | 73.0% | 58.5% | |||||||||
12.6 - 13.0 | 3 | $16,691,882 | 1.9% | 4.092% | 118 | 2.06x | 12.9% | 54.9% | 45.7% | |||||||||
13.6 - 14.0 | 1 | $3,491,553 | 0.4% | 4.700% | 118 | 1.98x | 13.6% | 56.8% | 46.4% | |||||||||
14.6 - 15.0 | 1 | $5,078,944 | 0.6% | 4.123% | 117 | 2.18x | 14.6% | 65.1% | 52.3% | |||||||||
15.1 - 15.5 | 1 | $50,275,604 | 5.7% | 3.479% | 119 | 2.24x | 15.1% | 32.7% | 21.6% | |||||||||
16.6 - 17.0 | 2 | $15,490,133 | 1.7% | 3.832% | 117 | 3.43x | 16.9% | 37.8% | 36.0% | |||||||||
23.6 - 24.0 | 1 | $50,000,000 | 5.6% | 3.350% | 117 | 5.97x | 23.9% | 17.9% | 17.9% | |||||||||
Total: | 54 | $885,426,724 | 100.0% | 4.054% | 118 | 1.98x | 10.1% | 62.5% | 57.0% | |||||||||
Minimum: 4.8% | ||||||||||||||||||
Maximum: 23.9% | ||||||||||||||||||
Weighted Average: 10.1% |
II-8 |
Appendix II | ||||||||||||||||||
Mortgage Pool Information |
Percentage of Collateral by Prepayment Restriction (%)(1)(2)(3)(4) | |||||
Prepayment Restrictions | Jul-15 | Jul-16 | Jul-17 | Jul-18 | Jul-19 |
Locked Out | 100.0% | 100.0% | 80.8% | 80.9% | 80.9% |
Yield Maintenance Total | 0.0% | 0.0% | 19.2% | 19.1% | 19.1% |
Open | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
TOTALS | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
Pool Balance Outstanding | $885,426,724 | $880,403,870 | $874,854,730 | $868,461,717 | $861,332,002 |
% Initial Pool Balance | 100.0% | 99.4% | 98.8% | 98.1% | 97.3% |
Prepayment Restrictions | Jul-20 | Jul-21 | Jul-22 | Jul-23 | Jul-24 |
Locked Out | 81.0% | 81.0% | 82.7% | 82.8% | 81.7% |
Yield Maintenance Total | 19.0% | 19.0% | 17.3% | 17.2% | 17.2% |
Open | 0.0% | 0.0% | 0.0% | 0.0% | 1.1% |
TOTALS | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
Pool Balance Outstanding | $853,546,828 | $844,395,937 | $817,908,323 | $808,297,226 | $798,323,504 |
% Initial Pool Balance | 96.4% | 95.4% | 92.4% | 91.3% | 90.2% |
Prepayment Restrictions | Jul-25 | Jul-26 | Jul-27 | Jul-28 | Jul-29 |
Locked Out | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
Yield Maintenance Total | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
Open | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
TOTALS | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
Pool Balance Outstanding | $6,491,032 | $5,281,005 | $4,018,063 | $2,700,281 | $1,324,485 |
% Initial Pool Balance | 0.7% | 0.6% | 0.5% | 0.3% | 0.1% |
Notes: | |||||
(1) The analysis is based on Structuring Assumptions and a 0% CPR as discussed in this prospectus supplement. | |||||
(2) See description of Yield Maintenance under“Description of the Offered Certificates—Distributions of Prepayment Premiums and Yield Maintenance Charges” in this prospectus supplement. | |||||
(3) Mortgage loans modeled as Yield Maintenance include mortgage loans characterized by YM1 and DEF/YM1 on Appendix I to this prospectus supplement. | |||||
(4) There may be limited exceptions to the indicated prepayment restrictions arising out of casualties, condemnations, property releases and the application of earnout reserves. |
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APPENDIX III
SIGNIFICANT LOAN SUMMARIES
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Mortgage Loan No. 1 – TKG 3 Retail Portfolio
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Mortgage Loan No. 1 – TKG 3 Retail Portfolio
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MSC 2015-MS1 | TKG 3 Retail Portfolio |
Mortgage Loan No. 1 – TKG 3 Retail Portfolio
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MSC 2015-MS1 | TKG 3 Retail Portfolio |
Mortgage Loan No. 1 – TKG 3 Retail Portfolio
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MSC 2015-MS1 | TKG 3 Retail Portfolio |
Mortgage Loan No. 1 – TKG 3 Retail Portfolio
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Mortgage Loan No. 1 – TKG 3 Retail Portfolio |
Mortgage Loan Information | Mortgaged Property Information(3) | ||||||
Mortgage Loan Seller: | MSMCH | Single Asset/Portfolio: | Portfolio | ||||
Original Balance(1): | $80,000,000 | Location: | Various | ||||
Cut-off Date Balance(1): | $80,000,000 | General Property Type: | Retail | ||||
% of Initial Pool Balance: | 9.0% | Detailed Property Type: | Anchored/Unanchored | ||||
Loan Purpose: | Refinance | Title Vesting: | Fee | ||||
Sponsor: | E. Stanley Kroenke | Year Built/Renovated: | Various | ||||
Mortgage Rate: | 4.240% | Size: | 1,416,414 SF | ||||
Note Date: | 5/15/2015 | Cut-off Date Balance per Unit(1): | $113 | ||||
First Payment Date: | 7/1/2015 | Maturity Date Balance per Unit(1): | $113 | ||||
Maturity Date: | 6/1/2025 | Property Manager: | TKG Management, Inc. (borrower related) | ||||
Original Term to Maturity: | 120 months | ||||||
Original Amortization Term: | 0 months | Underwriting and Financial Information(3) | |||||
IO Period: | 120 months | ||||||
Seasoning: | 1 month | UW NOI: | $14,184,806 | ||||
Prepayment Provisions: | LO (23); YM1 (93); O (4) | UW NOI Debt Yield(1): | 8.9% | ||||
Lockbox/Cash Mgmt Status: | Springing/Springing | UW NOI Debt Yield at Maturity(1): | 8.9% | ||||
Additional Debt Type: | Pari Passu | UW NCF DSCR(1): | 1.90x | ||||
Additional Debt Balance: | $79,708,750 | Most Recent NOI: | $14,572,836 (12/31/2014) | ||||
Future Debt Permitted (Type): | No (N/A) | 2nd Most Recent NOI(4): | N/A | ||||
Reserves(2) | 3rd Most Recent NOI(4): | N/A | |||||
Type | Initial | Monthly | Cap | Most Recent Occupancy: | 96.3% (3/17/2015) | ||
RE Tax: | $0 | Springing | N/A | 2nd Most Recent Occupancy(4): | N/A | ||
Insurance: | $0 | Springing | N/A | 3rd Most Recent Occupancy(4): | N/A | ||
Recurring Replacements: | $0 | Springing | N/A | Appraised Value (as of): | $212,945,000 (2/6/2015-2/26/2015) | ||
TI/LC: | $0 | Springing | N/A | Cut-off Date LTV Ratio(1): | 75.0% | ||
Maturity Date LTV Ratio(1): | 75.0% |
Sources and Uses | ||||||
Sources | Proceeds | % of Total | Uses | Proceeds | % of Total | |
Loan Amount: | $159,708,750 | 94.7% | Loan Payoff: | $167,080,358 | 99.0% | |
Borrower Equity: | $9,026,005 | 5.3% | Closing Costs: | $1,654,397 | 1.0% | |
Total Sources: | $168,734,755 | 100.0% | Total Uses: | $168,734,755 | 100.0% |
(1) | The TKG 3 Retail Portfolio Mortgage Loan is part of the TKG 3 Retail Portfolio Loan Pair, which is comprised of fourpari passupromissory notes with an aggregate Cut-off Date principal balance of $159,708,750. The Cut-off Date Balance per Unit, Maturity Date Balance per Unit, UW NOI Debt Yield, UW NOI Debt Yield at Maturity, UW NCF DSCR, Cut-off Date LTV Ratio and Maturity Date LTV Ratio numbers presented above are based on the aggregate principal balance of the promissory notes comprising the TKG 3 Retail Portfolio Loan Pair. |
(2) | See “—Escrows and Reserves” below for further discussion of reserve requirements. |
(3) | Mortgaged Property Information and Underwriting and Financial Information are based on a combination or sum of all six retail centers that comprise the TKG 3 Retail Portfolio Property. |
(4) | Affiliates or associates of the TKG 3 Retail Portfolio Borrower purchased the six retail centers that comprise the TKG 3 Retail Portfolio Property in 2011, 2012 and 2013. Complete historical operating statements and occupancy data prior to 2014 are not available for all six centers. |
The Mortgage Loan.The largest mortgage loan (the “TKG 3 Retail Portfolio Mortgage Loan”) is part of a loan pair (the “TKG 3 Retail Portfolio Loan Pair”) evidenced by fourpari passu promissory notes with an aggregate Cut-off Date principal balance of $159,708,750, all of which are secured by the same first priority fee mortgages encumbering five anchored shopping centers and one unanchored shopping center in six states (collectively, the “TKG 3 Retail Portfolio Property”). Promissory Notes A-1 and A-4, in the aggregate original principal amount of $80,000,000, represent the TKG 3 Retail Portfolio Mortgage Loan, and Promissory Notes A-2 and A-3, in the aggregate original principal amount of $79,708,750 (collectively, the “TKG 3 Retail Portfolio Serviced Companion Loan”), were contributed to the MSBAM 2015-C23 securitization trust. The TKG 3 Retail Portfolio Loan Pair will be serviced pursuant to the pooling and servicing agreement for this transaction. See “Description of the Mortgage Pool—The A/B Whole Loans and Loan Pairs—The TKG 3 Retail Portfolio Loan Pair” and “Servicing of the Mortgage Loans” in this prospectus supplement.
The proceeds of the TKG 3 Retail Portfolio Loan Pair were primarily used to refinance six previous loans secured by the six retail centers comprising the TKG 3 Retail Portfolio Property, which loans totaled approximately $167,080,358 at the time of payoff. The retail centers were purchased by affiliates or associates of the TKG 3 Retail Portfolio Borrower in 2011, 2012 and 2013 for a total purchase price of approximately $206,462,268.
The Borrower and the Sponsor.The borrowers are TKG Riverside Enterprises L.L.C., a New York limited liability company, TKG Norwichtown Commons, LLC, a Delaware limited liability company, TKG Coral North, L.L.C., a Delaware limited liability company, TKG Grant Creek Development, L.L.C., a Delaware limited liability company, Manhattan Marketplace Shopping Center, LLC, a Delaware limited liability company, and Riverside Crossing Three Development, L.L.C, a Delaware limited liability company, (collectively, the “TKG 3 Retail Portfolio Borrower”), which are single-purpose entities with independent directors. The TKG 3 Retail Portfolio Borrower is indirectly 100% owned by E. Stanley Kroenke, the sponsor and nonrecourse carve-out guarantor.
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Mr. Kroenke was a Wal-Mart Stores, Inc. director from 1995 to 2000. As of November 2014, Mr. Kroenke was noted on the “Forbes 400” list, with an estimated $5.8 billion net worth.
The Mortgaged Property.The TKG 3 Retail Portfolio Property consists of five anchored shopping centers and one unanchored shopping center in six states, listed below in decreasing order of size by allocated loan amount.
Riverside Center, located in Utica, New York, is a 692,658 SF retail center anchored by Walmart Supercenter, Lowe’s and BJ’s Wholesale Club with a gas station.
Norwichtown Commons, located in Norwich, Connecticut, is a 168,753 SF retail center anchored by Super Stop & Shop and Big Lots. The center was converted from an enclosed mall to an open-air center in 2013.
Coral North, located in Coralville, Iowa, a suburb of Iowa City, is a 208,406 SF retail center anchored by Gordmans department store, TJ Maxx, Bed Bath & Beyond and Michaels. Iowa City is home to the University of Iowa, which is located less than three miles from the Coral North center.
Grant Creek Town Center, located in Missoula, Montana, is a 163,420 SF retail center anchored by Ross Dress for Less, TJ Maxx and REI. Missoula is home to the University of Montana, which is located approximately 3.5 miles from the Grant Creek Town Center.
Manhattan Marketplace, located in Manhattan, Kansas, is a 148,173 SF retail center anchored by Dick’s Sporting Goods, Best Buy and Bed Bath & Beyond, and shadow anchored by Hy-Vee grocery store. Manhattan is home to Kansas State University, which is located approximately one mile from Manhattan Marketplace. Manhattan is also home to Fort Riley.
Riverside Crossing, located in Grand Junction, Colorado, is an unanchored 35,004 SF retail center situated approximately one mile from Mesa Mall, a 672,642 SF retail center anchored by Dillard’s, JC Penney and Sears that is not a part of the TKG 3 Retail Portfolio Property.
Property Summary | ||||||||||||||||||
Property | Location | Size (SF) | Occ.% | Allocated Cut- off Date Loan Amount | % of Allocated Loan Amount | Year Built/ Renovated | Appraised Value | Cut-off Date LTV | UW DSCR | |||||||||
Riverside Center | Utica, NY | 692,658 | 95.6% | $24,395,641 | 30.5% | 1973/1993; 2003; 2015 | $66,120,000 | 75.0% | 2.15x | |||||||||
Norwichtown Commons | Norwich, CT | 168,753 | 96.7% | $15,205,679 | 19.0% | 1966/2013 | $39,600,000 | 75.0% | 1.63x | |||||||||
Coral North | Coralville IA | 208,406 | 98.4% | $13,224,072 | 16.5% | 2006/N/A | $35,200,000 | 75.0% | 1.81x | |||||||||
Grant Creek Town Center | Missoula, MT | 163,420 | 92.8% | $12,373,023 | 15.5% | 1999/2002 | $32,400,000 | 75.0% | 1.73x | |||||||||
Manhattan Marketplace | Manhattan, KS | 148,173 | 98.9% | $10,143,464 | 12.7% | 2006-2011/N/A | $27,000,000 | 75.0% | 1.99x | |||||||||
Riverside Crossing | Grand Junction, CO | 35,004 | 100.0% | $4,658,121 | 5.8% | 2006-2008/N/A | $12,625,000 | 75.0% | 1.98x | |||||||||
Total/Wtd. Avg. | 1,416,414 | 96.3% | $80,000,000 | 100.0% | $212,945,000 | 75.0% | 1.90x |
Major Portfolio Tenants (by underwritten base rents).
Lowe’s (130,019 SF, 9% of portfolio NRA, 10% of portfolio underwritten base rent). Lowe’s Home Centers, Inc. (“Lowe’s”) (NYSE: LOW) leases 130,879 SF at Riverside Center. The lease began on November 11, 1997 and has a current expiration date of November 30, 2027, with six five-year lease renewal options. As of January 30, 2015, Lowe’s operated 1,840 home improvement and hardware stores in the United States, Canada and Mexico.
Stop & Shop (73,239 SF, 5% of portfolio NRA, 9% of portfolio underwritten base rent). The Stop & Shop Supermarket Company LLC (“Stop & Shop”) leases 73,239 SF at Norwichtown Commons. The original lease began on September 1, 1997, was extended and renewed effective September 1, 2012, and has a current lease expiration date of February 28, 2023, with six remaining five-year lease renewal options. Stop & Shop is a subsidiary of Koninklijke Ahold n.v. (AHLN.AS) (“Ahold”). As of December 31, 2014, Ahold, through two U.S. based subsidiaries, operated 398 Stop & Shop stores in New England and Metropolitan New York.
Walmart (204,235 SF, 14% of portfolio NRA, 7% of portfolio underwritten base rent). Wal-Mart Real Estate Business Trust (“Walmart”) leases 204,235 SF at Riverside Center. The lease began on March 1, 1995 and has a current expiration date of February 28, 2020, with 10 five-year lease renewal options. As of the end of fiscal year 2014, Walmart (NYSE: WMT) operated approximately 10,942 stores globally, including 4,203 U.S. based Walmart stores and 632 Sam’s Clubs.
BJ’s (114,489 SF, 8% of portfolio NRA, 6% of portfolio underwritten base rent). BJ’s Wholesale Club, Inc. (“BJ’s”) leases 114,489 SF at Riverside Center. The lease began on November 1, 1993, was renewed effective February 1, 2014, and has a current expiration date of January 31, 2019, with four remaining five-year lease renewal options. BJ’s also operates a gas station at Riverside Center. BJ’s currently operates 205 membership warehouse clubs in 15 states. The company is headquartered in Westborough, MA and, in September 2011, was acquired by Beacon Holding, Inc., an affiliate of Leonard Green & Partners, L.P. (“LGP”). LGP is a Los Angeles based private equity firm.
Dick’s Sporting Goods (45,000 SF, 3% of portfolio NRA, 4% of portfolio underwritten base rent). Dick’s Sporting Goods, Inc. (“Dick’s Sporting Goods”) leases 45,000 SF at Manhattan Marketplace. The lease began on July 27, 2011 and has a current expiration date of January 31, 2022, with four five-year lease renewal options. As of January 1, 2015, Dick’s Sporting Goods (NYSE: DKS) operated 603 stores in 46 states.
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The following tables present individual property summaries regarding anchor and major tenants at the six retail centers that comprise the TKG 3 Retail Portfolio Property:
Riverside Center Tenant Summary | |||||||||||||||||
Tenant Name | Credit Rating (Fitch/Moody’s/S&P)(1) | Tenant SF | Approximate % of SF | Annual UW Rent | % of Total Annual UW Rent | Annual UW Rent PSF | Lease Expiration | 2014 Sales PSF | |||||||||
Anchor/Major Tenants | |||||||||||||||||
Walmart | AA/Aa2/AA | 204,235 | 29% | $1,096,776 | 21% | $5.37 | 2/28/2020 | N/A | |||||||||
Lowe’s | NR/A3/A- | 130,019 | 19% | $1,604,431 | 31% | $12.34 | 11/30/2027 | $200 | |||||||||
BJ’s Wholesale Club | NR/B3/B- | 114,489 | 17% | $883,022 | 17% | $7.71 | 1/31/2019 | N/A | |||||||||
Burlington Coat Factory | NR/B1/NR | 70,000 | 10% | $529,375 | 10% | $7.56 | 6/30/2024 | $102 | |||||||||
Bass Pro Shops | NR/NR/NR | 61,790 | 9% | $482,530 | 9% | $7.81 | 8/31/2028 | N/A | |||||||||
Subtotal/Wtd. Avg. | 580,533 | 84% | $4,596,134 | 89% | $7.92 | ||||||||||||
Other Tenants | 81,990 | 12% | $593,892 | 11% | $7.24 | ||||||||||||
Vacant Space | 30,135 | 4% | $0 | 0% | $0.00 | ||||||||||||
Total/Wtd. Avg. | 692,658 | 100% | $5,190,026 | 100% | $7.83 |
(1) Certain ratings are those of the parent company whether or not the parent guarantees the lease. | |||||||||||||||||
Norwichtown Commons Tenant Summary | |||||||||||||||||
Tenant Name | Credit Rating (Fitch/Moody’s/S&P)(1) | Tenant SF | Approximate % of SF | Annual UW Rent | % of Total Annual UW Rent | Annual UW Rent PSF | Lease Expiration | 2014 Sales PSF | |||||||||
Anchor/Major Tenants | |||||||||||||||||
Stop & Shop | BBB/Baa3/BBB | 73,239 | 43% | $1,391,541 | 54% | $19.00 | 2/28/2023 | N/A | |||||||||
Big Lots | NR/NR/BBB- | 33,494 | 20% | $251,205 | 10% | $7.50 | 1/31/2021 | N/A | |||||||||
Planet Fitness | NR/B1/NR | 17,000 | 10% | $187,000 | 7% | $11.00 | 9/30/2034 | N/A | |||||||||
Dollar Tree | NR/Ba2/BB | 9,000 | 5% | $94,500 | 4% | $10.50 | 1/31/2018 | N/A | |||||||||
Dress Barn | NR/NR/NR | 7,600 | 5% | $152,000 | 6% | $20.00 | 12/31/2017 | $126 | |||||||||
Subtotal/Wtd. Avg. | 140,333 | 83% | $2,076,246 | 81% | $14.80 | ||||||||||||
Other Tenants | 22,854 | 14% | $501,965 | 19% | $21.96 | ||||||||||||
Vacant Space | 5,566 | 3% | $0 | 0% | $0.00 | ||||||||||||
Total/Wtd. Avg. | 168,753 | 100% | $2,578,211 | 100% | $15.80 | ||||||||||||
(1) Certain ratings are those of the parent company whether or not the parent guarantees the lease. | |||||||||||||||||
Coral North Tenant Summary | |||||||||||||||||
Tenant Name | Credit Rating (Fitch/Moody’s/S&P)(1) | Tenant SF | Approximate % of SF | Annual UW Rent | % of Total Annual UW Rent | Annual UW Rent PSF | Lease Expiration | 2014 Sales PSF | |||||||||
Anchor/Major Tenants | |||||||||||||||||
Gordmans | NR/NR/NR | 50,071 | 24% | $413,086 | 16% | $8.25 | 2/28/2018 | $132 | |||||||||
TJ Maxx | NR/A3/A+ | 25,000 | 12% | $193,750 | 8% | $7.75 | 5/31/2021 | $306(2) | |||||||||
Bed Bath & Beyond | NR/Baa1/A- | 23,028 | 11% | $215,982 | 8% | $9.38 | 1/31/2019 | N/A | |||||||||
Michaels | NR/NR/B+ | 21,633 | 10% | $231,040 | 9% | $10.68 | 2/28/2018 | N/A | |||||||||
Petco | NR/B3/B | 15,050 | 7% | $190,383 | 7% | $12.65 | 6/30/2018 | N/A | |||||||||
Subtotal/Wtd. Avg. | 134,782 | 65% | $1,244,241 | 49% | $9.23 | ||||||||||||
Other Tenants | 70,379 | 34% | $1,306,270 | 51% | $18.56 | ||||||||||||
Vacant Space | 3,245 | 2% | $0 | 0% | $0.00 | ||||||||||||
Total/Wtd. Avg. | 208,406 | 100% | $2,550,511 | 100% | $12.43 | ||||||||||||
(1) Certain ratings are those of the parent company whether or not the parent guarantees the lease.
(2) The TJ Maxx sales represent reported 2013 sales; 2014 sales are not yet available.
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MSC 2015-MS1 | TKG 3 Retail Portfolio |
Grant Creek Town Center Tenant Summary | |||||||||||||||||
Tenant Name | Credit Rating (Fitch/Moody’s/S&P)(1) | Tenant SF | Approximate % of SF | Annual UW Rent | % of Total Annual UW Rent | Annual UW Rent PSF | Lease Expiration | 2014 Sales PSF | |||||||||
Anchor/Major Tenants | |||||||||||||||||
Ross | NR/NR/NR | 29,974 | 18% | $292,247 | 13% | $9.75 | 1/31/2018 | $237 | |||||||||
TJ Maxx | NR/A3/A+ | 28,000 | 17% | $295,960 | 14% | $10.57 | 4/30/2017 | $265 | |||||||||
REI | NR/NR/NR | 23,535 | 14% | $310,662 | 14% | $13.20 | 5/31/2020 | N/A | |||||||||
St. Patrick Hospital | NR/NR/NR | 12,000 | 7% | $224,400 | 10% | $18.70 | 8/31/2019 | N/A | |||||||||
Famous Footwear | NR/NR/NR | 10,000 | 6% | $187,000 | 9% | $18.70 | 5/31/2017 | $180 | |||||||||
Subtotal/Wtd. Avg. | 103,509 | 63% | $1,310,269 | 60% | $12.66 | ||||||||||||
Other Tenants | 48,130 | 29% | $860,665 | 40% | $17.88 | ||||||||||||
Vacant Space | 11,781 | 7% | $0 | 0% | $0.00 | ||||||||||||
Total/Wtd. Avg. | 163,420 | 100% | $2,170,934 | 100% | $14.32 | ||||||||||||
(1) Certain ratings are those of the parent company whether or not the parent guarantees the lease. | |||||||||||||||||
Manhattan Marketplace Tenant Summary | |||||||||||||||||
Tenant Name | Credit Rating (Fitch/Moody’s/S&P)(1) | Tenant SF | Approximate % of SF | Annual UW Rent | % of Total Annual UW Rent | Annual UW Rent PSF | Lease Expiration | 2014 Sales PSF | |||||||||
Anchor/Major Tenants | |||||||||||||||||
Dick’s Sporting Goods | NR/NR/NR | 45,000 | 30% | $562,500 | 28% | $12.50 | 1/31/2022 | N/A | |||||||||
Best Buy | BB/Baa2/BB | 30,000 | 20% | $396,000 | 20% | $13.20 | 1/31/2017 | N/A | |||||||||
Bed Bath & Beyond | NR/Baa1/A- | 20,000 | 13% | $160,000 | 8% | $8.00 | 1/31/2020 | N/A | |||||||||
Petco | NR/B3/B | 16,500 | 11% | $263,175 | 13% | $15.95 | 1/31/2020 | N/A | |||||||||
Longhorn Steakhouse | BBB-/Ba1/BBB- | 5,662 | 4% | $75,000 | 4% | $13.25 | 1/31/2021 | N/A | |||||||||
Subtotal/Wtd. Avg. | 117,162 | 79% | $1,456,675 | 72% | $12.43 | ||||||||||||
Other Tenants | 29,346 | 20% | $552,949 | 28% | $18.84 | ||||||||||||
Vacant Space | 1,665 | 1% | $0 | 0% | $0.00 | ||||||||||||
Total/Wtd. Avg. | 148,173 | 100% | $2,009,624 | 100% | $13.72 | ||||||||||||
(1) Certain ratings are those of the parent company whether or not the parent guarantees the lease. | |||||||||||||||||
Riverside Crossing Tenant Summary | |||||||||||||||||
Tenant Name | Credit Rating (Fitch/Moody’s/S&P)(1) | Tenant SF | Approximate % of SF | Annual UW Rent | % of Total Annual UW Rent | Annual UW Rent PSF | Lease Expiration | 2014 Sales PSF | |||||||||
Anchor/Major Tenants | |||||||||||||||||
Grand International Buffet | NR/NR/NR | 8,045 | 23% | $173,772 | 18% | $21.60 | 9/30/2018 | N/A | |||||||||
USA Recruiting | NR/NR/NR | 4,949 | 14% | $141,541 | 15% | $28.60 | 10/31/2017 | N/A | |||||||||
Verizon Wireless | A-/Baa1/BBB+ | 4,108 | 12% | $144,585 | 15% | $35.20 | 12/31/2017 | N/A | |||||||||
Eyemart Express | NR/NR/NR | 2,740 | 8% | $68,250 | 7% | $24.91 | 10/31/2018 | N/A | |||||||||
Sleep Number | NR/NR/NR | 2,740 | 8% | $67,760 | 7% | $24.73 | 6/30/2017 | N/A | |||||||||
Subtotal/Wtd. Avg. | 22,582 | 65% | $595,908 | 63% | $26.39 | ||||||||||||
Other Tenants | 12,422 | 35% | $357,085 | 37% | $28.75 | ||||||||||||
Vacant Space | 0 | 0% | $0 | 0% | |||||||||||||
Total/Wtd. Avg. | 35,004 | 100% | $952,993 | 100% | $27.23 | ||||||||||||
(1) Certain ratings are those of the parent company whether or not the parent guarantees the lease.
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MSC 2015-MS1 | TKG 3 Retail Portfolio |
The following table presents certain information relating to the aggregate lease rollover at the TKG 3 Retail Portfolio Property and is based on the underwritten rent rolls of each property comprising the TKG 3 Retail Portfolio Property:
Portfolio Lease Rollover Schedule(1)(2) | ||||||||||||||||
Year | # of Leases Rolling | SF Rolling | UW Rent PSF Rolling(3) | Approx. % of Total SF Rolling | Approx. Cumulative % of SF Rolling | Total UW Rent Rolling | Approx. % of Total Rent Rolling | Approx. Cumulative % of Total Rent Rolling | ||||||||
MTM | 2 | 21,530 | $3.15 | 2% | 2% | $67,740 | 0% | 0% | ||||||||
2015 | 9 | 18,113 | $19.28 | 1% | 3% | $349,198 | 2% | 3% | ||||||||
2016 | 5 | 11,782 | $18.74 | 1% | 4% | $220,747 | 1% | 4% | ||||||||
2017 | 18 | 122,133 | $17.71 | 9% | 12% | $2,162,821 | 14% | 18% | ||||||||
2018 | 23 | 166,234 | $12.60 | 12% | 24% | $2,094,761 | 14% | 32% | ||||||||
2019 | 8 | 159,626 | $9.31 | 11% | 35% | $1,485,837 | 10% | 41% | ||||||||
2020 | 13 | 286,736 | $7.93 | 20% | 56% | $2,274,531 | 15% | 56% | ||||||||
2021 | 9 | 108,962 | $8.90 | 8% | 63% | $969,790 | 6% | 62% | ||||||||
2022 | 5 | 59,083 | $13.56 | 4% | 67% | $801,072 | 5% | 67% | ||||||||
2023 | 4 | 92,199 | $18.74 | 7% | 74% | $1,727,507 | 11% | 79% | ||||||||
2024 | 7 | 85,450 | $9.75 | 6% | 80% | $833,439 | 5% | 84% | ||||||||
2025 | 1 | 1,365 | $23.00 | 0% | 80% | $31,395 | 0% | 84% | ||||||||
2026 | 0 | 0 | $0.00 | 0% | 80% | $0 | 0% | 84% | ||||||||
2027 | 1 | 130,019 | $12.34 | 9% | 89% | $1,604,431 | 10% | 95% | ||||||||
2028 & Beyond | 3 | 100,790 | $8.23 | 7% | 96% | $829,030 | 5% | 100% | ||||||||
Vacant | 0 | 52,392 | $0.00 | 4% | 100% | $0 | 0% | 100% | ||||||||
Total/Wtd. Avg. | 108 | 1,416,414 | $11.33 | 100% | $15,452,299 | 100% | ||||||||||
(1) | Information is based on the underwritten rent roll. |
(2) | Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the lease rollover schedule. |
(3) | Wtd. Avg. UW Rent PSF Rolling excludes vacant space. |
The Markets.The TKG 3 Retail Portfolio Property is comprised of six retail centers in six different cities in six states, listed below in decreasing order of size by allocated loan amount. Riverside Center is located in Utica, Oneida County, New York, approximately 55 miles east of Syracuse and 95 miles northwest of Albany. Norwichtown Commons is located in Norwich, New London County, Connecticut, approximately 43 miles southeast of Hartford, CT, 135 miles northeast of New York City, NY, and 99 miles southwest of Boston. Coral North is located in Coralville, Johnson County, Iowa, approximately 108 miles east of Des Moines, 24 miles south of Cedar Rapids, and less than three miles from the University of Iowa campus. Grant Creek Town Center is located in Missoula, Missoula County Montana, approximately 115 miles west of Helena and approximately 3.5 miles from the University of Montana campus. Manhattan Marketplace is located in Manhattan, Riley County, Kansas, in the northern end of downtown Manhattan. Manhattan is home to Kansas State University. Riverside Crossing is located in Grand Junction, Mesa County, Colorado, which is approximately half way between Salt Lake City and Denver, Colorado.
Market Summaries | |||||||||||
Property | Address | Allocated Loan Amount | Estimated 2014 Population (five-mile radius) | Estimated Average 2014 Household Income (five-mile radius) | Average Submarket Retail Vacancy | ||||||
Riverside Center | 710 Horatio Street, Utica, NY | $24,395,641 | 95,165 | $56,276 | 5.2% | ||||||
Norwichtown Commons | 42 Town Street, Norwich, CT | $15,205,679 | 52,392 | $66,424 | 4.3% | ||||||
Coral North | 2515-2530 Corridor Way, Coralville, IA | $13,224,072 | 82,782 | $68,185 | 2.4% | ||||||
Grant Creek Town Center | 3055-3275 North Reserve Street, Missoula, MT | $12,373,023 | 75,648 | $53,096 | 3.8% | ||||||
Manhattan Marketplace | 401 3rd Place, Manhattan, KS | $10,143,464 | 63,096 | $63,144 | 2.4% | ||||||
Riverside Crossing | 2502 and 2504 Highway 6 & 50, Grand Junction, CO | $4,658,121 | 79,426 | $61,215 | 3.2% | ||||||
Source: Industry Reports
III-11 |
MSC 2015-MS1 | TKG 3 Retail Portfolio |
The following tables present the primary competitive centers to the TKG 3 Retail Portfolio Property:
Riverside Center Competitive Property Summary | |||||||||||||||||
Comp Name/Address | Property Size (SF) | Year Built | Comp Type | Tenant Name | Lease Date | Lease Size (SF) | Expense Reimb. | Annual Rent PSF | |||||||||
Geneva SC Outparcel Hamilton Street @ White Springs Road Geneva, NY | 11,000 | 2015 | In Line | Metro Mattress | 3/2015 | 3,200 | Gross | $23.44 | |||||||||
Fresh Market Plaza 52 Marion Avenue Saratoga Springs, NY | 40,479 | 2014 | In Line | Compliments To The Chef | 12/2014 | 2,285 | NNN | $28.00 | |||||||||
Panorama Plaza 1601 Penfield Road Penfield, NY | 279,919 | 1978 | In Line | GNC | 6/2014 | 1,440 | NNN | $24.50 | |||||||||
Mansion Square 3421 State Street Niskayuna, NY | 496,148 | N/A | In Line | UPS | 1/2014 | 1,200 | NNN | $25.00 | |||||||||
Tops Plaza 3836 NYS Route 281 Cortland, NY | 111,071 | 1995 | In Line | Little Caesar’s | 1/2014 | 1,200 | NNN | $18.63 | |||||||||
Victory Crossing 400 Commerce Drive Victor, NY | N/A | 2013 | In Line | Five Guys | 11/2013 | 2,579 | NNN | $25.00 | |||||||||
Kmart Plaza 4634 Commercial Drive New Hartford, NY | N/A | 1975 | In Line | Moe’s Southwest Grill | 10/2012 | 2,900 | NNN | $25.00 | |||||||||
The Shoppes at Latham Circle 800 New Loudon Road Latham, NY | 820,067 | 1957 | Jr. Anchor | Dick’s Sporting Goods | 5/2015 | 50,862 | NNN | $13.50 | |||||||||
Raymour & Flanigan Plaza 4000 NYS Route 31 Clay, NY | 136,492 | 2001 | Jr. Anchor | Burlington | 11/2014 | 47,626 | NNN | $8.50 | |||||||||
Amherst Shopping Center 3050 Sheridan Drive Amherst, NY | 164,603 | 1974 | Jr. Anchor | BJ’s Wholesale Club | 2/2012 | 49,743 | NNN | $6.00 | |||||||||
Culver Ridge Plaza 2255 East Ridge Road Irondequoit, NY | 871,200 | 1997 | Jr. Anchor | CW Price | 9/2011 | 26,959 | NNN | $9.50 | |||||||||
Greenport Commons 420 Fairview Avenue Hudson, NY | 508,785 | 2011 | Jr. Anchor | TJ Maxx | 10/2010 | 25,000 | NNN | $7.50 | |||||||||
Tops Plaza 3035 Niagara Falls Boulevard Amherst, NY | 145,642 | 1986 | Big Box/Anchor | Tops Markets | 1/2016 | 82,897 | NNN | $6.55 | |||||||||
Shopper’s World 15 Park Avenue Clinton Park, NY | N/A | 1988 | Big Box/Anchor | Price Chopper | 10/2014 | 77,478 | NNN | $11.66 | |||||||||
Freestanding 1707 McMahon Drive Altoona, PA | N/A | N/A | Big Box/Anchor | Lowe’s | 6/2014 | 121,148 | NNN | $7.27 | |||||||||
Marple Crossroads 400 S. State Road Springfield, PA | 450,000 | 1964 | Big Box/Anchor | Wal-Mart | 4/2011 | 113,058 | NNN | $11.59 | |||||||||
Freestanding 2044 Red Lion Road Philadelphia, PA | 413,820 | 1998 | Big Box/Anchor | BJ’s Wholesale Club | 6/2013 | 104,708 | NNN | $7.86 | |||||||||
Kittles Furniture 5600 Britton Parkway Columbus, OH | N/A | N/A | Big Box/Anchor | Kittles Furniture | 7/2010 | 91,386 | NNN | $7.11 | |||||||||
Township 5 Bennett Road Camillus, NY | 3,113,669 | 2014 | Ground Lease | LongHorn Steakhouse | 12/2014 | 6,242 | NNN | $16.02 | |||||||||
Henrietta Plaza 1100 Jefferson Road Henrietta, NY | N/A | 1999 | Ground Lease | Burger King | 5/2014 | 4,000 | NNN | $25.00 | |||||||||
Mansion Square 3421 State Street Niskayuna, NY | 496,148 | N/A | Ground Lease | Wendy’s | 7/2012 | 3,630 | NNN | $20.66 | |||||||||
Auto Zone 8037 Brewerton Road Cicero, NY | N/A | 1991 | Ground Lease | Auto Zone | 4/2012 | 3,500 | NNN | $24.97 | |||||||||
Genesee Plaza 1100 West Genesee Street Syracuse, NY | 15,000 | 2014 | Ground Lease | Dunkin Donuts | 1/2012 | 2,484 | NNN | $24.15 | |||||||||
Source: Appraisal
III-12 |
MSC 2015-MS1 | TKG 3 Retail Portfolio |
Norwichtown Commons Competitive Property Summary | ||||||||||||||||||
Comp Name/Address | Property Size (SF) | Comp Type | Anchors | Tenant Name | Lease Date | Lease Size (SF) | Expense Reimb. | Annual Rent PSF | TI/SF | |||||||||
Confidential Central New Haven County, CT | N/A | Grocery | N/A | Confidential | 5/2016 | 69,617 | NNN | $24.22 | $0 | |||||||||
Market Square 1220 Storrs Road Mansfield, CT | 36,500 | Grocery | Price Chopper | Price Chopper | 1/2014 | 31,500 | NNN | $16.34 | $70 | |||||||||
Pleasant Shops | N/A | Grocery | N/A | Whole Foods | 1/2014 | 38,000 | NNN | $15.75 | N/A | |||||||||
49 Pleasant Street | ||||||||||||||||||
Weymouth, MA | ||||||||||||||||||
Market Street | N/A | Grocery | N/A | Whole Foods | 8/2013 | 45,000 | NNN | $23.00 | N/A | |||||||||
427 Walnut Street | ||||||||||||||||||
Lynnfield, MA | ||||||||||||||||||
Confidential | 150,000 | Major | ShopRite | Planet Fitness | 7/2015 | 23,520 | NNN | $14.00 | $0 | |||||||||
Southwestern Hartford County, CT | ||||||||||||||||||
Confidential | 100,000 | Major | ShopRite | Liquor Store | 5/2016 | 23,000 | NNN | $22.75 | N/A | |||||||||
Southern New Haven County, CT | ||||||||||||||||||
Freestanding | 8,015 | Major | N/A | Advanced Auto | 1/2015 | 8,015 | NNN | $19.00 | New Build | |||||||||
800 East Main Street | ||||||||||||||||||
Meriden, CT | ||||||||||||||||||
Middletown Plaza | 180,000 | Major | Staples | Big Lots | 4/2013 | 31,166 | NNN | $7.50 | $30 | |||||||||
720 Washington Avenue | ||||||||||||||||||
Middletown, CT | ||||||||||||||||||
Olde Mistick Village | N/A | In Line | N/A | Just in Jammies | 1/2014 | 1,313 | Modified | $20.00 | N/A | |||||||||
27 Coogan Boulevard | Gross | |||||||||||||||||
Mystic, CT | ||||||||||||||||||
Olde Mistick Village | N/A | In Line | N/A | Neal Bobruff | 10/2013 | 1,200 | Modified | $24.00 | N/A | |||||||||
27 Coogan Boulevard | Gross | |||||||||||||||||
Mystic, CT | ||||||||||||||||||
Cromwell Square | N/A | In Line | N/A | Confidential | 6/2013 | 4,000 | NNN | $15.00 | $0 | |||||||||
45 Shunpike Road | ||||||||||||||||||
Cromwell, CT | ||||||||||||||||||
Plainfield Parkade | N/A | In Line | N/A | Full Moon Salon | 5/2013 | 1,200 | NNN | $15.00 | $0 | |||||||||
67 Lathrop Road | ||||||||||||||||||
Plainfield, CT | ||||||||||||||||||
Freestanding | N/A | In Line | N/A | Dollar General | 3/2013 | 9,002 | NNN | $14.18 | New Build | |||||||||
1380 Main Street | ||||||||||||||||||
Hartford, CT | ||||||||||||||||||
Strip Center | N/A | In Line | N/A | Listing | 3/2015 | 7,700 | NNN | $20.20 | Vanilla | |||||||||
45 Salem Turnpike | ||||||||||||||||||
Norwich, CT | ||||||||||||||||||
Source: Appraisal
III-13 |
MSC 2015-MS1 | TKG 3 Retail Portfolio |
Coral North Competitive Property Summary | ||||||||||||||||||
Comp Name/Address | Property Size (SF) | Year Built | Comp Type | Anchors | Tenant Name | Lease Date | Lease Size (SF) | Expense Reimb. | Annual Rent PSF | |||||||||
Retail Strip Center 3219 8th Street SW Altoona, IA | 7,428 | 2014 | Small Shop/ Retail | None | Heartland Dental | 10/2014 | 3,586 | NNN | $32.00 | |||||||||
Retail Strip Center 3219 8th Street SW Altoona, IA | 7,428 | 2014 | Small Shop/ Retail | None | Verizon | 10/2014 | 2,042 | NNN | $25.00 | |||||||||
Northview Centre II 1350 NW 18th Street Ankeny, IA | N/A | 2015 | Small Shop/ Retail | None | Which Wich Sandwiches | 1/2015 | 2,000 | NNN | $26.00 | |||||||||
Northview Centre I 1350 NW 18th Street Ankeny, IA | 6,404 | 2011 | Small Shop/ Retail | None | Dunkin Donuts | 10/2014 | 2,350 | NNN | $27.00 | |||||||||
Retail Strip Center 3580 8th Street SW Altoona, IA | 5,070 | 2013 | Small Shop/ Retail | None | Mattress Firm | 6/2013 | 3,380 | NNN | $19.50 | |||||||||
Retail Strip Center 1815 2nd Street Coralville, IA | 6,200 | 2007 | Small Shop/ Retail | None | Verizon | 7/2012 | 3,190 | NNN | $25.19 | |||||||||
Aspen Dental & Verizon Wireless 2953 & 2957 5th Avenue South Fort Dodge, IA | 5,700 | 2012 | Small Shop/ Retail | None | Aspen Dental | 4/2012 | 3,200 | NNN | $26.00 | |||||||||
Biomat USA 3533 S. Scatterfield Road Anderson, IN | 15,500 | 2015 | Blood/Medical Office | None | Biomat USA | 5/2015 | 15,500 | NNN | $14.32 | |||||||||
Davita Dialysis 5865 Sunnybrook Drive Sioux City, IA | 6,325 | 2013 | Blood/Medical Office | None | Davita Dialysis | 10/2014 | 6,325 | NNN | $19.93 | |||||||||
Bio Medical Applications of Indiana 1705 E. Industrial Dr. Terre Haute, IN | 7,936 | 2014 | Blood/Medical Office | None | Bio Medical Applications of Indiana | 9/2014 | 7,936 | NNN | $28.41 | |||||||||
Davita Dialysis 1401 North Michigan Street Elkhart, IN | 6,980 | 2014 | Blood/Medical Office | None | Davita Dialysis | 6/2014 | 6,980 | NNN | $24.14 | |||||||||
At Home - Garden Ridge 10331 University Avenue Clive, IA | 90,000 | 1991 | Anchors & Majors | At Home | At Home - Garden Ridge | 5/2015 | 90,000 | NNN | $6.39 | |||||||||
Centro Plaza 400 North 48th Street Lincoln, NE | 115,495 | 1986 | Anchors & Majors | Best Buy, TJ Maxx, Staples | TJ Maxx | 2/2015 | 24,320 | NNN | $10.00 | |||||||||
JoAnn Fabrics 3200 Agency Burlington, IA | 124,114 | 1972 | Anchors & Majors | Dick’s Sporting Goods, Staples and JoAnn Fabrics | JoAnn Fabrics | 8/2014 | 18,000 | NNN | $12.00 | |||||||||
Wilderness Hills 2933 Crescent Drive Lincoln, NE | N/A | 2014 | Anchors & Majors | Kohl’s, Marshall’s, Home Goods | Marshall`s/ Home Goods | 5/2014 | 46,000 | NNN | $10.00 | |||||||||
Office Max at Lake Manawa 505 E. 30th Avenue Council Bluffs, IA | N/A | 1998 | Anchors & Majors | Office Max | Office Max | 4/2013 | 23,500 | NNN | $11.50 | |||||||||
Source: Appraisal
III-14 |
MSC 2015-MS1 | TKG 3 Retail Portfolio |
Grant Creek Town Center Competitive Property Summary | ||||||||||||||||||||
Comp Name/Address | Property Size (SF) | Year Built | Comp Type | Anchors | Tenant Name | Lease Date | Lease Size (SF) | Expense Reimb. | Annual Rent PSF | TI/SF | ||||||||||
West Park Promenade 1603 Grand Avenue Billings, MT | 145,434 | 1961 | Anchor | Lucky’s Market, Hastings, Yellowstone Fitness | Yellowstone Fitness | 5/2014 | 41,272 | NNN | $6.50 | N/A | ||||||||||
West Park Promenade 1603 Grand Avenue Billings, MT | 145,434 | 1961 | Anchor | Lucky’s Market, Hastings, Yellowstone Fitness | Lucky’s Farmers Market | 9/2013 | 26,420 | NNN | $12.79 | N/A | ||||||||||
Rimrock Village 100 24th Street W Billings, MT | 172,290 | 1970 | Anchor | Hobby Lobby, Sports Authority | One Source Lighting | 5/2013 | 9,000 | NNN | $10.00 | $7 | ||||||||||
Market Commons 950 S 29th Street W Billings, MT | 19,120 | 2002 | Anchor | N/A | Mattress & Furniture Warehouse | 1/2013 | 15,000 | NNN | $9.50 | $10 | ||||||||||
Holiday Village Mall 1200 10th Avenue South Great Falls, MT | 496,372 | 1959 | Anchor | Herbergers, JCPenney, Osco Drug, Sears, Ross Dress For Less, Scheels All Sports | Big Lots | 10/2011 | 30,000 | NNN | $9.00 | $5 | ||||||||||
2240 Grand Avenue Billings, MT | N/A | 1974 | In-Line/ Shop | N/A | E Cigarette Factory Outlet | 1/2014 | 2,100 | NNN | $13.00 | $5 | ||||||||||
1447 Grand Avenue Billings, MT | N/A | 1969 | In-Line/ Shop | N/A | Good Vibrations | 12/2013 | 3,000 | NNN | $14.00 | $7 | ||||||||||
Mountain West Bank Building 3301 Great Northern Avenue Missoula, MT | N/A | 2008 | In-Line/ Shop | N/A | Confidential | 11/2013 | 2,470 | NNN | $14.00 | $20 | ||||||||||
935 SW Higgins Avenue Missoula, MT | N/A | 1974 | In-Line/ Shop | N/A | Massage Envy | 10/2013 | 3,550 | NNN | $12.00 | $10 | ||||||||||
425 N 5th Street W Missoula, MT | N/A | 1993 | In-Line/ Shop | N/A | Going Quilting | 6/2014 | 1,100 | NNN | $9.50 | $5 | ||||||||||
1200 S Reserve Street Missoula, MT | N/A | 2004 | In-Line/ Shop | N/A | Fairytales and Fantasies | 2/2014 | 1,300 | NNN | $13.00 | $8 | ||||||||||
2001 Brooks Street Missoula, MT | N/A | 1965 | In-Line/ Shop | N/A | Rocco Bridal | 1/2014 | 2,100 | NNN | $11.00 | $5 | ||||||||||
Source: Appraisal
III-15 |
MSC 2015-MS1 | TKG 3 Retail Portfolio |
Manhattan Marketplace Competitive Property Summary | ||||||||||||||||||||
Comp Name/Address | Property Size (SF) | Year Built | Comp Type | Anchors | Tenant Name | Lease Date | Lease Size (SF) | Expense Reimb. | Annual Rent PSF | TI/SF | ||||||||||
West Loop Shopping Center | 214,447 | 1970 | In Line | Dillons, | Confidential | 11/2014 | 4,360 | NNN | $14.00 | $0 | ||||||||||
2700 Anderson Avenue | Marshalls, | |||||||||||||||||||
Manhattan, KS | Jo Ann | |||||||||||||||||||
Three-Tenant Strip Center | 6,140 | 2013 | In Line | N/A | Qdoba Mexican | 6/2013 | 2,945 | Modified | $24.00 | $20 | ||||||||||
814 East Chestnut Street | Grill | Gross | ||||||||||||||||||
Junction City, KS | ||||||||||||||||||||
Three-Tenant Strip Center | 6,140 | 2013 | In Line | N/A | Great Clips | 6/2013 | 1,200 | NNN | $19.75 | $15 | ||||||||||
814 East Chestnut Street | ||||||||||||||||||||
Junction City, KS | ||||||||||||||||||||
Bluemont Center | 13,270 | 2004 | In Line | N/A | AT&T | 6/2013 | 1,800 | NNN | $20.00 | $0 | ||||||||||
100 East Bluemont | ||||||||||||||||||||
Manhattan, KS | ||||||||||||||||||||
Manko Center | 21,840 | 2005 | In Line | N/A | Gambino`s | 2/2012 | 1,800 | NNN | $15.00 | $0 | ||||||||||
900 Hayes Drive | ||||||||||||||||||||
Manhattan, KS | ||||||||||||||||||||
27 Iowa Center | 13,145 | 2014 | In Line | N/A | Buffalo Wild Wings | 9/2014 | 6,000 | NNN | $25.00 | $0 | ||||||||||
2626 Iowa Street | ||||||||||||||||||||
Lawrence, KS | ||||||||||||||||||||
27 Iowa Center | 13,145 | 2014 | In Line | N/A | Sun Tan City | 9/2014 | 2,800 | NNN | $25.00 | $25 | ||||||||||
2626 Iowa Street | ||||||||||||||||||||
Lawrence, KS | ||||||||||||||||||||
Northwest Crossing | 77,299 | 1984 | Major | N/A | Petco | 9/2014 | 12,500 | NNN | $15.25 | $5 | ||||||||||
3416 State Street West | ||||||||||||||||||||
Grand Island, NE | ||||||||||||||||||||
Centro Plaza | 115,495 | 1986 | Major | N/A | DSW Shoe | 10/2015 | 17,167 | NNN | $15.00 | $20 | ||||||||||
400 North 48th Street | Warehouse, Inc. | |||||||||||||||||||
Lincoln, NE | ||||||||||||||||||||
Centro Plaza | 115,495 | 1986 | Major | N/A | Michaels | 10/2015 | 21,891 | NNN | $10.89 | $0 | ||||||||||
400 North 48th Street | ||||||||||||||||||||
Lincoln, NE | ||||||||||||||||||||
West Loop Shopping Center | 214,447 | 1970 | Major | N/A | Confidential | 11/2013 | 22,000 | NNN | $8.75 | $0 | ||||||||||
2700 Anderson Avenue | ||||||||||||||||||||
Manhattan, KS | ||||||||||||||||||||
Lawton Marketplace | 179,181 | 2013 | Major | N/A | TJ Maxx | 8/2013 | 24,000 | NNN | $9.00 | $0 | ||||||||||
1824 NW 82nd Street | ||||||||||||||||||||
Lawton, OK | ||||||||||||||||||||
NewMarket Square | 830,000 | 2001 | Major | N/A | Confidential | 9/2012 | 30,000 | NNN | $9.75 | $0 | ||||||||||
2441 N Maize Road | ||||||||||||||||||||
Wichita, KS | ||||||||||||||||||||
The Shoppes at Liberty Triangle | 311,801 | 2011 | Major | N/A | Dick’s Sporting | 10/2012 | 45,000 | NNN | $12.00 | $0 | ||||||||||
NEC of Highway 152 and Interstate 35 | Goods | |||||||||||||||||||
Liberty, MO | ||||||||||||||||||||
Wilderness Hills | 46,000 | 2014 | Major | N/A | Marshall’s/Home | 5/2014 | 46,000 | NNN | $9.00 | $0 | ||||||||||
2933 Crescent Drive | Goods | |||||||||||||||||||
Lincoln, NE | ||||||||||||||||||||
Source: Appraisal
III-16 |
MSC 2015-MS1 | TKG 3 Retail Portfolio |
Riverside Crossing Competitive Property Summary | ||||||||||||||||||
Comp Name/Address | Property Size (SF) | Year Built | Anchors | Tenant Name | Lease Date | Lease Size (SF) | Expense Reimb. | Annual Rent PSF | TI/SF | |||||||||
Freestanding Building 2531 North 12th Street Grand Junction, CO | 7,803 | 1982 | N/A | Breckenridge Ale House | 2/2015 | 7,803 | NNN | $29.22 | N/A | |||||||||
Strip Center 2412 Patterson Road Grand Junction, CO | 1,468 | 1982 | N/A | Quest Diagnostics | 1/2015 | 1,468 | NNN | $21.99 | N/A | |||||||||
Strip Center 2430 Patterson Road Grand Junction, CO | 6,300 | 2014 | N/A | Which Wich | 8/2014 | 1,000 | NNN | $28.00 | $20 | |||||||||
Strip Center 2430 Patterson Road Grand Junction, CO | 6,300 | 2014 | N/A | Costa Vita | 7/2014 | 3,900 | NNN | $27.50 | $20 | |||||||||
Strip Center 2430 Patterson Road Grand Junction, CO | 6,300 | 2014 | N/A | Sports Clips | 7/2014 | 1,400 | NNN | $28.00 | $20 | |||||||||
Peachtree Shopping Center 3225 - 3227 I-70 Business Loop Grand Junction, CO | 42,020 | 1983 | Gold’s Gym | Confidential | 1/2014 | 3,200 | NNN | $12.50 | As Is | |||||||||
Peachtree Shopping Center 3225 - 3227 I-70 Business Loop Grand Junction, CO | 42,020 | 1983 | Gold’s Gym | Confidential | 1/2014 | 4,242 | NNN | $13.11 | As Is | |||||||||
Source: Appraisal
Operating History and Underwritten Net Cash Flow.The following table presents certain information relating to the combined historical operating performance and the Underwritten Net Cash Flow at the TKG 3 Retail Portfolio Property:
Cash Flow Analysis(1) | ||||||||||||||
2011 | 2012 | 2013 | 2014 | UW | UW PSF | |||||||||
Base Rent(2) | N/A | N/A | N/A | $15,137,947 | $16,227,768 | $11.46 | ||||||||
Total Recoveries | N/A | N/A | N/A | $5,412,487 | $6,654,958 | $4.70 | ||||||||
Other Income | N/A | N/A | N/A | $0 | $0 | $0.00 | ||||||||
Discounts Concessions | N/A | N/A | N/A | $0 | $0 | $0.00 | ||||||||
Less Vacancy & Credit Loss | N/A | N/A | N/A | ($161,952) | ($1,196,438) | ($0.84) | ||||||||
Effective Gross Income | N/A | N/A | N/A | $20,388,482 | $21,686,289 | $15.31 | ||||||||
Total Operating Expenses | N/A | N/A | N/A | $5,815,646 | $7,501,483 | $5.30 | ||||||||
Net Operating Income | N/A | N/A | N/A | $14,572,836 | $14,184,806 | $10.01 | ||||||||
Capital Expenditures | N/A | N/A | N/A | $32,980 | $293,535 | $0.21 | ||||||||
TI/LC | N/A | N/A | N/A | $178,897 | $843,862 | $0.60 | ||||||||
Net Cash Flow | N/A | N/A | N/A | $14,360,959 | $13,047,409 | $9.21 | ||||||||
Occupancy%(2) | N/A | N/A | N/A | N/A | 94.4% | |||||||||
NOI DSCR | N/A | N/A | N/A | 2.12x | 2.07x | |||||||||
NCF DSCR | N/A | N/A | N/A | 2.09x | 1.90x | |||||||||
NOI Debt Yield | N/A | N/A | N/A | 9.1% | 8.9% | |||||||||
NCF Debt Yield | N/A | N/A | N/A | 9.0% | 8.2% | |||||||||
(1) | Affiliates or associates of the TKG 3 Retail Portfolio Borrower purchased the six retail centers that comprise the TKG 3 Retail Portfolio Property in 2011, 2012 and 2013. Complete historical operating statements and occupancy data prior to 2014 are not available for all six centers. | |
(2) | Historical Base Rent is net of vacancy. Certain contractual rent steps totaling approximately $44,726 per year are underwritten, including $12,998 associated with averaging the Lowe’s base rent payable during the loan term. |
III-17 |
MSC 2015-MS1 | TKG 3 Retail Portfolio |
Escrows and Reserves. During a Cash Sweep Period, the TKG 3 Retail Portfolio Borrower is required to escrow monthly 1/12 of the annual estimated tax payments (unless such taxes are being paid directly to the applicable taxing authority by tenants under their leases or tenants are required to reimburse TKG 3 Retail Portfolio Borrower for or pay to TKG 3 Retail Portfolio Borrower such taxes under their leases) and 1/12 of the annual estimated insurance premiums (unless the TKG 3 Retail Portfolio Borrower maintains insurance under an acceptable blanket insurance policy).
During a Cash Sweep Period, the TKG 3 Retail Portfolio Borrower is also required to make the applicable monthly deposits set forth below for replacement reserves (which amount may be increased by the lender if the lender determines that an increase is reasonably necessary to maintain proper operation of the TKG 3 Retail Portfolio Property) and for TI/LC reserves with respect to each TKG 3 Retail Portfolio Property component:
Springing Reserves Summary | ||||||||
Property Name | Monthly Replacement Reserve Deposit | Annual Escrow PSF | Monthly TI/LC Reserve Deposit | Annual Escrow PSF | ||||
Riverside Center | $8,658 | $0.15 | $25,397 | $0.44 | ||||
Norwichtown Commons | $5,471 | $0.39 | $11,110 | $0.79 | ||||
Coral North | $2,606 | $0.15 | $12,331 | $0.71 | ||||
Grant Creek Town Center | $5,301 | $0.39 | $7,340 | $0.54 | ||||
Manhattan Marketplace | $1,852 | $0.15 | $3,828 | $0.31 | ||||
Riverside Crossing | $574 | $0.20 | $4,142 | $1.42 |
Lockbox and Cash Management.A springing hard lockbox is in place with respect to the TKG 3 Retail Portfolio Mortgage Loan (i.e., upon the occurrence and during the continuance of a Cash Sweep Period for the TKG 3 Retail Portfolio Mortgage Loan, the TKG 3 Retail Portfolio Borrower has agreed to establish and maintain a hard lockbox). Provided a Cash Sweep Period has occurred but is no longer continuing, the lockbox account is de-activated. The TKG 3 Retail Portfolio Mortgage Loan has springing cash management. Provided a Cash Sweep Period has not occurred or has occurred but is not continuing, the TKG 3 Retail Portfolio Mortgage Loan does not have cash management. Upon the occurrence and during the continuance of a Cash Sweep Period for the TKG 3 Retail Portfolio Mortgage Loan, funds in the lockbox account are applied on each monthly payment date to pay debt service on the TKG 3 Retail Portfolio Loan Pair, to fund the required reserves deposits as described above under“—Escrows and Reserves,” to disburse, provided no event of default has occurred, to the TKG 3 Retail Portfolio Borrower the monthly amount payable for operating expenses not otherwise paid or reserved for as described above under“—Escrows and Reserves” and referenced in the annual budget approved by lender together with other amounts incurred by the TKG 3 Retail Portfolio Borrower in connection with the operation and maintenance of the TKG 3 Retail Portfolio Property approved by lender and to remit the remainder to an account to be held by the lender as additional security for the TKG 3 Retail Portfolio Loan Pair.
A “Cash Sweep Period” will (i) commence upon the occurrence of an event of default and continue until no event of default exists or (ii) commence upon the DSCR falling below 1.10x for the trailing 12 months using a 30-year amortization loan constant and continue until either (x) the DSCR has been at least 1.15x for the immediately preceding 12 consecutive calendar months using a 30-year amortization loan constant or (y) the TKG 3 Retail Portfolio Borrower enters into a Master Lease (as defined below) (except such Master Lease may be terminated by the TKG 3 Retail Portfolio Borrower upon 30 days prior written notice to the lender if the event described in clause (ii)(x) above occurs (without giving effect to the Master Lease)).
A “Master Lease” is a lease agreement between the TKG 3 Retail Portfolio Borrower, as landlord, and E. Stanley Kroenke, as tenant, that (a) is for a term of five years or more and otherwise on market terms and conditions for properties substantially similar to the related mortgaged property and reasonably acceptable to lender and (b) covers a sufficient amount of rentable square feet such that when the rent under such lease is combined with the rent payable under all other leases at the TKG 3 Retail Portfolio Property, the DSCR is 1.25x using a 30-year amortization loan constant.
Additional Secured Indebtedness (not including trade debts). The TKG 3 Retail Portfolio Serviced Companion Loan was originated by Morgan Stanley Bank, N.A., on May 15, 2015 and is evidenced by two notes (Notes A-2 and A-3) with a combined Cut-off Date balance of $79,708,750. The notes evidencing the TKG 3 Retail Portfolio Serviced Companion Loan accrue interest at the same rate as the TKG 3 Retail Portfolio Mortgage Loan. The TKG 3 Retail Portfolio Mortgage Loan is entitled to payments of principal (if applicable) and interest on apro rata andpari passu basis with the TKG 3 Retail Portfolio Serviced Companion Loan as and to the extent described under “Description of the Mortgage Pool—The A/B Whole Loans and Loan Pairs —The TKG 3 Retail Portfolio Loan Pair” in this prospectus supplement. The holder of the TKG 3 Retail Portfolio Serviced Companion Loan on the closing date of this transaction will be the MSBAM 2015-C23 securitization trust. The holders of the TKG 3 Retail Portfolio Mortgage Loan and the TKG 3 Retail Portfolio Serviced Companion Loan have entered into a co-lender agreement that sets forth the allocation of collections on the TKG 3 Retail Portfolio Loan Pair.
Release of Property. Provided no event of default has occurred and remains uncured, at any time after June 1, 2017, the TKG 3 Retail Portfolio Borrower may obtain a release of the lien of the respective mortgage or deed of trust on an individual property comprising the TKG 3 Retail Portfolio Property, provided, among other conditions,
(i) the TKG 3 Retail Portfolio Borrower pays down the TKG 3 Retail Portfolio Loan Pair in an amount equal to 115% of the applicable allocated loan amount set forth below for the individual property being released together with interest on the TKG 3 Retail Portfolio Loan Pair accruing thereon through the current (or to the next) monthly payment date and the yield maintenance premium calculated pursuant to the terms of the loan agreement for the TKG 3 Retail Portfolio Loan Pair:
Property Name | Allocated Loan Amount | |
Riverside Center | $48,702,466 | |
Norwichtown Commons | $30,356,000 | |
Coral North | $26,400,000 | |
Grant Creek Town Center | $24,701,000 | |
Manhattan Marketplace | $20,250,000 | |
Riverside Crossing | $9,299,284 |
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MSC 2015-MS1 | TKG 3 Retail Portfolio |
(ii) after giving effect to the release, the LTV ratio with respect to the remaining TKG 3 Retail Portfolio Property shall not exceed the lesser of 75% or the LTV ratio immediately prior to the release (based upon updated appraisals of the TKG 3 Retail Portfolio Property obtained at the TKG 3 Retail Portfolio Borrower’s expense),
(iii) after giving effect to the release, the DSCR with respect to the remaining TKG 3 Retail Portfolio Property shall not be less than the greater of 1.25x and the DSCR immediately prior to the release and
(iv) after giving effect to the release, the debt yield with respect to the remaining TKG 3 Retail Portfolio Property shall not be less than the greater of 8.17% and the debt yield immediately prior to the release.
In addition, provided no event of default has occurred and remains uncured, the TKG 3 Retail Portfolio Borrower may obtain a release of the lien of the respective mortgage on a portion of the Riverside Center component of the TKG 3 Retail Portfolio Property identified as “Parcel A-Tract 3” (containing 0.35 acres) and “Proposed Pad 1-Outparcel” (containing 0.39 acres) for retail purposes compatible with the use and operation of such property as a super-regional shopping center, provided, among other conditions, (i) the TKG 3 Retail Portfolio Borrower pays down the TKG 3 Retail Portfolio Loan Pair in an amount equal to $425,500 together with interest on the TKG 3 Retail Portfolio Loan Pair accruing thereon through the current (or to the next) monthly payment date and the yield maintenance premium calculated pursuant to the terms of the loan agreement for the TKG 3 Retail Portfolio Loan Pair, (ii) after taking into account any improvement proposed to be built on the land to be released and its effect on the income and expenses at the TKG 3 Retail Portfolio Property, the DSCR with respect to the remaining TKG 3 Retail Portfolio Property shall not be less than the greater of 1.25x and the DSCR immediately prior to the release and (iii) the TKG 3 Retail Portfolio Borrower delivers to the lender (x) an appraisal dated not more than 60 days prior to the release date indicating a value of the Riverside Center property after the release (both before and after construction of improvements to be built on the release parcels) equal to or greater than the value of the Riverside Center property prior to the release and (y) a rating agency confirmation as to the partial release and anticipated improvements to be placed on the release parcels.
Terrorism Insurance.The TKG 3 Retail Portfolio Borrower is required to obtain insurance against acts of terrorism or other similar acts or events (or “fire following”) to the extent such insurance is available in form and substance satisfactory to lender (but in no event more than the sum of 100% of full replacement cost and 12 months of business interruption insurance). Notwithstanding the foregoing, for so long as the Terrorism Risk Insurance Program Reauthorization Act of 2007 (or any extension thereof or other federal government program with substantially similar protection) is in effect, the TKG 3 Retail Portfolio Borrower is required to maintain, and the lender is required to accept, terrorism insurance which covers “covered acts” (as defined by such statute or other program), as full compliance as it relates to the risks required to be covered pursuant to the preceding sentence, so long as such statute or other program covers both domestic and foreign acts of terrorism.
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MSC 2015-MS1 | 300 South Riverside Plaza Fee |
Mortgage Loan No. 2 – 300 South Riverside Plaza Fee
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MSC 2015-MS1 | 300 South Riverside Plaza Fee |
Mortgage Loan No. 2 – 300 South Riverside Plaza Fee
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MSC 2015-MS1 | 300 South Riverside Plaza Fee |
Mortgage Loan No. 2 – 300 South Riverside Plaza Fee |
Mortgage Loan Information | Mortgaged Property Information(5) | |||||||
Mortgage Loan Seller: | MSMCH | Single Asset/Portfolio: | Single Asset | |||||
Original Balance(1): | $67,000,000 | Location: | Chicago, IL 60606 | |||||
Cut-off Date Balance(1): | $67,000,000 | General Property Type(4): | Leased Fee | |||||
% of Initial Pool Balance: | 7.6% | Detailed Property Type(4): | Leased Fee | |||||
Loan Purpose: | Acquisition | Title Vesting: | Fee | |||||
Sponsor: | James Stanton; David Lowenfeld | Year Built/Renovated: | 1983/2012 | |||||
Mortgage Rate: | 3.950% | Size: | 1,055,273 SF | |||||
Note Date: | 2/10/2015 | Cut-off Date Balance per Unit(1): | $158 | |||||
First Payment Date: | 4/5/2015 | Maturity Date Balance per Unit(1)(2): | $158 | |||||
Effective Maturity Date(2): | 3/5/2025 | Property Manager: | N/A | |||||
Original Term to Maturity(2): | 120 months | |||||||
Original Amortization Term: | 0 months | Underwriting and Financial Information(5) | ||||||
IO Period: | 120 months | UW NOI: | $9,900,000 | |||||
Seasoning: | 4 months | UW NOI Debt Yield(1): | 5.9% | |||||
Prepayment Provisions: | LO (28); DEF (85); O (7) | UW NOI Debt Yield at Maturity(1)(2): | 5.9% | |||||
Lockbox/Cash Mgmt Status: | Hard/Springing | UW NCF DSCR(1): | 1.48x | |||||
Additional Debt Type: | Pari Passu | Most Recent NOI(6): | N/A | |||||
Additional Debt Balance: | $100,000,000 | 2nd Most Recent NOI(6): | N/A | |||||
Future Debt Permitted (Type): | No (N/A) | 3rd Most Recent NOI(6): | N/A | |||||
Reserves(3) | Most Recent Occupancy(6): | N/A | ||||||
Type | Initial | Monthly | Cap | 2nd Most Recent Occupancy(6): | N/A | |||
RE Tax: | $0 | Springing | N/A | 3rd Most Recent Occupancy(6): | N/A | |||
Insurance: | $0 | Springing | N/A | Appraised Value (as of): | $229,000,000 (11/12/2014) | |||
Cut-off Date LTV Ratio(1): | 72.9% | |||||||
Maturity Date LTV Ratio(1)(2): | 72.9% |
Sources and Uses | ||||||||||
Sources | Proceeds | % of Total | Uses | Proceeds | % of Total | |||||
Loan Amount(1): | $167,000,000 | 75.3% | Purchase Price: | $220,000,000 | 99.2% | |||||
Borrower Equity: | $54,742,740 | 24.7% | Closing Costs: | $1,742,740 | 0.8% | |||||
Total Sources: | $221,742,740 | 100.0% | Total Uses: | $221,742,740 | 100.0% |
(1) | The 300 South Riverside Plaza Fee Mortgage Loan is part of the 300 South Riverside Plaza Fee Non-Serviced Loan Combination, which is comprised of twopari passupromissory notes with an aggregate Cut-off Date principal balance of $167,000,000. The Cut-off Date Balance per Unit, Maturity Date Balance per Unit, UW NOI Debt Yield, UW NOI Debt Yield at Maturity, UW NCF DSCR, Cut-off Date LTV Ratio and Maturity Date LTV Ratio presented above are based on the aggregate note balance of the 300 South Riverside Plaza Fee Non-Serviced Loan Combination. | |
(2) | The 300 South Riverside Plaza Fee Non-Serviced Loan Combination has an anticipated repayment date (“ARD”) of March 5, 2025 and a stated maturity date of March 5, 2045. In the event the 300 South Riverside Plaza Fee Non-Serviced Loan Combination is not repaid in full by the ARD, the interest rate will increase from the initial interest rate of 3.950% to the greater of (a) 5.0% above the current interest rate and (b) 5.0% above the 20-year interpolated U.S. Treasury Rate. After the ARD, the lender may apply any excess cash to the reduction of the principal balance of the 300 South Riverside Plaza Fee Non-Serviced Loan Combination. References herein to “maturity” and “maturity date” refer to the ARD. | |
(3) | See “—Escrows and Reserves” below for further discussion of reserve requirements. | |
(4) | The 300 South Riverside Plaza Fee Mortgage Loan is secured by the air rights associated with space occupied by a 22-story office building located at 300 South Riverside Plaza in Chicago, IL and encumbered by a ground lease. The improvements are not collateral for the 300 South Riverside Plaza Fee Mortgage Loan other than of the 300 South Riverside Plaza Fee Borrower’s reversionary interest therein. Certain property information, such as Size, Cut-off Date Balance per Unit, Maturity Date Balance per Unit, and Year Built/Renovated relate to the Non-Collateral Improvements (defined below) and are for informational purposes only. | |
(5) | Underwriting and Financial information is based on the current annual ground lease payment due under the ground lease described below under“—The Property.” | |
(6) | The underwritten cash flow is based on the ground lease described below under“—The Property.” Historical NOI and occupancy data are not available for this new ground lease; however, certain historical operating information and occupancy data related to the Non-Collateral Improvements are available. See “—Operating History and Underwritten Cash Flow” below for further details. |
The Mortgage Loan.The second largest mortgage loan (the “300 South Riverside Plaza Fee Mortgage Loan”) is part of a non-serviced loan combination (the “300 South Riverside Plaza Fee Non-Serviced Loan Combination”) evidenced by twopari passu promissory notes (Notes A-1 and A-2) in the aggregate principal amount of $167,000,000 as of the Cut-off Date, both of which are secured by the same first priority fee mortgage encumbering certain air rights associated with land under a 22-story office building located at 300 South Riverside Plaza, in Chicago, Illinois (the “300 South Riverside Plaza Fee Property”). Promissory Note A-2, in the original principal amount of $67,000,000, represents the 300 South Riverside Plaza Fee Mortgage Loan, and Promissory Note A-1, in the original principal amount of $100,000,000 (the “300 South Riverside Plaza Fee Non-Serviced Companion Loan”), was contributed to the MSBAM 2015-C22 securitization trust. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The 300 South Riverside Plaza Fee Non-Serviced Loan Combination” and “Servicing of the Mortgage Loans” in this prospectus supplement. The 300 South Riverside Plaza Fee Non-Serviced Loan Combination will be serviced pursuant to the terms of the MSBAM 2015-C22 pooling and servicing agreement. See “Servicing of the Mortgage Loans—Additional Matters Relating to the Servicing of the Non-Serviced Mortgage Loans—The 300 South Riverside Plaza Fee Mortgage Loan” in this prospectus supplement. The proceeds of the 300 South Riverside Plaza Fee Non-Serviced Loan Combination were used to acquire the 300 South Riverside Plaza Fee Property for a purchase price of approximately $220,000,000.
The Borrower and the Sponsor.The borrowers are Lionshead 110 Riverside LLC and Lionshead 53 Riverside LLC, two single-purpose Delaware limited liability companies that own the 300 South Riverside Plaza Fee Property as tenants-in-common (collectively, the “300 South Riverside Plaza Fee
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MSC 2015-MS1 | 300 South Riverside Plaza Fee |
Borrower”). The 300 South Riverside Plaza Fee Borrower is majority owned and controlled by Jim Stanton, David Lowenfeld and the Estate of Victor Elmaleh (including family members of each of the foregoing). Schron Company affiliates own a minority indirect interest in the 300 South Riverside Plaza Fee Borrower. World-Wide Holdings Corporation (“World-Wide”) is the nonrecourse carve-out guarantor.
World-Wide is a subsidiary of World-Wide Group, a New York City-based real estate development company that has developed over $7 billion of residential, commercial and mixed-use properties. James Stanton is president of World-Wide Group, and David Lowenfeld is chief operating officer. The company’s October 31, 2014 consolidated balance sheet indicates total assets of approximately $53.3 million and liabilities of approximately $7.0 million.
The Property. The 300 South Riverside Plaza Fee Property consists of air rights associated with a 2.08 acre parcel located at 300 South Riverside Plaza above rail lines that lead to the neighboring Chicago Union Station in Chicago, IL. The 300 South Riverside Plaza Fee Property is currently subject to a 99-year ground lease of such air rights, dated February 10, 2015 (the “Ground Lease”) with South Riverside Building LLC (the “Ground Lessee”), which owns the improvements located on the 300 South Riverside Plaza Fee Property (the “Non-Collateral Improvements”). The Non-Collateral Improvements, which were constructed in 1983 and renovated in 2012, consist of a Class A, 22-story, 1,055,273 SF office building. The Non-Collateral Improvements are owned by the Ground Lessee, and only the 300 South Riverside Plaza Fee Borrower’s reversionary interest therein serves as collateral for the 300 South Riverside Plaza Fee Mortgage Loan. The Ground Lessee pays ground rent in the initial amount of $9,900,000, annually, on an absolute net basis, subject to annual CPI adjustments capped at 3% per year. Furthermore, the ground rent is scheduled to increase by an additional $500,000 per year upon each 10th anniversary during the ground lease term, plus any shortfall in CPI adjustments due to the aforementioned 3% annual adjustment cap. An affiliate of the Ground Lessee was the previous owner of the 300 South Riverside Plaza Fee Property.
The following table presents a summary regarding the largest tenants at the Non-Collateral Improvements located on the 300 South Riverside Plaza Fee Property:
Non-Collateral Improvements Tenant Summary(1) | ||||||||||||||
Tenant Name | Credit Rating (Fitch/Moody’s/S&P)(2) | Tenant SF | Approximate % of SF | Annual UW Rent | % of Total Annual UW Rent | Annual UW Rent PSF(3) | Lease Expiration | |||||||
Anchor/Major Tenants | ||||||||||||||
JP Morgan Chase | A+/A3/A | 486,143 | 46% | $9,980,474 | 46% | $20.53 | 9/30/2021 | (4) | ||||||
Zurich American Insurance | NR/A3/A | 107,807 | 10% | $2,736,949 | 13% | $25.39 | 4/30/2026 | |||||||
DeVry | NR/NR/NR | 77,116 | 7% | $1,542,320 | 7% | $20.00 | 4/30/2023 | |||||||
National Futures Association | NR/NR/NR | 71,125 | 7% | $1,356,786 | 6% | $19.08 | 8/31/2023 | |||||||
FDIC | AAA/Aaa/AA+ | 68,013 | 6% | $1,503,612 | 7% | $22.11 | 8/31/2019 | |||||||
Subtotal/Wtd. Avg. | 810,204 | 77% | $17,120,141 | 79% | $21.13 | |||||||||
Other Tenants | 223,358 | 21% | $4,657,603 | 21% | $20.85 | |||||||||
Vacant Space | 21,711 | 2% | $0 | 0% | $0.00 | |||||||||
Total/Wtd. Avg. | 1,055,273 | 100% | $21,777,744 | 100% | $21.07 |
(1) | The Non-Collateral Improvements are not collateral for the 300 South Riverside Plaza Fee Mortgage Loan (except for the reversionary interest of the 300 South Riverside Plaza Fee Borrower therein). The tenant information above represents leases of the Ground Lessee’s Non-Collateral Improvements and is provided for informational purposes only. | |
(2) | Certain ratings are those of the parent company whether or not the parent guarantees the lease. | |
(3) | Wtd. Avg. Annual UW Rent PSF excludes vacant space. | |
(4) | JP Morgan Chase has a lease termination option effective September 30, 2016 upon notice to Ground Lessee no later than nine months prior to such date. If such termination notice is given, the Ground Lessee is required to deposit $333,333 per month with the lender or a designee during the notice period until a $3,000,000 balance is on deposit. Such balance is to be applied (and released) as payment of the last $3,000,000 of JP Morgan Chase base rent payable during the calendar year 2017. |
The Market. The 300 South Riverside Plaza Fee Property is located in the West Loop submarket, within the central business district (CBD) of Chicago, Cook County, Illinois. The 300 South Riverside Plaza Fee Property is located adjacent to Chicago Union Station along the Chicago River. As of September 30, 2014, the overall Chicago office market had a 14.1% vacancy rate and an average asking rental rate of $22.12 PSF, the West Loop submarket, with approximately 52.6 million SF, had an 11.9% vacancy rate with an average asking rental rate of $31.07 PSF, and the West Loop Class A market, with approximately 34.7 million SF, had an 11.6% vacancy rate and an average asking rental rate of $33.39 PSF. The appraisal notes two office projects totaling approximately 2.3 million SF currently under construction in the West Loop submarket. For large office spaces (50,000 SF+) leases comparable to the leases of the Non-Collateral Improvements indicate base rental rates from $18.50 PSF to $25.00 PSF.
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MSC 2015-MS1 | 300 South Riverside Plaza Fee |
The following table presents Chicago Class A rental properties comparable to the Non-Collateral Improvements located on the 300 South Riverside Plaza Fee Property:
Non-Collateral Improvements Competitive Property Summary | |||||||||||||||||||
Property Name/Location | NRA | Year Built/Ren. | Occupancy | Tenant Name | Lease Date | Size (SF) | Term (years) | Rent PSF | Avg. Esc./Yr. | Concessions | TI/SF | ||||||||
300 S. Wacker Dr. 300 S. Wacker Dr. | 561,865 | 1971/1990 | 85.8% | MBHB | 12/1/2014 | 60,782 | 5.0 | $18.50 | 2.6% | 17 months | $75 | ||||||||
Willis Tower 233 S. Wacker Dr. | 3,549,487 | 1973/1991 | 83.8% | Dentons US LLP | 9/1/2014 | 125,553 | 15.0 | $19.00 | 2.3% | N/A | $84 | ||||||||
Citigroup Center 500 W. Madison St. | 1,455,688 | 1987/2005 | 95.5% | AIG | 6/1/2014 | 74,460 | 10.0 | $19.00 | 2.3% | 10 months | $68 | ||||||||
191 N. Wacker Dr. 191 N. Wacker Dr. | 732,000 | 2003/N/A | 92.2% | Heitman Financial | 6/1/2013 | 58,264 | 10.0 | $25.00 | 1.9% | 10 months | $55 | ||||||||
One North Wacker 1 N. Wacker Dr. | 1,373,754 | 2001/N/A | 88.7% | Options Clearing | 6/1/2013 | 57,383 | 10.0 | $23.15 | 2.0% | 5 months | $43 |
Source: Appraisal |
The following table presents certain information relating to the lease rollover schedule for the Non-Collateral Improvements located on the 300 South Riverside Plaza Fee Property:
Non-Collateral Improvements Rollover Schedule(1) | ||||||||||||||||
Year | # of Leases Rolling | SF Rolling | Annual UW Rent PSF Rolling(2) | Approx. % of Total SF Rolling | Approx. Cumulative % of SF Rolling | Total UW Rent Rolling | Approx. % of Total UW Rent Rolling | Approx. Cumulative % of Total UW Rent Rolling | ||||||||
MTM | 3 | 3 | $0.00 | 0% | 0% | $0 | 0% | 0% | ||||||||
2015 | 0 | 0 | $0.00 | 0% | 0% | $0 | 0% | 0% | ||||||||
2016 | 1 | 9,956 | $34.76 | 1% | 1% | $346,071 | 2% | 2% | ||||||||
2017 | 1 | 0 | $0.00 | 0% | 1% | $0 | 0% | 2% | ||||||||
2018 | 4 | 46,385 | $20.86 | 4% | 5% | $967,762 | 4% | 6% | ||||||||
2019 | 3 | 107,191 | $22.16 | 10% | 15% | $2,375,839 | 11% | 17% | ||||||||
2020 | 5 | 25,966 | $11.92 | 2% | 18% | $309,472 | 1% | 18% | ||||||||
2021 | 2 | 486,143 | $20.53 | 46% | 64% | $9,980,474 | 46% | 64% | ||||||||
2022 | 0 | 0 | $0.00 | 0% | 64% | $0 | 0% | 64% | ||||||||
2023 | 4 | 156,786 | $19.63 | 15% | 79% | $3,078,026 | 14% | 78% | ||||||||
2024 | 0 | 0 | $0.00 | 0% | 79% | $0 | 0% | 78% | ||||||||
2025 | 2 | 28,744 | $19.56 | 3% | 82% | $562,370 | 3% | 81% | ||||||||
2026 | 2 | 172,388 | $24.12 | 16% | 98% | $4,157,731 | 19% | 100% | ||||||||
2027 | 0 | 0 | $0.00 | 0% | 98% | $0 | 0% | 100% | ||||||||
2028 & Beyond | 0 | 0 | $0.00 | 0% | 98% | $0 | 0% | 100% | ||||||||
Vacant | 0 | 21,711 | $0.00 | 2% | 100% | $0 | 0% | 100% | ||||||||
Total/Wtd. Avg. | 27 | 1,055,273 | $21.07 | 100% | $21,777,744 | 100% |
(1) | The Non-Collateral Improvements are not collateral for the 300 South Riverside Plaza Fee Mortgage Loan (except for the reversionary interest of the 300 South Riverside Plaza Fee Borrower therein). The lease rollover schedule above represents leases of the Ground Lessee’s Non-Collateral Improvements and is provided for informational purposes only. | |
(2) | Wtd. Avg. UW Rent PSF Rolling excludes vacant space. |
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MSC 2015-MS1 | 300 South Riverside Plaza Fee |
Operating History and Underwritten Cash Flow.The following table presents certain information relating to the historic operating results of the Non-Collateral Improvements and the underwritten cash flow at the 300 South Riverside Plaza Fee Property:
Cash Flow Analysis of the Non-Collateral Improvements(1) | |||||||||||||||
Leasehold 2011 | Leasehold 2012 | Leasehold 2013 | Leasehold 2014 | Assumed with JP Morgan Chase “Marked to Market”(2) | UW(3) | UW PSF | |||||||||
Base Rent | $14,245,194 | $13,995,540 | $15,203,291 | $14,514,574 | $22,269,215 | $9,900,000 | $9.38 | ||||||||
Total Recoveries | $13,605,646 | $14,504,680 | $14,137,082 | $11,586,828 | $14,193,158 | $0 | $0.00 | ||||||||
Other Income | $785,501 | $913,637 | $791,242 | $810,476 | $791,242 | $0 | $0.00 | ||||||||
Discounts Concessions | $0 | $0 | $0 | $0 | $0 | $0 | $0.00 | ||||||||
Less Vacancy & Credit Loss | $0 | $0 | $0 | $0 | ($3,026,377) | $0 | $0.00 | ||||||||
Effective Gross Income | $28,636,341 | $29,413,856 | $30,131,615 | $26,911,878 | $34,227,238 | $9,900,000 | $9.38 | ||||||||
Total Expenses(4) | $13,355,490 | $13,509,310 | $13,957,600 | $14,573,938 | $14,331,423 | $0 | $0.00 | ||||||||
Net Operating Income | $15,280,851 | $15,904,546 | $16,174,015 | $12,337,940 | $19,895,815 | $9,900,000 | $9.38 | ||||||||
Capital Expenditures | $0 | $0 | $0 | $0 | $316,939 | $0 | $0.00 | ||||||||
TI/LC | $0 | $0 | $0 | $0 | $1,285,850 | $0 | $0.00 | ||||||||
Net Cash Flow | $15,280,851 | $15,904,546 | $16,174,015 | $12,337,940 | $18,293,025 | $9,900,000 | $9.38 | ||||||||
Occupancy % | 87.6% | 96.7% | 78.5% | (5) | 97.0% | (5) | 91.7% | N/A | |||||||
NOI DSCR | 2.28x | 2.38x | 2.42x | 1.84x | 2.97x | 1.48x | |||||||||
NCF DSCR | 2.28x | 2.38x | 2.42x | 1.84x | 2.74x | 1.48x | |||||||||
NOI Debt Yield | 9.2% | 9.5% | 9.7% | 7.4% | 11.9% | 5.9% | |||||||||
NCF Debt Yield | 9.2% | 9.5% | 9.7% | 7.4% | 11.0% | 5.9% |
(1) | The Non-Collateral Improvements are not collateral for the 300 South Riverside Plaza Fee Mortgage Loan (except for the reversionary interest of the 300 South Riverside Plaza Fee Borrower therein). The cash flow analysis table above represents historical financial results of the Non-Collateral Improvements and this historical financial data is provided for informational purposes only. The historical Occupancy % numbers reflect the occupancy of the Non-Collateral Improvements. The underwritten column above reflects the underwritten cash flow and related statistics associated with the 300 South Riverside Plaza Fee Property. | |
(2) | The Assumed with JP Morgan Chase “Marked to Market” column represents an underwriting assumption that the current office lease with JP Morgan Chase, totaling 482,722 SF, is leased at the appraiser’s estimate of market rent associated with such office space. The JP Morgan Chase tenant currently pays $5,430,945 in annual base rent, or approximately $11.25 PSF. The appraiser estimates that such space, if available to lease, could currently be rented at approximately $22.00 PSF. The appraiser’s estimate of market rent may or may not be achievable and is presented for informational purposes only. | |
(3) | The UW cash flow represents the ground rent payable to the 300 South Riverside Plaza Fee Borrower. The contractual annual rent payment is $9,900,000 on an absolute net basis. The lease has certain contractual rent steps as described above. See “—The Property” above for details. | |
(4) | The historical expenses do not reflect the related party air rights rent of $647,764 (2011, 2012, 2013) and $651,724 (2014)per annum paid to the former owner of the 300 South Riverside Plaza Fee Property. | |
(5) | A former tenant, National Union Fire, vacated approximately 199,214 SF in 2013. Approximately 172,388 SF of the former National Union Fire space was released to Zurich American Insurance and Newark Corporation effective May 1, 2014 and September 1, 2014, respectively. This temporary vacancy impacted the occupancy as of December 31, 2013 and the 2014 leasehold operating results. The 2014 occupancy rate reflects a rent roll dated September 30, 2014. |
Escrows and Reserves.Pursuant to the Ground Lease, the Ground Lessee under the Ground Lease is obligated to pay real estate taxes, insurance premiums, tenant improvements, leasing commissions, operating expenses and capital expenditures with respect to the 300 South Riverside Plaza Fee Property. If at any time the Ground Lease is not in full force and effect, the lender may require the 300 South Riverside Plaza Fee Borrower to establish promptly and maintain with the lender reserves for the payment of tenant improvements, leasing commissions, operating expenses and capital expenditures. If at any time the Ground Lease is not in full force and effect, an event of default on the 300 South Riverside Plaza Fee Mortgage Loan has occurred and is continuing or the ground tenant is subject to a bankruptcy or insolvency proceeding, the 300 South Riverside Plaza Fee Borrower will be required to deposit with the lender monthly 1/12 of the annual estimated tax payments and 1/12 of the annual estimated insurance premiums.
Lockbox and Cash Management.A hard lockbox is in place with respect to the 300 South Riverside Plaza Fee Mortgage Loan. The 300 South Riverside Plaza Fee Mortgage Loan has springing cash management. Provided a Cash Sweep Period (as defined below) has not commenced, funds in the lockbox account are swept daily to an account designated by the 300 South Riverside Plaza Fee Borrower. During the continuance of a Cash Sweep Period, funds in the lockbox account are applied on each monthly payment date (i) to pay debt service on the 300 South Riverside Plaza Fee Non-Serviced Loan Combination, (ii) to disburse, provided no event of default on the 300 South Riverside Plaza Fee Mortgage Loan has occurred and is continuing, to the 300 South Riverside Plaza Fee Borrower the monthly amount payable for operating expenses incurred by the 300 South Riverside Plaza Fee Borrower in connection with the operation and maintenance of the 300 South Riverside Plaza Fee Property and approved by the lender, and (iii) to remit the remainder to an account to be held by the lender as additional security for the 300 South Riverside Plaza Fee Non-Serviced Loan Combination.
A “Cash Sweep Period” will (a) commence on March 5, 2025 and continue thereafter without expiration or (b) commence upon the occurrence of an event of default under the 300 South Riverside Plaza Fee Mortgage Loan and continue until such event of default is cured.
Additional Secured Indebtedness (not including trade debts).The 300 South Riverside Plaza Fee Property also secures an additionalpari passu promissory note, the 300 South Riverside Plaza Fee Non-Serviced Companion Loan, with a Cut-off Date balance of $100,000,000. The 300 South Riverside Plaza Fee Non-Serviced Companion Loan was contributed to the MSBAM 2015-C22 securitization trust. The note evidencing the 300 South Riverside Plaza Fee Non-Serviced Companion Loan accrues interest at the same rate as the 300 South Riverside Plaza Fee Mortgage Loan. The 300 South Riverside Plaza Fee Mortgage Loan is entitled to payments of principal and interest on apro rata andpari passu basis with the 300 South Riverside Plaza Fee Non-Serviced Companion Loan. The holders of the 300 South Riverside Plaza Fee Mortgage Loan and the 300 South Riverside Plaza Fee Non-Serviced Companion Loan have entered into a co-lender agreement which sets forth the allocation of collections on the 300 South Riverside Plaza Fee Non-Serviced Loan Combination. The 300 South Riverside Plaza Fee Non-Serviced Companion Loan represents the controlling interest in the 300 South Riverside Plaza Fee Non-Serviced Loan Combination. The 300 South Riverside Plaza Fee Non-Serviced Loan Combination will be serviced pursuant to the terms of the pooling and servicing agreement for the MSBAM 2015-C22 securitization trust. See “Description of the
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MSC 2015-MS1 | 300 South Riverside Plaza Fee |
Mortgage Pool—The Non-Serviced Loan Combinations—The 300 South Riverside Plaza Fee Non-Serviced Loan Combination”in this prospectus supplement and “Servicing of the Mortgage Loans” in this prospectus supplement.
Mezzanine Loans and Preferred Equity. Not permitted.
Release of Property.Not permitted.
Terrorism Insurance. Generally, the 300 South Riverside Plaza Fee Borrower is required to obtain insurance against acts of terrorism or other similar acts or events (or “fire following”) to the extent such insurance is available in form and substance satisfactory to the lender in an amount determined by the lender in its sole discretion (in an amount not more than the sum of 100% of full replacement costs and 24 months of business interruption insurance). Notwithstanding the foregoing, for so long as the Terrorism Risk Insurance Program Reauthorization Act of 2007 (“TRIPRA”) (or any extension thereof or other federal government program with substantially similar protection) is in effect, the 300 South Riverside Plaza Fee Borrower is required to maintain, and lender is required to accept, terrorism insurance that covers “covered acts” (as defined by such statute or other program) as full compliance so long as such statute or other program covers both domestic and foreign acts of terrorism.
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MSC 2015-MS1 | 32 Old Slip Fee |
Mortgage Loan No. 3 – 32 Old Slip Fee
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MSC 2015-MS1 | 32 Old Slip Fee |
Mortgage Loan No. 3 – 32 Old Slip Fee
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MSC 2015-MS1 | 32 Old Slip Fee |
Mortgage Loan No. 3 – 32 Old Slip Fee |
Mortgage Loan Information | Property Information(5) | ||||||
Mortgage Loan Seller: | MSMCH | Single Asset/Portfolio: | Single Asset | ||||
Original Balance(1): | $60,000,000 | Location: | New York, NY 10005 | ||||
Cut-off Date Balance(1): | $60,000,000 | General Property Type: | Leased Fee | ||||
% of Initial Pool Balance: | 6.8% | Detailed Property Type: | Leased Fee | ||||
Loan Purpose: | Acquisition | Title Vesting: | Fee | ||||
Sponsor: | Leon Melohn | Year Built/Renovated: | 1987/N/A | ||||
Mortgage Rate: | 3.7075% | Size: | 1,133,361 SF | ||||
Note Date: | 4/14/2015 | Cut-off Date Balance per Unit(1): | $155 | ||||
First Payment Date: | 6/5/2015 | Maturity Date Balance per Unit(1): | $155 | ||||
Effective Maturity Date(2): | 5/5/2025 | Property Manager: | N/A | ||||
Original Term to Maturity(2): | 120 months | ||||||
Original Amortization Term: | 0 months | Underwriting and Financial Information | |||||
IO Period: | 120 months | UW NOI(6): | (a) $8,500,000 (b) $31,994,855 | ||||
Seasoning: | 2 months | UW NOI Debt Yield(1)(6): | (a) 4.8% (b) 18.2% | ||||
Prepayment Provisions(3): | LO (26); DEF (87); O (7) | UW NOI Debt Yield at Maturity(1)(6): | (a) 5.4% (b) 18.2% | ||||
Lockbox/Cash Mgmt Status: | Hard/In Place | UW NCF DSCR(1)(6): | (a) 1.28x (b) 4.32x | ||||
Additional Debt Type: | Pari Passu | Most Recent NOI(7): | N/A | ||||
Additional Debt Balance: | $116,000,000 | 2nd Most Recent NOI(7): | N/A | ||||
Future Debt Permitted (Type): | No (N/A) | 3rd Most Recent NOI(7): | N/A | ||||
Reserves(4) | Most Recent Occupancy(7): | N/A | |||||
Type | Initial | Monthly | Cap | 2nd Most Recent Occupancy(7): | N/A | ||
RE Tax: | $0 | Springing | N/A | 3rd Most Recent Occupancy(7): | N/A | ||
Insurance: | $0 | Springing | N/A | Appraised Value (as of): | $225,000,000 (12/1/2014) | ||
Recurring Replacements: | $0 | Springing | N/A | Cut-off Date LTV Ratio(1)(6): | (a) 78.2% (b) 26.1% | ||
Maturity Date LTV Ratio(1)(6): | (a) 78.2% (b) 26.1% |
Sources and Uses | ||||||
Sources | Proceeds | % of Total | Uses | Proceeds | % of Total | |
Loan Amount(1): | $176,000,000 | 81.8% | Purchase Price(8): | $207,500,000 | 96.4% | |
Borrower Equity: | $39,142,608 | 18.2% | Closing Costs: | $7,642,608 | 3.6% | |
Total Sources: | $215,142,608 | 100.0% | Total Uses: | $215,142,608 | 100.0% |
(1) | The 32 Old Slip Fee Mortgage Loan is part of the 32 Old Slip Fee Non-Serviced Loan Combination, which is comprised of fivepari passupromissory notes with an aggregate Cut-off Date principal balance of $176,000,000. The Cut-off Date Balance per Unit, Maturity Date Balance per Unit, UW NOI Debt Yield, UW NOI Debt Yield at Maturity, UW NCF DSCR, Cut-off Date LTV Ratio and Maturity Date LTV Ratio presented above are based on the aggregate principal balance of the promissory notes comprising the 32 Old Slip Fee Non-Serviced Loan Combination. The UW NOI Debt Yield at Maturity is based on the maturity date loan balance and the contractual ground rent payable under the ground lease described below under“—The Property” effective the 11th year of such ground lease. |
(2) | The 32 Old Slip Fee Non-Serviced Loan Combination has an anticipated repayment date (“ARD”) of May 5, 2025 and a stated maturity date of May 5, 2045. In the event the 32 Old Slip Fee Non-Serviced Loan Combination is not repaid in full by the ARD, the interest rate will increase from the initial interest rate of 3.7075% to the greater of (a) 5.0% above the initial interest rate and (b) 5.0% above the 20-year interpolated U.S. Treasury Rate. After the ARD, the lender may apply any excess cash to the reduction of the principal balance of the 32 Old Slip Fee Non-Serviced Loan Combination. References herein to “maturity” and “maturity date” refer to the ARD. |
(3) | The final lockout and defeasance periods will be determined based on the securitization date of the last component of the 32 Old Slip Fee Non-Serviced Loan Combination. |
(4) | See “—Escrows and Reserves” below for further discussion of reserve requirements. |
(5) | The 32 Old Slip Fee Mortgage Loan is secured by land occupied by a 36-story office building located at 32 Old Slip in New York, NY and encumbered by a ground lease and a master lease. The improvements are not collateral for the 32 Old Slip Fee Mortgage Loan other than the 32 Old Slip Fee Borrower’s reversionary interest therein. Certain property information, such as Size, Cut-off Date Balance per Unit, Maturity Date Balance per Unit, and Year Built/Renovated relate to the Non-Collateral Improvements (defined below) and are for informational purposes only. |
(6) | Underwriting and Financial Information is based on (a) except as described in the last sentence of footnote 1 above, the current annual ground lease payment due under the ground lease described below under“—The Property,”and (b) the “look-through” to the fee and Non-Collateral Improvements (leasehold) as described below under“—Operating History and Underwritten Cash Flow.” The Cut-off and Maturity Date LTV Ratios are based on (a) the appraised value of the 32 Old Slip Fee Property, and (b) the combined sales price of the 32 Old Slip Fee Property and the Non-Collateral Improvements (leasehold) pursuant to a purchase and sale agreement dated November 18, 2014. |
(7) | Historical NOI and occupancy data are not available for this new ground lease; however, certain historical operating information and occupancy data related to the Non-Collateral Improvements are available. See “—Operating History and Underwritten Cash Flow” below for further details. |
(8) | The purchase price includes a $10,000,000 brokerage fee. |
The Mortgage Loan.The third largest mortgage loan (the “32 Old Slip Fee Mortgage Loan”) is part of a non-serviced loan combination (the “32 Old Slip Fee Non-Serviced Loan Combination”) evidenced by fivepari passu promissory notes (Notes A-1 through A-5) in the aggregate principal amount of $176,000,000 as of the Cut-off Date, all of which are secured by the same first priority fee mortgage encumbering land under a 36-story office building located at 32 Old Slip, in New York, New York (the “32 Old Slip Fee Property”). Notes A-2 and A-5, in the combined original principal amount of $60,000,000, represent the 32 Old Slip Fee Mortgage Loan, and Notes A-1, A-3 and A-4, in the aggregate original principal amount of $116,000,000, represent a non-serviced companion loan (the “32 Old Slip Fee Non-Serviced Companion Loan”). A portion of the 32 Old Slip Fee Non-Serviced Companion Loan, represented by Notes A-3 and A-4, with a combined principal amount of $66,000,000, was contributed to the MSBAM 2015-C23 securitization trust, and the remaining portion of the 32 Old Slip Fee Non-Serviced Companion Loan, represented by Note A-1 in the original principal amount of $50,000,000, is expected to be held by Morgan Stanley Bank, N.A. or an affiliate thereof on the closing date of this transaction and may be
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MSC 2015-MS1 | 32 Old Slip Fee |
contributed to one or more future securitization transactions. The 32 Old Slip Fee Non-Serviced Loan Combination will be serviced pursuant to the terms of the MSBAM 2015-C23 pooling and servicing agreement. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The 32 Old Slip Fee Non-Serviced Loan Combination”in this prospectus supplement. The proceeds of the 32 Old Slip Fee Non-Serviced Loan Combination were used to acquire the 32 Old Slip Fee Property for a purchase price of approximately $207,500,000, including a $10,000,000 brokerage fee.
The Borrower and the Sponsor.The borrowers are 32 Slipstream, LLC (“TIC 1”) and 32 Old Stream, LLC (“TIC 2”), two single-purpose Delaware limited liability companies that own 61.04% and 38.96%, respectively, of the 32 Old Slip Fee Property as tenants-in-common (collectively, the “Fee Owner”), and Master Slip LLC, a single-purpose Delaware limited liability company (the “Master Lessee” and, together with the Fee Owner, the “32 Old Slip Fee Borrower”), each with two independent directors. TIC 1 and the Master Lessee are each 100% indirectly owned and controlled by Leon Melohn, CEO of New York City based Melohn Properties, Inc. Leon Melohn is also the nonrecourse carve-out guarantor. TIC 2 is currently owned by a tax exchange intermediary, and is expected to be 100% indirectly owned by Leon Melohn upon completion of a reverse 1031 exchange transaction, projected to occur within 210 days of the origination date, at which time Leon Melohn will acquire an indirect 100% interest in TIC 2. The Fee Owner master leases the 32 Old Slip Fee Property to the Master Lessee under a master lease (the “Master Lease”) that is subject to the Ground Lease. Upon completion of such exchange, the Master Lease in place with the Master Lessee will terminate.
The Property. The 32 Old Slip Fee Property consists of an approximately 0.97 acre of land located at 32 Old Slip in New York, New York, which is encumbered by a 99 year term ground lease (the “Ground Lease”) that commenced on April 13, 2015 and ends on April 29, 2114, with two 25-year lease extension options and assigned to the 32 Old Slip Fee Borrower in connection with the 32 Old Slip Fee Borrower’s acquisition of the 32 Old Slip Fee Property. The tenant under the Ground Lease, RXR 32 Old Slip Owner LLC, or any successor tenant under the Ground Lease (the “Ground Tenant”), owns the improvements currently located on the 32 Old Slip Fee Property (the “Non-Collateral Improvements”), and none of the Non-Collateral Improvements serves as collateral for the 32 Old Slip Fee Mortgage Loan (other than the 32 Old Slip Fee Borrower’s reversionary interest therein). The Non-Collateral Improvements, which were constructed in 1987, consist of a Class A, 36-story office building. The Ground Tenant is required to pay ground rent in the amount of $8,500,000, annually, on an absolute net basis, for the initial 10 years of the Ground Lease. The ground rent contractually increases to $9,572,381 beginning in the 11th year and then increases by 2% annually thereafter.
The following table presents a summary regarding the largest tenants at the Non-Collateral Improvements located on the 32 Old Slip Fee Property:
Non-Collateral Improvements Tenant Summary(1) | ||||||||||||||
Tenant Name | Credit Rating (Fitch/Moody’s/S&P)(2) | Tenant SF | Approximate % of SF | Annual UW Rent | % of Total Annual UW Rent | Annual UW Rent PSF(3) | Lease Expiration | |||||||
Major Tenants | ||||||||||||||
National Union Fire Insurance Co. of Pittsburgh | A/A1/A+ | 250,027 | 22% | $12,751,377 | 25% | $51.00 | 9/1/2017 | |||||||
DAIWA Securities | BBB+/Baa1/BBB+ | 112,270 | 10% | $6,740,249 | 13% | $60.04 | 6/1/2026 | |||||||
Frank Crystal | NR/NR/NR | 72,584 | 6% | $2,453,729 | 5% | $33.81 | 9/1/2019 | |||||||
GSA: Department of Education | AAA/Aaa/AA+ | 65,796 | 6% | $2,904,893 | 6% | $44.15 | 4/1/2020(4) | |||||||
Hudson River Trading | NR/NR/NR | 61,257 | 5% | $4,125,648 | 8% | $67.35 | 6/1/2018 | |||||||
Subtotal/Wtd. Avg. | 561,934 | 50% | $28,975,897 | 57% | $51.56 | |||||||||
Other Tenants | 459,001 | 40% | $21,858,649 | 43% | $47.62 | |||||||||
Vacant Space | 112,426 | 10% | $0 | 0% | $0.00 | |||||||||
Total/Wtd. Avg. | 1,133,361 | 100% | $50,834,546 | 100% | $49.79 |
(1) | The Non-Collateral Improvements are not collateral for the 32 Old Slip Fee Mortgage Loan (except for the reversionary interest of the 32 Old Slip Fee Borrower therein). The tenant information above represents leases of the Ground Lessee’s Non-Collateral Improvements and is provided for informational purposes only. |
(2) | Certain ratings are those of the parent company whether or not the parent guarantees the lease. |
(3) | Wtd. Avg. Annual UW Rent PSF excludes vacant space. |
(4) | The Department of Education may terminate its lease at any time upon not less than 180 days’ prior written notice. |
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MSC 2015-MS1 | 32 Old Slip Fee |
The following table presents certain information relating to the lease rollover schedule for the Non-Collateral Improvements located on the 32 Old Slip Fee Property:
Non-Collateral Improvements Lease Rollover Schedule(1) | ||||||||||
Year | # of Leases Rolling | SF Rolling | UW Rent PSF Rolling(2) | Approx. % of Total SF Rolling | Approx. Cumulative % of SF Rolling | Total UW Rent Rolling | Approx. % of Total Rent Rolling | Approx. Cumulative % of Total Rent Rolling | ||
MTM | 2 | 2,450 | $0.00 | 0% | 0% | $0 | 0% | 0% | ||
2015 | 0 | 0 | $0.00 | 0% | 0% | $0 | 0% | 0% | ||
2016 | 0 | 0 | $0.00 | 0% | 0% | $0 | 0% | 0% | ||
2017 | 14 | 309,633 | $52.00 | 27% | 28% | $16,101,497 | 32% | 32% | ||
2018 | 4 | 61,257 | $67.35 | 5% | 33% | $4,125,648 | 8% | 40% | ||
2019 | 5 | 76,612 | $34.41 | 7% | 40% | $2,636,353 | 5% | 45% | ||
2020 | 4 | 90,083 | $51.07 | 8% | 48% | $4,600,608 | 9% | 54% | ||
2021 | 4 | 62,147 | $52.97 | 5% | 53% | $3,291,736 | 6% | 61% | ||
2022 | 0 | 0 | $0.00 | 0% | 53% | $0 | 0% | 61% | ||
2023 | 3 | 78,045 | $49.36 | 7% | 60% | $3,852,535 | 8% | 68% | ||
2024 | 0 | 0 | $0.00 | 0% | 60% | $0 | 0% | 68% | ||
2025 | 7 | 97,415 | $43.92 | 9% | 69% | $4,278,650 | 8% | 76% | ||
2026 | 4 | 112,270 | $60.04 | 10% | 79% | $6,740,249 | 13% | 90% | ||
2027 | 0 | 0 | $0.00 | 0% | 79% | $0 | 0% | 90% | ||
2028 & Beyond | 3 | 131,023 | $39.74 | 12% | 90% | $5,207,270 | 10% | 100% | ||
Vacant | 0 | 112,426 | $0.00 | 10% | 100% | $0 | 0% | 100% | ||
Total/Wtd. Avg. | 50 | 1,133,361 | $49.79 | 100% | $50,834,546 | 100% | ||||
(1) | The Non-Collateral Improvements are not collateral for the 32 Old Slip Fee Mortgage Loan (except for the reversionary interest of the 32 Old Slip Fee Borrower therein). The lease rollover schedule above represents leases of the Ground Lessee’s Non-Collateral Improvements and is provided for informational purposes only. |
(2) | Wtd. Avg. UW Rent PSF Rolling excludes vacant space. |
Operating History and Underwritten Cash Flow.The following table presents certain information relating to the historical operating results of the Non-Collateral Improvements and the underwritten cash flow at the 32 Old Slip Fee Property:
Cash Flow Analysis of the Non-Collateral Improvements(1) | |||||||||||||||||
Leasehold 2010 | Leasehold 2011 | Leasehold 2012 | Leasehold 2013 | Leasehold 2014 | “Look-Through” to the Non-Collateral Improvements(2) | UW(3) | UW PSF | ||||||||||
Base Rent | $43,159,395 | $47,179,045 | $44,387,593 | $43,160,501 | $42,453,959 | $50,834,546 | $8,500,000 | $7.50 | |||||||||
Total Recoveries | $6,659,677 | $4,793,888 | $4,319,801 | $3,457,125 | $4,540,721 | $4,540,721 | $0 | $0.00 | |||||||||
Other Income | $4,248,097 | $2,208,312 | $1,776,766 | $3,761,290 | $1,419,708 | $1,419,708 | $0 | $0.00 | |||||||||
Discounts Concessions | $0 | ($6,037,648) | $0 | $0 | $0 | $0 | $0 | $0.00 | |||||||||
Less Vacancy & Credit Loss | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0.00 | |||||||||
Effective Gross Income | $54,067,169 | $48,143,597 | $50,484,160 | $50,378,915 | $48,414,388 | $56,794,975 | $8,500,000 | $7.50 | |||||||||
Total Expenses | $23,618,782 | $22,145,377 | $19,587,528 | $20,844,447 | $24,821,686 | $24,800,120 | $0 | $0.00 | |||||||||
Net Operating Income | $30,448,387 | $25,998,220 | $30,896,633 | $29,534,469 | $23,592,702 | $31,994,855 | $8,500,000 | $7.50 | |||||||||
Capital Expenditures | $0 | $0 | $0 | $0 | $0 | $340,288 | $0 | $0.00 | |||||||||
TI/LC | $0 | $0 | $0 | $0 | $0 | $3,051,251 | $0 | $0.00 | |||||||||
Net Cash Flow | $30,448,387 | $25,998,220 | $30,896,633 | $29,534,469 | $23,592,702 | $28,603,316 | $8,500,000 | $7.50 | |||||||||
Occupancy % | 91.6% | 85.8% | 81.4% | 81.7% | 90.1% | 90.0% | N/A | ||||||||||
NOI DSCR | 4.60x | 3.93x | 4.67x | 4.46x | 3.57x | 4.84x | 1.28x | ||||||||||
NCF DSCR | 4.60x | 3.93x | 4.67x | 4.46x | 3.57x | 4.32x | 1.28x | ||||||||||
NOI Debt Yield | 17.3% | 14.8% | 17.6% | 16.8% | 13.4% | 18.2% | 4.8% | ||||||||||
NCF Debt Yield | 17.3% | 14.8% | 17.6% | 16.8% | 13.4% | 16.3% | 4.8% |
(1) | The Non-Collateral Improvements are not collateral for the 32 Old Slip Fee Mortgage Loan (except for the reversionary interest of the 32 Old Slip Fee Borrower therein). The Cash Flow Analysis table above represents historical financial results of the Non-Collateral Improvements and this historical financial data is provided for informational purposes only. The historical Occupancy% numbers reflect the occupancy of the Non-Collateral Improvements. The underwritten column above reflects the underwritten cash flow and related statistics associated with the 32 Old Slip Fee Property. |
(2) | The “Look-Through” to the Non-Collateral Improvements assumed cash flow is based on the lender’s estimate of the Ground Lessee’s income and expenses, not including ground rent due under the Ground Lease. |
(3) | The UW cash flow represents the ground rent payable to the 32 Old Slip Fee Borrower. The contractual annual rent payment is $8,500,000 on an absolute net basis. The ground lease has certain contractual rent steps as described above. See “—The Property” above for details. |
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MSC 2015-MS1 | 32 Old Slip Fee |
Escrows and Reserves. The 32 Old Slip Fee Borrower has agreed to use commercially reasonable efforts to cause the Ground Tenant under the Ground Lease to comply with obligations thereunder with respect to, among other things, taxes and other charges, maintenance of the improvements (including adequacy of repairs) and insurance. Notwithstanding the foregoing, if a Ground Lease Trigger Period (as defined below) exists, the lender under the 32 Old Slip Fee Mortgage Loan may, at its option, require the 32 Old Slip Fee Borrower to establish promptly and maintain with the lender reserves for annual real estate taxes, annual insurance premiums and capital expenditures as determined by the lender exercising its then current underwriting standards with respect to reserves it employs with respect to secondary market loans, taking into account the rents being received under the leases.
A “Ground Lease Trigger Period”
(i) commences upon the earlier of a monetary event of default under the Ground Lease or the 180th day after a material non-monetary event of default under the Ground Lease and continues until the date on which any such default has been cured (or waived by the 32 Old Slip Fee Borrower with the consent of the lender under the 32 Old Slip Fee Mortgage Loan (if required under the loan documents)),
(ii) commences upon (x) the Ground Tenant giving written notice of its intention to terminate the Ground Lease pursuant to or in accordance with the terms of the Ground Lease or (y) the Ground Tenant or the 32 Old Slip Fee Borrower attempting to terminate or cancel the Ground Lease through legal action without the consent of the lender under the 32 Old Slip Fee Mortgage Loan and continues until the date on which the Ground Tenant (or 32 Old Slip Fee Borrower, as applicable) has revoked or rescinded any termination or cancellation notice, or has terminated such legal action with prejudice, as applicable, and the initiating party has reaffirmed the Ground Lease as being in full force and effect, or
(iii) commences upon (x) any termination or cancellation of the Ground Lease (including, without limitation, rejection in a bankruptcy or similar insolvency proceeding) and/or the Ground Lease failing to otherwise be in full force and effect or (y) any bankruptcy or similar insolvency of the Ground Tenant and continues until the date on which, in connection with any bankruptcy or insolvency proceedings involving the Ground Tenant and/or the Ground Lease, the Ground Tenant either (1) is no longer insolvent or subject to bankruptcy or insolvency proceedings and (A) the Ground Lease is in full force and effect or (B) the entire 32 Old Slip Fee Property has been re-let pursuant to a replacement ground lease in accordance with the loan agreement for the 32 Old Slip Fee Mortgage Loan, the term of the replacement ground lease has commenced, and the replacement ground tenant is in possession of the 32 Old Slip Fee Property and paying rent under the replacement ground lease with no abatements or (2) is subject to such bankruptcy proceedings but has affirmed the Ground Lease (or replaced the same with a new ground lease to a ground tenant approved by the lender under the 32 Old Slip Fee Mortgage Loan) pursuant to a final non-appealable court order.
Lockbox and Cash Management. A hard lockbox is in place with respect to the 32 Old Slip Fee Mortgage Loan. The 32 Old Slip Fee Mortgage Loan has in place cash management. Funds in the lockbox account are required to be applied on each monthly payment date (or, to the extent the Ground Tenant under the Ground Lease deposits the ground rent payable thereunder into the lockbox account after the end of the immediately preceding Collection Period (defined below), on the fifteenth (15th) day of the calendar month following the immediately preceding Collection Period (the “Additional Disbursement”)) to pay debt service on the 32 Old Slip Fee Mortgage Loan, to disburse, during a Cash Sweep Period (other than after the occurrence of an event of default on the 32 Old Slip Fee Mortgage Loan), to the 32 Old Slip Fee Borrower funds sufficient to pay the Monthly Operating Expense Amount (as defined below) for the calendar month in which such monthly payment date occurs, to disburse, during a Casualty Cash Sweep Period (as defined below) or a REMIC Cash Sweep Period (as defined below), to a reserve account any unpaid Casualty/Condemnation Payment (as defined below) amount or REMIC Payment (as defined below) amount, respectively, and to disburse any excess to the 32 Old Slip Fee Borrower; provided, that if an event of default has occurred and is continuing under the 32 Old Slip Fee Mortgage Loan or if the 32 Old Slip Fee Mortgage Loan has not been repaid in full as of May 5, 2025, then thereafter any excess will be remitted to an account to be held by the lender as additional security for the 32 Old Slip Fee Mortgage Loan. With respect to any Additional Disbursement, the funds in the lockbox account shall be applied (i) with respect to any debt service payment, in an amount sufficient to pay the debt service due on the monthly payment date immediately following the date of the Additional Disbursement and (ii) with respect to monthly operating expenses, provided no event of default has occurred under the 32 Old Slip Fee Mortgage Loan, in an amount sufficient to pay the monthly operating expense amount for the calendar month following the calendar month in which such Additional Disbursement occurs.
“Collection Period” with respect to any monthly payment date, is the period from and including the 5th day of the month preceding such monthly payment date to and including the 4th day of the calendar month in which such monthly payment date occurs.
A “Cash Sweep Period” will
(i) commence upon the occurrence of an event of default under the 32 Old Slip Fee Mortgage Loan and continue until such event of default is cured,
(ii) commence when a Casualty/Condemnation Payment is due (such period, a “Casualty Cash Sweep Period”) and continue until such amount is paid, whether from the reserve account or by the 32 Old Slip Fee Borrower,
(iii) commence when a REMIC Payment is due (such period, a “REMIC Cash Sweep Period”) and continue until such amount is paid, whether from the reserve account or by the 32 Old Slip Fee Borrower, or
(iv) commence on May 5, 2025 and continue until the 32 Old Slip Fee Mortgage Loan is paid in full.
“Casualty/Condemnation Payment” means, after giving effect to any release of the real property and improvements located at the 32 Old Slip Fee Property following a casualty or condemnation, in the event the 32 Old Slip Fee Mortgage Loan fails to satisfy the requirements for the Issuing Entity to qualify as a “real estate mortgage investment conduit” within the meaning of the Internal Revenue Code of 1986, as amended (the “REMIC Requirements”) as a result of the release, the amount of the prepayment of the 32 Old Slip Fee Mortgage Loan sufficient to satisfy the REMIC Requirements together with accrued interest to the next monthly payment date.
“REMIC Payment” means, in connection with the Ground Tenant’s modification (including alterations, additions, removal or demolition) of the improvements located at the 32 Old Slip Fee Property, if the lender under the 32 Old Slip Fee Mortgage Loan reasonably determines that the 32 Old Slip Fee Mortgage Loan would not satisfy the REMIC Requirements when such modification is completed, the amount of the prepayment of the 32 Old Slip Fee Mortgage Loan sufficient to satisfy the REMIC Requirements together with accrued interest to the next monthly payment date and the applicable yield maintenance premium.
“Monthly Operating Expense Amount” means, at any time after May 5, 2025 and at any time after the event described in clause (iii)(x) of the definition of Ground Lease Trigger Period above has occurred (until such Ground Lease Trigger Period has terminated in accordance with the loan documents), the
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monthly amount payable for operating expenses at the 32 Old Slip Fee Property (which will only include the improvements if the Ground Lease is no longer in full force and effect) as set forth in the annual budget approved by the lender and not otherwise reserved for and extraordinary expenses approved by the lender.
Additional Secured Indebtedness (not including trade debts).The 32 Old Slip Fee Property also secures the 32 Old Slip Fee Non-Serviced Companion Loan, with a Cut-off Date balance of $116,000,000. A portion of the 32 Old Slip Fee Non-Serviced Companion Loan was contributed to the MSBAM 2015-C23 securitization trust, and the remaining portion of the 32 Old Slip Fee Non-Serviced Companion Loan is expected to be held by Morgan Stanley Bank, N.A. or an affiliate thereof on the closing date of this transaction and may be contributed to one or more future securitization transactions. The promissory notes evidencing the 32 Old Slip Fee Non-Serviced Companion Loan accrue interest at the same rate as the 32 Old Slip Fee Mortgage Loan. The 32 Old Slip Fee Mortgage Loan is entitled to payments of principal and interest on apro rata andpari passu basis with the 32 Old Slip Fee Non-Serviced Companion Loan. The holders of the 32 Old Slip Fee Mortgage Loan and the 32 Old Slip Fee Non-Serviced Companion Loan have entered into a co-lender agreement which sets forth the allocation of collections on the 32 Old Slip Fee Non-Serviced Loan Combination. Notes A-3 and A-4, comprising a portion of the 32 Old Slip Fee Non-Serviced Companion Loan, represent the controlling interest in the 32 Old Slip Fee Non-Serviced Loan Combination, and were contributed to the MSBAM 2015-C23 securitization trust. The 32 Old Slip Fee Non-Serviced Loan Combination will be serviced pursuant to the terms of the pooling and servicing agreement for the MSBAM 2015-C23 securitization trust. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The 32 Old Slip Fee Non-Serviced Loan Combination”and “Servicing of the Mortgage Loans”in this prospectus supplement.
Mezzanine Loan and Preferred Equity.Not permitted.
Release of Property. Not permitted.
Terrorism Insurance. The 32 Old Slip Fee Borrower is required to obtain insurance against acts of terrorism or other similar acts or events (or “fire following”) to the extent such insurance is available in form and substance reasonably satisfactory to lender (but in no event more than the sum of 100% of full replacement cost and 12 months of business interruption insurance). Notwithstanding the foregoing, for so long as the Terrorism Risk Insurance Program Reauthorization Act of 2007 (or any extension thereof or other federal government program with substantially similar protection) is in effect, the 32 Old Slip Fee Borrower is required to maintain, and lender is required to accept, terrorism insurance which covers “covered acts” (as defined by such statute or other program), as full compliance as it relates to the risks required to be covered pursuant to the preceding sentence, so long as such statute or other program covers both domestic and foreign acts of terrorism.
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Mortgage Loan No. 4 – Waterfront at Port Chester
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Mortgage Loan No. 4 – Waterfront at Port Chester
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Mortgage Loan No. 4 – Waterfront at Port Chester
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Mortgage Loan No. 4 – Waterfront at Port Chester |
Mortgage Loan Information | Mortgaged Property Information | ||||||
Mortgage Loan Seller: | MSMCH | Single Asset/Portfolio: | Single Asset | ||||
Original Balance(1): | $53,500,000 | Location: | Port Chester, NY 10573 | ||||
Cut-off Date Balance(1): | $53,500,000 | General Property Type: | Retail | ||||
% of Initial Pool Balance: | 6.0% | Detailed Property Type: | Anchored | ||||
Loan Purpose: | Refinance | Title Vesting(3): | Fee | ||||
Sponsor: | Gregg Wasser | Year Built/Renovated: | 2005-2007/N/A | ||||
Mortgage Rate: | 4.130% | Size: | 349,743 SF | ||||
Note Date: | 3/24/2015 | Cut-off Date Balance per Unit(1): | $382 | ||||
First Payment Date: | 5/1/2015 | Maturity Date Balance per Unit(1): | $382 | ||||
Maturity Date: | 4/1/2025 | Property Manager: | Willow Park Enterprises, Inc. (borrower related) | ||||
Original Term to Maturity: | 120 months | ||||||
Original Amortization Term: | 0 months | Underwriting and Financial Information | |||||
IO Period: | 120 months | UW NOI: | $9,522,693 | ||||
Seasoning: | 3 months | UW NOI Debt Yield(1): | 7.1% | ||||
Prepayment Provisions: | LO (27); DEF (88); O (5) | UW NOI Debt Yield at Maturity(1): | 7.1% | ||||
Lockbox/Cash Mgmt Status: | Hard/Springing | UW NCF DSCR(1): | 1.66x | ||||
Additional Debt Type: | Pari Passu | Most Recent NOI: | $9,749,573 (12/31/2014) | ||||
Additional Debt Balance: | $80,000,000 | 2nd Most Recent NOI: | $10,511,852 (12/31/2013) | ||||
Future Debt Permitted (Type): | No (N/A) | 3rd Most Recent NOI: | $10,035,157 (12/31/2012) | ||||
Reserves(2) | Most Recent Occupancy: | 95.6% (3/1/2015) | |||||
Type | Initial | Monthly | Cap | 2nd Most Recent Occupancy: | 99.0% (12/31/2013) | ||
RE Tax: | $350,835 | $116,945 | N/A | 3rd Most Recent Occupancy: | 99.0% (12/31/2012) | ||
Insurance: | $0 | Springing | N/A | Appraised Value (as of): | $178,000,000 (12/8/2014) | ||
Recurring Replacements: | $0 | $4,386 | $250,000 | Cut-off Date LTV Ratio(1): | 75.0% | ||
TI/LC: | $0 | $29,240 | $1,200,000 | Maturity Date LTV Ratio(1): | 75.0% | ||
Other(2): | $62,500 | $0 | N/A | ||||
Sources and Uses | ||||||
Sources | Proceeds | % of Total | Uses | Proceeds | % of Total | |
Loan Amount(1): | $133,500,000 | 100.0% | Loan Payoff(4): | $117,086,877 | 87.7% | |
Reserves: | $413,335 | 0.3% | ||||
Closing Costs: | $2,297,178 | 1.7% | ||||
Return of Equity: | $13,702,610 | 10.3% | ||||
Total Sources: | $133,500,000 | 100.0% | Total Uses: | $133,500,000 | 100.0% |
(1) | The Waterfront at Port Chester Mortgage Loan is part of the Waterfront at Port Chester Non-Serviced Loan Combination, which is comprised of twopari passupromissory notes with an aggregate original principal balance of $133,500,000. The Cut-off Date Balance per Unit, Maturity Date Balance per Unit, UW NOI Debt Yield, UW NOI Debt Yield at Maturity, UW NCF DSCR, Cut-off Date LTV Ratio and Maturity Date LTV Ratio numbers presented above are based on the aggregate note balance of the Waterfront at Port Chester Non-Serviced Loan Combination. |
(2) | See “—Escrows and Reserves” below for further discussion of reserve requirements. At loan origination, the Waterfront at Port Chester Borrower deposited $62,500 into an escrow for an environmental condition. |
(3) | The Village of Port Chester Industrial Development Agency (“IDA”) owns the fee interest in the Waterfront at Port Chester Property, and the Waterfront at Port Chester Borrower owns the leasehold interest; however, the IDA has provided a mortgage of its fee interest in the Waterfront at Port Chester Property as security for the Waterfront at Port Chester Mortgage Loan. |
(4) | The loan payoff includes a previous loan balance and a related defeasance premium totaling $101,520,142, plus a second loan of approximately $15,566,735. |
The Mortgage Loan.The fourth largest mortgage loan (the “Waterfront at Port Chester Mortgage Loan”) is part of a non-serviced loan combination (the “Waterfront at Port Chester Non-Serviced Loan Combination”) evidenced by twopari passu promissory notes in the aggregate Cut-off Date principal amount of $133,500,000, both of which are secured by the same first priority fee mortgage encumbering an anchored shopping center known as the Waterfront at Port Chester, in Port Chester, New York (the “Waterfront at Port Chester Property”). Promissory Note A-2, in the original principal amount of $53,500,000, represents the Waterfront at Port Chester Mortgage Loan, and Promissory Note A-1, in the original principal amount of $80,000,000 (the “Waterfront at Port Chester Non-Serviced Companion Loan”), was contributed to the MSBAM 2015-C22 securitization trust. The Waterfront at Port Chester Non-Serviced Loan Combination will be serviced pursuant to terms of the MSBAM 2015-C22 pooling and servicing agreement. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The Waterfront at Port Chester Non-Serviced Loan Combination” and “Servicing of the Mortgage Loans—Additional Matters Relating to the Servicing of the Non-Serviced Mortgage Loans—The Waterfront at Port Chester Mortgage Loan” in this prospectus supplement. The proceeds of the Waterfront at Port Chester Non-Serviced Loan Combination were primarily used to refinance two previous loans secured by different portions of the Waterfront at Port Chester Property, totaling approximately $117,086,877 (including defeasance premiums), and return equity to the Waterfront at Port Chester Borrower. A previous loan secured by a portion of the Waterfront at Port Chester Property was included in the BACM 2006-1 transaction.
The Borrower and the Sponsor.The borrowers are G&S Port Chester Retail 1 DE, LLC, G&S Port Chester Unit 2A DE, LLC, G&S Port Chester Unit 4A DE, LLC, and G&S Port Chester Unit 2C DE, LLC (collectively, the “Waterfront at Port Chester Borrower”), each a single-purpose Delaware limited
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liability company with two independent directors. The president and majority owner of the Waterfront at Port Chester Borrower, nonrecourse carve-out guarantor and sponsor is Gregg Wasser.
Mr. Wasser is a founder of G&S Investors (“G&S”), a New York City-based real estate development company primarily operating in New York and New Jersey. The Waterfront at Port Chester Property was developed by G&S in 2005-2007.
The Property.The Waterfront at Port Chester Property is a 349,743 SF, five-building power center anchored by a Super Stop & Shop. Three of the five buildings are two-story buildings, are located on a contiguous parcel (the “Main Parcel”) and are connected by a shared three-level, 1,334-space parking structure (the “Parking Structure”) with a sky-bridge between two of the three buildings. A fourth building comprises retail strip space located across South Main Street from the Main Parcel. The fifth building is a free-standing Walgreens store located a block north of the Main Parcel. In addition to the 70,216 SF Super Stop & Shop, the Waterfront at Port Chester Property is anchored by a Bed Bath & Beyond, a Marshalls, a Michaels and a Petco. There is also a 14-screen AMC Loews Theater and a 23,404 SF Crunch Fitness health club. There is an adjacent Costco shadow anchor, adjacent to the Main Parcel, which is not part of the Waterfront at Port Chester Property and is not collateral for the Waterfront at Port Chester Mortgage Loan. There is a total of 1,500 parking spaces, including the Parking Structure and additional surface parking.
The Waterfront at Port Chester Property is located one block from the Metro-North Railroad Port Chester Station. The Parking Structure is subject to a two-unit condominium regime whereby Levels 1 and 3, containing 984 spaces (Unit A), and representing approximately 73.8% of the common interests (a controlling interest), are owned by the Waterfront at Port Chester Borrower and Level 2, containing 350 spaces (Unit B), and representing approximately 26.2% of the common interests, is owned by the Metropolitan Transportation Authority (the “MTA”) or an affiliate. The MTA has exclusive use of Level 2 during certain “peak” hours for train station related parking. During “non-peak” hours, parking is available on Level 2 for visitors to the Waterfront at Port Chester Property. The MTA reimburses the Waterfront at Port Chester Borrower for its pro-rata share of expenses associated with the maintenance of the Parking Structure. The Waterfront at Port Chester Borrower’s ownership interest in Unit A is collateral for the Waterfront at Port Chester Mortgage Loan.
The Waterfront at Port Chester Property was constructed between 2005 and 2007 pursuant to an agreement with the Port Chester Industrial Development Authority (the “IDA”). The Waterfront at Port Chester Borrower owns the leasehold interest in the Waterfront at Port Chester Property and the IDA owns the fee interest; however, the IDA has pledged its fee interest in the Waterfront at Port Chester Property as security for the Waterfront at Port Chester Mortgage Loan. The IDA agreement includes a 20-year PILOT program applicable to the Waterfront at Port Chester Property.
Major Tenants.
Super Stop & Shop (70,216 SF, 20% of NRA, 26% of underwritten base rent).Stop & Shop Supermarket Company LLC (“Super Stop & Shop”) leases 70,216 SF at the Waterfront at Port Chester Property. The lease began on October 13, 2000 and has a current expiration date of August 31, 2030, with four automatic five-year lease renewal periods followed by five additional five-year lease renewal options. The lease is guaranteed by the tenant’s parent, Koninklijke Ahold n.v. (AHLN.AS) (“Ahold”). As of its 2013 annual report, Ahold, through two U.S. based subsidiaries, operated 397 Stop & Shop stores in New England and Metropolitan New York.
AMC Loews Theater (70,000 SF, 20% of NRA, 22% of underwritten base rent). RKO Century Warner Theaters, Inc. (“AMC Loews Theater”) leases 70,000 SF at the Waterfront at Port Chester Property and operates the space as a 14-screen movie theater. The lease began on October 28, 2005 and has a current expiration date of December 31, 2030, with four five-year lease renewal options followed by one three-year lease renewal option. The lease is guaranteed by Loews Cineplex Entertainment Corporation. AMC Entertainment, Inc. (“AMC”) is the second largest movie theatre operator in the United States. The company operates approximately 345 theatres in the U.S., Canada, France, Hong Kong, Japan, Portugal, Spain and the United Kingdom under the banners American Multi-Cinema, Inc., AMC, International Theatrical Exhibition and National Cinema Network, Inc. AMC merged with Loews Cineplex Entertainment Corporation in 2006.
Bed Bath & Beyond (36,068 SF, 10% of NRA, 8% of underwritten base rent).Bed Bath & Beyond Inc. (“Bed Bath & Beyond”) (NASDAQ: BBY) leases 36,068 SF at the Waterfront at Port Chester Property. The lease began on March 3, 2006 and has a current expiration date of January 31, 2022, with three five-year lease renewal options. Bed Bath & Beyond and its subsidiaries operate approximately 1,400 stores under various brand names, including Bed Bath & Beyond, in the United States, Canada and Mexico.
Marshalls (30,105 SF, 9% of NRA, 8% of underwritten base rent). Marshalls of MA, Inc. (“Marshalls”) leases 30,105 SF at the Waterfront at Port Chester Property. The lease began on May 26, 2005 and has a current expiration date of May 31, 2020, with four five-year lease renewal options. Marshalls is a subsidiary of the TJX Companies, Inc. (NYSE: TJX), an off-price retailer of apparel and home fashions under various brands in the U.S. and worldwide, with more than 3,200 stores in six countries.
Crunch Fitness (23,404 SF, 7% of NRA, 8% of underwritten base rent). Fitness Holdings Port Chester LLC (“Crunch Fitness”) leases 23,404 SF at the Waterfront at Port Chester Property. The lease began on July 1, 2014 and has a current expiration date of December 31, 2025, with three five-year lease renewal options. Crunch Fitness is a health club chain founded in 1989, based in New York City, and co-owned by New Evolution Ventures and Angelo Gordon. The lease at the Waterfront at Port Chester Property is with a franchisor affiliate of Greenwich, Connecticut-based RLB Holdings.
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The following table presents certain information relating to the leases at the Waterfront at Port Chester Property:
Tenant Summary(1) | |||||||||||||||||
Tenant Name | Credit Rating (Fitch/Moody’s/S&P)(2) | Tenant SF | Approximate % of SF | Annual UW Rent | % of Total Annual UW Rent | Annual UW Rent PSF(3) | Lease Expiration | 2014 Sales PSF/Screen | |||||||||
Anchor/Major Tenants | |||||||||||||||||
Super Stop & Shop | BBB/Baa3/BBB | 70,216 | 20% | $2,597,992 | 26% | $37.00 | 8/31/2030 | $597 | |||||||||
AMC Loews Theater | NR/NR/B+ | 70,000 | 20% | $2,200,000 | 22% | $31.43 | 12/31/2030 | $652,759 | |||||||||
Bed Bath & Beyond | NR/Baa1/A- | 36,068 | 10% | $775,000 | 8% | $21.49 | 1/31/2022 | $279 | |||||||||
Marshalls | NR/A3/A+ | 30,105 | 9% | $810,000 | 8% | $26.91 | 5/31/2020 | $355 | (4) | ||||||||
Crunch Fitness | NR/NR/NR | 23,404 | 7% | $816,482 | 8% | $34.89 | 12/31/2025 | N/A | |||||||||
Michaels | NR/NR/NR | 21,390 | 6% | $427,800 | 4% | $20.00 | 3/31/2016 | $195 | |||||||||
Petco | NR/B3/B | 19,691 | 6% | $531,657 | 5% | $27.00 | 5/31/2017 | $131 | (4) | ||||||||
Walgreens | NR/Baa2/BBB | 11,210 | 3% | $384,160 | 4% | $34.27 | 1/31/2028 | $341 | |||||||||
Subtotal/Wtd. Avg. | 282,084 | 81% | $8,543,091 | 85% | $30.29 | ||||||||||||
Other Tenants | 52,434 | 15% | $1,476,121 | 15% | $28.15 | ||||||||||||
Vacant Space | 15,225 | 4% | $0 | 0% | $0.00 | ||||||||||||
Total/Wtd. Avg. | 349,743 | 100% | $10,019,212 | 100% | $29.95 |
(1) | Information is based on the underwritten rent roll, except the Super Stop & Shop SF and base rent, which is based on the tenant’s provided lease estoppel. |
(2) | Certain ratings are those of the parent company whether or not the parent guarantees the lease. |
(3) | Wtd. Avg. Annual UW Rent PSF excludes vacant space. |
(4) | Marshalls and Petco sales are for the 2013 calendar year. |
The following table presents certain information relating to the lease rollover schedule at the Waterfront at Port Chester Property:
Lease Rollover Schedule(1)(2) | |||||||||||||||||
Year | # of Leases Rolling | SF Rolling | UW Rent PSF Rolling(3) | Approx. % of Total SF Rolling | Approx. Cumulative % of SF Rolling | Total UW Rent Rolling | Approx. % of Total Rent Rolling | Approx. Cumulative % of Total Rent Rolling | |||||||||
MTM | 0 | 0 | $0.00 | 0% | 0% | $0 | 0% | 0% | |||||||||
2015 | 5 | 15,365 | $36.28 | 4% | 4% | $557,396 | 6% | 6% | |||||||||
2016 | 1 | 21,390 | $20.00 | 6% | 11% | $427,800 | 4% | 10% | |||||||||
2017 | 4 | 34,471 | $24.65 | 10% | 20% | $849,772 | 8% | 18% | |||||||||
2018 | 1 | 1,844 | $25.23 | 1% | 21% | $46,533 | 0% | 19% | |||||||||
2019 | 0 | 0 | $0.00 | 0% | 21% | $0 | 0% | 19% | |||||||||
2020 | 3 | 40,110 | $27.79 | 11% | 32% | $1,114,570 | 11% | 30% | |||||||||
2021 | 1 | 873 | $29.00 | 0% | 33% | $25,317 | 0% | 30% | |||||||||
2022 | 1 | 36,068 | $21.49 | 10% | 43% | $775,000 | 8% | 38% | |||||||||
2023 | 1 | 5,142 | $15.01 | 1% | 44% | $77,190 | 1% | 39% | |||||||||
2024 | 2 | 4,425 | $33.22 | 1% | 46% | $147,000 | 1% | 40% | |||||||||
2025 | 1 | 23,404 | $34.89 | 7% | 52% | $816,482 | 8% | 48% | |||||||||
2026 | 0 | 0 | $0.00 | 0% | 52% | $0 | 0% | 48% | |||||||||
2027 | 0 | 0 | $0.00 | 0% | 52% | $0 | 0% | 48% | |||||||||
2028 & Beyond | 3 | 151,426 | $34.22 | 43% | 96% | $5,182,152 | 52% | 100% | |||||||||
Vacant | 0 | 15,225 | $0.00 | 4% | 100% | $0 | 0% | 100% | |||||||||
Total/Wtd. Avg. | 23 | 349,743 | $29.95 | 100% | $10,019,212 | 100% | |||||||||||
(1) | Information is based on the underwritten rent roll, except the Super Stop & Shop SF and base rent, which is based on the tenant’s provided lease estoppel. |
(2) | Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the lease rollover schedule. |
(3) | Wtd. Avg. UW Rent PSF Rolling excludes vacant space. |
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The Market. The Waterfront at Port Chester Property is located in the Village of Port Chester, Westchester County, New York near the borders of Rye, New York and Byram (Greenwich), Connecticut, and within the Central Westchester retail submarket. As of September 30, 2014, the Central Westchester retail submarket had a retail inventory of approximately 3.3 million SF, a 9.2% average vacancy rate and an average asking rent of $39.08 PSF. Estimated 2014 population within a three-mile radius was 73,813 people and estimated 2014 average household income within a three-mile radius was $133,685.
The following table presents recent occupancy and leasing data at five primary competitive centers to the Waterfront at Port Chester Property:
Competitive Property Summary | ||||||||||||||||
Property Name/Location | Type | Year Built | Year Renov. | Occ. | Total GLA (SF) | Anchor Tenants | Rent PSF | Distance to Subject | ||||||||
Port Chester Shopping Center 421-575 Boston Post Road Port Chester, NY | Regional Center | 1970 | 2007 | 97% | 530,000 | Kohl’s Whole Foods Home Goods Party City | $18.00 - $45.00 | 0.8 miles South | ||||||||
Post Road Plaza 260 & 262 Boston Post Road Port Chester, NY | Neighborhood Center | 1985 | 2013 | 100% | 60,000 | LA Fitness Sleepy’s Apple Farm Market | $20.00 - $40.00 | 0.6 miles South | ||||||||
Rye Ridge Shopping Center 126 South Ridge Street Rye Brook, NY | Community Center | 1961 | 2010 | 98% | 232,346 | D’Agostino Grocery CVS Pharmacy Ace Hardware Medical Office Building | $30.00 - $50.00 | 0.9 miles West | ||||||||
Washington Park Plaza 251 South Ridge Street Rye Brook, NY | Neighborhood Center | 1979 | 2012 | 100% | 55,000 | A&P Fresh Market CVS Pharmacy Wells Fargo Bank | $20.00 - $35.00 | 1.1 miles West | ||||||||
White Plains City Center 5 City Place White Plains, NY | Regional Center | 2004 | 2010 | 98% | 515,000 | Target Shop Rite Nordstroms Rack Showcase Cinemas | $22.00 - $55.00 | 5.2 miles West |
Source: Appraisal
Operating History and Underwritten Cash Flow.The following table presents certain information relating to the underwritten cash flow at the Waterfront at Port Chester Property:
Cash Flow Analysis | |||||||||||||
2011 | 2012 | 2013 | 2014 | UW | UWPSF | ||||||||
Base Rent(1) | N/A | $10,437,488 | $10,432,354 | $10,306,816 | $10,475,848 | $29.95 | |||||||
Total Recoveries | N/A | $2,016,441 | $2,145,970 | $1,837,025 | $1,795,744 | $5.13 | |||||||
Other Income | N/A | $559,452 | $815,055 | $685,919 | $773,521 | $2.21 | |||||||
Discounts Concessions | N/A | ($322,483) | ($324,239) | $0 | $0 | $0.00 | |||||||
Less Vacancy & Credit Loss | N/A | $0 | $0 | ($411,340) | ($498,706) | ($1.43) | |||||||
Effective Gross Income | N/A | $12,690,898 | $13,069,140 | $12,418,420 | $12,546,407 | $35.87 | |||||||
Total Operating Expenses | N/A | $2,655,741 | $2,557,288 | $2,668,847 | $3,023,714 | $8.65 | |||||||
Net Operating Income | N/A | $10,035,157 | $10,511,852 | $9,749,573 | $9,522,693 | $27.23 | |||||||
Capital Expenditures | N/A | $0 | $0 | $0 | $52,632 | $0.15 | |||||||
TI/LC | N/A | $0 | $0 | $0 | $168,423 | $0.48 | |||||||
Net Cash Flow | N/A | $10,035,157 | $10,511,852 | $9,749,573 | $9,301,637 | $26.60 | |||||||
Occupancy%(2) | N/A | 99.0% | 99.0% | 95.6% | 95.2% | ||||||||
NOI DSCR | N/A | 1.80x | 1.88x | 1.74x | 1.70x | ||||||||
NCF DSCR | N/A | 1.80x | 1.88x | 1.74x | 1.66x | ||||||||
NOI Debt Yield | N/A | 7.5% | 7.9% | 7.3% | 7.1% | ||||||||
NCF Debt Yield | N/A | 7.5% | 7.9% | 7.3% | 7.0% |
(1) | Underwritten Rent associated with the Super Stop & Shop tenant is based on the average base rent during the loan term. |
(2) | Historical occupancy represents year-end data. A 30,000 SF former tenant vacated its space during the first quarter of 2014 and was replaced by the Crunch Fitness tenant effective July 1, 2014. |
Escrows and Reserves. The Waterfront at Port Chester Borrower deposited $350,835 in escrow for annual real estate taxes at loan origination and is required to escrow monthly 1/12 of the annual estimated tax payments. The Waterfront at Port Chester Borrower is required to escrow monthly 1/12 of the annual estimated insurance premiums (unless the Waterfront at Port Chester Borrower maintains insurance under an acceptable blanket insurance policy). The Waterfront at Port Chester Borrower is required to make monthly deposits of $4,386 for replacement reserves (which amount may be increased by the lender if the lender reasonably determines that an increase is necessary to maintain proper operation of the Waterfront at Port Chester Property), provided that such deposits are not required to the extent that the amount then on deposit in the replacement reserve exceeds $250,000. The Waterfront at Port Chester Borrower is required to make monthly deposits of $29,240 for TI/LC reserves, provided that such deposits are not required to the extent that the amount then on deposit in the TI/LC reserve exceeds $1,200,000. The Waterfront at Port Chester Borrower also deposited in escrow at loan origination $62,500 for costs which may be incurred as a result of environmental conditions at the Waterfront at Port Chester Property, which amount will be disbursed to the Waterfront at Port Chester Borrower, amongst other conditions, upon delivery to the lender of a reasonably satisfactory
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site inspection report with respect to such conditions. With respect to the aforementioned environmental escrow, $6,250 of the escrow amount is to be released to the Waterfront at Port Chester Borrower annually during the loan term if there are no costs incurred with respect to the noted environmental conditions.
Lockbox and Cash Management.A hard lockbox is in place with respect to the Waterfront at Port Chester Mortgage Loan. The Waterfront at Port Chester Mortgage Loan has springing cash management. Provided a Cash Sweep Period has not commenced, funds in the lockbox account are swept daily to an account designated by the Waterfront at Port Chester Borrower. During the continuance of a Cash Sweep Period, funds in the lockbox account are applied on each monthly payment date to pay debt service on the Waterfront at Port Chester Non-Serviced Loan Combination, to fund the required reserves deposits as described above under “—Escrows and Reserves,” to disburse, provided no event of default has occurred and is continuing, to the Waterfront at Port Chester Borrower the monthly amount payable for operating expenses not otherwise paid or reserved for as described above under “—Escrows and Reserves” and referenced in the annual budget approved by the lender together with other amounts approved by the lender that are incurred by the Waterfront at Port Chester Borrower in connection with the operation and maintenance of the Waterfront at Port Chester Property, and to remit the remainder to an account to be held by the lender as additional security for the Waterfront at Port Chester Non-Serviced Loan Combination.
A “Cash Sweep Period” will commence upon the occurrence of an event of default, a DSCR Event (as defined below), a Tenant Credit Event (as defined below) or a Major Lease Termination Event (as defined below) and continue until
(i) | in the case of an event of default, the lender’s acceptance of a cure of such event of default, |
(ii) | in the case of DSCR Event, the DSCR, measured as of the end of any calendar quarter, is greater than 1.25x for the trailing six consecutive month period, |
(iii) | in the case of a Tenant Credit Event, either (1) if the Tenant Credit Event is caused pursuant to an event described in clause (a) of the definition thereof, the date on which the Major Tenant’s lease has been affirmed in bankruptcy or (2) if the Tenant Credit Event is caused pursuant to an event described in clause (b) of definition thereof, the earliest to occur of (x) the date which is three months after the date on which such Major Tenant is re-opened for business and is in physical occupancy of its space at the Waterfront at Port Chester Property for such continuous period under the applicable lease which has been approved by the lender in its sole discretion, (y) the date on which the Major Tenant’s entire space has been re-let to a new tenant pursuant to a new lease on terms and conditions approved by the lender in its sole discretion or (z) the date on which the Waterfront at Port Chester Mortgage Loan has been partially defeased in part in accordance with the loan agreement for the Waterfront at Port Chester Mortgage Loan and the applicable individual parcel comprising the Waterfront at Port Chester Property has been released from the lien of the related mortgage, or |
(iv) | in the case of a Major Lease Termination Event, the earliest to occur of (x) the date on which the tenant under the subject Major Lease executes a renewal of the applicable lease for the demised space pursuant to the terms and conditions of the loan agreement for the Waterfront at Port Chester Mortgage Loan, (y) the date on which the applicable Major Tenant’s entire space has been re-let to a new tenant pursuant to a new lease on terms and conditions approved by the lender in its sole discretion or (z) the date on which the Waterfront at Port Chester Mortgage Loan has been partially defeased in part in accordance with the loan agreement for the Waterfront at Port Chester Mortgage Loan and the applicable individual parcel comprising the Waterfront at Port Chester Property has been released from the lien of the related mortgage. |
A “DSCR Event” means the DSCR, measured as of the end of any calendar quarter, has been less than 1.20x for the trailing six consecutive month period.
A “Major Lease” means each of (i) that certain lease, dated as of October 13, 2000, as amended between the Waterfront at Port Chester Borrower’s predecessor in interest, as landlord, and The Stop & Shop Supermarket Company, as tenant, (ii) that certain lease agreement, dated as of June 28, 2002, between the Waterfront at Port Chester Borrower’s predecessor in interest, as landlord, and Loews Mohawk Mall Cinemas, Inc., as tenant or (iii) any replacement lease entered into for the premises demised under either of the leases referred to in clauses (i) and (ii) of this definition.
A “Major Lease Termination Event” means, on the date which is 12 months prior to the expiration date of a Major Lease, a Major Tenant has not renewed such Major Lease, either by failing to give notice of its intent to renew, by giving notice of non-renewal or otherwise giving notice of its intent to terminate or vacate the demised premises.
A “Major Tenant” means any tenant which is party to a Major Lease.
A “Tenant Credit Event” means either (a) a Major Tenant files a voluntary bankruptcy petition or an involuntary bankruptcy petition is filed against a Major Tenant (or a Major Tenant consents to or otherwise acquiesces or joins in such a filing), consents to (or otherwise acquiesces or joins in an application for) a receiver or examiner, makes an assignment for the benefit of creditors or admits in writing its insolvency or inability to pay its debts as they come due or (b) a Major Tenant has “gone dark” for thirty consecutive days or vacated or surrendered its demised premises at the Waterfront at Port Chester Property.
Additional Secured Indebtedness (not including trade debts).The Waterfront at Port Chester Property also secures an additionalpari passu promissory note, the Waterfront at Port Chester Non-Serviced Companion Loan, with a Cut-off Date balance of $80,000,000. The Waterfront at Port Chester Non-Serviced Companion Loan was contributed to the MSBAM 2015-C22 securitization trust. The note evidencing the Waterfront at Port Chester Non-Serviced Companion Loan accrues interest at the same rate as the Waterfront at Port Chester Mortgage Loan. The Waterfront at Port Chester Mortgage Loan is entitled to payments of principal and interest on apro rata andpari passu basis with the Waterfront at Port Chester Non-Serviced Companion Loan. The holders of the Waterfront at Port Chester Mortgage Loan and the Waterfront at Port Chester Non-Serviced Companion Loan have entered into a co-lender agreement which sets forth the allocation of collections on the Waterfront at Port Chester Non-Serviced Loan Combination. The Waterfront at Port Chester Non-Serviced Companion Loan represents the controlling interest in the Waterfront at Port Chester Non-Serviced Loan Combination. The Waterfront at Port Chester Non-Serviced Loan Combination will be serviced pursuant to the terms of the pooling and servicing agreement for the MSBAM 2015-C22 securitization trust. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The Waterfront at Port Chester Non-Serviced Loan Combination”and “Servicing of the Mortgage Loans” in this prospectus supplement.
Mezzanine Loan and Preferred Equity.Not permitted.
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Release of Property. Provided no event of default has occurred and is continuing, the Waterfront at Port Chester Borrower may obtain a release of the individual properties comprising the Waterfront at Port Chester Property known as Unit 1, Unit 2A, Unit 2C and Unit 4A in connection with a defeasance in part of the Waterfront at Port Chester Mortgage Loan, provided, amongst other conditions, (i) the Waterfront at Port Chester Borrower defeases the Waterfront at Port Chester Mortgage Loan with U.S. government securities in a principal amount equal to 125% of the allocated loan amount with respect to the applicable individual property which is the subject of the release which allocated loan amount initially equals $113,147,084.20 (with respect to the Waterfront at Port Chester Property referred to as Unit 1), $11,444,286.65 (with respect to the Waterfront at Port Chester Property referred to as Unit 2A), $4,895,580.79 (with respect to the Waterfront at Port Chester Property referred to as Unit 2C), and $4,013,048.36 (with respect to the Waterfront at Port Chester Property referred to as Unit 4A), (ii) as of the date of consummation of the individual property release and partial defeasance event, after giving effect to the release of the lien encumbering the applicable property, with respect to the remaining Waterfront at Port Chester Property, (x) the debt yield of the Waterfront at Port Chester Mortgage Loan is greater than or equal to 6.97%, (y) the LTV ratio of the Waterfront at Port Chester Mortgage Loan is less than or equal to 75% (as determined based upon updated appraisals) and (z) the DSCR of the Waterfront at Port Chester Mortgage Loan is greater than or equal to 1.66x, and (iii) the Waterfront at Port Chester Borrower delivers a rating agency confirmation with respect to such individual property release and partial defeasance event.
Additionally, provided no event of default has occurred and is continuing, the Waterfront at Port Chester Borrower may obtain a release of a certain parking parcel of the Waterfront at Port Chester Property known as the Subdivision Parcel (as described in Schedule VIII of the loan agreement for the Waterfront at Port Chester Mortgage Loan), provided, amongst other conditions, the Waterfront at Port Chester Borrower provides supporting documentation that (i) the Subdivision Parcel is not necessary for the uses of the remainder of the Waterfront at Port Chester Property, (ii) sufficient parking remains on the remainder of the Waterfront at Port Chester Property, and (iii) the release of the Subdivision Parcel will not have a material adverse effect on the appraised value of the Waterfront at Port Chester Property.
Terrorism Insurance. Generally, the Waterfront at Port Chester Borrower is required to obtain insurance against acts of terrorism or other similar acts or events (or “fire following”) to the extent such insurance is available in form and substance satisfactory to lender (in an amount not more than the sum of 100% of full replacement costs and 12 months of business interruption insurance). Notwithstanding the foregoing, for so long as the Terrorism Risk Insurance Program Reauthorization Act of 2007 (or any extension thereof or other federal government program with substantially similar protection) is in effect, the Waterfront at Port Chester Borrower is required to maintain, and lender is required to accept, terrorism insurance which covers “covered acts” (as defined by such statute or other program), as full compliance, so long as such statute or other program covers both domestic and foreign acts of terrorism.
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MSC 2015-MS1 | Alderwood Mall |
Mortgage Loan No. 5 – Alderwood Mall
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Mortgage Loan No. 5 – Alderwood Mall
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Mortgage Loan No. 5 – Alderwood Mall
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Mortgage Loan No. 5 – Alderwood Mall
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MSC 2015-MS1 | Alderwood Mall |
Mortgage Loan No. 5 – Alderwood Mall |
Mortgage Loan Information | Property Information | ||||||
Mortgage Loan Seller: | MSMCH | Single Asset/Portfolio: | Single Asset | ||||
Original Balance(1): | $50,400,000 | Location: | Lynnwood, WA 98037 | ||||
Cut-off Date Balance(1): | $50,275,604 | General Property Type: | Retail | ||||
% of Initial Pool Balance: | 5.7% | Detailed Property Type: | Super Regional Mall | ||||
Loan Purpose: | Refinance | Title Vesting: | Fee | ||||
Sponsor: | GGP/Homart II L.L.C. | Year Built/Renovated: | 1979/1995; 2003; 2009 | ||||
Mortgage Rate: | 3.47875% | Size(4): | 575,704 SF | ||||
Note Date: | 5/5/2015 | Cut-off Date Balance per Unit(1): | $394 | ||||
First Payment Date: | 7/1/2015 | Maturity Date Balance per Unit(1): | $260 | ||||
Maturity Date: | 6/1/2025 | Property Manager: | General Growth Services, Inc. | ||||
Original Term to Maturity: | 120 months | (borrower related) | |||||
Original Amortization Term(2): | 360 months | Underwriting and Financial Information | |||||
IO Period: | None | UW NOI: | $34,130,830 | ||||
Seasoning: | 1 month | UW NOI Debt Yield(1): | 15.1% | ||||
Prepayment Provisions: | LO (25); DEF (88); O (7) | UW NOI Debt Yield at Maturity(1): | 22.8% | ||||
Lockbox/Cash Mgmt Status: | Hard/Springing | UW NCF DSCR(1)(2): | 2.24x | ||||
Additional Debt Type: | Pari Passu/B Note | Most Recent NOI: | $32,168,596 (2/28/2015 TTM) | ||||
Additional Debt Balance: | $176,800,000/$127,800,000 | 2nd Most Recent NOI: | $31,643,830 (12/31/2013) | ||||
Future Debt Permitted (Type): | Yes (Mezzanine) | 3rd Most Recent NOI: | $29,331,334 (12/31/2012) | ||||
Reserves(3) | Most Recent Occupancy: | 96.4% (2/28/2015) | |||||
Type | Initial | Monthly | Cap | 2nd Most Recent Occupancy: | 97.8% (12/31/2013) | ||
RE Tax: | $0 | Springing | N/A | 3rd Most Recent Occupancy: | 97.9% (12/31/2012) | ||
Insurance: | $0 | Springing | N/A | Appraised Value (as of): | $693,500,000 (3/17/2015) | ||
Recurring Replacements: | $0 | Springing | N/A | Cut-off Date LTV Ratio(1): | 32.7% | ||
TI/LC: | $0 | Springing | N/A | Maturity Date LTV Ratio(1): | 21.6% |
Sources and Uses | ||||||
Sources | Proceeds | % of Total | Uses | Proceeds | % of Total | |
Loan Amount(1): | $355,000,000 | 100.0% | Loan Payoff: | $243,293,021 | 68.5% | |
Closing Costs: | $1,160,730 | 0.3% | ||||
Return of Equity: | $110,546,249 | 31.1% | ||||
Total Sources: | $355,000,000 | 100.0% | Total Uses: | $355,000,000 | 100.0% |
(1) | The Alderwood Mall Mortgage Loan is part of the Alderwood Mall Non-Serviced Loan Combination, which is comprised of fourpari passu seniornotes and two subordinate notes with an aggregate original principal balance of $355,000,000. The four Alderwood Mallpari passu senior notes have a combined original principal balance of $227,200,000 and the two subordinate notes have a combined original principal balance of $127,800,000. The Cut-off Date Balance per Unit, Maturity Date Balance per Unit, UW NOI Debt Yield, UW NOI Debt Yield at Maturity, UW NCF DSCR, Cut-off Date LTV Ratio and Maturity Date LTV Ratio presented above are based on the four senior notes totaling $227,200,000 without regard to the subordinate notes. |
(2) | The Alderwood Mall Mortgage Loan amortizes according to a schedule attached to this prospectus supplement. The monthly payment varies due to the allocation of principal and interest between the Alderwood Mall Mortgage Loan and the Alderwood Mall B Note (as defined below). The UW NCF DSCR is based on the average debt service payment over the first 12 months for the four senior notes totaling $227,200,000 without regard to the subordinate notes. |
(3) | See “—Escrowsand Reserves” below for further discussion of reserve requirements. |
(4) | The Alderwood Mall Property size includes the improvements owned by the Alderwood Mall Borrower. It excludes approximately 705,898 SF of non-collateral anchor space comprising the Macy’s, Sears, JC Penney and Nordstrom stores. |
The Mortgage Loan. The fifth largest mortgage loan (the “Alderwood Mall Mortgage Loan”) is part of a non-serviced loan combination (the “Alderwood Mall Non-Serviced Loan Combination”) evidenced by (i) fourpari passu senior notes in the aggregate original principal amount of $227,200,000 and (ii) two subordinate notes in the aggregate original principal amount of $127,800,000, all of which are secured by the same first priority fee mortgage encumbering a portion of the super-regional mall known as Alderwood Mall in Lynwood, Washington (the “Alderwood Mall Property”). The Alderwood Mall Mortgage Loan is evidenced by onepari passupromissory note (Note A-1-3) with an outstanding principal balance as of the Cut-off Date of $50,275,604. Notes A-1-1, A-1-2 and A-1-4, in the aggregate original principal amount of $176,800,000, collectively represent a non-serviced companion loan (the “Alderwood Mall Non-Serviced Companion Loan”), and arepari passuwith the Alderwood Mall Mortgage Loan. Notes A-2-1 and A-2-2, in the aggregate original principal amount of $127,800,000, collectively represent a B note (the “Alderwood Mall B Note”) and are generally subordinate to the Alderwood Mall Mortgage Loan and the Alderwood Mall Non-Serviced Companion Loan. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The Alderwood Mall Non-Serviced Loan Combination” and “Servicing of the Mortgage Loans” in this prospectus supplement.
The Alderwood Mall Mortgage Loan will be included in the MSC 2015-MS1 securitization trust. A portion of the Alderwood Mall Non-Serviced Companion Loan (Notes A-1-1 and A-1-2), in the aggregate original principal amount of $127,800,000, and the entire Alderwood Mall B Note were contributed to the MSCCG 2015-ALDR securitization trust. The remaining portion of the Alderwood Mall Non-Serviced Companion Loan (Note A-1-4), in the original principal amount of $49,000,000, is expected to be held by Citigroup Global Markets Realty Corp. or an affiliate thereof on the closing date of this transaction and may be contributed to one or more future securitization transactions. The Alderwood Mall Non-Serviced Loan Combination will be serviced pursuant to the terms of the MSCCG 2015-ALDR trust and servicing agreement.
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The proceeds of the Alderwood Mall Non-Serviced Loan Combination were used to refinance a previous loan with an outstanding balance of approximately $243,293,021 secured by the Alderwood Mall Property, pay closing costs and return equity to the Alderwood Mall Borrower.
The Borrower and the Sponsor.The borrower is Alderwood Mall L.L.C. (the “Alderwood Mall Borrower”), a previously existing single-purpose Delaware limited liability company with two independent directors. The Alderwood Mall Borrower is owned indirectly by GGP/Homart II L.L.C. (the “Sponsor” or the “Guarantor”), a joint venture between (i) GGP Limited Partnership and GGP Nimbus, LP and (ii) New York State Common Retirement Fund (“NYSCRF”), and managed by a subsidiary of General Growth Properties, Inc. (“GGP”) (NYSE: GGP). GGP/Homart II L.L.C. currently indirectly owns (along with its relevant joint-venture partners) 10 malls totaling approximately 12 million SF. GGP is a fully integrated, self-managed and self-administered real estate investment trust focused on owning, managing, leasing and redeveloping regional malls throughout the United States. As of March 31, 2015, GGP owned, either entirely or with joint venture partners, 129 shopping centers and high street retail properties comprising approximately 127 million square feet of gross leasable area. NYSCRF holds all of the assets of the New York State and Local Retirement System, which has more than one million members, retirees and beneficiaries. NYSCRF had $176.8 billion in audited net assets held in trust for pension as of March 31, 2014.
The Property.The Alderwood Mall Property represents 575,704 SF of theater, in-line and food court space within the approximately 1,281,602 SF single-level super-regional Alderwood Mall with a combination of enclosed retail space and outdoor retail shops in Lynwood, Washington. The outdoor component is designed with various seating areas, decorative fountains and attractive landscaping. The Alderwood Mall includes 6,419 parking spaces, for a parking ratio of 5.00 per 1,000 SF, within one three-level and one four-level parking structure and various surface lots. The Alderwood Mall was originally constructed in 1979 and was expanded and/or renovated in 1995, 2003-2004 and 2009-2013. GGP purchased the portion of the Alderwood Mall that constitutes the Alderwood Mall Property in 1999 for $162 million and subsequently invested an additional approximately $162 million in capital expenditures throughout the Alderwood Mall Property.
Alderwood Mall is anchored by Macy’s, Sears, JC Penney, Nordstrom (collectively, the “Non-Collateral Anchors”) and a 16-screen Loews Cineplex (together with the Non-Collateral Anchors, the “Anchor Tenants”), and is leased to over 140 additional tenants including Apple, American Girl, H&M, Victoria’s Secret, Michael Kors and Lululemon, as well as 10 food court tenants. Macy’s, JC Penney and Nordstrom own their respective spaces. Sears occupies a building that was sold by Sears in March 2015 to a joint venture owned by Sears and an affiliate of GGP. The department store anchors have been at the Alderwood Mall since its inception in 1979 or shortly thereafter. Loews Cineplex leases from the Alderwood Mall Borrower a building that was constructed for it in 2005. As of February 28, 2015, the Alderwood Mall Property had in-line occupancy of 94.6% and collateral occupancy of 96.4%. Average historical occupancy averaged 97.4% for 2011, 2012, 2013 and TTM February 2015.
Comparable tenants produced TTM January 2015 sales of approximately $625 PSF. Without the Apple tenant, comparable sales were approximately $513 PSF. The average TTM January 2015 comparable tenant occupancy cost was 12.7% (15.6% excluding Apple). The following table presents a summary of historical in-line sales, occupancy costs and total mall sales.
Historical Sales Summary | |||||||
Comparable In-line Tenant Sales PSF | Comparable In-line Tenant Occupancy Cost(1) | ||||||
Year | w/ Apple | w/o Apple | w/ Apple | w/o Apple | Total Comparable In-line Sales | Total Mall Sales(2) | |
2011 | $511 | $421 | 15.6% | 19.0% | $169,438,090 | N/A | |
2012 | $588 | $474 | 13.5% | 16.8% | $194,981,753 | $401,708,831 | |
2013 | $613 | $500 | 13.0% | 16.0% | $203,332,705 | $411,076,148 | |
1/31/2015 TTM(3) | $625 | $513 | 12.7% | 15.6% | $207,410,095 | $419,467,761 |
(1) | Occupancy Cost% calculations are based on UW Total Rent (base rent, recoveries, percentage rent in lieu and overage rent) excluding utilities/HVAC recoveries, divided by 1/31/15 TTM Sales. |
(2) | Total Mall Sales include sponsor-provided estimates for Anchor Tenants. Anchor sales estimates for 2011 were unavailable. |
(3) | For TTM figures, comparable in-line tenants are defined as all stores less than 10,000 SF with at least 12 months of sales data. |
Major Tenants.
Loews Cineplex (79,330 SF, 14% of NRA, 10% of underwritten base rent). American Multi-Cinema, Inc. as successor in interest to Loews Akron Cinemas, Inc. (“Loews”) leases 79,330 SF at the Alderwood Mall Property and operates the space as a 16 screen movie theater. The lease began on March 25, 2005 and has a current expiration date of December 31, 2025, with four five-year lease renewal options. Loews is a subsidiary of AMC Entertainment Holdings, Inc. (“AMC”) (NYSE: AMC). As of May 5, 2015, AMC operates 347 locations with 4,971 screens in the United States.
REI (25,543 SF, 4% of NRA, 3% of underwritten base rent). Recreational Equipment, Inc. (“REI”) leases 25,543 SF at the Alderwood Mall Property. The lease began on October 31, 2014, was extended on July 25, 2014, and has a current expiration date of January 31, 2020, with one five-year lease renewal option.
Forever 21 (24,320 SF, 4% of NRA, 3% of underwritten base rent). Forever 21 Retail, Inc. (“Forever 21”) leases 24,320 SF at the Alderwood Mall Property. The lease began on January 2, 2012 and has a current expiration date of January 31, 2022. Forever 21 is a privately held fashion retailer with over 480 stores under the Forever 21, XXI Forever, For Love 21, Heritage 1981 and Reference brands.
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The following table presents certain information relating to the anchor tenants and major tenants. Certain tenants may have co-tenancy provisions permitting the early termination of their leases based on sales performance and/or occupancy at the Alderwood Mall Property.
Major Tenant Summary | |||||||||||||||||||||||
Credit Rating | Tenant | % of | UW Base | Sales (TTM 1/31/2015)(4) | Occ. | Lease | |||||||||||||||||
Tenant Name | (Moody’s/S&P/Fitch)(1) | SF | Occ. % | Collateral SF | Rent(2) | PSF(3) | $ | PSF(3) | Cost %(5) | Expiration | |||||||||||||
Non-Collateral Anchors | |||||||||||||||||||||||
Macy’s(6) | Baa2/BBB+/BBB | 235,213 | N/A | N/A | N/A | $54,000,000 | $230 | 0.0% | N/A | ||||||||||||||
Sears(7) | Caa1/CCC+/CC | 177,679 | N/A | N/A | N/A | 18,800,000 | $106 | 0.7% | N/A | ||||||||||||||
JC Penney(8) | Caa1/CCC+/CCC | 148,949 | N/A | N/A | N/A | 30,000,000 | $201 | 0.3% | N/A | ||||||||||||||
Nordstrom(9) | Baa1/A-/BBB+ | 144,057 | N/A | N/A | N/A | 62,500,000 | $434 | 0.0% | N/A | ||||||||||||||
Subtotal/Wtd. Avg. | 705,898 | 100.0% | $165,300,000 | $234 | 0.1% | ||||||||||||||||||
Anchor/Major (collateral) | |||||||||||||||||||||||
Loews Cineplex(10) | NR/NR/NR | 79,330 | 14% | $2,657,555 | $166,097 | $9,701,563 | $606,348 | 29.4% | 12/31/2025 | ||||||||||||||
REI | NR/NR/NR | 25,543 | 4% | $823,762 | $32.25 | N/A | N/A | N/A | 1/31/2020 | ||||||||||||||
Forever 21 | NR/NR/NR | 24,320 | 4% | $874,061 | $35.94 | 4,908,691 | $202 | 17.8% | 1/31/2022 | ||||||||||||||
H&M(11) | NR/NR/NR | 18,000 | 3% | $764,100 | $42.45 | 8,655,518 | $481 | 11.1% | 1/31/2023 | ||||||||||||||
Claim Jumper | NR/NR/NR | 12,641 | 2% | $412,981 | $32.67 | 4,323,983 | $342 | 13.2% | 10/31/2024 | ||||||||||||||
American Girl | NR/NR/NR | 12,500 | 2% | $576,875 | $46.15 | 7,962,206 | $637 | 7.2% | 2/28/2022 | ||||||||||||||
Urban Outfitters | NR/NR/NR | 10,829 | 2% | $249,067 | $23.00 | 2,892,421 | $267 | 19.9% | 1/31/2017 | ||||||||||||||
Subtotal/Wtd. Avg. | 183,163 | 100.0% | 32% | $6,358,401 | $34.71 | $38,444,381 | $210 | 19.7% | |||||||||||||||
Select Top 10 In-Line(12) | |||||||||||||||||||||||
Pottery Barn | NR/NR/NR | 9,058 | 2% | $436,052 | $48.14 | 4,743,241 | $524 | 9.2% | 1/31/2017 | ||||||||||||||
Victoria’s Secret | Ba1/BB+/BB+ | 9,131 | 2% | $427,331 | $46.80 | 5,446,221 | $596 | 12.3% | 1/31/2025 | ||||||||||||||
Abercrombie & Fitch | B1/BB-/NR | 9,180 | 2% | $400,064 | $43.58 | 2,040,704 | $222 | 19.6% | 2/28/2019 | ||||||||||||||
Gap | Baa3/BBB-/BBB- | 5,438 | 1% | $385,772 | $70.94 | 1,607,416 | $296 | 25.2% | 1/31/2017 | ||||||||||||||
Ben Bridge Jeweler | Aa2/AA/AA- | 2,714 | 1% | $374,478 | $137.98 | 4,500,798 | $1,658 | 8.5% | 12/31/2021 | ||||||||||||||
Zumiez | NR/NR/NR | 4,062 | 1% | $364,686 | $89.78 | 2,347,810 | $578 | 16.1% | 5/31/2018 | ||||||||||||||
Express | NR/NR/NR | 7,316 | 1% | $362,800 | $49.59 | 2,482,519 | $339 | 28.5% | 1/31/2019 | ||||||||||||||
Champs Sports | NR/NR/NR | 5,376 | 1% | $354,063 | $65.86 | 2,373,254 | $441 | 15.6% | 3/31/2016 | ||||||||||||||
Lane Bryant | NR/NR/NR | 5,967 | 1% | $346,384 | $58.05 | 1,497,365 | $251 | 27.1% | 1/31/2020 | ||||||||||||||
American Eagle Outfitters | NR/NR/NR | 6,000 | 1% | $336,000 | $56.00 | 2,626,021 | $438 | 21.6% | 1/31/2017 | ||||||||||||||
All In-line < 10,000 SF | 392,541 | 94.6% | 68% | $19,341,918 | $52.06 | 215,723,380 | |||||||||||||||||
Total Collateral SF | 575,704 | 96.4% | 100.0% | $25,700,319 | $46.33 | $254,167,761 | |||||||||||||||||
Total Mall SF | 1,281,602 | 98.4% | $419,467,761 | ||||||||||||||||||||
Comparable In-Line | 331,852 | $207,410,095 | $625 | 12.7% | |||||||||||||||||||
Comparable In-Line Without Apple(13) | 327,898 | $168,271,996 | $513 | 15.6% |
(1) | Certain ratings are those of the parent company whether or not the parent company guarantees the lease. |
(2) | Base rental revenue reflects the following: (a) annualized base rent from signed leases as of the February 28, 2015 rent roll, (b) annualized contractual base rent steps through January 1, 2016 and (c) The Art Of Shaving (659 SF, $68,062 of UW Base Rent) and Young Art Lessons & Gallery (1,427 SF, $68,981 of UW Base Rent), both of which have signed leases but are not yet open for business. See “Underwritten Base Rental Revenue” in the notes to the Cash Flow Analysis for additional detail. |
(3) | PSF figures exclude vacant space. |
(4) | Tenant sales for TTM ended January 31, 2015, except for anchors which are based on the Alderwood Mall Borrower’s estimate for 2014. |
(5) | Occupancy Cost% calculations are based on UW Total Rent (UW base rent, recoveries, percentage rent in lieu and overage rent) excluding utilities/HVAC recoveries, divided by 1/31/15 TTM Sales. |
(6) | Macy’s owns its land and improvements. Macy’s has been operating at the Alderwood Mall since it opened in 1979 as The Bon Marché before being rebranded as a Macy’s in 2005. Sales data shown is based on sponsor estimates for 2014. |
(7) | A joint venture between Sears and GGP owns the Sears land and improvements, which do not serve as collateral for the Alderwood Mall Non-Serviced Loan Combination. Sears has been operating at the Alderwood Mall since 1980, shortly after it opened. Sears is required to pay an annual payment of $131,460 for its share of common area maintenance. Sales data shown is based on sponsor estimates for 2014. |
(8) | JC Penney owns its land and improvements. JC Penney has been operating at the Alderwood Mall since 1980, shortly after it opened. JC Penney is required to pay $80,000 for its share of common area maintenance. Sales data shown is based on sponsor estimates for 2014. |
(9) | Nordstrom owns its own land and improvements. Nordstrom has been operating at the Alderwood Mall since it opened in 1979. Sales data is based on Sponsor estimates for 2014. |
(10) | Sales PSF for Loews Cineplex are based on 16 screens. |
(11) | H&M has a termination right for 180 days following December 31, 2016 with 6 months’ notice and the payment of a termination fee equal to 50% of unamortized tenant improvements if sales fail to exceed $6,000,120 during 2016. As of the January 2015 TTM, H&M’s sales were $8,655,518. |
(12) | Select Top 10 In-Line tenants based on UW base rent. |
(13) | Apple leases approximately 3,954 SF (0.7% of NRA) of in-line space at the Alderwood Mall Property. |
III-52 |
MSC 2015-MS1 | Alderwood Mall |
The following table presents certain information relating to the lease rollover schedule at the Alderwood Mall Property:
Lease Rollover Schedule | |||||||||||||||||
Year | # of Leases Rolling | SF Rolling(1) | Approx. % of Total SF Rolling | Approx. Cumulative % of SF Rolling | Total UW Rent Rolling(2) | UW Rent PSF Rolling(3) | Approx. % of Total Rent Rolling | Approx. Cumulative % of Total Rent Rolling | |||||||||
Vacant | 0 | 21,006 | 4% | 4% | $0 | $0.00 | 0% | 0% | |||||||||
MTM | 4 | 7,923 | 1% | 5% | $560,700 | $70.77 | 2% | 2% | |||||||||
2015 | 5 | 9,683 | 2% | 7% | $554,401 | $57.26 | 2% | 4% | |||||||||
2016 | 14 | 47,030 | 8% | 15% | $2,181,590 | $46.39 | 9% | 13% | |||||||||
2017 | 18 | 59,409 | 10% | 25% | $3,265,906 | $54.97 | 13% | 26% | |||||||||
2018 | 15 | 40,542 | 7% | 32% | $2,482,945 | $61.24 | 10% | 35% | |||||||||
2019 | 18 | 67,484 | 12% | 44% | $3,180,964 | $47.14 | 12% | 48% | |||||||||
2020 | 11 | 48,551 | 8% | 52% | $2,048,765 | $42.20 | 8% | 56% | |||||||||
2021 | 11 | 21,232 | 4% | 56% | $1,465,167 | $69.01 | 6% | 61% | |||||||||
2022 | 12 | 61,540 | 11% | 67% | $2,594,749 | $42.16 | 10% | 71% | |||||||||
2023 | 6 | 28,592 | 5% | 72% | $1,397,950 | $48.89 | 5% | 77% | |||||||||
2024 | 11 | 35,340 | 6% | 78% | $1,427,008 | $40.38 | 6% | 82% | |||||||||
2025 | 15 | 119,172 | 21% | 99% | $4,359,774 | $36.58 | 17% | 99% | |||||||||
2026 | 1 | 8,200 | 1% | 100% | $180,400 | $22.00 | 1% | 100% | |||||||||
Total/Wtd. Avg. | 141 | 575,704 | 100% | $25,700,319 | $46.33 | 100% |
(1) | Based on the Alderwood Mall Borrower’s owned space and excludes storage space. |
(2) | Base rental revenue reflects the following: (a) annualized base rent from signed leases as of the February 28, 2015 rent roll, (b) annualized contractual base rent steps through January 1, 2016 and (c) The Art Of Shaving (659 SF, $68,062 of UW Base Rent) and Young Art Lessons & Gallery (1,427 SF, $68,981 of UW Base Rent), both of which have signed leases but are not yet open for business. See “Underwritten Base Rental Revenue” in the notes to the Cash Flow Analysis. |
(3) | UW Base Rent PSF excludes vacant space. |
The Market. The Alderwood Mall Property is located in Lynnwood, Washington in southwestern Snohomish County, within the northern portion of the Seattle-Tacoma CBSA, which is part of the larger Seattle-Tacoma-Bellevue Metropolitan Statistical Area (the “Seattle MSA”). The Alderwood Mall Property is situated along the western side of Interstate 5, within the southwest quadrant of Alderwood Mall Parkway and 184th Street Southwest in the City of Lynnwood, Washington. This location is approximately 17.0 miles north of downtown Seattle, approximately 13.5 miles south of Everett, WA, approximately 20.0 miles northwest of Bellevue, WA and approximately 96.0 miles south of the Canadian border. The Alderwood Mall Property is located just west of the Interstate 5 and Interstate 405 exchange, which has an annual traffic count that averages approximately 138,000 vehicles per day (over 50 million per year). Alderwood Mall acts as a commercial/retail hub for the area, with additional retail development in the area consisting of multiple community, power and strip centers. Average household income in the Alderwood Mall primary trade area was $82,965 for 2014.
The appraiser concluded a primary trade area of a 7.0 mile radius around the Alderwood Mall Property and a secondary trade area of a 10.0 mile radius around the Alderwood Mall Property. A summary of demographics in the primary and secondary trade areas compared to the Seattle MSA, Washington and the United States is presented below.
Demographic Summary | |||||||||||
Statistic | 7.0-mile Radius | 10.0-mile Radius | Seattle MSA | Washington | United States | ||||||
Population | |||||||||||
2000 | 410,960 | 617,940 | 3,043,887 | 5,893,709 | 281,394,317 | ||||||
2014 | 493,697 | 721,138 | 3,606,693 | 7,005,333 | 317,178,116 | ||||||
2019 (projected) | 520,901 | 760,213 | 3,818,212 | 7,374,927 | 328,287,020 | ||||||
% Increase 2000-2014 | 20.1% | 16.7% | 18.5% | 18.9% | 12.7% | ||||||
% Increase 2014-2019 | 5.5% | 5.4% | 5.9% | 5.3% | 3.5% | ||||||
Average Household Income | |||||||||||
2000 | $65,771 | $66,073 | $65,808 | $58,580 | $56,674 | ||||||
2014 | $82,965 | $84,752 | $86,667 | $76,632 | $71,318 | ||||||
2019 (projected) | $90,750 | $93,349 | $96,259 | $84,256 | $75,940 | ||||||
% Increase 2000-2014 | 26.1% | 28.3% | 31.7% | 30.8% | 25.8% | ||||||
% Increase 2014-2019 | 9.4% | 10.1% | 11.1% | 9.9% | 6.5% | ||||||
Number of Households | |||||||||||
2000 | 158,368 | 244,617 | 1,196,570 | 2,271,081 | 105,466,823 | ||||||
2014 | 192,896 | 290,182 | 1,425,525 | 2,736,650 | 120,151,595 | ||||||
2019 (projected) | 204,102 | 307,074 | 1,511,896 | 2,889,425 | 124,610,342 | ||||||
% Increase 2000-2014 | 21.8% | 18.6% | 19.1% | 20.5% | 13.9% | ||||||
% Increase 2014-2019 | 5.8% | 5.8% | 6.1% | 5.6% | 3.7% |
III-53 |
MSC 2015-MS1 | Alderwood Mall |
The five primary competitors to the Alderwood Mall, as identified by the appraisal, are shown below. The appraiser identified University Village and Bellevue Square as the two most competitive centers in terms of competition for tenants and shoppers. University Square is located near the University of Washington and the central portion of Seattle and competes for lifestyle center tenants and shoppers. Bellevue Square includes an upscale merchandising mix and flagship department store locations for Nordstrom and Macy’s and competes with the Alderwood Mall for upscale tenants and shoppers. Westfield Southcenter is located outside the Alderwood Mall’s primary retail market, but is considered similar to the Alderwood Mall in terms of merchandising mix, quality and location.
Competitive Property Summary | |||||||||||||||||
Property Name | Center Type | Proximity | Total GLA | Year Built | Year Renovated | Anchor Tenants | Occupancy | In-line Sales PSF | |||||||||
Alderwood Mall | Super Regional | N/A | 1,281,602 | 1979 | 1995; 2003-2004; 2009-2013 | Macy’s JC Penney Nordstrom Sears | 98% | $619 | |||||||||
Everett Mall | Regional | 7 miles N | 716,053 | 1968 | 1988 | Macy’s Sears Regal Cinemas | 93% | $350 | |||||||||
Northgate Mall | Super Regional | 11 miles S | 1,021,989 | 1950 | 1997; 2007 | Macy’s JC Penney Nordstrom Bed Bath & Beyond | 100% | $425 | |||||||||
University Village | Lifestyle | 15 miles SE | 368,965 | 1956 | 2003 | Crate & Barrel H&M Barnes & Noble | 92% | $720 | |||||||||
Bellevue Square | Super Regional | 18 miles SE | 1,577,889 | 1946 | 2001; 2005; 2009; 2014 | Macy’s Nordstrom Crate & Barrel | 96% | $855 | |||||||||
Westfield Southcenter | Super Regional | 30 miles S | 1,843,292 | 1968 | 1998; 2008 | Macy’s JC Penney Nordstrom Sears | 96% | $650 |
Source: Appraisal
III-54 |
MSC 2015-MS1 | Alderwood Mall |
Operating History and Underwritten Net Cash Flow.The following table presents certain information relating to historical operating performance and the Underwritten Cash Flow at the Alderwood Mall Property:
Cash Flow Analysis | ||||||||||||||||
2012 | 2013 | 2014 | 2/28/2015 TTM | 2015 Budget | UW | (1) | UW PSF | |||||||||
Base Rental Revenue | $23,476,011 | $24,559,648 | $24,754,619 | $24,822,238 | $25,908,706 | $25,079,936 | (2) | $43.56 | ||||||||
Rent Steps | $0 | $0 | $0 | $0 | $0 | $620,383 | $1.08 | |||||||||
Percentage Rent In Lieu | $256,172 | $5,806 | $7,031 | $0 | $0 | $0 | $0 | |||||||||
Overage Rent | $482,178 | $819,075 | $765,279 | $797,840 | $524,986 | $908,826 | $1.58 | |||||||||
Total Minimum Rent | $24,214,361 | $25,384,529 | $25,526,929 | $25,620,079 | $26,433,692 | $26,609,145 | $46.22 | |||||||||
Expense Reimbursements | $9,036,763 | $9,763,161 | $10,376,772 | $10,346,091 | $11,126,806 | $11,126,806 | (3) | $19.33 | ||||||||
Other Income | $4,371,352 | $4,536,973 | $3,860,837 | $4,192,829 | $4,000,200 | $4,000,200 | (4) | $6.95 | ||||||||
Total Gross Income | $37,622,477 | $39,684,663 | $39,764,538 | $40,158,998 | $41,560,698 | $41,736,151 | $72.50 | |||||||||
Vacancy and Credit Loss | ($94,056) | ($99,212) | ($99,411) | ($100,397) | ($103,902) | $0 | (1) | $0 | ||||||||
Effective Gross Income | $37,528,421 | $39,585,451 | $39,665,127 | $40,058,601 | $41,456,797 | $41,736,151 | $72.50 | |||||||||
Recoverable Expenses(5) | ||||||||||||||||
Repairs & Maintenance | $673,329 | $625,849 | $624,127 | $626,024 | $693,756 | $693,756 | $1.21 | |||||||||
Security | $756,070 | $762,411 | $728,042 | $753,171 | $787,825 | $787,825 | $1.37 | |||||||||
Cleaning Expense | $874,805 | $766,314 | $727,040 | $741,579 | $761,218 | $761,218 | $1.32 | |||||||||
Utilities | $887,974 | $891,600 | $901,520 | $895,775 | $880,889 | $880,889 | $1.53 | |||||||||
Landscaping | $151,403 | $145,640 | $162,439 | $160,709 | $172,669 | $172,669 | $0.30 | |||||||||
Insurance | $295,737 | $236,145 | $143,190 | $155,927 | $134,218 | $134,218 | $0.23 | |||||||||
Miscellaneous Recoverable | $726,906 | $733,027 | $712,225 | $716,247 | $764,279 | $764,279 | $1.33 | |||||||||
Marketing | $471,216 | $357,583 | $525,872 | $573,335 | $648,335 | $648,335 | $1.13 | |||||||||
Real Estate Taxes | $1,597,639 | $1,649,990 | $1,580,795 | $1,548,720 | $1,536,977 | $1,536,977 | (6) | $2.67 | ||||||||
Non-Recoverable Expenses | ||||||||||||||||
General & Administrative | $237,179 | $192,182 | $190,268 | $185,918 | $225,154 | $225,154 | $0.39 | |||||||||
Management Fees | $1,524,830 | $1,580,881 | $1,477,417 | $1,532,600 | $1,467,488 | $1,000,000 | (7) | $1.74 | ||||||||
Total Expenses | $8,197,087 | $7,941,621 | $7,772,933 | $7,890,005 | $8,072,809 | $7,605,321 | $13.21 | |||||||||
Net Operating Income | $29,331,334 | $31,643,830 | $31,892,193 | $32,168,596 | $33,383,988 | $34,130,830 | $59.29 | |||||||||
Capital Reserves | $0 | $0 | $0 | $0 | $0 | $86,356 | (8) | $0.15 | ||||||||
Tenant Improvements | $0 | $0 | $0 | $0 | $0 | $476,142 | (9) | $0.83 | ||||||||
Leasing Commissions | $0 | $0 | $0 | $0 | $0 | $958,052 | (10) | $1.66 | ||||||||
Net Cash Flow | $29,331,334 | $31,643,830 | $31,892,193 | $32,168,596 | $33,383,988 | $32,610,281 | $56.64 | |||||||||
Occupancy%(11) | 97.9% | 97.8% | 98.6% | 95.9% | N/A | N/A | (1) | |||||||||
NOI DSCR | 2.01x | 2.17x | 2.19x | 2.21x | 2.29x | 2.34x | (12) | N/A | ||||||||
NCF DSCR | 2.01x | 2.17x | 2.19x | 2.21x | 2.29x | 2.24x | (12) | N/A | ||||||||
NOI Debt Yield | 12.9% | 14.0% | 14.1% | 14.2% | 14.7% | 15.1% | N/A | |||||||||
NCF Debt Yield | 12.9% | 14.0% | 14.1% | 14.2% | 14.7% | 14.4% | N/A |
(1) | Underwritten Occupancy is based on square footage of 575,704 (based on February 28, 2015 rent roll) and reflects in place occupancy, including The Art of Shaving and Young Art Lessons & Gallery (in aggregate representing 0.4% of collateral SF), which have executed leases but have not yet taken occupancy or commenced paying rent. |
(2) | Underwritten Base Rental Revenue is based on the rent roll as of February 28, 2015 and includes The Art of Shaving (659 SF, $68,062 of UW Base Rent) and Young Art Lessons & Gallery (1,427 SF, $68,981 of UW Base Rent), which have executed leases but have not yet taken occupancy or commenced paying rent. |
(3) | Underwritten Expense Reimbursements have been underwritten based on the 2015 budget. |
(4) | Underwritten Other Income is underwritten per the 2015 budget and includes specialty leasing income & recoveries, other rental income and miscellaneous income. |
(5) | Underwritten Expenses reflect the 2015 budget for the Alderwood Mall Property, unless otherwise noted. |
(6) | Underwritten Real Estate Taxes are based on the 2015 budget and include local improvement bonds debt service of approximately $209,000. Such improvement bonds are subordinate to real estate taxes and require equal annual payments up to and including the payment date in July 2019, following which they will be fully discharged and the related expense will cease. Underwritten Real Estate Taxes exclude contingent partial real estate tax liabilities to JC Penney and Macy’s which are due under their respective reciprocal easement agreements (each, an “REA”) but which the Alderwood Mall Borrower has not historically paid. If the Alderwood Mall Borrower were to make such payments, they would be reimbursable per the terms of most inline tenants’ leases. Lender has recourse to the Alderwood Mall Borrower and the related guarantor for losses resulting from the Alderwood Mall Borrower’s failure to reimburse any party to the applicable REA for real estate taxes in accordance with the terms of such REA, unless such failure is solely caused by a lack of cash flow at the Alderwood Mall Property. See “Risk Factors—Risks Related to the Mortgage Loans—A Significant Concentration of Retail Properties in the Mortgage Pool Will Subject Your Investment to the Special Risks of Retail Properties” in this prospectus supplement. |
(7) | Underwritten Management Fee reflects a management fee of 5.0% of effective gross income less recoveries, capped at $1,000,000. |
(8) | Underwritten Replacement Reserves reflects $0.15 per square foot for all underwritten square footage at the Alderwood Mall Property. The property condition report prepared March 24, 2015 estimated un-inflated annual reserve expenditures of $0.33 per square foot per year. |
(9) | Underwritten Tenant Improvements reflect $18.00 PSF for new leases and $9.00 per square foot for renewals for in-line tenants and $2.00 PSF for new leases and $1.00 PSF for renewals for anchor/major tenants. Based on a 65% renewal probability and 10-year lease terms, this equates to a blended annual expense of $0.83 PSF for all collateral space. |
(10) | Underwritten Leasing Commissions reflect leasing commissions of 4.0% of average base rent and recoveries for new leases and 2.0% of average base rent and recoveries for renewals. Based on a 65% renewal probability, this equates to a blended annual expense of $1.66 PSF for all collateral space. |
(11) | 2012 and 2013 Occupancy% represent the average annual occupancy; 2014 Occupancy% represents the occupancy as of December 31, 2014. |
(12) | NOI DSCR and NCF DSCR are based on the four senior notes totaling $227,200,000 without regard to the subordinate notes and are calculated based on the sum of the first 12 monthly debt service payments for such senior notes. |
III-55 |
MSC 2015-MS1 | Alderwood Mall |
Escrows and Reserves. During the continuance of a Trigger Period (as defined below), the Alderwood Mall Borrower is required to escrow monthly 1/12 of the annual estimated tax payments and 1/12 of the annual estimated insurance premiums (unless the Alderwood Mall Borrower maintains insurance under an acceptable blanket insurance policy). During the continuance of a Trigger Period, the Alderwood Mall Borrower is required to make monthly deposits of $9,595 for replacement reserves, provided that such deposits are not required to the extent that the amount then on deposit in the replacement reserve equals or exceeds $115,140. The Guarantor delivered at loan origination an indemnity agreement for tenant improvement costs and leasing commissions in lieu of the required up front deposit in escrow equal to $591,860 and, during the continuance of a Trigger Period, is required to make monthly deposits of $32,712 for TI/LC reserves, provided that such deposits are not required to the extent that the amount then on deposit in the TI/LC reserve equals or exceeds $392,541.
Lockbox and Cash Management.A hard lockbox is in place with respect to the Alderwood Mall Mortgage Loan. Provided a Trigger Period has not occurred or has occurred but is no longer continuing, funds in the lockbox account are swept daily to an account designated by the Alderwood Mall Borrower. The Alderwood Mall Mortgage Loan has springing cash management (i.e., the Alderwood Mall Mortgage Loan has cash management only during a Trigger Period). During the continuance of a Trigger Period for the Alderwood Mall Mortgage Loan, funds in the lockbox account are applied on each monthly payment date to pay debt service on the Alderwood Mall Non-Serviced Loan Combination, to fund the required reserves deposits as described above under“—Escrows and Reserves,” to disburse, if an event of default has occurred and is continuing (so long as (x) the lender under the Alderwood Mall Mortgage Loan has not initiated foreclosure proceedings, the appointment of a receiver or other judicial action and (y) such event of default is not (i) a maturity date default following which the lender does not take any of the actions referred to in clause (x) for thirty days, (ii) a voluntary or involuntary bankruptcy filing or similar proceeding in respect of the Alderwood Mall Borrower or the Guarantor (unless such involuntary filing or proceeding is dismissed within sixty days of filing) or (iii) an affirmative or collusive action by the Alderwood Mall Borrower or the Guarantor or any other entity to delay the lender’s ability to initiate the actions referred to in clause (x) above) to an operating account of the Alderwood Mall Borrower the sum of the operating expenses and capital expenditures for the applicable calendar month referenced in the annual budget approved by the lender (or, if greater, the actual operating expenses and capital expenditures for such month but not more than 110% of the budgeted amount without the prior consent of the lender which, other than during a monetary event of default, may not be unreasonably withheld or delayed), provided, among other conditions, (a) the lender has a perfected first priority security interest in such operating account, (b) funds disbursed for management fees may not exceed 3% of “gross income” derived from ownership and operation of the Alderwood Mall Property (as defined in the loan agreement for the Alderwood Mall Mortgage Loan) and (c) if requested by the lender, no amounts will be paid to any affiliate of the Alderwood Mall Borrower or the Guarantor, and to disburse the remainder either (1) if an event of default on the Alderwood Mall Mortgage Loan has occurred and is continuing, to an account to be held by the lender as additional security for the Alderwood Mall Non-Serviced Loan Combination, or (2) if the Trigger Period is due to the occurrence and continuance of a DSCR Event (as defined below) (and no event of default on the Alderwood Mall Non-Serviced Loan Combination has occurred and is continuing), to the Alderwood Mall Borrower.
A “Trigger Period” will
(i) | commence upon the occurrence of an event of default under the Alderwood Mall Non-Serviced Loan Combination and continue until the date on which the event of default under the Alderwood Mall Mortgage Loan is cured or waived, or |
(ii) | commence upon the date the lender determines that the DSCR on the Alderwood Mall Non-Serviced Loan Combination has fallen below 1.40x (such event, a “DSCR Event”) and continue until the date the lender determines that the DSCR on the Alderwood Mall Non-Serviced Loan Combination is equal to or exceeds 1.40x. |
Additional Secured Indebtedness (not including trade debts).In addition to the Alderwood Mall Mortgage Loan, the Alderwood Mall Property also secures the Alderwood Mall Non-Serviced Companion Loan and the Alderwood Mall B Note. The Alderwood Mall Mortgage Loan, the Alderwood Mall Non-Serviced Companion Loan, and the Alderwood Mall B Note all accrue interest at 3.47875%per annum. Prior to an event of default, each of the promissory notes comprising the Alderwood Mall Non-Serviced Loan Combination is entitled to payments of interest and principal on apro rata basis with each of the other promissory notes comprising such Non-Serviced Loan Combination. After an event of default, the Alderwood Mall Mortgage Loan and the Alderwood Mall Non-Serviced Companion Loan will continue to be entitled to payments of interest and principal on apro ratabasis as between such notes; however, the Alderwood Mall Mortgage Loan and the Alderwood Mall Non-Serviced Companion Loan will be entitled to payments of interest and principal on a senior basis to the Alderwood Mall B Note. Such priorities and the allocation of collections on the Alderwood Mall Non-Serviced Loan Combination are set forth in an agreement between note holders governing the promissory notes comprising the Alderwood Mall Non-Serviced Loan Combination. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The Alderwood Mall Non-Serviced Loan Combination” in this prospectus supplement.
The following table presents certain information relating to the Alderwood Mall Non-Serviced Loan Combination:
Full Debt Summary | ||||||
Cumulative Original Balance | Cumulative Loan PSF(1) | Cumulative LTV | Cumulative NOI DY(2) | Cumulative NCF DSCR(2) | ||
Alderwood Mall Mortgage Loan | Alderwood Mall Non-Serviced Companion Loan | |||||
$50,400,000 | $176,800,000 | $227,200,000 | $395 | 32.8% | 15.0% | 2.24x |
Note A-1-3 | Notes A-1-1, A-1-2 and A-1-4 | |||||
Alderwood Mall B Note | ||||||
$127,800,000 | $355,000,000 | $617 | 51.2% | 9.6% | 1.71x | |
Notes A-2-1 and A-2-2 | ||||||
Implied Equity(3) | $338,500,000 | |||||
(1) | Based on collateral square footage of 575,704. |
(2) | Based on UW NOI of $34,130,830 and UW NCF of $32,610,281 and actual debt service. |
(3) | Based on $693,500,000 appraised value as of March 17, 2015. |
III-56 |
MSC 2015-MS1 | Alderwood Mall |
Mezzanine Loan and Preferred Equity.A single mezzanine loan secured by a pledge of 100% of the direct or indirect ownership interests in the Alderwood Mall Borrower (such loan, the “Permitted Mezzanine Debt”) is permitted subject to various conditions, including amongst other conditions: (i) no default or event of default exists, (ii) the principal amount of the Permitted Mezzanine Debt will not result in an aggregate LTV ratio (including the Alderwood Mall Mortgage Loan) greater than 48.63% (based upon a new appraisal dated no more than 30 days before the closing of the Permitted Mezzanine Debt) or an aggregate DSCR (including the Alderwood Mall Mortgage Loan) less than 1.79x, (iii) the mezzanine lender is an entity which satisfies the definition of a “Qualified Pledgee” (as such term is defined in the loan documents for the Alderwood Mall Mortgage Loan) and enters into an intercreditor agreement reasonably acceptable to the lender under the Alderwood Mall Mortgage Loan, (iv) the term of the Permitted Mezzanine Debt is co-terminous with the Alderwood Mall Mortgage Loan (or the Permitted Mezzanine Debt is freely prepayable without premium or penalty after the maturity of the Alderwood Mall Mortgage Loan) and all other terms, provisions and conditions of the Permitted Mezzanine Debt, including the loan documents, are reasonably acceptable to the lender under the Alderwood Mall Mortgage Loan, (v) if the Permitted Mezzanine Debt is a floating rate loan, the borrower purchases an interest rate cap with a notional amount equal to the original principal balance of the Permitted Mezzanine Debt and a strike price reasonably acceptable to the lender under the Alderwood Mall Mortgage Loan and (vi) the Alderwood Mall Borrower delivers, if required by the lender under the Alderwood Mall Mortgage Loan, an updated substantive non-consolidation legal opinion and a rating agency confirmation.
Expansion, Release and Substitution of Property. Provided no event of default has occurred and is continuing, the Alderwood Mall Borrower may (x) acquire any parcel of land, together with any improvements located thereon, constituting an integral part of or adjoining or proximately located near the Alderwood Mall Property (other than in connection with a substitution) (such parcel, an “Expansion Parcel”), (y) obtain a release from the lien of the mortgage (1) one or more parcels (including “air rights” parcels) or outlots or (2) acquired Expansion Parcels referred to in clause (x) above which parcels referred to in this clause (y) are transferred to a third party other than a subsidiary of Alderwood Mall Borrower or (z) obtain a release of a portion of the Alderwood Mall Property in connection with the acquisition and encumbrance of a parcel of real property to be substituted which is reasonably equivalent in value to the parcel to be released and which is at or adjacent to the Alderwood Mall Property (taking into account any rights reserved by the Alderwood Mall Borrower, including cross-easements for parking and access) as established by a letter of value (but not an entire appraisal) provided by the Alderwood Mall Borrower from the appraiser which appraised the Alderwood Mall Property in connection with the origination of the Alderwood Mall Mortgage Loan or an appraiser of comparable experience selected by the Alderwood Mall Borrower, so long as, among other conditions, (i) with respect to any release referred to in clause (y), (A) such parcel is not necessary for the operation or use of the Alderwood Mall Property for its then current use and may be readily separated from the Alderwood Mall Property without a material diminution in the value of the Alderwood Mall Property and (B) other than a release of an acquired Expansion Parcel, such parcel is vacant, non-income producing and unimproved or improved only by landscaping, utility facilities that are readily relocatable or surface parking areas, (ii) with respect to any release referred to in clause (z), such parcel is vacant, non-income producing and unimproved or improved only by landscaping, utility facilities that are readily relocatable or surface parking areas, and (iii) with respect to any release referred to in clause (y) (other than a release of an acquired Expansion Parcel) or substitution referred to in clause (z), the Alderwood Mall Borrower obtains a rating agency confirmation for such release or substitution.
Terrorism Insurance.The Alderwood Mall Borrower is required to obtain insurance against acts of terrorism or other similar acts or events (or “fire following”) to the extent such insurance is available in form and substance reasonably satisfactory to the lender (but in no event more than the sum of 100% of full replacement cost and 18 months of business interruption insurance). Notwithstanding the foregoing, for so long as the Terrorism Risk Insurance Program Reauthorization Act of 2007 (or any extension thereof or other federal government program with substantially similar protection) is in effect, the Alderwood Mall Borrower is required to maintain, and lender is required to accept, terrorism insurance which covers “covered acts” (as defined by such statute or other program), as full compliance as it relates to the risks required to be covered pursuant to the preceding sentence, so long as such statute or other program covers both domestic and foreign acts of terrorism. Notwithstanding the foregoing, the Alderwood Mall Borrower will not be obligated to spend an amount more than two times the amount of the annual insurance premium that is payable at such time with respect to the comprehensive special perils insurance on the improvements and personal property and the business income insurance (without giving effect to the cost of earthquake insurance or terrorism insurance components of such policies) and allocable to the Alderwood Mall Property based on market rates in any policy year on the premiums for required terrorism insurance (and if the cost of the required terrorism insurance exceeds such amount, then the Alderwood Mall Borrower is required to purchase the maximum amount of terrorism insurance available with funds equal to such amount).
III-57 |
MSC 2015-MS1 | 841-853 Broadway |
Mortgage Loan No. 6 – 841-853 Broadway |
III-58 |
MSC 2015-MS1 | 841-853 Broadway |
Mortgage Loan No. 6 – 841-853 Broadway
III-59 |
MSC 2015-MS1 | 841-853 Broadway |
Mortgage Loan No. 6 – 841-853 Broadway |
Mortgage Loan Information | Property Information | ||||||
Mortgage Loan Seller: | MSMCH | Single Asset/Portfolio: | Single Asset | ||||
Original Balance: | $50,000,000 | Location: | New York, NY 10003 | ||||
Cut-off Date Balance: | $50,000,000 | General Property Type: | Mixed Use | ||||
% of Initial Pool Balance: | 5.6% | Detailed Property Type: | Office/Retail | ||||
Loan Purpose: | Refinance | Title Vesting: | Fee | ||||
Sponsor: | Jeffrey J. Feil | Year Built/Renovated(2): | 1913; 1926/2015 | ||||
Mortgage Rate: | 3.350% | Size: | 250,921 SF | ||||
Note Date: | 3/10/2015 | Cut-off Date Balance per Unit: | $199 | ||||
First Payment Date: | 5/1/2015 | Maturity Date Balance per Unit: | $199 | ||||
Maturity Date: | 4/1/2025 | Property Manager: | Jeffrey Management Corp. | ||||
Original Term to Maturity: | 120 months | (borrower related) | |||||
Original Amortization Term: | 0 months | Underwriting and Financial Information | |||||
IO Period: | 120 months | UW NOI: | $11,953,170 | ||||
Seasoning: | 3 months | UW NOI Debt Yield: | 23.9% | ||||
Prepayment Provisions: | LO (27); DEF (88); O (5) | UW NOI Debt Yield at Maturity: | 23.9% | ||||
Lockbox/Cash Mgmt Status: | Springing/Springing | UW NCF DSCR: | 5.97x | ||||
Additional Debt Type: | N/A | Most Recent NOI: | $3,956,927 (12/31/2014) | ||||
Additional Debt Balance: | N/A | 2nd Most Recent NOI: | $5,263,594 (12/31/2013) | ||||
Future Debt Permitted (Type): | No (N/A) | 3rd Most Recent NOI: | $7,548,042 (12/31/2012) | ||||
Reserves(1) | Most Recent Occupancy(3): | 91.7% (2/28/2015) | |||||
Type | Initial | Monthly | Cap | 2nd Most Recent Occupancy(3): | N/A | ||
RE Tax: | $628,469 | $209,490 | N/A | 3rd Most Recent Occupancy(3): | N/A | ||
Insurance: | $0 | Springing | N/A | Appraised Value (as of): | $280,000,000 (2/1/2015) | ||
Other: | $3,266,667 | $0 | N/A | Cut-off Date LTV Ratio: | 17.9% | ||
Maturity Date LTV Ratio: | 17.9% |
Sources and Uses | ||||||
Sources | Proceeds | % of Total | Uses | Proceeds | % of Total | |
Loan Amount: | $50,000,000 | 100.0% | Loan Payoff: | $11,589,945 | 23.2% | |
Reserves: | $3,895,136 | 7.8% | ||||
Closing Costs: | $1,441,267 | 2.9% | ||||
Return of Equity(4): | $33,073,652 | 66.1% | ||||
Total Sources: | $50,000,000 | 100.0% | Total Uses: | $50,000,000 | 100.0% |
(1) | See “—Escrows and Reserves” below for further discussion of reserve requirements. |
(2) | The 2015 partial renovation is in process. See “—The Property” below for further information. |
(3) | The Occupancy Rate includes the Capital One tenant, which leases 15,990 SF (6.4%) at the 841-853 Broadway Property, but which has not yet taken occupancy, and the Centro, Inc. tenant, which leases 26,234 (10.5%) SF at the 841-853 Broadway Property, but which has not yet taken occupancy. Historical occupancy data was not provided by the 841-853 Broadway Borrower. |
(4) | The 841-853 Broadway Borrower is utilizing a portion of returned equity to fund an ongoing 841-853 Broadway Property partial renovation program. See “—The Property” below for further information. |
The Mortgage Loan.The sixth largest mortgage loan (the “841-853 Broadway Mortgage Loan”) is evidenced by a promissory note in the original principal amount of $50,000,000 secured by a first priority fee mortgage encumbering two adjoining mixed use office and retail buildings totaling 250,921 SF in New York, New York (the “841-853 Broadway Property”). The proceeds of the 841-853 Broadway Mortgage Loan were primarily used to refinance a previous loan of approximately $11,589,945 secured by the 841-853 Broadway Property, fund reserves and return equity to the 841-853 Broadway Borrower. The previous loan secured by the 841-853 Broadway Property was included in the BACM 2006-2 transaction.
The Borrower and the Sponsor.The borrower is 841-853 Fee Owner LLC (the “841-853 Broadway Borrower”), a single-purpose Delaware limited liability company with two independent directors. The 841-853 Broadway Borrower is majority owned and controlled by Jeffrey J. Feil and certain Feil family members through Feil Family LLC and the Feil Property Trust. Jeffrey J. Feil, the nonrecourse carve-out guarantor, is the CEO of The Feil Organization, a New York City based real estate owner and manager controlling over 26 million SF of commercial properties and 5,000 residential units.
The Property. The 841-853 Broadway Property consists of two buildings, containing a total of 250,921 SF of office and retail space, and located on the corners of East 14th and East 13th Streets and Broadway in the Union Square neighborhood of Manhattan. 841 Broadway is an eight-story building constructed in 1913, and 853 Broadway is a 21-story building constructed in 1926. The two structures are adjacent and are operated as a single property. The 841-853 Broadway Borrower is currently renovating portions of the 841-853 Broadway Property at an estimated total cost of approximately $14.9 million, including a new glass curtain wall on the first five floors of 853 Broadway, renovation of the lobbies, upgrade of the elevators, upgrade ofelectrical and plumbing systems and common area renovations. As of the appraisal date, approximately $7.4 million of budgeted work was outstanding. No reserve is held by the lender to fund any remaining renovation costs, except for certain expenses directly associated with the Capital One Lease (as defined below).
III-60 |
MSC 2015-MS1 | 841-853 Broadway |
The 841-853 Broadway Property was 91.7% leased as of February 28, 2015; however, the Capital One and Centro, Inc. tenants have not yet taken occupancy. Capital One, N.A. executed a lease with the 841-853 Broadway Borrower on February 24, 2015 (the “Capital One Lease”). The Capital One Lease is for 15,990 SF (6.4%) for 10 years and four months effective upon delivery of the leased space to the tenant. The underwritten base rent associated with the Capital One Lease, which is currently scheduled to commence on September 1, 2015, is $3,500,000 per year, or approximately 20% of underwritten base rents associated with the 841-853 Broadway Property. If the 841-853 Broadway Borrower does not deliver the leased space to the Capital One tenant on or before 210 days past May 1, 2015 (the “Estimated Delivery Date”), such tenant may cancel the lease with no further obligations to the 841-853 Broadway Borrower. The lender holds certain escrows associated with the Capital One Lease. See “—Escrows and Reserves” below for further information. The Centro, Inc. tenant, which leases 26,234 SF (10.5%), and is required to pay $1,495,338 per year (approximately 9% of the underwritten base rent), is expected to take possession of its space between May 1, 2015 and August 1, 2015 (the “Centro, Inc. Commencement Date”). The tenant is required to begin rental payments on the later of July 1, 2015 and the first day following the 60 day period following the Centro, Inc. Commencement Date. In addition, Santander Bank, N.A. has executed a 10-year lease for 3,193 SF (1.3%) of retail and storage space at the 841-853 Broadway Property with an estimated commencement date of October 1, 2015. This lease will partially replace two underwritten but expiring retail leases (Cosi, Inc. and Cohen Fashion Optical). The two expiring leases currently pay a total underwritten base rent of approximately $678,867 per year, or approximately 3.9% of the underwritten base rent. The Santander Bank lease requires annual base rent of $1,050,000. The Santander Bank rent is not underwritten.
Major Tenants.
Capital One (15,990 SF, 6% of NRA, 20% of underwritten rent). Capital One, N.A. (“Capital One”), a subsidiary of Capital One Financial Corporation (NYSE: COF), leases 15,990 SF of retail space at the 841-853 Broadway Property, including 4,180 of ground floor space, 5,450 SF of mezzanine level space and 6,360 SF of lower level space. The tenant executed its lease on February 24, 2015 and is currently scheduled to take occupancy between the Estimated Delivery Date and August 29, 2015 (120 days following the Estimated Delivery Date) for a term of 10 years and four months. The tenant intends to operate the space as a financial services center in conjunction with a “Capital One 360 Café.” The tenant has two five-year lease renewal options. If the leased space is not delivered to the tenant by 210 days past the Estimated Delivery Date, then the tenant has the right, with 10 days prior written notice, to terminate the Capital One Lease with no further obligations to the 841-853 Broadway Borrower. Capital One Financial Corporation is a financial holding company whose subsidiaries held $210.4 billion in deposits and had $306.2 billion in total assets as of March 31, 2015.
MAC Cosmetics (1,535 SF, 1% of NRA, 9% of underwritten rent). M.A.C. Cosmetics Inc. (“MAC Cosmetics”), a subsidiary of The Estee Lauder Companies Inc. (NYSE: EL), leases 1,535 SF of retail space at the 841-853 Broadway Property. The lease began on August 18, 2014 and has a current expiration date of December 31, 2029, with one five-year lease renewal option. The lease is guaranteed by The Estee Lauder Companies Inc., a global manufacturer of skin care, makeup, fragrance and hair care products.
Centro, Inc. (26,234 SF, 10% of NRA, 9% of underwritten rent). Centro, Inc. leases 26,234 SF of office space at the 841-853 Broadway Property. The tenant executed its lease on January 6, 2015 and is currently scheduled to take occupancy between May 1, 2015 and August 1, 2015 for a term of 10 years and four months. The tenant has the right to terminate the lease on the seventh anniversary of the rent commencement date with nine months’ notice and payment of a $1,860,325 lease termination fee. Centro, Inc. is a privately held Chicago-based media management software company specializing in digital advertising. The company was founded in 2001 and has 11 office locations in North America.
The following table presents certain information relating to the leases at the 841-853 Broadway Property:
Tenant Summary | |||||||||||||||
Tenant Name | Credit Rating (Fitch/Moody’s/S&P) | Tenant SF | Approximate% of SF | Annual UW Rent | % of Total Annual UW Rent | Annual UW Rent PSF(1) | Lease Expiration | ||||||||
Anchor/Major Tenants(2) | |||||||||||||||
Capital One(3) | A-/Baa1/BBB | 15,990 | 6% | $3,500,000 | 20% | $218.89 | 8/31/2025 | ||||||||
MAC Cosmetics | NR/A2/A+ | 1,535 | 1% | $1,600,000 | 9% | $1,042.35 | 12/31/2029 | ||||||||
Centro, Inc.(4) | NR/NR/NR | 26,234 | 10% | $1,495,338 | 9% | $57.00 | 8/31/2025(5) | ||||||||
Max Brenner Union Square | NR/NR/NR | 4,534 | 2% | $905,916 | 5% | $199.81 | 6/30/2021 | ||||||||
Chelsea Hotels Management | NR/NR/NR | 13,292 | 5% | $757,644 | 4% | $57.00 | 7/31/2025(5) | ||||||||
Subtotal/Wtd. Avg. | 61,585 | 25% | $8,258,898 | 48% | $134.11 | ||||||||||
Other Tenants | 168,543 | 67% | $9,066,432 | 52% | $53.79 | ||||||||||
Vacant Space | 20,793 | 8% | $0 | 0% | $0.00 | ||||||||||
Total/Wtd. Avg. | 250,921 | 100% | $17,325,330 | 100% | $75.29 |
(1) | Wtd. Avg. Annual UW Rent PSF excludes vacant space. |
(2) | Anchor/Major Tenants are listed for the 841-853 Broadway Property according to associated Annual UW Rent rather than Tenant SF. |
(3) | Capital One executed a lease with the 841-853 Broadway Borrower in February 2015; however, the tenant has not taken occupancy of its space. The 841-853 Broadway Borrower has until 210 days past May 1, 2015 to deliver the space to the tenant or the tenant may terminate the lease with no further obligation to the 841-853 Broadway Borrower. The Capital One lease expiration date is defined in the Capital One Lease as the later of August 31, 2025 and the last day of the 124th full calendar month following the lease commencement date. |
(4) | Centro, Inc. is not yet in occupancy. The tenant is expected to take occupancy on or before August 1, 2015. |
(5) | Centro, Inc. has the one-time right to cancel the lease effective beginning on or about July 1, 2022, upon nine months’ written notice with the payment of a termination fee equal to $1,860,325. Chelsea Hotels Management has the one-time right to cancel the lease effective beginning on or about February 1, 2020, upon six months’ written notice with the payment of a termination fee equal to $1,172,184. |
III-61 |
MSC 2015-MS1 | 841-853 Broadway |
The following table presents certain information relating to the lease rollover schedule at the 841-853 Broadway Property:
Lease Rollover Schedule(1)(2) | |||||||||||||||||||||
Year | # of Leases Rolling | SF Rolling | UW Rent PSF Rolling(3) | Approx. % of Total SF Rolling | Approx. Cumulative % of SF Rolling | Total UW Rent Rolling | Approx. % of Total Rent Rolling | Approx. Cumulative % of Total Rent Rolling | |||||||||||||
MTM | 1 | 416 | $70.22 | 0% | 0% | $29,210 | 0% | 0% | |||||||||||||
2015(4) | 6 | 12,603 | $88.00 | 5% | 5% | $1,109,076 | 6% | 7% | |||||||||||||
2016 | 11 | 29,446 | $51.75 | 12% | 17% | $1,523,834 | 9% | 15% | |||||||||||||
2017 | 7 | 16,529 | $50.29 | 7% | 24% | $831,268 | 5% | 20% | |||||||||||||
2018 | 5 | 12,512 | $68.58 | 5% | 28% | $858,019 | 5% | 25% | |||||||||||||
2019 | 4 | 7,284 | $62.53 | 3% | 31% | $455,437 | 3% | 28% | |||||||||||||
2020 | 11 | 41,816 | $41.97 | 17% | 48% | $1,754,902 | 10% | 38% | |||||||||||||
2021 | 3 | 22,555 | $71.07 | 9% | 57% | $1,602,973 | 9% | 47% | |||||||||||||
2022 | 2 | 10,377 | $54.58 | 4% | 61% | $566,338 | 3% | 50% | |||||||||||||
2023 | 2 | 8,816 | $61.61 | 4% | 65% | $543,189 | 3% | 54% | |||||||||||||
2024 | 1 | 3,362 | $66.95 | 1% | 66% | $225,086 | 1% | 55% | |||||||||||||
2025 | 4 | 62,877 | $99.02 | 25% | 91% | $6,226,000 | 36% | 91% | |||||||||||||
2026 | 0 | 0 | $0.00 | 0% | 91% | $0 | 0% | 91% | |||||||||||||
2027 | 0 | 0 | $0.00 | 0% | 91% | $0 | 0% | 91% | |||||||||||||
2028 & Beyond | 1 | 1,535 | $1,042.35 | 1% | 92% | $1,600,000 | 9% | 100% | |||||||||||||
Vacant | 0 | 20,793 | $0.00 | 8% | 100% | $0 | 0% | 100% | |||||||||||||
Total/Wtd. Avg. | 58 | 250,921 | $75.29 | 100% | $17,325,330 | 100% |
(1) | Information is based on the underwritten rent roll, with the exception of the Capital One and Centro, Inc. tenants, which are not yet in occupancy. Data regarding these two tenants is based on executed leases. The Capital One expiration date will depend on its final determined lease start date. |
(2) | Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the lease rollover schedule. |
(3) | Wtd. Avg. UW Rent PSF Rolling excludes vacant space. |
(4) | Two of the leases expiring in 2015 represent Cosi, Inc. and Cohen Fashion Optical. Cosi, Inc. extended its lease expiration date from February 28, 2015 to June 30, 2015. Cohen Optical has a lease expiration date of August 31, 2015. These two tenants are expected to be partially replaced by Santander Bank, which is currently scheduled to begin its lease on October 1, 2015 and operate its space as a bank branch. The currently in place Cosi Inc. and Cohen Fashion Optical leases are underwritten. The Santander Bank lease is not underwritten. |
The Market. The 841-853 Broadway Property is located within the Madison/Union Square submarket of Manhattan in New York, NY. The 841-853 Broadway Property is located on Broadway between East 13th and East 14th Streets, directly south of and with exposure to Union Square. As of September 30, 2014, the submarket office vacancy was 9.1% and the average office asking rent was $56.75 PSF. As of September 30, 2014, the Union Square area retail vacancy averaged approximately 2.9% and ground floor rental rates were generally between $475 and $525 PSF. Approximately 275,000 people live within a one-mile radius of Union Square and daily visits total nearly 350,000 people.
The following table presents recent leasing data at certain retail and office competitive properties with respect to the 841-853 Broadway Property:
Competitive Property Summary | |||||||||||||||
Comp Name | Address | Original Year Built | Size (SF) | Contract Rent PSF | Tenant Name | Lease Date | Lease Size (SF) | ||||||||
Retail Comp 1 | 114 Fifth Avenue | 1910 | 352,374 | $425.00 | Lululemon | 12/1/2014 | 14,853 | ||||||||
Retail Comp 2 | 920 Broadway | 1916 | 106,565 | $310.00 | Just Tiger | 12/1/2014 | 10,009 | ||||||||
Retail Comp 3 | 87 Fifth Avenue | 1904 | 57,826 | $400.00 | Aritzia | 10/1/2014 | 10,400 | ||||||||
Retail Comp 4 | 100 Fifth Avenue | 1906 | 250,671 | $272.00 | Eddie Bauer | 10/1/2014 | 7,400 | ||||||||
Retail Comp 5 | 950 Broadway | 1985 | 363,054 | $350.00 | TD Bank | 4/1/2014 | 3,354 | ||||||||
Retail Comp 6 | 872 Broadway | 1915 | 6,684 | $600.00 | Fresh | 3/1/2014 | 1,000 | ||||||||
Retail Comp 7 | 105 Fifth Avenue | 1907 | 102,017 | $302.00 | Banana Republic | 1/1/2014 | 28,800 | ||||||||
Retail Comp 8 | 1 Union Square West | 1900 | 51,284 | $550.00 | Reebok/Adidas | 12/1/2013 | 11,600 | ||||||||
Office Comp 1 | 387 Park Avenue South | 1910 | 204,000 | $75.00 | Criteo | 2/1/2015 | 40,238 | ||||||||
Office Comp 2 | 114 Fifth Avenue | 1910 | 352,374 | $80.00 | Acxiom | 1/1/2015 | 19,326 | ||||||||
Office Comp 3 | 387 Park Avenue South | 1910 | 204,000 | $61.00 | Regus | 1/1/2015 | 19,269 | ||||||||
Office Comp 4 | 200 Park Avenue South | 1908 | 225,000 | $72.00 | ITE Management | 11/1/2014 | 6,419 | ||||||||
Office Comp 5 | 315 Park Avenue South | 1928 | 276,000 | $67.00 | Oracle | 10/1/2014 | 33,748 | ||||||||
Office Comp 6 | 79 Fifth Avenue | 1908 | 282,000 | $69.00 | Hulu | 10/1/2014 | 20,053 | ||||||||
Office Comp 7 | 90 Fifth Avenue | 1903 | 110,000 | $80.00 | Peak Performance | 10/1/2014 | 25,204 | ||||||||
Office Comp 8 | 114 Fifth Avenue | 1910 | 352,374 | $76.00 | Gawker Media | 9/1/2014 | 57,978 | ||||||||
Office Comp 9 | 245 West 17th Street | 1909 | 132,000 | $72.00 | 9/1/2014 | 57,960 | |||||||||
Office Comp 10 | 920 Broadway | 1916 | 106,565 | $71.00 | New Era | 8/1/2014 | 6,500 |
Source: Appraisal
III-62 |
MSC 2015-MS1 | 841-853 Broadway |
Operating History and Underwritten Cash Flow.The following table presents certain information relating to the Underwritten Cash Flow at the 841- 853 Broadway Property:
Cash Flow Analysis(1) | |||||||||||||
2011 | 2012 | 2013 | 2014 | UW | UW PSF | ||||||||
Base Rent(2) | $11,161,779 | $10,839,686 | $9,166,620 | $8,272,780 | $18,737,094 | $74.67 | |||||||
Total Recoveries | $684,986 | $909,819 | $1,018,589 | $1,040,598 | $1,213,367 | $4.84 | |||||||
Other Income | $930,019 | $850,931 | $683,324 | $638,498 | $618,071 | $2.46 | |||||||
Discounts Concessions | $0 | $0 | $0 | $0 | $0 | $0.00 | |||||||
Less Vacancy & Credit Loss | $0 | $0 | $0 | $0 | ($1,841,973) | ($7.34) | |||||||
Effective Gross Income | $12,776,784 | $12,600,436 | $10,868,533 | $9,951,876 | $18,726,559 | $74.63 | |||||||
Total Operating Expenses | $4,807,928 | $5,052,394 | $5,604,939 | $5,994,949 | $6,773,389 | $26.99 | |||||||
Net Operating Income | $7,968,856 | $7,548,042 | $5,263,594 | $3,956,927 | $11,953,170 | $47.64 | |||||||
Capital Expenditures | $0 | $0 | $0 | $0 | $52,863 | $0.21 | |||||||
TI/LC | $0 | $0 | $0 | $0 | $1,760,338 | $7.02 | |||||||
Net Cash Flow | $7,968,856 | $7,548,042 | $5,263,594 | $3,956,927 | $10,139,969 | $40.41 | |||||||
Occupancy %(3) | N/A | N/A | N/A | N/A | 90.2% | ||||||||
NOI DSCR | 4.69x | 4.44x | 3.10x | 2.33x | 7.04x | ||||||||
NCF DSCR | 4.69x | 4.44x | 3.10x | 2.33x | 5.97x | ||||||||
NOI Debt Yield | 15.9% | 15.1% | 10.5% | 7.9% | 23.9% | ||||||||
NCF Debt Yield | 15.9% | 15.1% | 10.5% | 7.9% | 20.3% |
(1) | The 841-853 Broadway was substantially re-leased in 2014 and 2015. Leases accounting for approximately 58% of underwritten base rents were executed in the years 2013, 2014 and 2015. |
(2) | Historical Base Rent is net of vacancy. Certain contractual rent steps scheduled through August 2015 and totaling approximately $38,756 per year are underwritten. |
(3) | Historical occupancy data was not provided by the 841-853 Broadway Borrower. |
Escrows and Reserves. The 841-853 Broadway Borrower is required to escrow monthly 1/12 of the annual estimated tax payments and 1/12 of the annual estimated insurance premiums (unless, with respect to the insurance premium only, the 841-853 Broadway Borrower maintains insurance under an acceptable blanket insurance policy). The 841-853 Broadway Borrower deposited in escrow at loan origination: (i) $600,000, for work required to be performed by the 841-853 Broadway Borrower as landlord pursuant to the Capital One lease as set forth on an exhibit thereto, (ii) $500,000, for tenant’s alterations required to be performed by Capital One Bank, N.A. as tenant pursuant to the Capital One lease, the cost of which the 841-853 Broadway Borrower is required to pay or reimburse Capital One for pursuant to the terms of the Capital One lease, (iii) $1,000,000, for leasing commissions payable with respect to the Capital One lease to Robert K. Futterman & Associates LLC and (iv) $1,166,667, with respect to the outstanding free rent credit pursuant to the Capital One lease, which amount will be disbursed, provided no event of default under the 841-853 Broadway Mortgage Loan is in existence, to the 841-853 Broadway Borrower (or if a Trigger Period (as defined below) has occurred and is continuing, to the lockbox account) either (x) in four equal installments until disbursed in full, upon receipt by the lender of evidence reasonably acceptable to the lender that the “Commencement Date” (as such term is defined in the Capital One lease) has occurred or (y) in full, upon receipt by the lender of evidence reasonably acceptable to the lender that the “Rent Commencement Date” (as such term is defined in the Capital One lease) has occurred.
Lockbox and Cash Management.A springing lockbox is in place with respect to the 841-853 Broadway Mortgage Loan (i.e., the 841-853 Broadway Borrower has agreed to establish and maintain a hard lockbox upon the commencement of an initial Trigger Period for the 841-853 Broadway Mortgage Loan and for the remainder of the term of the 841-853 Broadway Mortgage Loan). The 841-853 Broadway Mortgage Loan has springing cash management. Provided a Trigger Period has not occurred or has occurred but is no longer continuing, the 841-853 Broadway Mortgage Loan will not have cash management. During the continuance of a Trigger Period for the 841-853 Broadway Mortgage Loan, funds in the lockbox account are required to be applied on each monthly payment date to pay debt service on the 841-853 Broadway Mortgage Loan, to fund the required reserves deposits as described above under“—Escrows and Reserves,”to disburse to the 841-853 Broadway Borrower the monthly amount payable for operating expenses not otherwise paid or reserved for as described above under “—Escrows and Reserves” and referenced in the annual budget approved by the lender together with other amounts incurred by the 841-853 Broadway Borrower in connection with the operation and maintenance of the 841-853 Broadway Property reasonably approved by the lender, and to disburse the remainder to an account to be held by the lender as additional security for the 841-853 Broadway Mortgage Loan.
A “Trigger Period” will
(i) commence upon the occurrence of an event of default under the 841-853 Broadway Mortgage Loan and continue until the date on which the event of default under the 841-853 Broadway Mortgage Loan is cured to the lender’s reasonable satisfaction, or
(ii) commence upon the date the lender determines that the DSCR on the 841-853 Broadway Mortgage Loan tested monthly has fallen below 1.15x for the immediately preceding six consecutive calendar months and continue until the date the lender determines that the DSCR on the 841-853 Broadway Mortgage Loan tested monthly has been equal to or greater than 1.20x for the immediately preceding six consecutive calendar months; provided, that, notwithstanding that the DSCR has fallen below the minimum level referred to above in this clause (ii), a Trigger Period pursuant to this clause (ii) will not occur if the 841-853 Broadway Borrower delivers to the lender an irrevocable unconditional sight draft letter of credit reasonably acceptable to the lender issued by an institution that satisfies the requirements set forth in the loan agreement for the 841-853 Broadway Mortgage Loan in a face amount which, if applied to prepay the outstanding principal amount of the 841-853 Broadway Mortgage Loan, would cause the DSCR to be equal to or exceed the required minimum DSCR set forth above.
Additional Secured Indebtedness (not including trade debts).Not permitted.
Mezzanine Loan and Preferred Equity. Not permitted
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Release of Property. Not permitted.
Terrorism Insurance.The 841-853 Broadway Borrower is required to obtain insurance against acts of terrorism or other similar acts or events (or “fire following”) to the extent such insurance is available in form and substance reasonably satisfactory to lender (but in no event more than the sum of 100% of full replacement cost and 12 months of business interruption insurance). Notwithstanding the foregoing, for so long as the Terrorism Risk Insurance Program Reauthorization Act of 2007 (or any extension thereof or other federal government program with substantially similar protection) is in effect, the 841-853 Broadway Borrower is required to maintain, and lender is required to accept, terrorism insurance which covers “covered acts” (as defined by such statute or other program), as full compliance as it relates to the risks required to be covered pursuant to the preceding sentence, so long as such statute or other program covers both domestic and foreign acts of terrorism.
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Mortgage Loan No. 7 – Shoppes at Westlake Village
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Mortgage Loan No. 7 – Shoppes at Westlake Village
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Mortgage Loan No. 7 – Shoppes at Westlake Village |
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Mortgage Loan No. 7 – Shoppes at Westlake Village |
Mortgage Loan Information | Mortgaged Property Information | ||||||
Mortgage Loan Seller: | MSMCH | Single Asset/Portfolio: | Single Asset | ||||
Original Balance: | $50,000,000 | Location: | Westlake Village, CA 91362 | ||||
Cut-off Date Balance: | $50,000,000 | General Property Type: | Retail | ||||
% of Initial Pool Balance: | 5.6% | Detailed Property Type: | Shadow Anchored | ||||
Loan Purpose: | Refinance | Title Vesting: | Fee | ||||
Sponsor: | Daniel F. Selleck; Chet Huffman | Year Built/Renovated: | 2014/N/A | ||||
Mortgage Rate: | 4.200% | Size: | 105,532 SF | ||||
Note Date: | 4/15/2015 | Cut-off Date Balance per Unit: | $474 | ||||
First Payment Date: | 6/1/2015 | Maturity Date Balance per Unit: | $474 | ||||
Maturity Date: | 5/1/2025 | Property Manager: | Selleck Development Group Inc. (borrower related) | ||||
Original Term to Maturity: | 120 months | ||||||
Original Amortization Term: | 0 months | Underwriting and Financial Information | |||||
IO Period: | 120 months | UW NOI: | $4,139,036 | ||||
Seasoning: | 2 months | UW NOI Debt Yield: | 8.3% | ||||
Prepayment Provisions: | LO (26); DEF (90); O (4) | UW NOI Debt Yield at Maturity: | 8.3% | ||||
Lockbox/Cash Mgmt Status: | Springing/Springing | UW NCF DSCR: | 1.85x | ||||
Additional Debt Type: | N/A | Most Recent NOI(2): | N/A | ||||
Additional Debt Balance: | N/A | 2nd Most Recent NOI(2): | N/A | ||||
Future Debt Permitted (Type): | No (N/A) | 3rd Most Recent NOI(2): | N/A | ||||
Reserves(1) | Most Recent Occupancy: | 97.6% (4/13/2015) | |||||
Type | Initial | Monthly | Cap | 2nd Most Recent Occupancy(2): | N/A | ||
RE Tax: | $51,668 | $25,834 | N/A | 3rd Most Recent Occupancy(2): | N/A | ||
Insurance: | $38,440 | $4,805 | N/A | Appraised Value (as of): | $78,000,000 (12/3/2014) | ||
Recurring Replacements: | $0 | $881 | N/A | Cut-off Date LTV Ratio: | 64.1% | ||
TI/LC: | $0 | $8,813 | $250,000 | Maturity Date LTV Ratio: | 64.1% | ||
Other: | $3,167,300 | $0 | N/A |
Sources and Uses | |||||||
Sources | Proceeds | % of Total | Uses | Proceeds | % of Total | ||
Loan Amount: | $50,000,000 | 100% | Loan Payoff | $33,785,326 | 67.6% | ||
Reserves: | $3,257,408 | 6.5% | |||||
Closing Costs(3): | $524,667 | 1.0% | |||||
Return of Equity: | $12,432,599 | 24.9% | |||||
Total Sources: | $50,000,000 | 100% | Total Uses: | $50,000,000 | 100.0% | ||
(1) | See “—Escrows and Reserves” below for further discussion of reserve requirements. |
(2) | The Shoppes at Westlake Village Property is newly constructed. Historical operating and occupancy information are not available. |
(3) | Closing Costs include a $200,000 loan consulting fee paid to Selleck Development Group Inc., an affiliate of the Shoppes at Westlake Village Borrower. |
The Mortgage Loan.The seventh largest mortgage loan (the “Shoppes at Westlake Village Mortgage Loan”) is evidenced by a promissory note in the original principal amount of $50,000,000 secured by a first priority fee mortgage encumbering a 105,532 SF shadow anchored center in Thousand Oaks, California (the “Shoppes at Westlake Village Property”). The proceeds of the Shoppes at Westlake Village Mortgage Loan were primarily used to refinance a previous construction loan of approximately $33,785,326 secured by the Shoppes at Westlake Village Property, fund reserves and return equity to the Shoppes at Westlake Village Borrower. Construction costs associated with the Shoppes at Westlake Village Property were approximately $40,000,000.
The Borrower and the Sponsor.The borrower is SDG Russell Ranch Associates II, LLC, a Delaware limited liability company with two independent directors (the “Shoppes at Westlake Village Borrower”). The Shoppes at Westlake Village Borrower is 100% indirectly owned and controlled by Daniel F. Selleck (50%) and Chet and Cynthia Huffman, through the Huffman Family Trust dated March 22, 2004 (50%). Mr. Selleck owns and operates Selleck Development Group Inc., which is a Westlake Village based real estate development and management company.
The Property.The Shoppes at Westlake Village Property is a newly constructed, 105,532 SF Target shadow-anchored neighborhood retail center. The center includes 8 primarily one-story retail buildings, not including the 137,324 SF non-collateral Target, which is tenant-owned, but including a 3,750 SF In-N-Out Burger restaurant which is constructed on a Shoppes at Westlake Village Borrower owned pad site. One of such buildings is a two-story building with approximately 2,807 SF of second floor executive suites office space operated by an affiliate of the Shoppes at Westlake Village Borrower. The tenant owned Target is in the center of the Shoppes at Westlake Village Property. The Shoppes at Westlake Village Property is 97.6% leased; however, two tenants, representing 11,151 SF (10.6% of net rentable area), are not yet in occupancy. The DaVita tenant is scheduled to open and begin rental payments on or about August 10, 2015 and the Q Sushi tenant is scheduled to open on or about June 1, 2015. Q Sushi began rental payments on April 1, 2015. See “—Escrows and Reserves” below for information regarding rent and outstanding TI/LC reserves associated with these tenants. There are 400 surface parking spaces associated with the Shoppes at Westlake Village Property.
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Major Tenants.
Total Woman Gym + Spa (13,591 SF, 13% of NRA, 9% of underwritten rent). TW Holdings, Inc. (“Total Woman”) leases 13,591 SF at the Shoppes at Westlake Village Property and operates the space as a fitness center and day spa specializing in women’s fitness. The lease began on August 1, 2014 and has a current expiration date of July 31, 2029, with three five-year lease renewal options. Total Woman was founded in 1965 and currently operates 14 locations in California.
Guitar Center (9,397 SF, 9% of NRA, 9% of underwritten rent).Guitar Center Stores, Inc. (“Guitar Center”) leases 9,397 SF at the Shoppes at Westlake Village Property. The lease began on April 30, 2015 and has a current expiration date of April 29, 2025, with three five-year lease renewal options. Guitar Center, founded in 1959, is the largest chain of musical instrument retailers in the U.S., with over 260 locations. The company is majority owned by Ares Management LLC (NYSE: ARES) and is headquartered in Westlake Village, California.
Tilly’s (9,066 SF, 9% of NRA, 6% of underwritten rent). World of Jeans & Tops, d/b/a Tilly’s (“Tilly’s”) leases 9,066 SF at the Shoppes at Westlake Village Property. The lease began on March 31, 2015 and has a current expiration date of March 30, 2025, with three five-year lease renewal options. Tilly’s is an Irvine, California based clothing, shoes and accessories retailer with approximately 211 stores in 33 states.
DaVita (8,342 SF, 8% of NRA, 5% of underwritten rent). Total Renal Care, Inc. d/b/a DaVita (“DaVita”), a subsidiary of DaVita HealthCare Partners, Inc., and leases 8,342 SF at the Shoppes at Westlake Village Property. The lease is scheduled to begin on August 9, 2015 and expire on July 31, 2030, with two five-year lease renewal options. DaVita HealthCare Partners, Inc. (NYSE: DVA) is a Denver, Colorado based kidney care company with over 2,000 locations in the United States.
Jeannine’s (7,588 SF, 7% of NRA, 7% of underwritten rent). Jeanine’s Westlake Village, LLC (“Jeannine’s”) leases 7,588 SF at the Shoppes at Westlake Village Property. The lease began on October 27, 2014 and has a current expiration date of April 26, 2027, with two five-year lease renewal options. Jeannine’s is a privately held gourmet food hall and market. Jeanine’s was founded 30 years ago and has four locations in Santa Barbara, Montecito and at the Shoppes at Westlake Village Property.
The following table presents certain information relating to the leases at the Shoppes at Westlake Village Property:
Tenant Summary | |||||||||||||||||
Tenant Name | Credit Rating (Fitch/Moody’s/S&P)(1) | Tenant SF | Approximate % of SF | Annual UW Rent | % of Total Annual UW Rent | Annual UW Rent PSF(2) | Lease Expiration | 2014 Sales PSF(3) | |||||||||
Major Tenants | |||||||||||||||||
Total Woman Gym + Spa | NR/NR/NR | 13,591 | 13% | $366,957 | 9% | $27.00 | 7/31/2029 | N/A | |||||||||
Guitar Center | NR/NR/NR | 9,397 | 9% | $383,398 | 9% | $40.80 | 4/29/2025 | N/A | |||||||||
Tilly’s | NR/NR/NR | 9,066 | 9% | $261,000 | 6% | $28.79 | 4/1/2025 | N/A | |||||||||
DaVita | NR/B1/BB | 8,342 | 8% | $200,208 | 5% | $24.00 | 7/31/2030 | N/A | |||||||||
Jeannine’s | NR/NR/NR | 7,588 | 7% | $303,520 | 7% | $40.00 | 4/26/2027 | N/A | |||||||||
Subtotal/Wtd. Avg. | 47,984 | 45% | $1,515,083 | 36% | $31.57 | ||||||||||||
Other Tenants | 55,028 | 52% | $2,748,660 | 64% | $49.95 | ||||||||||||
Vacant Space | 2,520 | 2% | $0 | 0% | $0.00 | ||||||||||||
Total/Wtd. Avg. | 105,532 | 100% | $4,263,743 | 100% | $41.39 | ||||||||||||
(1) | Certain ratings are those of the parent company whether or not the parent guarantees the lease. |
(2) | Wtd. Avg. Annual UW Rent PSF Rolling excludes vacant space. |
(3) | The Shoppes at Westlake Village Property is newly constructed. Tenant sales are not available. |
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The following table presents certain information relating to the lease rollover schedule at the Shoppes at Westlake Village Property:
Lease Rollover Schedule(1)(2) | ||||||||||||||||
Year | # of Leases Rolling | SF Rolling | UW Rent PSF Rolling(3) | Approx. % of Total SF Rolling | Approx. Cumulative % of SF Rolling | Total UW Rent Rolling | Approx. % of Total Rent Rolling | Approx. Cumulative % of Total Rent Rolling | ||||||||
MTM | 0 | 0 | $0.00 | 0% | 0% | $0 | 0% | 0% | ||||||||
2015 | 0 | 0 | $0.00 | 0% | 0% | $0 | 0% | 0% | ||||||||
2016 | 0 | 0 | $0.00 | 0% | 0% | $0 | 0% | 0% | ||||||||
2017 | 0 | 0 | $0.00 | 0% | 0% | $0 | 0% | 0% | ||||||||
2018 | 0 | 0 | $0.00 | 0% | 0% | $0 | 0% | 0% | ||||||||
2019 | 8 | 13,977 | $47.15 | 13% | 13% | $658,961 | 15% | 15% | ||||||||
2020 | 3 | 3,601 | $51.91 | 3% | 17% | $186,944 | 4% | 20% | ||||||||
2021 | 2 | 4,065 | $45.94 | 4% | 21% | $186,728 | 4% | 24% | ||||||||
2022 | 4 | 11,775 | $54.10 | 11% | 32% | $636,984 | 15% | 39% | ||||||||
2023 | 0 | 0 | $0.00 | 0% | 32% | $0 | 0% | 39% | ||||||||
2024 | 3 | 8,177 | $48.90 | 8% | 39% | $399,865 | 9% | 49% | ||||||||
2025 | 6 | 28,146 | $40.81 | 27% | 66% | $1,148,576 | 27% | 75% | ||||||||
2026 | 0 | 0 | $0.00 | 0% | 66% | $0 | 0% | 75% | ||||||||
2027 | 1 | 7,588 | $40.00 | 7% | 73% | $303,520 | 7% | 83% | ||||||||
2028 & Beyond | 3 | 25,683 | $28.90 | 24% | 98% | $742,165 | 17% | 100% | ||||||||
Vacant | 0 | 2,520 | $0.00 | 2% | 100% | $0 | 0% | 100% | ||||||||
Total/Wtd. Avg. | 30 | 105,532 | $41.39 | 100% | $4,263,743 | 100% | ||||||||||
(1) | Information is based on the underwritten rent roll. |
(2) | Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the lease rollover schedule. |
(3) | Wtd. Avg. UW Rent PSF Rolling excludes vacant space. |
The Market. The Shoppes at Westlake Village Property is located in the Westlake Village/Thousand Oaks submarket of Los Angeles County, California. Westlake Village is a planned community primarily developed in the 1970s. As of September 30, 2014, the submarket had a vacancy rate of 2.6% and an average asking rental rate of $34.08 PSF, annualized. The Shoppes at Westlake Village Property is located approximately 35 miles west of downtown Los Angeles, has approximately 1,500 feet of Ventura (101) Freeway frontage, and is approximately 0.5 mile east of a Ventura Freeway on-ramp. The estimated 2014 population within a three-mile radius was 51,456 people, and the estimated 2014 average household income within a three-mile radius was $139,861.
The following table presents recent occupancy and leasing data at seven primary competitive centers to the Shoppes at Westlake Village Property:
Competitive Property Summary | |||||||||||||||||
Property Name/Address | Year Built | Occ. | GLA (SF) | Tenant Name | Lease Area (SF) | Lease Date | Lease Term (Yrs.) | Annual Base Rent PSF | |||||||||
North Ranch Mall 3815 East Thousand Oaks Boulevard Thousand Oaks, CA | 1977 | 92% | 146,625 | Luigi Basile HearX Veggie Grill North Ranch Barber Shop | 4,300 1,200 2,805 531 | Nov-13 Aug-13 Jul-13 May-13 | 5.0 5.0 10.0 5.0 | $22.20 $46.80 $66.00 $60.00 | |||||||||
Paseo Marketplace 3637-3755 East Thousand Oaks Boulevard Thousand Oaks, CA | 1979 | 92% | 132,612 | Shop Tenant Fast Frame | 675 940 | Aug-13 Jan-13 | 5.0 5.0 | $36.00 $28.20 | |||||||||
Westlake Village Marketplace 5750-5780 Lindero Canyon Boulevard Westlake Village, CA | 1990 | 95% | 157,131 | Listing Starbucks Mission Renaissance Molly’s Beauty | 1,600 2,000 900 900 | Jul-14 May-12 Nov-11 Nov-11 | 5.0 10.0 5.0 10.0 | $60.00 $60.00 $54.00 $54.00 | |||||||||
North Ranch Gateway 30805-30895 East Thousand Oaks Boulevard Westlake Village, CA | 1987 | 80% | 86,582 | Dry Cleaners Subway Quoted | 1,600 1,011 --- | Aug-14 Aug-11 --- | 10.0 7.0 --- | $36.00 $42.72 $36.00 | |||||||||
El Camino Shopping Center SEC Mulholland Drive & 101 Freeway Calabasas, CA | 2002 | 100% | 135,883 | Wells Fargo | 4,000 | Nov-14 | 5.0 | $36.00 | |||||||||
Oakbrook Plaza 1736 East Avenida De Los Arboles Thousand Oaks, CA | 1980 | 93% | 83,278 | Kheri Mailing Center Goodwill Industries Mehdi & Mohammed Humkar Bank of America | 1,285 1,200 1,200 300 | Jan-15 Jun-14 Jun-14 Jun-14 | 4.0 5.0 4.0 10.0 | $32.40 $23.40 $30.00 $51.96 | |||||||||
The Courtyard at the Commons 23631-23741 Calabasas Road Calabasas, CA | 1981 | 100% | 89,074 | Susie Cakes Fresh Enterprises Roger L. Garrett, D.D.S. | 1,404 2,231 1,459 | Jan-13 Nov-12 Jul-12 | 6.0 5.0 5.0 | $51.00 $54.00 $50.88 | |||||||||
Source: Appraisal
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Operating History and Underwritten Cash Flow.The following table presents certain information relating to the Underwritten Cash Flow at the Shoppes at Westlake Village Property:
Cash Flow Analysis(1) | |||||||||||||
2011 | 2012 | 2013 | 2014 | UW | UW PSF | ||||||||
Base Rent | N/A | N/A | N/A | N/A | $4,369,583 | $41.41 | |||||||
Total Recoveries | N/A | N/A | N/A | N/A | $1,114,000 | $10.56 | |||||||
Other Income | N/A | N/A | N/A | N/A | $44,256 | $0.42 | |||||||
Discounts Concessions | N/A | N/A | N/A | N/A | $0 | $0.00 | |||||||
Less Vacancy & Credit Loss | N/A | N/A | N/A | N/A | ($274,179) | ($2.60) | |||||||
Effective Gross Income | N/A | N/A | N/A | N/A | $5,253,660 | $49.78 | |||||||
Total Operating Expenses | N/A | N/A | N/A | N/A | $1,114,623 | $10.56 | |||||||
Net Operating Income | N/A | N/A | N/A | N/A | $4,139,036 | $39.22 | |||||||
Capital Expenditures | N/A | N/A | N/A | N/A | $15,924 | $0.15 | |||||||
TI/LC | N/A | N/A | N/A | N/A | $187,197 | $1.77 | |||||||
Net Cash Flow | N/A | N/A | N/A | N/A | $3,935,915 | $37.30 | |||||||
Occupancy % | N/A | N/A | N/A | N/A | 95.0% | ||||||||
NOI DSCR | N/A | N/A | N/A | N/A | 1.94x | ||||||||
NCF DSCR | N/A | N/A | N/A | N/A | 1.85x | ||||||||
NOI Debt Yield | N/A | N/A | N/A | N/A | 8.3% | ||||||||
NCF Debt Yield | N/A | N/A | N/A | N/A | 7.9% | ||||||||
(1) | The Shoppes at Westlake Village Property is newly constructed. Historical operating and occupancy information are not available. |
Escrows and Reserves. The Shoppes at Westlake Village Borrower deposited $51,668 in escrow for annual real estate taxes at loan origination and is required to escrow monthly 1/12 of the annual estimated tax payments (other than with respect to the taxes due in connection with the space leased to In N’Out, so long as such tenant is paying such taxes and is not in default under its lease). The Shoppes at Westlake Village Borrower deposited $38,440 in escrow for annual estimated insurance premiums at loan origination and is required to escrow monthly 1/12 of the annual estimated insurance premiums (unless the Shoppes at Westlake Village Borrower maintains insurance under an acceptable blanket insurance policy). The Shoppes at Westlake Village Borrower is required to make monthly deposits of $881 for replacement reserves (which amount may be increased by the lender if the lender reasonably determines that an increase is necessary to maintain proper operation of the Shoppes at Westlake Village Property). The Shoppes at Westlake Village Borrower is required to make monthly deposits of $8,813 for TI/LC reserves, provided that such deposits are not required to the extent that the amount then on deposit in the TI/LC reserve exceeds $250,000.
The Shoppes at Westlake Village Borrower also deposited in escrow at loan origination (x) $1,767,300 for tenant improvement costs and leasing commissions which the Shoppes at Westlake Village Borrower is obligated to pay or reimburse in specified amounts under leases with 12 tenants at the Shoppes at Westlake Village Property set forth on a schedule to the loan agreement and (y) $1,400,000 in connection with four tenants at the Shoppes at Westlake Village Property that, as of loan origination, had not yet taken occupancy under their respective leases, which amounts will be released to the Shoppes at Westlake Village Borrower (in an amount equal to $655,000 for Guitar Center, $395,000 for DaVita, $250,000 for Q Sushi and $100,000 for Which Wich) upon delivery of an estoppel executed by the respective tenant certifying that such lease is in full force and effect and such tenant is in full occupancy, paying full unabated rent with no right to set off or other free rent period due.
Lockbox and Cash Management.A springing hard lockbox is in effect with respect to the Shoppes at Westlake Village Mortgage Loan (i.e. upon the commencement of the initial Cash Sweep Event Period for the Shoppes at Westlake Village Mortgage Loan, the Shoppes at Westlake Village Borrower has agreed to establish and maintain a hard lockbox following the commencement of such Cash Sweep Event Period). Provided a Cash Sweep Event Period has occurred but is no longer continuing, funds in the lockbox account are required to be swept daily to an account designated by the Shoppes at Westlake Village Borrower. The Shoppes at Westlake Village Mortgage Loan has springing cash management (i.e. the Shoppes at Westlake Village Mortgage Loan has cash management only during a Cash Sweep Event Period). During the continuance of a Cash Sweep Event Period for the Shoppes at Westlake Village Mortgage Loan, funds in the lockbox account are applied on each monthly payment date to pay debt service on the Shoppes at Westlake Village Mortgage Loan, to fund the required reserves deposits as described above under “—Escrows and Reserves,” to disburse to an escrow account the monthly amount payable for operating expenses not otherwise paid or reserved for as described above under “—Escrows and Reserves” and referenced in the annual budget approved by lender, together with other amounts (including extraordinary operating expenses or capital expenses not set forth in the annual budget) incurred by the Shoppes at Westlake Village Borrower in connection with the operation and maintenance of the Shoppes at Westlake Village Property, subject to lender approval, and to disburse the remainder to an account to be held by the lender as additional security for the Shoppes at Westlake Village Mortgage Loan.
A “Cash Sweep Event Period” will
(i) | commence upon the occurrence of an event of default under the Shoppes at Westlake Village Mortgage Loan and continue until the date on which the event of default under the Shoppes at Westlake Village Mortgage Loan is cured, |
(ii) | commence upon the date the lender determines that the DSCR on the Shoppes at Westlake Village Mortgage Loan has fallen below 1.15x for six consecutive calendar months and continue until the date the lender determines that the DSCR on the Shoppes at Westlake Village Mortgage Loan has been equal to or greater than 1.15x for one calendar quarter, or |
(iii) | commence upon the earlier to occur of the date on which any two Major Tenants (as defined below) either (x) vacate (or give written notice of intent to vacate) their premises or fail to renew their leases as and when required thereunder or (y) initiate an action (or an action is brought against them) under any bankruptcy, insolvency or creditors’ rights laws and continue until the date on which either (a) the vacated premises is re-tenanted by a replacement tenant reasonably acceptable to the lender pursuant to a lease reasonably |
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acceptable to the lender or (b) each tenant that was involved in the bankruptcy action has assumed (and the applicable bankruptcy court has affirmed such assumption) of the applicable lease and such tenant has been in continuous operation of its business at the Shoppes at Westlake Village Property for 45 consecutive days and is paying full rent as is required under such lease. |
“Major Tenant” means a tenant under (i) a lease which individually or when aggregated with all other leases at the Shoppes at Westlake Village Property with the same tenant and its affiliates demises 9,000 or more square feet of gross leasable area at the Shoppes at Westlake Village Property or (ii) any lease which contains an option, offer, right of first refusal or other similar entitlement to acquire all or any portion of the Shoppes at Westlake Village Property.
Additional Secured Indebtedness (not including trade debts). Not permitted.
Mezzanine Loan and Preferred Equity.Not permitted.
Release of Property.Not permitted.
Terrorism Insurance.The Shoppes at Westlake Village Borrower is required to obtain insurance against acts of terrorism or other similar acts or events (or “fire following”) to the extent such insurance is available in form and substance satisfactory to lender (but in no event more than the sum of 100% of full replacement cost and 12 months of business interruption insurance). Notwithstanding the foregoing, for so long as the Terrorism Risk Insurance Program Reauthorization Act of 2007 (or any extension thereof or other federal government program with substantially similar protection) is in effect, the Shoppes at Westlake Village Borrower is required to maintain, and lender is required to accept, terrorism insurance which covers “covered acts” (as defined by such statute or other program), as full compliance as it relates to the risks required to be covered pursuant to the preceding sentence, so long as such statute or other program covers both domestic and foreign acts of terrorism.
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MSC 2015-MS1 | Hilton Garden Inn W 54th Street |
Mortgage Loan No. 8 – Hilton Garden Inn W 54th Street
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MSC 2015-MS1 | Hilton Garden Inn W 54th Street |
Mortgage Loan No. 8 – Hilton Garden Inn W 54th Street
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MSC 2015-MS1 | Hilton Garden Inn W 54th Street |
Mortgage Loan No. 8 – Hilton Garden Inn W 54th Street |
Mortgage Loan Information | Mortgaged Property Information | |||||||
Mortgage Loan Seller: | MSMCH | Single Asset/Portfolio: | Single Asset | |||||
Original Balance(1): | $40,000,000 | Location: | New York, NY 10019 | |||||
Cut-off Date Balance(1): | $40,000,000 | General Property Type: | Hospitality | |||||
% of Initial Pool Balance: | 4.5% | Detailed Property Type: | Select Service | |||||
Loan Purpose(2): | Refinance | Title Vesting: | Fee | |||||
Sponsor: | Morad Ghadamian; Joseph Moinian | Year Built/Renovated: | 2013/N/A | |||||
Mortgage Rate: | 4.01290323% | Size: | 401 Rooms | |||||
Note Date: | 2/6/2015 | Cut-off Date Balance per Unit(1): | $386,534 | |||||
First Payment Date: | 4/1/2015 | Maturity Date Balance per Unit(1): | $386,534 | |||||
Maturity Date: | 3/1/2025 | Property Manager: | Hersha Hospitality Management, L.P. | |||||
Original Term to Maturity: | 120 months | |||||||
Original Amortization Term: | 0 months | Underwriting and Financial Information | ||||||
IO Period: | 120 months | UW NOI: | $18,113,617 | |||||
Seasoning: | 4 months | UW NOI Debt Yield(1): | 11.7% | |||||
Prepayment Provisions: | LO (28); DEF (88); O (4) | UW NOI Debt Yield at Maturity(1): | 11.7% | |||||
Lockbox/Cash Mgmt Status: | Soft/Springing | UW NCF DSCR(1): | 2.64x | |||||
Additional Debt Type: | Pari Passu/B Note/Mezzanine | Most Recent NOI: | $16,855,340 (2/28/2015 TTM) | |||||
Additional Debt Balance: | $115,000,000/$20,000,000/$25,000,000 | 2nd Most Recent NOI: | $16,566,756 (12/31/2014) | |||||
Future Debt Permitted (Type): | No (N/A) | 3rd Most Recent NOI(4): | N/A | |||||
Reserves(3) | Most Recent Occupancy: | 94.6% (2/28/2015) | ||||||
Type | Initial | Monthly | Cap | 2nd Most Recent Occupancy: | 90.1% (12/31/2014) | |||
RE Tax: | $0 | Springing | N/A | 3rd Most Recent Occupancy(4): | N/A | |||
Insurance: | $0 | Springing | N/A | Appraised Value (as of): | $251,000,000 (11/24/2014) | |||
Recurring Replacements: | $0 | Springing | N/A | Cut-off Date LTV Ratio(1): | 61.8% | |||
Maturity Date LTV Ratio(1): | 61.8% |
Sources and Uses | |||||||
Sources | Proceeds | % of Total | Uses | Proceeds | % of Total | ||
Loan Amount(1): | $175,000,000 | 87.5% | Closing Costs: | $7,575,865 | 3.8% | ||
Mezzanine Loan: | $25,000,000 | 12.5% | Return of Equity(2): | $192,424,135 | 96.2% | ||
Total Sources: | $200,000,000 | 100.0% | Total Uses: | $200,000,000 | 100.0% |
(1) | The Hilton Garden Inn W 54th Street Mortgage Loan is part of the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, which is comprised of threepari passusenior notes and one subordinate B note with an aggregate principal balance of $175,000,000. The three Hilton Garden Inn W 54th Streetpari passu senior notes have a combined original principal balance of $155,000,000, and the subordinate B note has an original principal balance of $20,000,000. The Cut-off Date Balance per Unit, Maturity Date Balance per Unit, UW NOI Debt Yield, UW NOI Debt Yield at Maturity, UW NCF DSCR, Cut-off Date LTV Ratio and Maturity Date LTV Ratio presented above are based on the aggregate note balance of thepari passu senior notes without regard to the B note. The Cut-off Date Balance per Unit, Maturity Date Balance per Unit, UW NOI Debt Yield, UW NOI Debt Yield at Maturity, UW NCF DSCR, Cut-off Date LTV Ratio and Maturity Date LTV Ratio based on the aggregate note balance of the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination (including the subordinate B note) are $436,409, $436,409, 10.4%, 10.4%, 2.16x, 69.7% and 69.7%, respectively. |
(2) | The Hilton Garden Inn W 54th Street Property was previously unencumbered by mortgage debt. |
(3) | See “—Escrows and Reserves” below for further discussion of reserve requirements. |
(4) | The Hilton Garden Inn W 54th Street Property is newly constructed. Historical financial and occupancy information prior to 2014 is not available. |
The Mortgage Loan.The eighth largest mortgage loan (the “Hilton Garden Inn W 54th Street Mortgage Loan”) is part of a non-serviced loan combination (the “Hilton Garden Inn W 54th Street Non-Serviced Loan Combination”) evidenced by threepari passupromissory notes (Notes A-1, A-2 and A-3) in the aggregate original principal amount of $155,000,000 and one subordinate note in the original principal amount of $20,000,000 (the “Hilton Garden Inn W 54th Street B Note”), all of which are secured by the same first priority fee mortgage encumbering a select service hospitality property known as Hilton Garden Inn W 54th Street in the Midtown West neighborhood of Manhattan, New York, New York (the “Hilton Garden Inn W 54th Street Property”).
Note A-1, in the original principal amount of $40,000,000, represents the Hilton Garden Inn W 54th Street Mortgage Loan, and Note A-2 and Note A-3, in the aggregate original principal amount of $115,000,000, collectively represent the “Hilton Garden Inn W 54th Street Non-Serviced Companion Loan.” Note A-2 was contributed to the MSBAM 2015-C22 securitization trust. Note A-3 was contributed to the MSBAM 2015-C23 securitization trust. The holders of the respective promissory notes evidencing the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination have entered into certain agreements between note holders that set forth the respective rights of each such note holder. The Hilton Garden Inn W 54th Street Non-Serviced Loan Combination will be serviced pursuant to the terms of the pooling and servicing agreement for the MSBAM 2015-C22 securitization trust. See “—Additional Secured Indebtedness” below for additional information. See also “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The Hilton Garden Inn W 54th Street Non-Serviced Loan Combination” and “Servicing of the Mortgage Loans” in this prospectus supplement.
The proceeds of the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Mezzanine Loan were used to recapitalize the Hilton Garden Inn W 54th Street Borrower as the Hilton Garden Inn W 54th Street Property was previously unencumbered by
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MSC 2015-MS1 | Hilton Garden Inn W 54th Street |
mortgage debt. The Hilton Garden Inn W 54th Street Borrower constructed the Hilton Garden Inn W 54th Street Property in 2013 and has provided a statement indicating that total construction costs were approximately $131.5 million, including land valued at approximately $61.3 million, which was contributed by an affiliate of the Hilton Garden Inn W 54th Street Borrower.
The Borrower and the Sponsor.The borrower is 237 West 54 Owner, L.L.C. (the “Hilton Garden Inn W 54th Street Borrower”), a recycled, single-purpose Delaware limited liability company with two independent directors. The Hilton Garden Inn W 54th Street Borroweris 74.95% indirectly owned by Morad Ghadamian, and 25.05% indirectly owned by Joseph Moinian. The nonrecourse carve-out guarantors are Morad Ghadamian and Joseph Moinian.
Morad Ghadamian is a real estate investor and President of the Marjan International Corporation, a New York City based home furnishings company specializing in floor coverings. Joseph Moinian is the CEO of The Moinian Group, a privately held New York City based real estate firm founded in 1982. The Moinian Group reports ownership positions in a portfolio in excess of 20 million SF of commercial real estate across major cities including New York, Chicago, Dallas and Los Angeles.
The Property.The Hilton Garden Inn W 54th Street Property is a 34-story select service hospitality property with 401 hotel rooms, including 243 king rooms, 135 double rooms and 23 suites, and a ground-level retail space leased on a 10-year term to RJJ Restaurant, LLC and operated as a 200-seat Empire Steakhouse restaurant. It is located on West 54th Street between Broadway and Eighth Avenue in Midtown Manhattan, a few blocks north of Times Square. The Hilton Garden Inn W 54th Street Property was constructed in 2013 as a joint venture between Starwood Capital Group Global, L.P. (“Starwood”) and The Moinian Group. (Starwood affiliates subsequently sold their various interests in the Hilton Garden Inn W 54th Street Property to one of the Hilton Garden Inn W 54th Street Mortgage Loan sponsors.) The hotel opened for business in January 2014. Hotel amenities include approximately 820 SF of meeting space, a fitness center, a business center, a pantry and a guest laundry room. The Hilton Garden Inn W 54th Street Property is subject to a franchise agreement with Hilton Garden Inns Franchise LLC, an affiliate of Hilton Worldwide, through December 31, 2034.
Demand at the Hilton Garden Inn W 54th Street Property in 2014, the hotel’s first year of operations, was approximately 35% commercial, 5% meeting and group and 60% leisure.
Hilton Garden Inn W 54th Street Historical Occupancy, ADR, RevPAR | ||||||||||
Competitive Set | Hilton Garden Inn W 54th Street | Penetration Factor | ||||||||
Year | Occupancy | ADR | RevPAR | Occupancy | ADR | RevPAR | Occupancy | ADR | RevPAR | |
2014 | 94.2% | $245.36 | $231.24 | 90.1% | $245.70 | $221.46 | 95.6% | 100.1% | 95.8% |
Source: Industry Report
The Market.The Hilton Garden Inn W 54th Street Property is located in the Midtown West neighborhood of Manhattan in New York, New York. Specifically, the hotel is located on West 54th Street between Broadway and Eighth Avenue, which is within the Midtown/Times Square market area. As of September 30, 2014, the overall Manhattan hotel market consisted of approximately 86,478 rooms with an average 86.7% occupancy rate, an average room rate of $278.99 and a RevPAR of $241.94. A total of 4,737 new hotels rooms are expected to be delivered in the Borough of Manhattan in 2015 and 4,373 new rooms are expected in 2016, including approximately 2,805 rooms in Midtown West over those two years.
Competitive properties to the Hilton Garden Inn W 54th Street Property are shown in the table below:
Primary Competitive Hotel Supply – Occupancy and Average Rate Comparison (Estimated) | ||||||||||
Property Name | Rooms | 2013 Occupancy | 2013 Average Rate | 2013 RevPAR | 2014 Occupancy | 2014 Average Rate | 2014 RevPAR | Occupancy Penetration | Yield Penetration | |
Hampton Inn Manhattan Times Square North | 300 | 99% | $274.00 | $271.26 | 100% | $272.00 | $272.00 | 110.5% | 118.0% | |
Hilton Garden Inn Times Square | 369 | 84% | $271.00 | $227.64 | 100% | $266.00 | $266.00 | 110.5% | 115.4% | |
Courtyard by Marriott New York Manhattan Central Park | 378 | Opened December 2013 | 68% | $280.00 | $190.40 | 75.1% | 82.6% | |||
Residence Inn by Marriott New York Manhattan Central Park | 261 | Opened December 2013 | 70% | $278.00 | $194.60 | 77.3% | 84.5% |
Source: Appraisal
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MSC 2015-MS1 | Hilton Garden Inn W 54th Street |
Operating History and Underwritten Cash Flow.The following table presents certain information relating to the underwritten cash flow at the Hilton Garden Inn W 54th Street Property:
Cash Flow Analysis(1) | ||||||||||||||
2011 | 2012 | 2013 | 2014 | 2/28/2015 TTM | UW(2) | UW per Room | ||||||||
Occupancy | N/A | N/A | N/A | 90.1% | 94.6% | 94.6% | ||||||||
ADR | N/A | N/A | N/A | $245.72 | $236.31 | $254.56 | ||||||||
RevPAR | N/A | N/A | N/A | $221.50 | $223.47 | $240.81 | ||||||||
Rooms Revenue | N/A | N/A | N/A | $30,732,747 | $32,942,825 | $35,246,706 | $87,897 | |||||||
Food & Beverage | N/A | N/A | N/A | $5,700 | $6,075 | $6,075 | $15 | |||||||
Other Income(3) | N/A | N/A | N/A | $1,096,505 | $1,255,912 | $1,255,913 | $3,132 | |||||||
Total Revenue | N/A | N/A | N/A | $31,834,953 | $34,204,812 | $36,508,694 | $91,044 | |||||||
Total Expenses | N/A | N/A | N/A | $15,268,197 | $17,349,472 | $18,395,077 | $45,873 | |||||||
Net Op. Income | N/A | N/A | N/A | $16,566,756 | $16,855,340 | $18,113,617 | $45,171 | |||||||
FF&E | N/A | N/A | N/A | $636,701 | $682,399 | $1,460,348 | $3,642 | |||||||
Net Cash Flow | N/A | N/A | N/A | $15,930,055 | $16,172,942 | $16,653,269 | $41,529 | |||||||
NOI DSCR | N/A | N/A | N/A | 2.63x | 2.67x | 2.87x | ||||||||
NCF DSCR | N/A | N/A | N/A | 2.52x | 2.56x | 2.64x | ||||||||
NOI Debt Yield | N/A | N/A | N/A | 10.7% | 10.9% | 11.7% | ||||||||
NCF Debt Yield | N/A | N/A | N/A | 10.3% | 10.4% | 10.7% |
(1) | The Hilton Garden Inn W 54th Street Property was constructed in 2013 and opened for business in January 2014. Therefore, historical operating data is limited. |
(2) | The Hilton Garden Inn W 54th Street Property is a newly constructed hotel. Underwritten income is based on the TTM occupancy rate and the estimated 2014 average competitive primary and secondary competitive hotel room rate of $254.56. |
(3) | Other Income includes miscellaneous income, rental income (for instance, the Empire Steakhouse base rent was $360,000 per year in 2014) and telecommunications income. |
Escrows and Reserves. The Hilton Garden Inn W 54th Street Borrower is required to escrow monthly 1/12 of the annual estimated tax payments and 1/12 of the annual estimated insurance premiums (unless either (i) the property manager is paying or has reserved funds for payment of such taxes or insurance premiums in accordance with the management agreement or (ii) with respect to insurance premiums only, the Hilton Garden Inn W 54th Street Borrower maintains insurance under an acceptable blanket insurance policy). The Hilton Garden Inn W 54th Street Borrower is also required to make monthly deposits in a reserve for FF&E reasonably approved by the lender equal to the greater of (i) the amount required to be reserved for FF&E pursuant to the management agreement, if any, or (ii) 4% of the operating income for the Hilton Garden Inn W 54th Street Property for the calendar month which is two months prior to the applicable monthly payment date; provided, that the Hilton Garden Inn W 54th Street Borrower will not be required to make deposits to the FF&E reserve so long as the property manager is reserving such amounts for FF&E in accordance with the management agreement.
Lockbox and Cash Management.A soft lockbox is in place with respect to the Hilton Garden Inn W 54th Street Mortgage Loan (i.e., all revenues from the Hilton Garden Inn W 54th Street Property remaining after payment by the property manager of all operating expenses are deposited directly by the Hilton Garden Inn W 54th Street Borrower, or its property manager, and the operating lessee into the lockbox account). The Hilton Garden Inn W 54th Street Mortgage Loan has springing cash management. Provided a Trigger Period (as defined below) has not commenced, funds in the lockbox account are swept to an account designated by the Hilton Garden Inn W 54th Street Borrower. Upon the occurrence and during the continuance of a Trigger Period, funds in the lockbox account are disbursed on each monthly payment date to pay debt service on the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, to fund required deposits to the reserves as described above under“—Escrows and Reserves,” including from and after the first anniversary of the origination of the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination, to make any required deposits into the FF&E reserve only if and so long as the property manager is not reserving such amounts for FF&E in accordance with the management agreement, to pay the servicing fees, if any, due under the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Mezzanine Loan (as defined below), to disburse to the Hilton Garden Inn W 54th Street Borrower the monthly amount payable for operating expenses and capital expenditures not otherwise reserved for and referenced in the annual budget approved by lender and any extraordinary expenses approved by the lender, to pay, provided no event of default on the Hilton Garden Inn W 54th Street Mortgage Loan has occurred and is continuing, debt service due on the Hilton Garden Inn W 54th Street Mezzanine Loan and to remit any excess to an account to be held by the lender as additional security for the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination.
A “Trigger Period” will (i) commence upon the occurrence of an event of default under the Hilton Garden Inn W 54th Street Mortgage Loan and/or the Hilton Garden Inn W 54th Street Mezzanine Loan and continue until, in the case of an event of default under the Hilton Garden Inn W 54th Street Mortgage Loan, the cure or waiver of such event of default under the Hilton Garden Inn W 54th Street Mortgage Loan which is accepted by the lender under the Hilton Garden Inn W 54th Street Mortgage Loan in writing or, in the case of an event of default under the Hilton Garden Inn W 54th Street Mezzanine Loan, the cure or waiver of such event of default under the Hilton Garden Inn W 54th Street Mezzanine Loan which is accepted by the lender under the Hilton Garden Inn W 54th Street Mezzanine Loan in writing and such lender shall not have otherwise accelerated the Hilton Garden Inn W 54th Street Mezzanine Loan, moved for a receiver or commenced foreclosure proceedings or (ii) commence upon the debt yield being less than 7.50% (or, on and after March 1, 2017, 9.00%) for two consecutive calendar quarters and continue until the debt yield equals or exceeds 8.00% (or, on and after March 1, 2017, 9.50%) for two consecutive calendar quarters. Notwithstanding the foregoing, in no event may a Trigger Period occur as a result of the debt yield being less than 7.50% prior to March 1, 2016.
Additional Secured Indebtedness (not including trade debts).The Hilton Garden Inn W 54th Street Property also secures the Hilton Garden Inn W 54th Street Non-Serviced Companion Loan, which has a combined Cut-off Date balance of $115,000,000, and the Hilton Garden Inn W 54th Street B Note, which has a Cut-off Date balance of $20,000,000. Note A-2 (comprising a portion of the Hilton Garden Inn W 54th Street Non-Serviced Companion Loan) was contributed to the MSBAM 2015-C22 securitization trust. Note A-3 (comprising the remaining portion of the Hilton Garden Inn W 54th Street
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MSC 2015-MS1 | Hilton Garden Inn W 54th Street |
Non-Serviced Companion Loan) was contributed to the MSBAM 2015-C23 securitization trust. The current holder of the Hilton Garden Inn W 54th Street B Note is Aareal Capital Corporation. The notes evidencing the Hilton Garden Inn W 54th Street Non-Serviced Companion Loan accrue interest at the same rate as the Hilton Garden Inn W 54th Street Mortgage Loan. The Hilton Garden Inn W 54th Street Mortgage Loan is entitled to payments of principal and interest on apro rata andpari passu basis with the Hilton Garden Inn W 54th Street Non-Serviced Companion Loan. The Hilton Garden Inn W 54th Street Mortgage Loan and the Hilton Garden Inn W 54th Street Non-Serviced Companion Loan will be entitled to payments of interest and principal on a senior basis relative to the Hilton Garden Inn W 54th Street B Note. Such priorities and the allocation of collections on the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination are set forth in certain agreements between note holders governing the promissory notes comprising the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination. Note A-2 represents the controlling interest in the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination. The Hilton Garden Inn W 54th Street Non-Serviced Loan Combination will be serviced pursuant to the terms of the pooling and servicing agreement for the MSBAM 2015-C22 securitization trust. See “Description of the Mortgage Pool—The Non-Serviced Loan Combinations—The Hilton Garden Inn W 54th Street Non-Serviced Loan Combination”in this prospectus supplement and“Servicing of the Mortgage Loans”in this prospectus supplement.
The following table presents certain information relating to the Hilton Garden Inn W 54th Street Non-Serviced Loan Combination and the Hilton Garden Inn W 54th Street Mezzanine Loan:
Full Debt Summary | |||||||||
Notes | Original Principal Balance | Interest Rate | Original Term to Maturity (mos.) | Original Amort. Term (mos.) |
Original IO Term (mos.) | Total Debt UW NCF DSCR | Total Debt UW NOI Debt Yield | Total Debt Cut-off Date LTV | |
Mortgage Loan | $40,000,000 | 4.01290323% | 120 | 0 | 120 | 2.64x | 11.7% | 61.8% | |
Non-Serviced Companion Loan | $115,000,000 | 4.01290323% | 120 | 0 | 120 | 2.64x | 11.7% | 61.8% | |
B Note | $20,000,000 | 7.000% | 120 | 0 | 120 | 2.16x | 10.4% | 69.7% | |
Mezzanine Loan | $25,000,000 | 10.000% | 120 | 0 | 120 | 1.62x | 9.1% | 79.7% | |
Total/Wtd. Avg. | $200,000,000 | 5.060% | 120 | 0 | 120 | 1.62x | 9.1% | 79.7% |
Mezzanine Loan and Preferred Equity.The “Hilton Garden Inn W 54th Street Mezzanine Loan” refers to a loan in the principal amount of $25,000,000 made by Morgan Stanley Mortgage Capital Holdings LLC to 237 West 54 Mezz Two Owner, L.L.C. (the “Hilton Garden Inn W 54th Street Mezzanine Borrower”), secured by 100% of the direct equity interest in the Hilton Garden Inn W 54th Street Borrower and put in place simultaneously with the origination of the Hilton Garden Inn W 54th Street Mortgage Loan. The Hilton Garden Inn W 54th Street Mezzanine Loan and the Hilton Garden Inn W 54th Street Mortgage Loan are subject to an intercreditor agreement. The Hilton Garden Inn W 54th Street Mezzanine Loan was assumed by 237 West 54th Mezzanine LLC on March 17, 2015.
In addition, a preferred equity (or other similar) investment (such investment, the “Permitted Preferred Equity”) is permitted subject to various conditions, including amongst other conditions: (i) no mortgage loan or mezzanine loan event of default is continuing, (ii) the investment is in the direct or indirect owner of the Hilton Garden Inn W 54th Street Mezzanine Borrower in an amount not to exceed $20,000,000, (iii) the investment is not secured by the Hilton Garden Inn W 54th Street Property (or any direct or indirect equity interests in the Hilton Garden Inn W 54th Street Borrower or the Hilton Garden Inn W 54th Street Mezzanine Borrower) or evidenced by a promissory note, (iv) the investment does not require the lender under the Hilton Garden Inn W 54th Street Mortgage Loan or the Hilton Garden Inn W 54th Street Mezzanine Loan to enter into an intercreditor agreement (or other recognition agreement) with the investor in the Permitted Preferred Equity or provide any rights or remedies to such investor arising out of any defaults that would lead to a change in control of the Hilton Garden Inn W 54th Street Borrower or Hilton Garden Inn W 54th Street Mezzanine Borrower or the Hilton Garden Inn W 54th Street Property, (v) the Permitted Preferred Equity requires fixed payment obligations only and is payable only from excess cash flow on the Hilton Garden Inn W 54th Street Property and (vi) the preferred equity documents and payments to the investor in the Permitted Preferred Equity are subordinate to the loan documents, and payments required pursuant to the loan documents, for the Hilton Garden Inn W 54th Street Mortgage Loan and the Hilton Garden Inn W 54th Street Mezzanine Loan.
Release of Property. Not permitted.
Terrorism Insurance. Generally, the Hilton Garden Inn W 54th Street Borrower is required to obtain insurance against terrorism, terrorist acts or similar acts of sabotage with amounts, terms and coverage consistent with those required with respect to the comprehensive all risk insurance, the commercial general liability insurance and the business interruption insurance required to be maintained by the Hilton Garden Inn W 54th Street Borrower so long as such coverage is available.
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MSC 2015-MS1 | Premier Apartments |
Mortgage Loan No. 9 – Premier Apartments
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MSC 2015-MS1 | Premier Apartments |
Mortgage Loan No. 9 – Premier Apartments
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MSC 2015-MS1 | Premier Apartments |
Mortgage Loan No. 9 – Premier Apartments |
Mortgage Loan Information | Mortgaged Property Information | ||||||
Mortgage Loan Seller: | MSMCH | Single Asset/Portfolio: | Single Asset | ||||
Original Balance: | $33,250,000 | Location: | Silver Spring, MD 20910 | ||||
Cut-off Date Balance: | $33,250,000 | General Property Type: | Multifamily | ||||
% of Initial Pool Balance: | 3.8% | Detailed Property Type: | High Rise | ||||
Loan Purpose: | Refinance | Title Vesting: | Fee | ||||
Sponsor: | GR Holding LLLP | Year Built/Renovated: | 2014/N/A | ||||
Mortgage Rate: | 4.85474% | Size: | 160 Units | ||||
Note Date: | 6/10/2015 | Cut-off Date Balance per Unit: | $207,813 | ||||
First Payment Date: | 8/1/2015 | Maturity Date Balance per Unit: | $191,555 | ||||
Maturity Date: | 7/1/2025 | Property Manager: | Vantage Management, Inc. | ||||
Original Term to Maturity: | 120 months | ||||||
Original Amortization Term: | 360 months | Underwriting and Financial Information | |||||
IO Period: | 60 months | UW NOI: | $2,463,849 | ||||
Seasoning: | 0 months | UW NOI Debt Yield: | 7.4% | ||||
Prepayment Provisions: | LO (24); DEF (92); O (4) | UW NOI Debt Yield at Maturity: | 8.0% | ||||
Lockbox/Cash Mgmt Status: | Springing/Springing | UW NCF DSCR: | 1.15x | ||||
Additional Debt Type: | Mezzanine | Most Recent NOI(2): | $577,648 (4/30/2015 TTM) | ||||
Additional Debt Balance: | $5,250,000 | 2nd Most Recent NOI(2): | N/A | ||||
Future Debt Permitted (Type): | No (N/A) | 3rd Most Recent NOI(2): | N/A | ||||
Reserves(1) | Most Recent Occupancy: | 95.6% (6/2/2015) | |||||
Type | Initial | Monthly | Cap | 2nd Most Recent Occupancy(2): | N/A | ||
RE Tax: | $278,920 | $27,892 | N/A | 3rd Most Recent Occupancy(2): | N/A | ||
Insurance: | $0 | Springing | N/A | Appraised Value (as of): | $55,700,000 (3/19/2015) | ||
Recurring Replacements: | $0 | $3,333 | N/A | Cut-off Date LTV Ratio: | 59.7% | ||
Maturity Date LTV Ratio: | 55.0% |
Sources and Uses | ||||||
Sources | Proceeds | % of Total | Uses | Proceeds | % of Total | |
Loan Amount: | $33,250,000 | 86.4% | Loan Payoff: | $30,083,402 | 78.1% | |
Mezzanine Loan: | $5,250,000 | 13.6% | Preferred Equity Payment: | $6,437,250 | 16.7% | |
Reserves: | $278,920 | 0.7% | ||||
Closing Costs(3): | $713,374 | 1.9% | ||||
Return of Equity: | $987,054 | 2.6% | ||||
Total Sources: | $38,500,000 | 100.0% | Total Uses: | $38,500,000 | 100.0% |
(1) | See “—Escrows and Reserves” below for further discussion of reserve requirements. |
(2) | The Premier Apartments Property was constructed in 2014 and reached stabilized occupancy in October 2014. Historical operating and occupancy data is limited or not available. |
(3) | Closing costs exclude a $300,000 owner operations escrow funded at closing and held in a Premier Apartments Borrower controlled account. |
The Mortgage Loan.The ninth largest mortgage loan (the “Premier Apartments Mortgage Loan”) is evidenced by a promissory note in the original principal amount of $33,250,000 secured by a first priority fee mortgage encumbering a high-rise multifamily building with a total of 160 apartments, a parking structure and a ground floor commercial space in Silver Spring, Maryland (the “Premier Apartments Property”). The proceeds of the Premier Apartments Mortgage Loan, together with a mezzanine loan (the “Premier Apartments Mezzanine Loan”) were used to refinance a construction loan of approximately $30,083,402 and repay preferred equity of approximately $6,437,250. The Premier Apartments Borrower provided a Premier Apartments Property cost basis of approximately $45,133,829, including a $1,030,647 developer’s fee paid to an affiliate of the Premier Apartments Borrower.
The Borrower and the Sponsor.The borrower is 8711 Apartments Owner LLC (the “Premier Apartments Borrower”), a single-purpose Delaware limited liability company with one independent director. The Premier Apartments Borrower is majority owned and controlled by Marvin Land and Anthony LaBarbera, the Chairman and President & CEO, respectively, of Guardian Realty Investors, LLC (“Guardian”). GR Holding LLLP is the nonrecourse carve-out guarantor.
Guardian, a North Bethesda-based private REIT, was founded in 1966 and is focused exclusively on the greater Washington DC market. As of December 31, 2014, the company reported full or partial ownership of 20 commercial and residential properties totaling approximately 1.75 million SF. As of December 31, 2014, GR Holding LLLP reported total assets of approximately $360.1 million and total equity of approximately $93.2 million.
The Property. The Premier Apartments Property consists of a 14-story high-rise LEED Silver certified apartment complex containing 160 studio, one-bedroom and two-bedroom residential units, a 2,635 SF ground floor commercial retail space currently leased to Wells Fargo, N.A. for a term of 10 years, and a 190-space parking structure. There are three studio floorplan variations, six one-bedroom floorplans, three one-bedroom and den-unit floorplans, and three two-bedroom floorplans. Common amenities include a 24-hour concierge (the Premier Apartments Borrower is considering reducing or eliminating this service), an attached parking garage (at additional cost), a garden, a rooftop patio and a club room. The Premier Apartments Property was completed in 2014 and reached stabilized occupancy in October of that year. Tenants were generally given one month free rent during the initial lease-up period in addition to certain initial parking rental credits.
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MSC 2015-MS1 | Premier Apartments |
Twenty of the apartment units within the Premier Apartments Property (approximately 12.5% of total units) are required to be leased according to the Montgomery County’s Moderately Priced Dwelling Unit (MPDU) income and rent restrictions. The maximum income to qualify for such units is 70% (for high rises) of the median income for the Washington, DC Primary Metropolitan Statistical Area (PMSA). Rental rates for such units are capped at 25 percent of the tenants’ monthly household gross income. All new construction in Montgomery County consisting of more than 20 units is subject to MPDU restrictions. The current allowable rents associated with the Premier Apartments Property MPDU restricted units were set upon approval of the related rental offering agreement by the Montgomery County Department of Housing and Community Affairs. The MPDU restrictions applicable to the Premier Apartments Property are perpetual.
The table below shows the apartment mix at the Premier Apartments Property:
Unit Mix | |||||
Apartment Type | Number of Units | Avg. Size (SF) | Avg. Rent | Rent Range | Market Rent |
Studio/One Bath | 20 | 471 | $1,468 | $1,095 - $1,533 | $1,584 |
One Bedroom/One Bath | 117 | 750 | $1,771 | $1,182 - $2,032 | $1,870 |
Two Bedroom/Two Bath | 23 | 996 | $2,176 | $1,421 - $2,292 | $2,416 |
The Market. The Premier Apartments Property is located in the Silver Spring submarket of suburban Montgomery County, Maryland, a component jurisdiction of the Washington, DC metropolitan statistical area (“MSA”). The Premier Apartments Property is located approximately 600 yards from the Silver Spring Metrorail station. As of December 31, 2014, the submarket had a vacancy rate of 7.7%. The appraisal notes that approximately 8,116 new apartment units in 36 projects are under construction in the overall Suburban Maryland region, with an additional approximately 12,133 units within 49 projects planned and 94 buildings with approximately 27,454 units proposed. Within the subject Silver Spring submarket, approximately 1,416 new units are projected over the next five years. As of December 31, 2014, the Suburban Maryland region of the Washington DC MSA contained approximately 156,797 rental units in 548 buildings with an overall vacancy rate of 4.1%. The average monthly Silver Spring submarket rental rate for 2014 was $1,584, while the overall Suburban Maryland region average 2014 rental rate was $1,424 per month.
Comparable rental properties to the Premier Apartments Property are shown in the table below. For each competitive property, the tenants pay all utilities and parking is available at an additional charge.
Competitive Property Summary | |||||||
Property Name/Address | Units | Year Built | Occupancy | Unit Type | Unit Size (SF) | Quoted Rent per Month | Concessions |
1200 East West 1200 East West Highway Silver Spring, MD | 247 | 2010 | 95% | 1 BR/1 BA 2 BR/2 BA 2 BR/2.5 BA 2 BR/2.5 BA Den | 560 - 740 905 - 925 975 - 1,060 1,350 | $1,730 - $2,195 $2,050 - $2,537 $2,180 - $2,650 $2,565 - $3,032 | Reduced rents on select 2 BR Units |
The Bennington 1215 East West Highway Silver Spring, MD | 223
| 2004 | 93% | Studio 1 BR/1 BA 2 BR/1 BA 2 BR/2 BA | 539 - 554 665 - 840 998 - 1,001 1,038 - 1,135 | $1,490 - $1,590 $1,700 - $1,920 $1,920 - $2,050 $2,260 - $2,725 | None |
The Citron 815 Pershing Drive Silver Spring, MD | 222 | 2013 | 94% | Studio 1 BR/1 BA 1 BR/1 BA Den 2 BR/2 BA | 512 - 566 706 - 745 879 - 1,047 1,058 - 1,192 | $1,890 - $1,936 $2,099 - $2,216 $2,504 - $2,702 $2,825 - $3,035 | None |
The Solaire 1150 Ripley Street Silver Spring, MD | 295 | 2012 | 96% | Studio 1 BR/1 BA 1 BR/1 BA LW 2 BR/2 BA 2 BR/2 BA Den | 526 - 642 632 - 868 660 - 731 1,056 - 1,191 1,268 - 1,500 | $1,610 - $2,000 $1,875 - $2,435 $2,145 - $2,376 $2,750 - $3,005 $3,225 - $3,705 | Waive security deposit |
The Veridian 1133 East West Highway Silver Spring, MD | 457 | 2009 | 94% | Studio 1 BR/1 BA 1 BR/1 BA Den 2 BR/2 BA | 470 - 673 660 - 754 823 - 1,012 1,097 - 1,172 | $1,455 - $1,540 $1,570 - $1,825 $1,810 - $2,105 $2,100 - $2,400 | $350 off select units |
Heritage at Silver Spring 8021 Georgia Avenue Silver Spring, MD | 210 | 2013 | 94% | Studio 1 BR/1 BA 2 BR/2 BA 2 BR/2 BA TH | 515 - 547 685 - 851 880 - 1,136 1,179 - 1,228 | $1,725 - $1,770 $1,890 - $2,220 $2,495 - $2,902 $3,076 - $3,134 | None |
Source: Appraisal
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Operating History and Underwritten Cash Flow.The following table presents certain information relating to the Underwritten Cash Flow at the Premier Apartments Property:
Cash Flow Analysis(1) | |||||||||||||
2011 | 2012 | 2013 | 4/30/2015 TTM | UW | UW per Unit | ||||||||
Base Rent | N/A | N/A | N/A | $3,532,420 | $3,446,441 | $21,540 | |||||||
Other Income(2) | N/A | N/A | N/A | $370,618 | $575,925 | $3,600 | |||||||
Discounts Concessions(3) | N/A | N/A | N/A | ($523,508) | ($65,099) | ($407) | |||||||
Less Vacancy | N/A | N/A | N/A | ($778,593) | ($172,322) | ($1,077) | |||||||
Effective Gross Income | N/A | N/A | N/A | $2,600,937 | $3,784,945 | $23,656 | |||||||
Total Expenses(4) | N/A | N/A | N/A | $2,023,289 | $1,321,096 | $8,257 | |||||||
Net Operating Income | N/A | N/A | N/A | $577,648 | $2,463,849 | $15,399 | |||||||
Capital Expenditures | N/A | N/A | N/A | $0 | $36,000 | $225 | |||||||
Net Cash Flow | N/A | N/A | N/A | $577,648 | $2,427,849 | $15,174 | |||||||
Occupancy % | N/A | N/A | N/A | 95.6% | (5) | 95.0% | |||||||
NOI DSCR | N/A | N/A | N/A | 0.27x | 1.17x | ||||||||
NCF DSCR | N/A | N/A | N/A | 0.27x | 1.15x | ||||||||
NOI Debt Yield | N/A | N/A | N/A | 1.7% | 7.4% | ||||||||
NCF Debt Yield | N/A | N/A | N/A | 1.7% | 7.3% |
(1) | The Premier Apartments Property was constructed in 2014 and reached a stabilized occupancy in October 2014; therefore, historical operating data is limited. |
(2) | Underwritten other income includes $272,232 of parking income associated with the 190 space parking garage, commercial retail base rent of $184,450, $19,260 of commercial retail space expense recoveries, and $99,983 of miscellaneous fee and charges income, including tenant utility reimbursements. |
(3) | April 30, 2015 TTM discounts and concessions include one month of free rent offered to new leases during the initial property lease-up, parking lease credits offered during initial property lease-up and approximately $26,973 of bad debt expense. Underwritten discounts and concessions include assumed future concessions equal to 1/2 of one month of rent offered on 1/3 of all apartments plus 0.5% of bad debt allowance. The property does not currently offer concession on new leases. |
(4) | April 30, 2015 TTM expenses include substantial lease up expenses. Underwritten expenses are generally based on the appraiser’s estimates. Total underwritten expenses per unit equal $8,257, which compares to an expense comparable range of $6,942 to $8,586 per unit. The expense comparables represent six similar properties located in Bethesda, MD, Silver Spring, MD, Rockville, MD and Washington DC, with expense ratios of 25.6% to 36.3%. The underwritten expense ratio is approximately 34.9%. |
(5) | Based on a borrower rent roll dated May 13, 2015. |
Escrows and Reserves. The Premier Apartments Borrower deposited $278,920 in escrow for annual real estate taxes at loan origination and is required to escrow monthly 1/12 of the annual estimated tax payments. The Premier Apartments Borrower is required to escrow monthly 1/12 of the annual estimated insurance premiums (unless the Premier Apartments Borrower maintains insurance under an acceptable blanket insurance policy). The Premier Apartments Borrower is required to make monthly deposits of $3,333 for replacement reserves (which amount may be increased by the lender if the lender reasonably determines that an increase is necessary to maintain proper operation of the Premier Apartments Property).
Lockbox and Cash Management.A springing soft lockbox is in place with respect to the Premier Apartments Mortgage Loan (i.e. during any Cash Sweep Period (as defined below) for the Premier Apartments Mortgage Loan, the Premier Apartments Borrower and/or the property manager are permitted to collect all rents, revenues, charges and other consideration and are required to cause such amounts to be deposited into the lockbox account). Provided a Cash Sweep Period has occurred but is no longer continuing, the lockbox account will cease to be in effect. The Premier Apartments Mortgage Loan has springing cash management (i.e. the Premier Apartments Mortgage Loan has cash management only during a Cash Sweep Period). During the continuance of a Cash Sweep Period for the Premier Apartments Mortgage Loan, funds in the lockbox account are applied on each monthly payment date to pay debt service on the Premier Apartments Mortgage Loan, to fund the required reserves deposits as described above under “—Escrows and Reserves,” to disburse, provided no event of default has occurred and is continuing, to the Premier Apartments Borrower the monthly amount payable for operating expenses not otherwise paid or reserved for as described above under “—Escrows and Reserves” and referenced in the annual budget approved by lender together with other amounts incurred by the Premier Apartments Borrower in connection with the operation and maintenance of the Premier Apartments Property approved by lender, to pay, provided no event of default under the Premier Apartments Mortgage Loan has occurred, debt service due on the Premier Apartments Mezzanine Loan (as defined below), and to disburse any excess either (x) if the Cash Sweep Period was caused solely by an event of default under the Premier Apartments Mezzanine Loan, to the lender under the Premier Apartments Mezzanine Loan or (y) if the Cash Sweep Period was not caused solely by an event of default under the Premier Apartments Mezzanine Loan, to an account to be held by the lender as additional security for the Premier Apartments Mortgage Loan.
A “Cash Sweep Period” will
(i) | commence upon the occurrence of an event of default under the Premier Apartments Mortgage Loan and continue until the date on which no event of default under the Premier Apartments Mortgage Loan exists, or |
(ii) | commence upon the occurrence of an event of default under the Premier Apartments Mezzanine Loan and continue until the date on which the lender under the Premier Apartments Mezzanine Loan has notified in writing the lender under the Premier Apartments Mortgage Loan that no event of default under the Premier Apartments Mezzanine Loan exists, or |
(iii) | commence upon the date the lender under the Premier Apartments Mortgage Loan determines that the aggregate DSCR on the Premier Apartments Mortgage Loan (based on payments of principal and interest) and the Premier Apartments Mezzanine Loan has, for a period of six consecutive months, fallen below 0.95x during years one and two, 1.00x during year three, 1.05x during year four and 1.10x for the remainder of the loan term based on the trailing 12 months and based on actual as-is in-place underwritten cash flow using rating agency criteria as determined by the lender under the Premier Apartments Mortgage Loan and continue until the date the lender under the Premier Apartments Mortgage Loan determines that the aggregate DSCR on the Premier Apartments Mortgage Loan (based on payments of principal and interest) and the Premier Apartments Mezzanine Loan has been equal to or greater than the then applicable DSCR test for the immediately preceding three consecutive calendar months based on the trailing 12 months and based on actual as-is in-place underwritten cash flow using rating agency criteria as determined by the lender under the Premier Apartments Mortgage Loan. |
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MSC 2015-MS1 | Premier Apartments |
Additional Secured Indebtedness (not including trade debts).Not permitted.
Mezzanine Loan and Preferred Equity.The Premier Apartments Mezzanine Loan refers to a loan in the principal amount of $5,250,000 made by Morgan Stanley Mortgage Capital Holdings LLC to 8711 Apartments Mezz LLC, secured by 100% of the direct or indirect equity interest in the Premier Apartments Borrower and put in place simultaneously with the origination of the Premier Apartments Mortgage Loan. The Premier Apartments Mezzanine Loan and the Premier Apartments Mortgage Loan are subject to an intercreditor agreement between the Premier Apartments Mortgage Loan lender and Morgan Stanley Mortgage Capital Holdings LLC. The Premier Apartments Mezzanine Loan may be transferred at any time.
The following table presents certain information relating to the Premier Apartments Mezzanine Loan:
Mezzanine Debt Summary | ||||||||||||||
Mezzanine Debt Original Principal Balance | Mezzanine Debt Interest Rate | Original Term to Maturity (mos.) | Original Amort. Term (mos.) |
Original IO Term (mos.) | Total Debt UW NCF DSCR(1) | Total Debt UW NOI Debt Yield | Total Debt Cut-off Date LTV | |||||||
$5,250,000 | 9.0% | 120 | 0 | 120 | 0.94x | 6.4% | 69.1% |
(1) | The Total Debt UW NCF DSCR is based on payments of principal and interest associated with the Premier Apartments Mortgage Loan, which begin on August 1, 2020, and the interest-only payments associated with the Premier Apartments Mezzanine Loan. |
Release of Property. Not permitted.
Terrorism Insurance.The Premier Apartments Borrower is required to obtain insurance against acts of terrorism or other similar acts or events (or “fire following”) to the extent such insurance is available in form and substance satisfactory to lender (but in no event more than the sum of 100% of full replacement cost and 12 months of business interruption insurance). Notwithstanding the foregoing, for so long as the Terrorism Risk Insurance Program Reauthorization Act of 2007 (or any extension thereof or other federal government program with substantially similar protection) is in effect, the Premier Apartments Borrower is required to maintain, and the lender is required to accept, terrorism insurance which covers “covered acts” (as defined by such statute or other program), as full compliance as it relates to the risks required to be covered pursuant to the preceding sentence, so long as such statute or other program covers both domestic and foreign acts of terrorism.
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MSC 2015-MS1 | West Valley Medical Center |
Mortgage Loan No. 10 – West Valley Medical Center |
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Mortgage Loan No. 10 – West Valley Medical Center |
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Mortgage Loan No. 10 – West Valley Medical Center |
Mortgage Loan Information | Property Information | ||||||
Mortgage Loan Seller: | MSMCH | Single Asset/Portfolio: | Single Asset | ||||
Original Balance: | $27,000,000 | Location: | Encino, CA 91316 | ||||
Cut-off Date Balance: | $27,000,000 | General Property Type: | Office | ||||
% of Initial Pool Balance: | 3.0% | Detailed Property Type: | Medical | ||||
Loan Purpose: | Refinance | Title Vesting: | Fee | ||||
Sponsor: | Mark Hamermesh; Gary Grabel | Year Built/Renovated: | 1964; 1986/1995; 2002 | ||||
Mortgage Rate: | 4.000% | Size: | 103,008 SF | ||||
Note Date: | 3/5/2015 | Cut-off Date Balance per Unit: | $262 | ||||
First Payment Date: | 5/1/2015 | Maturity Date Balance per Unit: | $262 | ||||
Maturity Date: | 4/1/2025 | Property Manager: | Ethan Christopher, LLC (borrower related) | ||||
Original Term to Maturity: | 120 months | ||||||
Original Amortization Term: | 0 months | Underwriting and Financial Information | |||||
IO Period: | 120 months | UW NOI: | $2,802,059 | ||||
Seasoning: | 3 months | UW NOI Debt Yield: | 10.4% | ||||
Prepayment Provisions: | LO (27); DEF (87); O (6) | UW NOI Debt Yield at Maturity: | 10.4% | ||||
Lockbox/Cash Mgmt Status: | Springing/Springing | UW NCF DSCR: | 2.25x | ||||
Additional Debt Type: | N/A | Most Recent NOI: | $2,676,526 (12/31/2014) | ||||
Additional Debt Balance: | N/A | 2nd Most Recent NOI: | $2,492,337 (12/31/2013) | ||||
Future Debt Permitted (Type): | Yes (Mezzanine) | 3rd Most Recent NOI: | $2,494,713 (12/31/2012) | ||||
Reserves(1) | Most Recent Occupancy: | 100.0% (3/4/2015) | |||||
Type | Initial | Monthly | Cap | 2nd Most Recent Occupancy: | 97.3% (12/31/2013) | ||
RE Tax: | $22,735 | $22,735 | N/A | 3rd Most Recent Occupancy: | 90.7% (12/31/2012) | ||
Insurance: | $0 | Springing | N/A | Appraised Value (as of): | $50,250,000 (12/30/2014) | ||
Other: | $473,806 | $0 | N/A | Cut-off Date LTV Ratio: | 53.7% | ||
Maturity Date LTV Ratio: | 53.7% |
Sources and Uses | ||||||
Sources | Proceeds | % of Total | Uses | Proceeds | % of Total | |
Loan Amount: | $27,000,000 | 100.0% | Loan Payoff: | $24,854,963 | 92.1% | |
Reserves: | $496,541 | 1.8% | ||||
Closing Costs: | $303,601 | 1.1% | ||||
Return of Equity: | $1,344,895 | 5.0% | ||||
Total Sources: | $27,000,000 | 100.0% | Total Uses: | $27,000,000 | 100.0% |
(1) | See “—Escrows and Reserves” below for further discussion of reserve requirements. |
The Mortgage Loan.The tenth largest mortgage loan (the “West Valley Medical Center Mortgage Loan”) is evidenced by a promissory note in the original principal amount of $27,000,000 secured by a first priority fee mortgage encumbering a 103,008 SF medical office building in Encino, California (the “West Valley Medical Center Property”). The proceeds of the West Valley Medical Center Mortgage Loan were primarily used to refinance a previous loan secured by the West Valley Medical Center Property in the original principal amount of approximately $24,854,963, to fund reserves and to return equity to the West Valley Medical Center Borrower. The previous loan secured by the West Valley Medical Center Property was included in the MLMT 2005-MCP1 transaction.
The Borrower and the Sponsor.The borrower is West Valley Medical Partners, LLC (the “West Valley Medical Center Borrower”), a previously existing single-purpose California limited liability company with one independent director. The West Valley Medical Center Borrower is partially owned and controlled by Mark Hamermesh and Gary Grabel, the nonrecourse carve-out guarantors. Mr. Hamermesh and Mr. Grabel are both principals of Ethan Christopher, LLC, an Encino-based real estate investment firm founded in 1999. The company owns and manages approximately 400,000 SF of medical office space in seven properties and multiple retail properties in California and Arizona.
The Property.The West Valley Medical Center Property is a three-building, one, three and five-story, 103,008 SF medical office complex, including a 9,047 SF surgical center and a 3,439 SF pharmacy. The West Valley Medical Center Property is located in Encino, California, approximately 13 miles west of downtown Los Angeles. The 150 bed Encino Hospital Medical Center is approximately 1.5 miles to the east and the 99 bed Sherman Oaks Hospital acute care facility is approximately 3.6 miles to the east. As of March 4, 2015, the West Valley Medical Center Property was occupied by 47 tenants. The largest tenant, Prime Surgical Affiliates, is an outpatient surgical center. The tenant took occupancy in 2014 and replaced a previous surgical center tenant after renovating its space. There are 384 surface parking spaces.
Major Tenants.
Prime Surgical Affiliates (9,047 SF, 9% of NRA, 9% of underwritten rent).Prime Surgical Affiliates, Inc. (“Prime Surgical”) leases 9,047 SF at the West Valley Medical Center Property and operates the space as an outpatient surgical center. The lease began on November 15, 2014 and has a current
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expiration date of May 15, 2025, with two five-year lease renewal options. Prime Surgical is an out-of-network ambulatory surgery center adaptive firm. The tenant has three additional locations in Glendale, Foothill Ranch, and Torrance, California.
RadNet Management (7,090 SF, 7% of NRA, 7% of underwritten rent).RadNet Management, Inc. (“RadNet”) leases 7,090 SF at the West Valley Medical Center Property. The tenant’s current lease began on October 1, 2013 and has a current expiration date of September 30, 2018, with one six-year lease renewal option. RadNet is a subsidiary of RadNet, Inc. (NASDAQ: RDNT) and operates over 250 outpatient diagnostic imaging centers in seven states.
Keith Brookenthal, M.D. (7,054 SF, 7% of NRA, 7% of underwritten rent).Keith Brookenthal, M.D. leases 7,054 SF at the West Valley Medical Center Property. The lease began on December 1, 2014 and has a current expiration date of November 30, 2023. Dr. Brookenthal is an orthopedic surgeon affiliated with the Los Robles Hospital and Medical Center. 1,038 SF of the tenant’s space is subleased to Athletic Physical Therapy, Inc. until December 31, 2015.
The following table presents certain information relating to the leases at the West Valley Medical Center Property:
Tenant Summary(1) | |||||||
Tenant Name | Credit Rating (Fitch/Moody’s/S&P)(2) | Tenant SF | Approximate % of SF | Annual UW Rent | % of Total Annual UW Rent | Annual UW Rent PSF | Lease Expiration |
Major Tenants | |||||||
Prime Surgical Affiliates | NR/NR/NR | 9,047 | 9% | $334,380 | 9% | $36.96 | 5/15/2025 |
RadNet Management | NR/NR/NR | 7,090 | 7% | $238,953 | 7% | $33.70 | 9/30/2018 |
Keith Brookenthal M.D.(3) | NR/NR/NR | 7,054 | 7% | $241,247 | 7% | $34.20 | 11/30/2023 |
Providence Tarzana Medical Center | NR/NR/NR | 5,100 | 5% | $165,497 | 5% | $32.45 | 12/31/2016 |
Valley Pediatric Medical Group | NR/NR/NR | 4,608 | 4% | $146,028 | 4% | $31.69 | 2/28/2020 |
Subtotal/Wtd. Avg. | 32,899 | 32% | $1,126,105 | 31% | $34.23 | ||
Other Tenants | 70,109 | 68% | $2,528,829 | 69% | $36.07 | ||
Vacant Space | 0 | 0% | $0 | 0% | $0.00 | ||
Total/Wtd. Avg. | 103,008 | 100% | $3,654,934 | 100% | $35.48 |
(1) | Information is based on the underwritten rent roll. | |
(2) | Certain ratings are those of the parent company whether or not the parent guarantees the lease. | |
(3) | Keith Brookenthal M.D. subleases 1,038 SF to Athletic Physical Therapy, Inc. until December 30, 2015. |
The following table presents certain information relating to the lease rollover schedule at the West Valley Medical Center Property:
Lease Rollover Schedule(1)(2) | ||||||||
Year | # of Leases Rolling | SF Rolling | UW Rent PSF Rolling(3) | Approx. % of Total SF Rolling | Approx. Cumulative % of SF Rolling | Total UW Rent Rolling | Approx. % of Total Rent Rolling | Approx. Cumulative % of Total Rent Rolling |
MTM | 1 | 2,888 | $22.29 | 3% | 3% | $64,368 | 2% | 2% |
2015 | 3 | 4,662 | $31.52 | 5% | 7% | $146,930 | 4% | 6% |
2016 | 6 | 13,275 | $35.28 | 13% | 20% | $468,405 | 13% | 19% |
2017 | 10 | 12,540 | $36.23 | 12% | 32% | $454,366 | 12% | 31% |
2018 | 7 | 13,875 | $36.55 | 13% | 46% | $507,089 | 14% | 45% |
2019 | 9 | 14,803 | $36.23 | 14% | 60% | $536,270 | 15% | 60% |
2020 | 6 | 12,539 | $33.49 | 12% | 72% | $419,910 | 11% | 71% |
2021 | 1 | 3,217 | $33.60 | 3% | 76% | $108,091 | 3% | 74% |
2022 | 3 | 6,720 | $35.10 | 7% | 82% | $235,888 | 6% | 80% |
2023 | 2 | 8,100 | $34.61 | 8% | 90% | $280,357 | 8% | 88% |
2024 | 1 | 1,342 | $36.00 | 1% | 91% | $48,312 | 1% | 89% |
2025 | 1 | 9,047 | $36.96 | 9% | 100% | $334,380 | 9% | 99% |
2026 | 0 | 0 | $0.00 | 0% | 100% | $0 | 0% | 99% |
2027 | 1 | 0 | $0.00 | 0% | 100% | $50,568 | 1% | 100% |
2028 & Beyond | 0 | 0 | $0.00 | 0% | 100% | $0 | 0% | 100% |
Vacant | 0 | 0 | $0.00 | 0% | 100% | $0 | 0% | 100% |
Total/Wtd. Avg. | 51 | 103,008 | $35.48 | 100% | $3,654,934 | 100% |
(1) | Information is based on the underwritten rent roll. | |
(2) | Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the subject lease and that are not considered in the lease rollover schedule. | |
(3) | Wtd. Avg. UW Rent PSF Rolling excludes vacant space. |
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MSC 2015-MS1 | West Valley Medical Center |
The Market. The West Valley Medical Center Property is located in the San Fernando Valley Encino submarket of Los Angeles, Los Angeles County, California. As of September 30, 2014, the submarket had an overall office vacancy rate of 11.1% and an average asking annual lease rate of $27.00 PSF. As of September 30, 2014, the medical office supply within a five-mile radius of the West Valley Medical Center Property had a 13.3% availability rate and an average annual lease rate of $31.92 PSF.
The following table presents recent occupancy and leasing data at competitive medical office buildings with respect to the West Valley Medical Center Property:
Competitive Property Summary | ||||||||
Property Name/Address | Year Built | Occ. | Size (SF) | Tenant Name(1) | Lease Size (SF) | Lease Date | Lease Term (Yrs.) | Annual Base Rent PSF |
Encino Medical Plaza 5400 Balboa Boulevard Encino, CA | 1973 | 93% | 68,429 | Lewis R. Weintraub, M.D. Roger Friedman, Inc. BH Skin Inc. Rubio Optical, Inc. | 1,477 2,209 2,209 2,209 | Jan-15 Jun-14 May-14 May-14 | 2 5 3 5 | $37.80 $33.00 $32.40 $42.00 |
Ventura Libbit Building 16311 Ventura Boulevard Encino, CA | 1980 | 100% | 172,619 | Vacant (Medical Office) Vacant | 640 1,240 | Dec-14 Dec-14 | 0 0 | $33.00 $33.00 |
Encino Medical Tower 16260 Ventura Blvd Encino, CA | 1964 | 96% | 60,529 | Vacant Vacant | 4,000 1,050 | Dec-14 Dec-14 | 0 0 | $34.20 $34.20 |
Los Encinos Office Building 17609 Ventura Boulevard Encino, CA | 1980 | 86% | 41,588 | Vacant (Medical) Vacant (Office/Medical) MZMZ Corporation | 3,356 1,500 2,498 | Dec-14 Dec-14 Jul-13 | 0 0 5 | $34.20 $30.00 $25.20 |
Encino Woods Building 17525 Ventura Blvd Encino, CA | 1980 | 82% | 38,632 | Vacant (Office) Vacant (Medical Office) | 4,333 1,798 | Dec-14 Dec-14 | 0 0 | $22.20 $31.20 |
Encino Professional Building 16500 Ventura Blvd Encino, CA | 1985 | 85% | 31,534 | Vacant (Medical) Vacant (Medical) | 1,725 1,785 | Dec-14 Dec-14 | 0 0 | $33.00 $34.80 |
Sherman Oaks Medical Center 4835-4849 Van Nuys Boulevard Sherman Oaks, CA | 1954 | 90% | 28,692 | Vacant Unilab Corporation Philip Conwisar M.D., Inc. California Neuroscience Research Medical | 1,498 1,001 2,986 2,187 | Dec-14 Jul-14 Sep-13 Jan-13 | 0 3 1 5 | $28.20 $34.20 $27.60 $27.60 |
Source: Appraisal | ||
(1) | “Vacant” tenant names may reference occupied tenant spaces that are expected to become vacant. |
Operating History and Underwritten Cash Flow.The following table presents certain information relating to the Underwritten Cash Flow at the West Valley Medical Center Property:
Cash Flow Analysis | |||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | 2014 | UW | UW PSF | ||||||||||
Base Rent(1) | $3,167,152 | $3,290,010 | $3,249,829 | $3,079,730 | $3,045,331 | $3,149,802 | $3,654,934 | $35.48 | |||||||||
Total Recoveries | $123,503 | $229,334 | $382,942 | $107,574 | $135,372 | $289,096 | $157,044 | $1.52 | |||||||||
Other Income | $736,850 | $700,034 | $718,788 | $694,438 | $670,595 | $711,139 | $779,711 | $7.57 | |||||||||
Discounts Concessions | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0.00 | |||||||||
Less Vacancy & Credit Loss | $0 | $0 | $0 | $0 | $0 | $0 | ($234,177) | ($2.27) | |||||||||
Effective Gross Income | $4,027,505 | $4,219,378 | $4,351,559 | $3,881,742 | $3,851,298 | $4,150,037 | $4,357,512 | $42.30 | |||||||||
Total Operating Expenses | $1,399,369 | $1,375,757 | $1,393,545 | $1,387,029 | $1,358,961 | $1,473,511 | $1,555,453 | $15.10 | |||||||||
Net Operating Income | $2,628,136 | $2,843,621 | $2,958,014 | $2,494,713 | $2,492,337 | $2,676,526 | $2,802,059 | $27.20 | |||||||||
Capital Expenditures | $0 | $0 | $0 | $0 | $0 | $0 | $20,570 | $0.20 | |||||||||
TI/LC | $0 | $0 | $0 | $0 | $0 | $0 | $320,889 | $3.12 | |||||||||
Net Cash Flow | $2,628,136 | $2,843,621 | $2,958,014 | $2,494,713 | $2,492,337 | $2,676,526 | $2,460,601 | $23.89 | |||||||||
Occupancy % | 94.0% | 100.0% | 98.0% | 90.7% | 97.3% | 100.0% | 94.9% | ||||||||||
NOI DSCR | 2.40x | 2.60x | 2.70x | 2.28x | 2.28x | 2.44x | 2.56x | ||||||||||
NCF DSCR | 2.40x | 2.60x | 2.70x | 2.28x | 2.28x | 2.44x | 2.25x | ||||||||||
NOI Debt Yield | 9.7% | 10.5% | 11.0% | 9.2% | 9.2% | 9.9% | 10.4% | ||||||||||
NCF Debt Yield | 9.7% | 10.5% | 11.0% | 9.2% | 9.2% | 9.9% | 9.1% |
(1) | Historical Base Rent is net of vacancy. Certain contractual rent steps scheduled through August 2015 and totaling approximately $36,538 per year are underwritten. |
Escrows and Reserves. The West Valley Medical Center Borrower deposited $22,735 in escrow for annual real estate taxes at loan origination and is required to escrow 1/12 of the annual estimated tax payments monthly. The West Valley Medical Center Borrower is not required to escrow 1/12 of the
III-90 |
MSC 2015-MS1 | West Valley Medical Center |
annual estimated insurance premiums monthly (provided no event of default shall have occurred and is continuing and the West Valley Medical Center Borrower maintains insurance under an acceptable blanket insurance policy). The West Valley Medical Center Borrower deposited in escrow at loan origination (x) $275,700 for outstanding tenant improvement costs and leasing commissions with respect to the space leased to Café 101, Pediatric Care Physicians, Keith Brookenthal, Children’s Hospital of Los Angeles and Robert Rossi DDA, which amounts will be disbursed to the West Valley Medical Center Borrower upon certification, among other things, that the work to be funded by the requested disbursement has been completed in a good and workmanlike manner in accordance with applicable law and has been (or upon such disbursement will be) paid for in full and (y) $198,106 for outstanding free rent with respect to the space leased to Pediatric Care Physicians, Keith Brookenthal, Children’s Hospital of Los Angeles, Prime Surgical Affiliates, Ohad Ben-Yehuda and Ted D. Evans, which amounts will be disbursed to the West Valley Medical Center Borrower on a monthly basis in accordance with a schedule attached to the loan agreement as the applicable periods expire.
Lockbox and Cash Management.The West Valley Medical Center Mortgage Loan has a springing hard lockbox (i.e., the West Valley Medical Center Borrower has agreed to establish and maintain a hard lockbox following the commencement of a Cash Sweep Period for the West Valley Medical Center Mortgage Loan). The West Valley Medical Center Mortgage Loan has springing cash management. Provided a Cash Sweep Period is not continuing, the West Valley Medical Center Mortgage Loan does not have cash management. During the continuance of a Cash Sweep Period for the West Valley Medical Center Mortgage Loan, funds in the lockbox account are applied on each monthly payment date to pay debt service on the West Valley Medical Center Mortgage Loan, to fund the required reserves deposits as described above under “—Escrows and Reserves,” to disburse, provided an event of default has not occurred, to the West Valley Medical Center Borrower the monthly amount payable for operating expenses not otherwise paid or reserved for as described above under “—Escrows and Reserves” and referenced in the annual budget approved by the lender together with other amounts incurred by the West Valley Medical Center Borrower in connection with the operation and maintenance of the West Valley Medical Center Property and approved by the lender, and to disburse the remainder to an account to be held by the lender as additional security for the West Valley Medical Center Mortgage Loan.
A “Cash Sweep Period” will
(i) commence upon the occurrence of an event of default under the West Valley Medical Center Mortgage Loan and continue until the date on which the event of default under the West Valley Medical Center Mortgage Loan is cured, or
(ii) commence upon the date the lender determines that the DSCR on the West Valley Medical Center Mortgage Loan has fallen below 1.10x for six consecutive calendar months and continue until the date the lender determines that the DSCR on the West Valley Medical Center Mortgage Loan has been equal to or greater than 1.25x for the immediately preceding six consecutive calendar months.
Additional Secured Indebtedness (not including trade debts). Not permitted.
Mezzanine Loan and Preferred Equity. In addition, mezzanine financing (such financing, the “Permitted Mezzanine Financing”) secured by a pledge of the entire direct or indirect equity ownership interest in the West Valley Medical Center Borrower is permitted subject to various conditions, including among other conditions: (i) no event of default exists, (ii) the principal amount of the Permitted Mezzanine Financing will not result in an aggregate LTV ratio (including the West Valley Medical Center Mortgage Loan) greater than 60% (based upon a current appraisal of the West Valley Medical Center Property) or an aggregate DSCR (including the West Valley Medical Center Mortgage Loan) less than 1.35x, (iii) the mezzanine lender is an entity satisfying certain net worth and other requirements set forth in the related loan agreement, is approved by the lender under the West Valley Medical Center Mortgage Loan and enters into an intercreditor agreement acceptable to the lender under the West Valley Medical Center Mortgage Loan, (iv) the term of the Permitted Mezzanine Financing is co-terminous with or longer than the West Valley Medical Center Mortgage Loan and (v) the West Valley Medical Center Borrower delivers, if required by the lender under the West Valley Medical Center Mortgage Loan, a rating agency confirmation with respect to the Permitted Mezzanine Financing.
Release of Property. Not permitted
Terrorism Insurance. The West Valley Medical Center Borrower is required to obtain insurance against acts of terrorism or other similar acts or events (or “fire following”) to the extent such insurance is available in form and substance reasonably satisfactory to the lender (but in no event more than the sum of 100% of full replacement cost and 12 months of business interruption insurance). Notwithstanding the foregoing, for so long as the Terrorism Risk Insurance Program Reauthorization Act of 2007 (or any extension thereof or other federal government program with substantially similar protection) is in effect, the West Valley Medical Center Borrower is required to maintain, and the lender is required to accept, terrorism insurance which covers “covered acts” (as defined by such statute or other program), as full compliance as it relates to the risks required to be covered pursuant to the preceding sentence, so long as such statute or other program covers both domestic and foreign acts of terrorism.
III-91 |
MSC 2015-MS1 | Northeastern Apartments |
Mortgage Loan No. 11 – Northeastern Apartments |
Mortgage Loan Information | Mortgaged Property Information | ||||||
Mortgage Loan Seller: | MSMCH | Single Asset/Portfolio: | Single Asset | ||||
Original Balance: | $24,350,000 | Location: | Boston, MA 02115 | ||||
Cut-off Date Balance: | $24,208,794 | General Property Type: | Multifamily | ||||
% of Initial Pool Balance: | 2.7% | Detailed Property Type: | Student Housing | ||||
Loan Purpose: | Refinance | Title Vesting: | Fee | ||||
Sponsor: | Anwar N. Faisal | Year Built/Renovated: | 1900/2000; 2009-2014 | ||||
Mortgage Rate: | 3.790% | Size: | 82 Units | ||||
Note Date: | 2/18/2015 | Cut-off Date Balance per Unit: | $295,229 | ||||
First Payment Date: | 4/1/2015 | Maturity Date Balance per Unit: | $234,815 | ||||
Maturity Date: | 3/1/2025 | Property Manager: | Alpha Management Corporation (borrower related) | ||||
Original Term to Maturity: | 120 months | ||||||
Original Amortization Term: | 360 months | Underwriting and Financial Information | |||||
IO Period: | 0 months | UW NOI: | $1,881,062 | ||||
Seasoning: | 4 months | UW NOI Debt Yield: | 7.8% | ||||
Prepayment Provisions: | LO (28); DEF (88); O (4) | UW NOI Debt Yield at Maturity: | 9.8% | ||||
Lockbox/Cash Mgmt Status: | N/A | UW NCF DSCR: | 1.37x | ||||
Additional Debt Type: | N/A | Most Recent NOI: | $1,929,195 (12/31/2014) | ||||
Additional Debt Balance: | N/A | 2nd Most Recent NOI: | $1,717,591 (12/31/2013) | ||||
Future Debt Permitted (Type): | No (N/A) | 3rd Most Recent NOI: | $1,575,310 (12/31/2012) | ||||
Reserves | Occupancy Rate: | 100.0% (5/13/2015) | |||||
Type | Initial | Monthly | Cap | 2nd Most Recent Occupancy(1): | N/A | ||
RE Tax: | $23,780 | $11,890 | N/A | 3rd Most Recent Occupancy(1): | N/A | ||
Insurance: | $0 | Springing | N/A | Appraised Value (as of): | $40,000,000 (1/15/2015) | ||
Recurring Replacements: | $0 | $300 | N/A | Cut-off Date LTV Ratio: | 60.6% | ||
Deferred Maintenance: | $45,504 | $0 | N/A | Maturity Date LTV Ratio: | 48.1% | ||
Sources and Uses | ||||||
Sources | Proceeds | % of Total | Uses | Proceeds | % of Total | |
Loan Amount: | $24,350,000 | 100.0% | Reserves: | $69,284 | 0.3% | |
Closing Costs: | $215,407 | 0.9% | ||||
Return of Equity: | $24,065,310 | 98.8% | ||||
Total Sources: | $24,350,000 | 100.0% | Total Uses: | $24,350,000 | 100.0% |
(1) | Historical occupancy reports were not provided by the Northeastern Apartments Borrower. |
The Mortgage Loan.The eleventh largest mortgage loan (the “Northeastern Apartments Mortgage Loan”) is evidenced by a promissory note in the original principal amount of $24,350,000 secured by a first priority fee mortgage encumbering three multifamily buildings with a total of 82 apartments in Boston, Massachusetts (collectively, the “Northeastern Apartments Property”). The proceeds of the Northeastern Apartments Mortgage Loan were used to fund reserves, pay closing costs and recapitalize the Northeastern Apartments Borrower. The Northeastern Apartments Property was previously part of a portfolio of properties that secured a loan included in the MSC 2005-IQ10 transaction. That previous loan was repaid in November 2014 prior to the origination of the Northeastern Apartments Mortgage Loan. The Northeastern Apartments Property was unencumbered by mortgage debt at loan origination.
The Borrower and the Sponsor.The borrower is Zeena Realty LLC, (the “Northeastern Apartments Borrower”) a single-purpose Massachusetts limited liability company with a managing member that has two independent directors. The Northeastern Apartments Borrower is 100% indirectly owned and controlled by Anwar N. Faisal, the nonrecourse carve-out guarantor. Mr. Faisal owns approximately 1,200 apartment units and five commercial properties in the Boston metropolitan area, all of which are managed by his company Alpha Management Corporation.
The Property. The Northeastern Apartments Property consists of three multifamily apartment buildings, two of which are adjoining, and all of which are within a half mile of each other and adjacent to the Northeastern University Campus in the Fenway neighborhood of Boston, Massachusetts. The Northeastern Apartments Property caters primarily to students enrolled at Northeastern University. The buildings were constructed in 1900 and renovated in 2000 and 2009-2014 following the sponsor’s acquisition. The Northeastern Apartments Property contains a total of 82 apartments. Apartments are generally leased by students from September 1st through August 31st and generally require guarantees to be executed by students’ parents. Northeastern University currently leases 28 of the apartments for the 2014/2015 school year. The current Northeastern University lease began on September 1, 2014 and expires on August 31, 2015. The university has executed a lease for the same number of apartments at the Northeastern Apartments Property for the period of September 1, 2015 through August 31, 2016.
III-92 |
MSC 2015-MS1 | Northeastern Apartments |
The chart below shows the apartment mix at the Northeastern Apartments Property:
Unit Mix | ||||||||
Property Address | Studios | 1 BR | (1) | 2 BR | (1) | 3 BR | 4 BR | Avg. Size (SF) |
97 Saint Stephen Street | 16 | 14 | 10 | 1 | 1 | 581 | ||
132-134 Hemenway Street | 14 | 11 | 13 | 2 | 0 | 610 | ||
Total | 30 | 25 | 23 | 3 | 1 | 595 |
(1) | Approximately 13 of the 25 one-bedroom units and 12 of the 23 two-bedroom units are “split” units whereby a portion of the apartment living room has been converted to an additional sleeping area. |
The Market. The Northeastern Apartments Property is located in the Fenway neighborhood of Boston, Suffolk County, Massachusetts, adjacent to the Northeastern University campus. The Northeastern Apartments Property is located in the Central City/Back Bay/Beacon Hill apartment submarket. As of September 30, 2014, the overall Boston apartment vacancy rate was 4.2%, the submarket vacancy rate was 4.5%, and the average submarket monthly rental rate was $2,935 (compared to a Boston-wide average of $1,877). The appraisal reviewed competitive data for approximately 2,500 apartment units in buildings ranging from 5 units to approximately 500 units. Many of the competitive properties are student housing oriented. Consensus occupancy rates for the most competitive properties were estimated to be 97% to 99%. The appraisal noted that historically these occupancy rates have varied minimally due to student demand. Additional supply in the submarket averaged approximately 221 new units per year between 2008 and 2013. The appraisal estimates new supply will average approximately 537 new units per year between 2013 and 2018, growing from approximately 23,376 units as of September 30, 2014 to approximately 25,695 units in 2018.
The Boston area is home to over 80 colleges and universities. Ten universities are located within a 10-mile radius of the city. Northeastern University, a private university which is the primary occupancy driver at the Northeastern Apartments Property, was founded in 1898 and offers graduate and undergraduate degrees in nine colleges and schools. The university had a total graduate and undergraduate enrollment of approximately 20,053 students in 2013.
Operating History and Underwritten Cash Flow.The following table presents certain information relating to the historical operating performance and the underwritten Cash Flow at the Northeastern Apartments Property:
Cash Flow Analysis | |||||||||||||
2011 | 2012 | 2013 | 2014 | UW | UW per Unit | ||||||||
Base Rent | $1,830,500 | $1,945,980 | $2,099,200 | $2,303,316 | $2,403,948 | $29,316 | |||||||
Total Recoveries | $0 | $0 | $0 | $0 | $0 | $0 | |||||||
Other Income(1) | $0 | $0 | $4,100 | $36,647 | $36,647 | $447 | |||||||
Discounts Concessions | $0 | $0 | $0 | $0 | $0 | $0.00 | |||||||
Less Vacancy & Credit Loss | $0 | $0 | $0 | $0 | ($120,197) | ($1,466) | |||||||
Effective Gross Income | $1,830,500 | $1,945,980 | $2,103,300 | $2,339,963 | $2,320,398 | $28,298 | |||||||
Total Operating Expenses | $370,535 | $370,670 | $385,709 | $410,768 | $439,336 | $5,358 | |||||||
Net Operating Income | $1,459,965 | $1,575,310 | $1,717,591 | $1,929,195 | $1,881,062 | $22,940 | |||||||
Capital Expenditures | $0 | $0 | $0 | $0 | $24,600 | $300 | |||||||
TI/LC | $0 | $0 | $0 | $0 | $0 | $0 | |||||||
Net Cash Flow | $1,459,965 | $1,575,310 | $1,717,591 | $1,929,195 | $1,856,462 | $22,640 | |||||||
Occupancy % | N/A | N/A | N/A | N/A | 95.0% | ||||||||
NOI DSCR | 1.07x | 1.16x | 1.26x | 1.42x | 1.38x | ||||||||
NCF DSCR | 1.07x | 1.16x | 1.26x | 1.42x | 1.37x | ||||||||
NOI Debt Yield | 6.0% | 6.5% | 7.1% | 8.0% | 7.8% | ||||||||
NCF Debt Yield | 6.0% | 6.5% | 7.1% | 8.0% | 7.7% |
(1) | Underwritten other income is based on amounts for the 2014 calendar year and is comprised of laundry income ($14,760), Comcast cable/media lease income ($14,687) and parking income ($7,200). |
III-93 |
MSC 2015-MS1 | Preferred Freezer - Vernon, CA |
Mortgage Loan No. 12 – Preferred Freezer - Vernon, CA |
Mortgage Loan Information | Mortgaged Property Information | ||||||
Mortgage Loan Seller: | MSMCH | Single Asset/Portfolio: | Single Asset | ||||
Original Balance: | $19,200,000 | Location: | Vernon, CA 90058 | ||||
Cut-off Date Balance: | $19,200,000 | General Property Type: | Industrial | ||||
% of Initial Pool Balance: | 2.2% | Detailed Property Type: | Warehouse | ||||
Loan Purpose: | Refinance | Title Vesting: | Fee | ||||
Sponsor: | Bernard Huberman; Daniel Rosenthal | Year Built/Renovated: | 2001/N/A | ||||
Mortgage Rate: | 4.220% | Size: | 103,000 SF | ||||
Note Date: | 5/1/2015 | Cut-off Date Balance per Unit: | $186 | ||||
First Payment Date: | 6/1/2015 | Maturity Date Balance per Unit: | $186 | ||||
Maturity Date: | 5/1/2025 | Property Manager: | Preferred Freezer | ||||
Original Term to Maturity: | 120 months | ||||||
Original Amortization Term: | 0 months | Underwriting and Financial Information | |||||
IO Period: | 120 months | UW NOI: | $1,873,529 | ||||
Seasoning: | 2 months | UW NOI Debt Yield: | 9.8% | ||||
Prepayment Provisions: | LO (26); DEF (87); O (7) | UW NOI Debt Yield at Maturity: | 9.8% | ||||
Lockbox/Cash Mgmt Status: | Springing/Springing | UW NCF DSCR: | 2.11x | ||||
Additional Debt Type: | N/A | Most Recent NOI: | $1,818,603 (12/31/2014) | ||||
Additional Debt Balance: | N/A | 2nd Most Recent NOI: | $1,823,857 (12/31/2013) | ||||
Future Debt Permitted (Type): | No (N/A) | 3rd Most Recent NOI: | $1,823,944 (12/31/2012) | ||||
Reserves(1) | Most Recent Occupancy: | 100.0% (3/30/2015) | |||||
Type | Initial | Monthly | Cap | 2nd Most Recent Occupancy: | 100.0% (12/31/2013) | ||
RE Tax: | $0 | Springing | N/A | 3rd Most Recent Occupancy: | 100.0% (12/31/2012) | ||
Insurance: | $0 | Springing | N/A | Appraised Value (as of): | $32,500,000 (2/12/2015) | ||
TI/LC: | $0 | Springing | N/A | Cut-off Date LTV Ratio: | 59.1% | ||
Maturity Date LTV Ratio: | 59.1% | ||||||
Sources and Uses | ||||||
Sources | Proceeds | % of Total | Uses | Proceeds | % of Total | |
Loan Amount: | $19,200,000 | 100.0% | Loan Payoff: | $14,000,816 | 72.9% | |
Closing Costs: | $295,500 | 1.5% | ||||
Return of Equity: | $4,903,685 | 25.5% | ||||
Total Sources: | $19,200,000 | 100.0% | Total Uses: | $19,200,000 | 100.0% |
(1) | A cash flow sweep is triggered upon the single tenant at the Preferred Freezer - Vernon, CA Property going dark, filing for bankruptcy or terminating its lease. |
The Mortgage Loan.The twelfth largest mortgage loan (the “Preferred Freezer - Vernon, CA Mortgage Loan”) is evidenced by a promissory note in the original principal balance of $19,200,000 and is secured by a first priority fee mortgage encumbering a 103,000 SF warehouse and distribution center located in Vernon, CA (the “Preferred Freezer - Vernon, CA Property”). The proceeds of the Preferred Freezer - Vernon, CA Mortgage Loan were used to refinance a previous loan of approximately $14,000,816 secured by the Preferred Freezer - Vernon, CA Property, pay closing costs, and return equity to the Preferred Freezer - Vernon, CA Borrower. The previous loan secured by the Preferred Freezer - Vernon, CA Property was included in the WBCMT 2005-C20 transaction.
The Borrower and the Sponsor.The borrower is BLT Alameda Vernon Freezer LP (the “Preferred Freezer - Vernon, CA Borrower”), a recycled single-purpose California limited partnership. The Preferred Freezer - Vernon, CA Borrower is majority owned and controlled by the Bernard Huberman Trust and the Daniel Rosenthal Trust. The nonrecourse carve-out guarantors are Bernard Huberman and Daniel Rosenthal. Mr. Huberman and Mr. Rosenthal own and operate BLT Enterprises, a privately owned Southern California-based company that has specialized for over 20 years in the development and operation of material recovery facilities and transfer stations, as well as the processing and marketing of recyclable materials.
The Property. The Preferred Freezer - Vernon, CA Property consists of a 103,000 SF primarily refrigerated warehouse and distribution center constructed in 2001 and 100% leased to Preferred Freezer Services of Vernon, LLC, a subsidiary of Preferred Freezer Services, a private Chatham, New Jersey-based cold storage provider which operates approximately 35 warehouse facilities in the United States. As of September 30, 2014, Preferred Freezer Services reported total assets of $181.6 million, total liabilities of $107.6 million, and member’s capital of $74.0 million. The Preferred Freezer lease commenced on July 1, 2015 and has a current expiration date of June 30, 2030, with four five-year lease renewal options. The Preferred Freezer - Vernon, CA Property contains approximately 76,950 SF of freezer warehouse space and approximately 26,000 SF of refrigerated loading dock space. Clear heights are 45 feet and there are 15 dock-high loading doors. Total freezer capacity is approximately 4.1 million cubic feet.
III-94 |
MSC 2015-MS1 | Preferred Freezer - Vernon, CA |
The Market. The Preferred Freezer - Vernon, CA Property is located in Vernon, Los Angeles County, California, approximately two miles south of downtown Los Angeles. The Santa Monica Freeway (I-10) is located approximately two miles north. The Long Beach Freeway (SR-710) is located approximately four miles east. The Harbor Freeway (SR-110) is located approximately 2.7 miles west and the Glen Anderson Freeway (SR-105) is located approximately 4.5 miles south. Vernon is primarily an industrial city consisting almost entirely of warehouses and factories. As of December 31, 2014, the greater Los Angeles industrial market had a 3.2% vacancy rate and the Vernon area industrial market had a 2.4% vacancy rate.
Competitive properties to the Preferred Freezer - Vernon, CA Property are shown in the table below.
Competitive Property Summary | |||||||||||||||||||
Property Name/Address | Property Size (SF) | Year Built | Clear Height (Ft.) | Occ. | Tenant Name | Lease Size (SF) | Lease Date | Lease Term (Yrs.) | Rent PSF/Yr. (1) | ||||||||||
3000-3090 E. Washington Boulevard Los Angeles, CA | 290,260 | 2008 | 30 | 100% | Harvest Sensations | 47,056 | 6/1/2014 | 10 | $15.72 | ||||||||||
3000-3090 E. Washington Boulevard Los Angeles, CA | 290,260 | 2008 | 42 | 100% | 99 Cent Only Store | 120,634 | 5/1/2013 | 15 | $14.28 | ||||||||||
3185 E. Washington Boulevard Los Angeles, CA | 59,207 | 2006 | 24 | 100% | Zions Market | 59,207 | 3/9/2013 | 10 | $13.20 | ||||||||||
2330 57th Street Vernon, CA | 216,965 | 1975 | 28 | 100% | Greenwave Foods | 50,971 | 10/1/2012 | 5 | $12.96 | ||||||||||
14900 Innovation Riverside, CA | 682,800 | 2007 | 35 | 100% | Fresh & Easy | 682,800 | 4/1/2011 | 15 | $17.52 | ||||||||||
3251 De Forest Drive Mira Loma, CA | 679,077 | 1995 | 32 | 100% | Confidential | 53,907 | 6/1/2010 | 5.33 | $17.76 | ||||||||||
3425 E. Vernon Avenue Vernon, CA | 120,000 | 1974/2004 | 32 | 53% | Active Listing | 56,307 | N/A | 5-20 | $15.00 |
Source: Appraisal
(1) | The appraisal notes the comparable properties are leased at rates between approximately $0.40 and $0.67 per cubic foot of storage space. The appraiser estimated market rent based on this metric of $0.48 per cubic foot for the Preferred Freezer - Vernon, CA Property. The underwritten rent based on a July 1, 2015 rent step equates to approximately $0.485 per cubic foot of storage space. |
Operating History and Underwritten Cash Flow.The following table presents certain information relating to the Underwritten Net Cash Flow at the Preferred Freezer - Vernon, CA Property:
Cash Flow Analysis | |||||||||||||
2011 | 2012 | 2013 | 2014 | UW(1) | UW PSF | ||||||||
Base Rent | $1,825,690 | $1,825,690 | $1,825,690 | $1,825,690 | $1,987,973 | $19.30 | |||||||
Total Recoveries | $0 | $0 | $0 | $0 | $300,906 | $2.92 | |||||||
Other Income | $0 | $0 | $0 | $0 | $0 | $0.00 | |||||||
Discounts Concessions | $0 | $0 | $0 | $0 | $0 | $0.00 | |||||||
Less Vacancy & Credit Loss | $0 | $0 | $0 | $0 | ($114,444) | ($1.11) | |||||||
Effective Gross Income | $1,825,690 | $1,825,690 | $1,825,690 | $1,825,690 | $2,174,435 | $21.11 | |||||||
Total Expenses | $1,626 | $1,746 | $1,833 | $7,087 | $300,906 | $2.92 | |||||||
Net Operating Income | $1,824,064 | $1,823,944 | $1,823,857 | $1,818,603 | $1,873,529 | $18.19 | |||||||
Capital Expenditures | $0 | $0 | $0 | $0 | $22,280 | $0.22 | |||||||
TI/LC | $0 | $0 | $0 | $0 | $116,390 | $1.13 | |||||||
Net Cash Flow | $1,824,064 | $1,823,944 | $1,823,857 | $1,818,603 | $1,734,860 | $16.84 | |||||||
Occupancy% | 100.0% | 100.0% | 100.0% | 100.0% | 95.0% | ||||||||
NOI DSCR | 2.22x | 2.22x | 2.22x | 2.21x | 2.28x | ||||||||
NCF DSCR | 2.22x | 2.22x | 2.22x | 2.21x | 2.11x | ||||||||
NOI Debt Yield | 9.5% | 9.5% | 9.5% | 9.5% | 9.8% | ||||||||
NCF Debt Yield | 9.5% | 9.5% | 9.5% | 9.5% | 9.0% |
(1) | The underwritten base rent reflects a contractual rent step effective July 1, 2015. Until the July 1, 2015 rent step, the contractual base rent is $17.73 PSF per year, or $1,825,690. |
III-95 |
MSC 2015-MS1 | Saticoy Plaza |
Mortgage Loan No. 13 – Saticoy Plaza |
Mortgage Loan Information | Mortgaged Property Information | ||||||
Mortgage Loan Seller: | MSMCH | Single Asset/Portfolio: | Single Asset | ||||
Original Balance: | $19,000,000 | Location: | Van Nuys, CA 91406 | ||||
Cut-off Date Balance: | $19,000,000 | General Property Type: | Retail | ||||
% of Initial Pool Balance: | 2.1% | Detailed Property Type: | Shadow Anchored | ||||
Loan Purpose: | Refinance | Title Vesting: | Fee | ||||
Sponsor: | Nasser Moradian | Year Built/Renovated: | 1986/2005 | ||||
Mortgage Rate: | 4.370% | Size: | 61,548 SF | ||||
Note Date: | 6/3/2015 | Cut-off Date Balance per Unit: | $309 | ||||
First Payment Date: | 8/1/2015 | Maturity Date Balance per Unit: | $309 | ||||
Maturity Date: | 7/1/2025 | Property Manager: | Nass, Inc. (borrower related) | ||||
Original Term to Maturity: | 120 months | ||||||
Original Amortization Term: | 0 months | Underwriting and Financial Information | |||||
IO Period: | 120 months | UW NOI: | $1,588,173 | ||||
Seasoning: | 0 months | UW NOI Debt Yield: | 8.4% | ||||
Prepayment Provisions: | LO (24); DEF (89); O (7) | UW NOI Debt Yield at Maturity: | 8.4% | ||||
Lockbox/Cash Mgmt Status: | Springing/Springing | UW NCF DSCR: | 1.76x | ||||
Additional Debt Type: | N/A | Most Recent NOI: | $1,409,833 (12/31/2014) | ||||
Additional Debt Balance: | N/A | 2nd Most Recent NOI: | $1,174,305 (12/31/2013) | ||||
Future Debt Permitted (Type): | No (N/A) | 3rd Most Recent NOI: | $1,266,525 (12/31/2012) | ||||
Reserves | Most Recent Occupancy: | 100.0% (6/3/2015) | |||||
Type | Initial | Monthly | Cap | 2nd Most Recent Occupancy: | N/A | ||
RE Tax: | $53,840 | $8,973 | N/A | 3rd Most Recent Occupancy: | N/A | ||
Insurance: | $9,633 | $1,376 | N/A | Appraised Value (as of): | $33,000,000 (3/18/2015) | ||
TI/LC: | $100,000 | Springing | $100,000 | Cut-off Date LTV Ratio: | 57.6% | ||
Free Rent Reserve: | $35,400 | $0 | N/A | Maturity Date LTV Ratio: | 57.6% |
Sources and Uses | ||||||
Sources | Proceeds | % of Total | Uses | Proceeds | % of Total | |
Loan Amount: | $19,000,000 | 100.0% | Loan Payoff: | $13,870,657 | 73.0% | |
Reserves: | $198,873 | 1.0% | ||||
Closing Costs: | $152,857 | 0.8% | ||||
Return of Equity: | $4,777,613 | 25.1% | ||||
Total Sources: | $19,000,000 | 100.0% | Total Uses: | $19,000,000 | 100.0% |
The Mortgage Loan.The thirteenth largest mortgage loan (the “Saticoy Plaza Mortgage Loan”) is evidenced by a promissory note in the original principal balance of $19,000,000 and is secured by a first priority fee mortgage encumbering a 61,548 SF shadow anchored retail center located in Van Nuys, CA (the “Saticoy Plaza Property”). The proceeds of the Saticoy Plaza Mortgage Loan were used to refinance a previous loan of approximately $13,870,657 secured by the Saticoy Plaza Property, pay closing costs, and return equity to the Saticoy Plaza Borrower. The previous loan secured by the Saticoy Plaza Property was included in the MLMT 2005-CIP1 transaction.
The Borrower and the Sponsor.The borrower is Saticoy Plaza, LLC (the “Saticoy Plaza Borrower”), a recycled single-purpose California limited liability company. The Saticoy Plaza Borrower is 100% indirectly owned and controlled by Nasser Moradian, the nonrecourse carve-out guarantor. Mr. Moradian owns and operates Westlake Village, CA-based Nass, Inc., a real estate management corporation.
The Property.The Saticoy Plaza Property consists of a 61,548 SF retail center shadow anchored by an approximately 44,095 SF Ralph’s supermarket. The Ralph’s supermarket, which is not collateral for the Saticoy Plaza Mortgage Loan, is tenant owned and was recently renovated. The center consists of two in-line buildings separated by the Ralph’s and four outparcels. The Saticoy Plaza Property was constructed in 1986 and renovated in 2005. The Saticoy Plaza Property’s pro rata share of parking totals 326 spaces. The largest tenant at the Saticoy Plaza Property is Rite Aid, which tenant’s lease commenced in December 1985. The tenant currently pays $6.67 PSF (not including approximately $3.85 PSF of percentage rent paid in 2014) and the appraiser’s estimated market rent for the space is $30.00 PSF. Rite Aid has one remaining five-year lease renewal option through May 31, 2022.
III-96 |
MSC 2015-MS1 | Saticoy Plaza |
The following table presents a summary regarding major tenants at the Saticoy Plaza Property:
Tenant Summary | ||||||||
Tenant Name | Credit Rating (Fitch/Moody’s/S&P)(1) | Tenant SF | Approximate % of SF | Annual UW Rent | % of Total Annual UW Rent | Annual UW Rent PSF | Lease Expiration | 2014 Sales PSF |
Anchor/Major Tenants | ||||||||
Rite Aid | B/B3/B | 17,200 | 28% | $114,660 | 7% | $6.67 | 5/31/2017 | $415 |
House of Champions | NR/NR/NR | 6,254 | 10% | $112,572 | 7% | $18.00 | 8/31/2025 | N/A |
Chase Bank | A+/A3/A | 5,850 | 10% | $178,920 | 11% | $30.58 | 11/30/2023 | N/A |
AT&T Wireless | A-/Baa1/BBB+ | 3,000 | 5% | $126,000 | 8% | $42.00 | 7/31/2024 | N/A |
Mid Valley Vet | NR/NR/NR | 2,500 | 4% | $90,750 | 6% | $36.30 | 8/31/2024 | N/A |
Subtotal/Wtd. Avg. | 34,804 | 57% | $622,902 | 38% | $17.90 | |||
Other Tenants | 26,744 | 43% | $1,009,418 | 62% | $37.74 | |||
Vacant Space | 0 | 0% | $0 | 0% | ||||
Total/Wtd. Avg. | 61,548 | 100% | $1,632,320 | 100% | $26.52 |
(1) | Certain ratings are those of the parent company whether or not the parent guarantees the lease. |
The following table presents certain information relating to the lease rollover schedule at the Saticoy Plaza Property:
Lease Rollover Schedule | ||||||||
Year | # of Leases Rolling | SF Rolling | UW Rent PSF Rolling | Approx. % of Total SF Rolling | Approx. Cumulative % of SF Rolling | Total UW Rent Rolling | Approx. % of Total Rent Rolling | Approx. Cumulative % of Total Rent Rolling |
MTM | 0 | 0 | $0.00 | 0% | 0% | $0 | 0% | 0% |
2015 | 2 | 1,957 | $36.82 | 3% | 3% | $72,049 | 4% | 4% |
2016 | 6 | 7,862 | $33.38 | 13% | 16% | $262,454 | 16% | 20% |
2017 | 2 | 18,700 | $8.78 | 30% | 46% | $164,160 | 10% | 31% |
2018 | 3 | 5,431 | $48.32 | 9% | 55% | $262,449 | 16% | 47% |
2019 | 5 | 7,340 | $28.61 | 12% | 67% | $209,970 | 13% | 59% |
2020 | 1 | 1,800 | $33.00 | 3% | 70% | $59,400 | 4% | 63% |
2021 | 0 | 0 | $0.00 | 0% | 70% | $0 | 0% | 63% |
2022 | 0 | 0 | $0.00 | 0% | 70% | $0 | 0% | 63% |
2023 | 1 | 5,850 | $30.58 | 10% | 80% | $178,920 | 11% | 74% |
2024 | 2 | 5,500 | $39.41 | 9% | 88% | $216,750 | 13% | 87% |
2025 | 2 | 7,108 | $24.54 | 12% | 100% | $174,447 | 11% | 98% |
2026 | 1 | 0 | $0.00 | 0% | 100% | $31,721 | 2% | 100% |
2027 | 0 | 0 | $0.00 | 0% | 100% | $0 | 0% | 100% |
2028 & Beyond | 0 | 0 | $0.00 | 0% | 100% | $0 | 0% | 100% |
Vacant | 0 | 0 | $0.00 | 0% | 100% | $0 | 0% | 100% |
Total/Wtd. Avg. | 25 | 61,548 | $26.52 | 100% | $1,632,320 | 100% |
III-97 |
MSC 2015-MS1 | Saticoy Plaza |
The Market. The Saticoy Plaza Property is located in Van Nuys, Los Angeles County, California, within the Van Nuys submarket of the San Fernando Valley. As of December 31, 2014, the submarket had an 8.1% retail vacancy rate and the average rent was $22.32 PSF, annualized. Estimated 2015 population within a three-mile radius is 259,005 people and 2015 estimated average household income within a three-mile radius is $66,409.
Competitive properties to the Saticoy Plaza Property are shown in the table below.
Competitive Property Summary | ||||||||
Property Name/Address | Year Built | Occ. | GLA (SF) | Tenant Name | Lease Area (SF) | Lease Date | Lease Term (Yrs.) | Annual Base Rent PSF |
Strip Retail Center 13300 Victory Boulevard Van Nuys, CA | 1984 | 90% | 14,126 | UPS New Shop Tenant Vacant | 1,814 976 1,461 | Apr-12 Mar-13 Mar-15 | 10.0 5.0 --- | $21.00 $27.00 $30.00 |
Island Pacific Plaza 14417 Roscoe Boulevard Van Nuys, CA | 1983 | 58% | 19,720 | Retail Tenant Vacant | 1,650 2,500 | Mar-13 Mar-15 | 3.0 --- | $30.00 $24.00 |
Unanchored Retail Center 5600-5634 Van Nuys Boulevard Van Nuys, CA | 1949 | 88% | 17,655 | Pizza Rev Auto Ins. of New Mex. Vacant | 2,772 2,100 2,100 | Aug-13 Oct-14 Mar-15 | 5.0 5.0 --- | $30.60 $19.80 $33.00 |
4821 Lankershim NWC Lankershim & Camarillo St. North Hollywood, CA | 1937 | 86% | 20,823 | Petco Check N’ Go Vacant | 7,000 825 2,200 | Feb-13 Sep-13 Mar-15 | 10.0 2.0 --- | $27.96 $58.20 $30.00 |
Orchards at University Square 9000-9020 Reseda Boulevard Northridge, CA | 2015 | 100% | 12,554 | Starbucks Coffee Flame Broiler Urbane Cafe Farmer Boys Food | 1,700 1,328 1,800 2,800 | Oct-14 Feb-15 Feb-15 Mar-15 | 10.0 10.0 10.0 20.0 | $52.56 $45.00 $48.96 $48.24 |
Neighborhood Retail Center 8232-8254 White Oak Avenue Northridge, CA | 1954 | 74% | 15,935 | Vacant Vacant | 1,280 1,950 | Mar-15 Mar-15 | --- --- | $33.00 $30.00 |
Boulevard Shops 9631-9725 Reseda Boulevard Northridge, CA | 1979 | 99% | 79,500 | Cigarette Shop Vacant | 890 890 | Mar-13 Mar-15 | 5.0 --- | $30.00 $27.00 |
Northridge Park Plaza SEC Devonshire St. & Reseda Blvd. Northridge, CA | 1961 | 86% | 21,485 | Tutti Fruiti Pacific Western Shik Do Rak Veterinary Hospital | 2,276 3,133 3,000 1,872 | Nov-13 Mar-14 Aug-14 Oct-14 | 5.0 2.0 10.0 5.0 | $30.00 $36.12 $33.84 $30.00 |
Source:Appraisal
Operating History and Underwritten Cash Flow.The following table presents certain information relating to the Underwritten Net Cash Flow at the Saticoy Plaza Property:
Cash Flow Analysis | |||||||||||||
2011 | 2012 | 2013 | 2014 | UW | UW PSF | ||||||||
Base Rent(1) | $1,204,626 | $1,206,163 | $1,137,842 | $1,357,266 | $1,632,320 | $26.52 | |||||||
Total Recoveries | $307,791 | $316,290 | $313,280 | $327,084 | $508,687 | $8.26 | |||||||
Other Income | $52,388 | $66,816 | $52,951 | $66,195 | $66,195 | $1.08 | |||||||
Discounts Concessions | $0 | $0 | $0 | $0 | $0 | $0.00 | |||||||
Less Vacancy & Credit Loss | $0 |
| $0 |
| $0 |
| $0 |
| ($107,050) |
| ($1.74) |
| |
Effective Gross Income | $1,564,805 | $1,589,270 | $1,504,073 | $1,750,545 | $2,100,152 | $34.12 | |||||||
Total Operating Expenses | $320,616 |
| $322,745 |
| $329,768 |
| $340,712 |
| $511,979 |
| $8.32 |
| |
Net Operating Income | $1,244,188 | $1,266,525 | $1,174,305 | $1,409,833 | $1,588,173 | $25.80 | |||||||
Capital Expenditures | $0 | $0 | $0 | $0 | $15,297 | $0.25 | |||||||
TI/LC | $0 |
| $0 |
| $0 |
| $0 |
| $95,399 |
| $1.55 |
| |
Net Cash Flow | $1,244,188 | $1,266,525 | $1,174,305 | $1,409,833 | $1,477,476 | $24.01 | |||||||
Occupancy % | N/A | N/A | N/A | N/A | 95.0% | ||||||||
NOI DSCR | 1.48x | 1.50x | 1.39x | 1.67x | 1.89x | ||||||||
NCF DSCR | 1.48x | 1.50x | 1.39x | 1.67x | 1.76x | ||||||||
NOI Debt Yield | 6.5% | 6.7% | 6.2% | 7.4% | 8.4% | ||||||||
NCF Debt Yield | 6.5% | 6.7% | 6.2% | 7.4% | 7.8% |
(1) | Historical Base Rent is net of vacancy. Certain contractual rent steps scheduled through March 2016 and totaling approximately $46,961 per year are underwritten. |
III-98 |
(THIS PAGE INTENTIONALLY LEFT BLANK)
III-99 |
MSC 2015-MS1 | Grapevine Town Center |
Mortgage Loan No. 14 – Grapevine Town Center |
Mortgage Loan Information | Mortgaged Property Information | ||||||
Mortgage Loan Seller: | MSMCH | Single Asset/Portfolio: | Single Asset | ||||
Original Balance: | $18,320,000 | Location: | Grapevine, TX 76051 | ||||
Cut-off Date Balance: | $18,294,326 | General Property Type: | Retail | ||||
% of Initial Pool Balance: | 2.1% | Detailed Property Type: | Anchored | ||||
Loan Purpose: | Refinance | Title Vesting: | Fee | ||||
Sponsor: | The Weitzman Group | Year Built/Renovated: | 1995; 1996; 1997/N/A | ||||
Mortgage Rate: | 4.155% | Size: | 207,004 SF | ||||
Note Date: | 5/7/2015 | Cut-off Date Balance per Unit: | $88 | ||||
First Payment Date: | 7/1/2015 | Maturity Date Balance per Unit: | $71 | ||||
Maturity Date: | 6/1/2025 | Property Manager: | Centcor Realty Services, Inc. | ||||
Original Term to Maturity: | 120 months | (borrower related) | |||||
Original Amortization Term: | 360 months | Underwriting and Financial Information | |||||
IO Period: | 0 months | UW NOI: | $2,109,462 | ||||
Seasoning: | 1 month | UW NOI Debt Yield: | 11.5% | ||||
Prepayment Provisions: | LO (25); DEF (91); O (4) | UW NOI Debt Yield at Maturity: | 14.4% | ||||
Lockbox/Cash Mgmt Status: | Springing/Springing | UW NCF DSCR: | 1.79x | ||||
Additional Debt Type: | N/A | Most Recent NOI: | $2,153,951 (2/28/2015 TTM) | ||||
Additional Debt Balance: | N/A | 2nd Most Recent NOI: | $1,935,115 (12/31/2013) | ||||
Future Debt Permitted (Type): | No (N/A) | 3rd Most Recent NOI: | $2,220,165 (12/31/2012) | ||||
Reserves | Most Recent Occupancy: | 87.5% (3/10/2015) | |||||
Type | Initial | Monthly | Cap | 2nd Most Recent Occupancy: | 86.7% (12/31/2013) | ||
RE Tax: | $252,385 | $50,477 | N/A | 3rd Most Recent Occupancy: | 89.7% (12/31/2012) | ||
Insurance: | $0 | Springing | N/A | Appraised Value (as of): | $31,000,000 (2/25/2015) | ||
Recurring Replacements: | $0 | $3,070 | N/A | Cut-off Date LTV Ratio: | 59.0% | ||
TI/LC: | $0 | $4,167 | $250,000 | Maturity Date LTV Ratio: | 47.3% | ||
Sources and Uses | ||||||
Sources | Proceeds | % of Total | Uses | Proceeds | % of Total | |
Loan Amount: | $18,320,000 | 100.0% | Loan Payoff: | $17,213,457 | 94.0% | |
Reserves: | $252,385 | 1.4% | ||||
Closing Costs: | $324,638 | 1.8% | ||||
Return of Equity: | $529,520 | 2.9% | ||||
Total Sources: | $18,320,000 | 100.0% | Total Uses: | $18,320,000 | 100.0% |
The Mortgage Loan.The fourteenth largest mortgage loan (the “Grapevine Town Center Mortgage Loan”) is evidenced by a promissory note in the original principal balance of $18,320,000 and is secured by a first priority fee mortgage encumbering a 207,004 SF anchored retail center located in Grapevine, TX (the “Grapevine Town Center Property”). The proceeds of the Grapevine Town Center Mortgage Loan wereused to refinance a previous loan of approximately $17,213,457 secured by the Grapevine Town Center Property, fund escrows, pay closing costs, and return equity to the Grapevine Town Center Borrower.
The Borrower and the Sponsor.The borrower is Tate/114 Shopping Center, Ltd. (the “Grapevine Town Center Borrower”), a single-purpose Texas limited partnership. The Grapevine Town Center Borrower is partially indirectly owned and controlled by Herbert D. Weitzman, the nonrecourse carve-out guarantor. Mr. Weitzman’s recourse guaranty is limited to any voluntary bankruptcy of the Grapevine Town Center Borrower. Mr. Weitzman is Chairman of The Weitzman Group and Cencor Realty Services, a Dallas-based commercial real estate owner and manager. The firms manage over 21 million SF of retail space in Texas.
The Property.The Grapevine Town Center Property consists of a 207,004 SF power center anchored by an Office Depot, a Big Lots and a Ross Dress for Less and shadow-anchored by a 116,000 SF Target. The Target store, which is not collateral for the Grapevine Town Center Mortgage Loan, is tenant-owned. The center consists of six buildings, the largest of which is the in-line building attached to the Target shadow anchor. The Grapevine Town Center Property was constructed in phases between 1995 and 1997. The Grapevine Town Center Property has 986 surface parking spaces. The Grapevine Town Center Property is located on West State Highway 114, which has an estimated traffic count of 119,226 vehicles per day.
III-100 |
MSC 2015-MS1 | Grapevine Town Center |
The following table presents a summary regarding major tenants at the Grapevine Town Center Property:
Tenant Summary(1) | ||||||||
Tenant Name | Credit Rating (Fitch/Moody’s/S&P)(2) | Tenant SF | Approximate % of SF | Annual UW Rent | % of Total Annual UW Rent | Annual UW Rent PSF(3) | Lease Expiration | 2014 Sales PSF |
Anchor/Major Tenants | ||||||||
Office Depot | NR/NR/NR | 30,845 | 15% | $308,450 | 13% | $10.00 | 8/31/2020 | $118 |
Big Lots | NR/NR/BBB- | 30,390 | 15% | $273,510 | 12% | $9.00 | 1/31/2020 | N/A |
Ross Dress for Less | NR/NR/NR | 28,400 | 14% | $284,000 | 12% | $10.00 | 1/31/2019 | $153 |
Beall’s | NR/NR/NR | 25,027 | 12% | $337,865 | 14% | $13.50 | 9/30/2020 | N/A |
Cost Plus World Market | NR/Baa1/A- | 19,089 | 9% | $240,000 | 10% | $12.57 | MTM(4) | $161 |
Subtotal/Wtd. Avg. | 133,751 | 65% | $1,443,825 | 61% | $10.79 | |||
Other Tenants | 47,455 | 23% | $932,189 | 39% | $19.64 | |||
Vacant Space | 25,859 | 12% | $0 | 0% | $0.00 | |||
Total/Wtd. Avg. | 207,065 | 100% | $2,376,014 | 100% | $13.11 |
(1) | Information is based on the underwritten rent roll. |
(2) | Certain ratings are those of the parent company whether or not the parent guarantees the lease. |
(3) | Wtd. Avg. Annual UW Rent PSF Rolling excludes vacant space. |
(4) | The Cost Plus World Market tenant currently occupies its space on a month to month basis. The tenant’s lease expired on January 31, 2015 and currently pays “holdover” rent of $18.86 PSF. The tenant is underwritten based on its previous contractual rent of $12.57 PSF. |
The following table presents certain information relating to the lease rollover at the Grapevine Town Center Property.
Lease Rollover Schedule(1)(2) | ||||||||
Year | # of Leases Rolling | SF Rolling | UW Rent PSF Rolling(3) | Approx. % of Total SF Rolling | Approx. Cumulative % of SF Rolling | Total UW Rent Rolling | Approx. % of Total Rent Rolling | Approx. Cumulative % of Total Rent Rolling |
MTM | 1 | 19,089 | $12.57 | 9% | 9% | $240,000 | 10% | 10% |
2015 | 1 | 3,960 | $12.50 | 2% | 11% | $49,500 | 2% | 12% |
2016 | 2 | 6,735 | $20.23 | 3% | 14% | $136,230 | 6% | 18% |
2017 | 2 | 11,700 | $15.38 | 6% | 20% | $179,900 | 8% | 25% |
2018 | 1 | 3,000 | $19.00 | 1% | 21% | $57,000 | 2% | 28% |
2019 | 4 | 38,612 | $12.21 | 19% | 40% | $471,363 | 20% | 48% |
2020 | 5 | 93,910 | $11.97 | 45% | 85% | $1,124,421 | 47% | 95% |
2021 | 0 | 0 | $0.00 | 0% | 85% | $0 | 0% | 95% |
2022 | 0 | 0 | $0.00 | 0% | 85% | $0 | 0% | 95% |
2023 | 0 | 0 | $0.00 | 0% | 85% | $0 | 0% | 95% |
2024 | 1 | 4,200 | $28.00 | 2% | 88% | $117,600 | 5% | 100% |
2025 | 0 | 0 | $0.00 | 0% | 88% | $0 | 0% | 100% |
2026 | 0 | 0 | $0.00 | 0% | 88% | $0 | 0% | 100% |
2027 | 0 | 0 | $0.00 | 0% | 88% | $0 | 0% | 100% |
2028 & Beyond | 0 | 0 | $0.00 | 0% | 88% | $0 | 0% | 100% |
Vacant | 0 | 25,859 | $0.00 | 12% | 100% | $0 | 0% | 100% |
Total/Wtd. Avg. | 17 | 207,065 | $13.11 | 100% | $2,376,014 | 100% |
(1) | Information is based on the underwritten rent roll. |
(2) | Certain tenants may have termination options that are exercisable prior to the originally stated expiration date of the subject lease that are not considered in the lease rollover schedule. |
(3) | Wtd. Avg. Annual UW Rent PSF Rolling excludes vacant space. |
III-101 |
MSC 2015-MS1 | Grapevine Town Center |
The Market.The Grapevine Town Center Property is located in Grapevine, Tarrant County, Texas, approximately 20 miles northwest of the Dallas Central Business District and within the Mid Cities submarket. As of December 31, 2014, the submarket had a 6.6% retail vacancy rate, and the average rent was $13.53 PSF, annualized. Estimated 2015 population within a three-mile radius is 48,094 people, and 2015 estimated average household income within a three-mile radius is $107,911.
The following table presents a summary regarding the competitive properties to the Grapevine Town Center Property:
Competitive Property Summary | |||||||||
Property Name/Address | Property Size (SF) | Year Built | Anchor/Major Tenants | Occ. | Tenant Name | Lease Size (SF) | Lease Date | Rent PSF/Yr. | |
Grapevine Crossing 1501-1527 Northwest Highway Grapevine, TX | 125,381 | 2001/ 2005 | Academy Sports, Best Buy | 99% | Quoted Contract | --- | --- | $18-$27 | |
Park West Plaza 302 Park Boulevard Grapevine, TX | 82,977 | 1991/ 2005 | Tom Thumb | 99% | Scrubs Etc. Wise Guys Pizza Quoted Contract - In-line | 4,180 2,950 --- | Apr-14 Aug-14 --- | $22 $23 Low to mid $20s | |
Gateway Plaza I & II 2900-3100 East Southlake Blvd Southlake, TX | 372,811 | 2000 | Kohl’s | 95% | Not Disclosed Men’s Warehouse Quoted Asking - In-line | 2,600 6,000 --- | Mar-13 Aug-13 --- | $28 $27 $28 | |
Southlake Village 2110-2120 East Southlake Blvd Southlake, TX | 117,553 | 1996 | Kroger | 100% | Movie Trading Company Sally Lynn Home Quoted Contract - In-line | 4,393 2,530 --- | Oct-13 Dec-13 --- | $16 $18 Low teens to low $20s | |
Shops of Southlake 1201-1465 East Southlake Blvd Southlake, TX | 228,000 | 2006 | Central Market | 100% | Red Swagger Elos Aqua Studios Spring Free Trampoline Quoted Contract - In-line | 3,916 2,216 2,146 --- | Aug-13 Apr-14 Aug-14 --- | $29 $33 $35 Mid $20s - mid $30s |
Source: Appraisal
Operating History and Underwritten Cash Flow.The following table presents certain information relating to the Underwritten Net Cash Flow at the Grapevine Town Center Property:
Cash Flow Analysis | ||||||||||||||||
2011 | 2012 | 2013 | 2014 | 2/28/2015 TTM | UW | UW PSF | ||||||||||
Base Rent(1) | N/A | $2,526,827 | $2,483,808 | $2,266,758 | $2,306,725 | $2,838,617 | $13.71 | |||||||||
Total Recoveries | N/A | $839,295 | $772,710 | $900,064 | $903,702 | $974,121 | $4.70 | |||||||||
Other Income | N/A | $0 | $0 | $0 | $0 | $0 | $0.00 | |||||||||
Discounts Concessions | N/A | ($21,077) | ($85,232) | ($25,956) | ($25,956) | $0 | $0.00 | |||||||||
Less Vacancy & Credit Loss | N/A | $0 | $0 | $0 | $0 | ($584,264) | ($2.82) | |||||||||
Effective Gross Income | N/A | $3,345,045 | $3,171,286 | $3,140,866 | $3,184,471 | $3,228,474 | $15.59 | |||||||||
Total Expenses | N/A | $1,124,880 | $1,236,171 | $1,011,443 | $1,030,520 | $1,119,012 | $5.40 | |||||||||
Net Operating Income | N/A | $2,220,165 | $1,935,115 | $2,129,423 | $2,153,951 | $2,109,462 | $10.19 | |||||||||
Capital Expenditures | N/A | $0 | $0 | $0 | $0 | $36,840 | $0.18 | |||||||||
TI/LC | N/A | $0 | $0 | $0 | $0 | $161,511 | $0.78 | |||||||||
Net Cash Flow | N/A | $2,220,165 | $1,935,115 | $2,129,423 | $2,153,951 | $1,911,111 | $9.23 | |||||||||
Occupancy% | N/A | 89.7% | 86.7% | 87.5% | 87.5% | (2) | 83.7% | |||||||||
NOI DSCR | N/A | 2.08x | 1.81x | 1.99x | 2.01x | 1.97x | ||||||||||
NCF DSCR | N/A | 2.08x | 1.81x | 1.99x | 2.01x | 1.79x | ||||||||||
NOI Debt Yield | N/A | 12.1% | 10.6% | 11.6% | 11.8% | 11.5% | ||||||||||
NCF Debt Yield | N/A | 12.1% | 10.6% | 11.6% | 11.8% | 10.4% | ||||||||||
(1) | Historical Base Rent is net of vacancy. Certain contractual rent steps scheduled through January 2016 and totaling approximately $63,903 per year are underwritten. |
(2) | Based on a borrower rent roll dated 3/10/2015 |
III-102 |
(THIS PAGE INTENTIONALLY LEFT BLANK)
III-103 |
MSC 2015-MS1 | Campus Quarters |
Mortgage Loan No. 15 – Campus Quarters |
Mortgage Loan Information | Mortgaged Property Information | ||||||
Mortgage Loan Seller: | MSMCH | Single Asset/Portfolio: | Single Asset | ||||
Original Balance: | $18,000,000 | Location: | Mobile, AL 36608 | ||||
Cut-off Date Balance: | $18,000,000 | General Property Type: | Multifamily | ||||
% of Initial Pool Balance: | 2.0% | Detailed Property Type: | Student Housing | ||||
Loan Purpose: | Acquisition | Title Vesting: | Fee | ||||
Sponsor: | Michael P. Wheeler | Year Built/Renovated: | 2012/N/A | ||||
Mortgage Rate: | 4.570% | Size: | 165 Units | ||||
Note Date: | 5/26/2015 | Cut-off Date Balance per Unit: | $109,091 | ||||
First Payment Date: | 7/1/2015 | Maturity Date Balance per Unit: | $103,059 | ||||
Maturity Date: | 6/1/2022 | Property Manager: | Asset Campus Housing USA, LLC, contracted by ILM Operations, LLC (borrower related) | ||||
Original Term to Maturity: | 84 months | ||||||
Original Amortization Term: | 360 months | ||||||
IO Period: | 42 months | Underwriting and Financial Information | |||||
Seasoning: | 1 month | UW NOI: | $1,706,957 | ||||
Prepayment Provisions: | LO (25); DEF/YM1 (55); O (4) | UW NOI Debt Yield: | 9.5% | ||||
Lockbox/Cash Mgmt Status: | Springing/Springing | UW NOI Debt Yield at Maturity: | 10.0% | ||||
Additional Debt Type: | N/A | UW NCF DSCR: | 1.48x | ||||
Additional Debt Balance: | N/A | Most Recent NOI: | $1,726,423 (4/30/2015 TTM) | ||||
Future Debt Permitted (Type)(1): | Yes (Mezzanine) | 2nd Most Recent NOI: | $1,400,499 (12/31/2014) | ||||
3rd Most Recent NOI: | $1,404,009 (12/31/2013) | ||||||
Reserves | Most Recent Occupancy: | 94.6% (5/12/2015) | |||||
Type | Initial | Monthly | Cap | 2nd Most Recent Occupancy: | 91.8% (12/31/2014) | ||
RE Tax: | $128,226 | $18,318 | N/A | 3rd Most Recent Occupancy: | 70.7% (12/31/2013) | ||
Insurance: | $13,890 | $6,945 | N/A | Appraised Value (as of): | $24,400,000 (12/15/2014) | ||
Recurring Replacements: | $0 | $6,525 | N/A | Cut-off Date LTV Ratio: | 73.8% | ||
Other(2): | $100,000 | $0 | N/A | Maturity Date LTV Ratio: | 69.7% |
Sources and Uses | |||||||
Sources | Proceeds | % of Total | Uses | Proceeds | % of Total | ||
Loan Amount: | $18,000,000 | 74.0% | Purchase Price: | $23,662,468 | 97.2% | ||
Borrower Equity: | $6,333,007 | 26.0% | Reserves: | $242,116 | 1.0% | ||
Closing Costs: | $428,423 | 1.8% | |||||
Total Sources: | $24,333,007 | 100.0% | Total Uses: | $24,333,007 | 100.0% | ||
(1) | Future Mezzanine financing is permitted subject to a minimum combined 1.15x DSCR, a maximum combined 85.0% LTV and a minimum combined 7.5% debt yield. |
(2) | The lender holds a $100,000 debt service reserve. The reserve will be released to the Campus Quarters Borrower after the 24th month of the Campus Quarters Mortgage Loan term if there have been no events of defaults during that period. |
The Mortgage Loan.The fifteenth largest mortgage loan (the “Campus Quarters Mortgage Loan”) is evidenced by a promissory note in the original principal amount of $18,000,000 secured by a first priority fee mortgage encumbering a 165-unit student housing apartment complex in Mobile, Alabama (the “Campus Quarters Property”). The proceeds of the Campus Quarters Loan were used to acquire the Campus Quarters Property for a purchase price of approximately $23,973,073.
The Borrower and the Sponsor.The borrower is Mobile CQ Student Housing LLC (the “Campus Quarters Borrower”), a single-purpose Delaware limited liability company. The Campus Quarters Borrower is 50% indirectly owned by Michael P. Wheeler, the nonrecourse carve-out guarantor, and 50% indirectly owned by RS Campus, LLC, an affiliate of Red Starr Investments (“Red Starr”). Red Starr is a Harrison NY-based real estate investment firm.
The Property.The Campus Quarters Property is a 165-unit, 522-bed garden style student housing complex constructed in 2012. Units are rented fully furnished with TV stand, coffee table, couch, chairs, bar stools, full-size bed with frame, dresser, and desk and desk chair. All of the units feature a private patio or balcony area. Shared amenities include a resort style swimming pool, Precor equipped fitness room, iMac computer lab/lounge, media room, billiards room, beach volleyball, bike racks, barbecue areas, gated entry, and a stand up tanning bed. The Campus Quarters Property is located within walking distance of the University of South Alabama. As of a June 12, 2015 leasing report, the Campus Quarters Property was approximately 92.4% preleased for the 2015-2016 school year.
The University of South Alabama, a public university founded in 1963, enrolled approximately 16,055 students in 2014 and offers almost 100 undergraduate, graduate and doctoral degree programs. The university currently provides on-campus housing for approximately 2,284 students in six residence halls. No students are required to live on campus. University enrollment has increased from approximately 15,007 in 2010.
III-104 |
MSC 2015-MS1 | Campus Quarters |
The table below summarizes the Campus Quarters Property apartment mix.
Unit Mix | |||||||||||||
Type | No. of Units | No. of Bedrooms | Unit Size (SF) | Bedroom Occ. | Rent per Unit | Rent per Bed | |||||||
2BR/2BA | 45 | 90 | 810 | 97% | $1,170 | $585 | |||||||
3BR/3BA | 48 | 144 | 1,114 | 83% | $1,680 | $560 | |||||||
4BR/4.5BA | 72 | 288 | 1,472 | 95% | $2,060 | $515 | |||||||
Total/Wtd. Avg. | 165 | 522 | 1,187 | 92% | $1,707 | $539 | |||||||
Source: Appraisal
The Market.The Campus Quarters Property is located in Mobile, Mobile County, Alabama, within 1/2 mile of the University of South Alabama campus and approximately 8.5 miles west of the Mobile central business district. The University of South Alabama is the primary demand driver for the Campus Quarters Property. As of September 30, 2014, the overall Mobile apartment market had a 5.2% vacancy rate. The Mobile area currently has 295 apartment units under construction with another 774 units in planning. The appraiser indicated that no new student housing projects are proposed or under construction in the Campus Quarters Property neighborhood.
Comparable rental properties to the Campus Quarters Property are shown in the chart below:
Competitive Property Summary | ||||||||||||||
Property Name/Address | Size (Units) | Size (SF) | Year Built | Occupancy | Distance from Subject (Mi.) | Avg. Rent per Bed | ||||||||
The Grove 375 Cleverdon Parkway Mobile, AL | 384 | 403,200 | 2008 | N/A | 1.3 | $676 | ||||||||
Twin Oaks 6451 Old Shell Road Mobile, AL | 112 | 79,200 | 1971 | 96% | 1.3 | $113 | ||||||||
Robinwood 6001 Old Shell Road Mobile, AL | 136 | 78,200 | 1973 | 98% | 0.6 | $64 | ||||||||
Stone Ridge at Somerby Park 1200 Somerby Drive Mobile, AL | 317 | 305,550 | 2008 | 95% | 4.0 | $566 | ||||||||
The Edge 6201 Old Shell Road Mobile, AL | 157 | 190,070 | 2013 | N/A | 0.9 | $495 | ||||||||
Arlington Park 7070 Grelot Road Mobile, AL | 252 | 293,892 | 2002 | 93% | 4.0 | $262 | ||||||||
Source: Appraisal
Operating History and Underwritten Cash Flow.The following table presents certain information relating to the historical operating performance and the underwritten Cash Flow at the Campus Quarters Property:
Cash Flow Analysis(1) | |||||||||||||||
2011 | 2012 | 2013 | 2014 | 4/30/2015 TTM | UW | UW PSF | |||||||||
Base Rent | N/A | N/A | $2,615,913 | $2,753,592 | $2,951,850 | $3,259,860 | $19,757 | ||||||||
Total Recoveries | N/A | N/A | $0 | $0 | $0 | $0 | $0 | ||||||||
Other Income | N/A | N/A | $176,363 | $212,735 | $259,428 | $269,213 | $1,632 | ||||||||
Discounts Concessions | N/A | N/A | $0 | ($8,233) | ($2,252) | ($37,683) | ($228) | ||||||||
Less Vacancy & Credit Loss | N/A | N/A | $0 | $0 | $0 | ($228,190) | ($1,383) | ||||||||
Effective Gross Income | N/A | N/A | $2,792,276 | $2,958,094 | $3,209,026 | $3,263,200 | $19,777 | ||||||||
Total Operating Expenses | N/A | N/A | $1,388,267 | $1,557,595 | $1,482,603 | $1,556,243 | $9,432 | ||||||||
Net Operating Income | N/A | N/A | $1,404,009 | $1,400,499 | $1,726,423 | $1,706,957 | $10,345 | ||||||||
Capital Expenditures | N/A | N/A | $0 | $0 | $0 | $78,300 | $475 | ||||||||
Net Cash Flow | N/A | N/A | $1,404,009 | $1,400,499 | $1,726,423 | $1,628,657 | $9,871 | ||||||||
Occupancy % | N/A | N/A | 70.7% | 91.8% | 94.6% | 93.0% | |||||||||
NOI DSCR | N/A | N/A | 1.27x | 1.27x | 1.56x | 1.55x | |||||||||
NCF DSCR | N/A | N/A | 1.27x | 1.27x | 1.56x | 1.48x | |||||||||
NOI Debt Yield | N/A | N/A | 7.8% | 7.8% | 9.6% | 9.5% | |||||||||
NCF Debt Yield | N/A | N/A | 7.8% | 7.8% | 9.6% | 9.0% | |||||||||
(1) The Campus Quarters Property was constructed in 2012.
III-105 |
(THIS PAGE INTENTIONALLY LEFT BLANK)
APPENDIX IV
FORM OF DISTRIBUTION DATE STATEMENT
IV-1 |
(THIS PAGE INTENTIONALLY LEFT BLANK)
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
DISTRIBUTION DATE STATEMENT | ||||||||
Table of Contents | ||||||||
STATEMENT SECTIONS | PAGE(s) | |||||||
Certificate Distribution Detail | 2 | |||||||
Certificate Factor Detail | 3 | |||||||
Exchangeable Class Detail | 4 | |||||||
Reconciliation Detail | 5 | |||||||
Other Required Information | 6 | |||||||
Cash Reconciliation Detail | 7 | |||||||
Current Mortgage Loan and Property Stratification Tables | 8-10 | |||||||
Mortgage Loan Detail | 11 | |||||||
NOI Detail | 12 | |||||||
Principal Prepayment Detail | 13 | |||||||
Historical Detail | 14 | |||||||
Delinquency Loan Detail | 15 | |||||||
Specially Serviced Loan Detail | 16-17 | |||||||
Advance Summary | 18 | |||||||
Modified Loan Detail | 19 | |||||||
Historical Liquidated Loan Detail | 20 | |||||||
Historical Bond / Collateral Loss Reconciliation | 21 | |||||||
Interest Shortfall Reconciliation Detail | 22-23 | |||||||
Defeased Loan Detail | 24 | |||||||
Supplemental Reporting | 25 | |||||||
Depositor | Master Servicer | Special Servicer | Trust Advisor | |||||||||||||||
Morgan Stanley Capital I Inc. | Midland Loan Services | Midland Loan Services | Park Bridge Lender Services LLC | |||||||||||||||
1585 Broadway | A Division of PNC Bank, N.A. | A Division of PNC Bank, N.A. | 560 Lexington Avenue, 17th Floor | |||||||||||||||
New York, NY 10036 | 10851 Mastin Street, Building 82 | 10851 Mastin Street, Building 82 | New York, NY 10022 | |||||||||||||||
Overland Park, KS 66210 | Overland Park, KS 66210 | |||||||||||||||||
Contact: | ||||||||||||||||||
Contact: General Information Number | Heather Wagner | Contact: Heather Wagner | Contact: David Rodgers | |||||||||||||||
Phone Number: (212) 761-4000 | Phone Number: (913) 253-9570 | Phone Number: (913) 253-9570 | Phone Number: (212) 310-9821 | |||||||||||||||
This report is compiled by Wells Fargo Bank, N.A. from information provided by third parties. Wells Fargo Bank, N.A. has not independently confirmed the accuracy of the information.
Please visitwww.ctslink.com for additional information and special notices. In addition, certificateholders may register online for email notification when special notices are posted. For information or assistance please call 866-846-4526. | ||||||||||||||||||
Page 1 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Certificate Distribution Detail | ||||||||||||||||||||||||||
Class (2) | CUSIP | Pass- Through Rate | Original Balance | Beginning Balance | Principal Distribution | Interest Distribution | Prepayment Premium | Realized Loss/ Additional Trust Fund Expenses | Total Distribution | Ending Balance | Current Subordination Level (1) | |||||||||||||||
A-1 | 0.000000% | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||
A-2 | 0.000000% | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||
A-SB | 0.000000% | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||
A-3 | 0.000000% | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||
A-4 | 0.000000% | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||
A-S | 0.000000% | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||
B | 0.000000% | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||
C | 0.000000% | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||
D | 0.000000% | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||
E | 0.000000% | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||
F | 0.000000% | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||
G | 0.000000% | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||
V | 0.000000% | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||
R | 0.000000% | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||
Totals | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||||
Class | CUSIP | Pass-Through Rate | Original Notional Amount | Beginning Notional Amount | Interest Distribution | Prepayment Premium | Total Distribution | Ending Notional Amount | ||||||||||||||||||
X-A | 0.000000% | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||||||
(1) Calculated by taking (A) the sum of the ending certificate balance of all classes less (B) the sum of (i) the ending balance of the designated class and (ii) the ending certificate balance of all classes which are not subordinate to the designated class and dividing the result by (A).
(2) Class A-S, Class B, Class C all represent the “Regular Interest” of these respective classes. For details on how the balances and payments of these “Regular Interests” are split between their respective certificates and the Exchangable Class PST, please refer to page 4. | ||||||||||||||||||||||||||
Page 2 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Certificate Factor Detail | |||||||||
Class | CUSIP | Beginning | Principal | Interest | Prepayment | Realized Loss/ | Ending | ||
A-1 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | |||
A-2 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | |||
A-SB | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | |||
A-3 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | |||
A-4 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | |||
A-S | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | |||
B | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | |||
C | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | |||
D | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | |||
E | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | |||
F | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | |||
G | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | |||
V | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | |||
R | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | |||
Class | CUSIP | Beginning Notional Amount | Interest Distribution | Prepayment Premium | Ending Notional Amount | ||||
X-A | 0.00000000 | 0.00000000 | 0.00000000 | 0.00000000 | |||||
Page 3 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Exchangeable Class Detail | ||||||||||||||
Class\ Component | CUSIP | Pass-Through Rate | Original Balance | Beginning Balance | Principal Distribution | Interest Distribution | Prepayment Premium | Realized Loss/ Additional Trust Fund Expenses | Total Distribution | Ending Balance | ||||
A-S Regular Interest Breakdown | ||||||||||||||
A-S (Cert) | 0.000000% | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||
A-S (PST) | 0.000000% | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||
Totals | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||
B Regular Interest Breakdown | ||||||||||||||
B (Cert) | 0.000000% | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||
B (PST) | 0.000000% | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||
Totals | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||
C Regular Interest Breakdown | ||||||||||||||
C (Cert) | 0.000000% | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||
C (PST) | 0.000000% | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||
Totals | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||
Class PST Detail | ||||||||||||||
Class\ Component | CUSIP | Pass-Through Rate | Original Balance | Beginning Balance | Principal Distribution | Interest Distribution | Prepayment Premium | Realized Loss/ Additional Trust Fund Expenses | Total Distribution | Ending Balance | ||||
PST | 0.000000% | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||
Page 4 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Reconciliation Detail | ||||||||||||||||||||||
Principal Reconciliation | ||||||||||||||||||||||
Stated Beginning Principal Balance | Unpaid Beginning Principal Balance | Scheduled Principal | Unscheduled Principal | Principal Adjustments | Realized Loss | Stated Ending Principal Balance | Unpaid Ending Principal Balance | Current Principal Distribution Amount | ||||||||||||||
Total | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Certificate Interest Reconciliation | |||||||||||||||||||||||||
Class | Accrual Dates | Accrual Days | Accrued Certificate Interest | Net Aggregate Prepayment Interest Shortfall | Distributable Certificate Interest | Distributable Certificate Interest Adjustment | WAC CAP Shortfall | Additional Trust Fund Expenses | Interest Distribution | Remaining Unpaid Distributable Certificate Interest | |||||||||||||||
A-1 | 0 | 0 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||
A-2 | 0 | 0 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||
A-SB | 0 | 0 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||
A-3 | 0 | 0 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||
A-4 | 0 | 0 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||
X-A | 0 | 0 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | �� | ||||||||||||||
A-S | 0 | 0 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||
B | 0 | 0 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||
C | 0 | 0 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||
D | 0 | 0 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||
E | 0 | 0 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||
F | 0 | 0 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||
G | 0 | 0 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||||||||||||||
Totals | 0 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | ||||||||||||||||
Page 5 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Other Required Information | |||||||||||||||||||
Available Distribution Amount (1) | 0.00 | ||||||||||||||||||
Appraisal Reduction Amount | |||||||||||||||||||
Loan Number | Appraisal | Cumulative | Most Recent | ||||||||||||||||
Reduction | ASER | App. Red. | |||||||||||||||||
Effected | Amount | Date | |||||||||||||||||
Total | |||||||||||||||||||
(1) The Available Distribution Amount includes any Prepayment Premiums. | |||||||||||||||||||
Page 6 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Cash Reconciliation Detail | ||||||||
Total Funds Collected | Total Funds Distributed | |||||||
Interest: | Fees: | |||||||
Interest paid or advanced | 0.00 | Master Servicing Fee - Midland Loan Services | 0.00 | |||||
Interest reductions due to Non-Recoverability Determinations | 0.00 | Trustee Fee - Wells Fargo Bank, N.A. | 0.00 | |||||
Interest Adjustments | 0.00 | Certificate Administration Fee - Wells Fargo Bank, N.A. | 0.00 | |||||
Deferred Interest | 0.00 | CREFC Royalty License Fee | 0.00 | |||||
Net Prepayment Interest Shortfall | 0.00 | Trust Advisor Fee - Park Bridge Lender Services LLC | 0.00 | |||||
Net Prepayment Interest Excess | 0.00 | Total Fees | 0.00 | |||||
Extension Interest | 0.00 | Additional Trust Fund Expenses: | ||||||
Interest Reserve Withdrawal | 0.00 | |||||||
Total Interest Collected | 0.00 | Reimbursement for Interest on Advances | 0.00 | |||||
ASER Amount | 0.00 | |||||||
Principal: | Special Servicing Fee | 0.00 | ||||||
Scheduled Principal | 0.00 | Rating Agency Expenses | 0.00 | |||||
Unscheduled Principal | 0.00 | Attorney Fees & Expenses | 0.00 | |||||
Principal Prepayments | 0.00 | Bankruptcy Expense | 0.00 | |||||
Collection of Principal after Maturity Date | 0.00 | Taxes Imposed on Trust Fund | 0.00 | |||||
Recoveries from Liquidation and Insurance Proceeds | 0.00 | Non-Recoverable Advances | 0.00 | |||||
Excess of Prior Principal Amounts paid | 0.00 | Other Expenses | 0.00 | |||||
Curtailments | 0.00 | Total Additional Trust Fund Expenses | 0.00 | |||||
Negative Amortization | 0.00 | |||||||
Principal Adjustments | 0.00 | Interest Reserve Deposit | 0.00 | |||||
Total Principal Collected | 0.00 | |||||||
Payments to Certificateholders & Others: | ||||||||
Other: | Interest Distribution | 0.00 | ||||||
Prepayment Penalties/Yield Maintenance | 0.00 | Principal Distribution | 0.00 | |||||
Repayment Fees | 0.00 | Prepayment Penalties/Yield Maintenance | 0.00 | |||||
Borrower Option Extension Fees | 0.00 | Borrower Option Extension Fees | 0.00 | |||||
Equity Payments Received | 0.00 | Equity Payments Paid | 0.00 | |||||
Net Swap Counterparty Payments Received | 0.00 | Net Swap Counterparty Payments Paid | 0.00 | |||||
Total Other Collected | 0.00 | Total Payments to Certificateholders & Others | 0.00 | |||||
Total Funds Collected | 0.00 | Total Funds Distributed | 0.00 | |||||
Page 7 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Current Mortgage Loan and Property Stratification Tables Aggregate Pool | ||||||||||||||||
Property Type (1) | State (1) | |||||||||||||||
Property Type | # of Props. | Scheduled Balance | % of Agg. Bal. | WAM (2) | WAC | Weighted Avg DSCR (3) | State | # of Props. | Scheduled Balance | % of Agg. Bal. | WAM (2) | WAC | Weighted Avg DSCR (3) | |||
Totals | Totals | |||||||||||||||
Seasoning | ||||||||||||||||
Seasoning | # of loans | Scheduled Balance | % of Agg. Bal. | WAM (2) | WAC | Weighted Avg DSCR (3) | ||||||||||
Totals | ||||||||||||||||
See footnotes on last page of this section. | ||||||||||||||||
Page 8 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Current Mortgage Loan and Property Stratification Tables Aggregate Pool | ||||||||||||||||
Scheduled Balance | Anticipated Remaining Term (ARD and Balloon Loans) | |||||||||||||||
Scheduled Balance | # of loans | Scheduled Balance | % of Agg. Bal. | WAM (2) | WAC | Weighted Avg DSCR (3) | Anticipated Remaining Term (2) | # of loans | Scheduled Balance | % of Agg. Bal. | WAM (2) | WAC | Weighted Avg DSCR (3) | |||
Totals | ||||||||||||||||
Remaining Amortization Term (ARD and Balloon Loans) | ||||||||||||||||
Totals | Remaining | % of | ||||||||||||||
Amortization | # of | Scheduled | Agg. | WAM | Weighted | |||||||||||
Note Rate | Term | loans | Balance | Bal. | (2) | WAC | Avg DSCR (3) | |||||||||
% of | ||||||||||||||||
Note | # of | Scheduled | Agg | WAM | Weighted | |||||||||||
Rate | loans | Balance | Bal. | (2) | WAC | Avg DSCR (3) | ||||||||||
Totals | ||||||||||||||||
Remaining Stated Term (Fully Amortizing Loans) | ||||||||||||||||
Remaining | % of | |||||||||||||||
Stated | # of | Scheduled | Agg. | WAM | Weighted | |||||||||||
Term | loans | Balance | Bal. | (2) | WAC | Avg DSCR (3) | ||||||||||
Totals | ||||||||||||||||
Totals | ||||||||||||||||
See footnotes on last page of this section. | ||||||||||||||||
Page 9 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Current Mortgage Loan and Property Stratification Tables Aggregate Pool | ||||||||||||||||
Age of Most Recent NOI | Debt Service Coverage Ratio (3) | |||||||||||||||
�� | ||||||||||||||||
Age of Most Recent NOI | # of loans | Scheduled Balance | % of Agg. Bal. | WAM (2) | WAC | Weighted Avg DSCR (3) | Debt Service Coverage Ratio | # of loans | Scheduled Balance | % of Agg. Bal. | WAM (2) | WAC | Weighted Avg DSCR (3) | |||
Totals | Totals | |||||||||||||||
(1) Data in this table was calculated by allocating pro-rata the current loan information to the properties based upon the Cut-Off Date balance of each property as disclosed in the offering document. | ||||||||||||||||
(2) Anticipated Remaining Term and WAM are each calculated based upon the term from the current month to the earlier of the Anticipated Repayment Date, if applicable, and the Maturity Date. | ||||||||||||||||
(3) Debt Service Coverage Ratios are updated periodically as new NOI figures become available from borrowers on an asset level. In all cases the most current DSCR provided by the Master Servicer is used. To the extent that no DSCR is provided by the Master Servicer, information from the offering document is used. The DSCRs reported by the Master Servicer may be based on a period of less than 12 months. Regardless, DSCRs are normalized based on the Most Recent Financial as of Start and End Dates as reported on the NOI Detail page of this statement. The Certificate Administrator makes no representations as to the accuracy of the data provided by the borrower for this calculation. | ||||||||||||||||
Page 10 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Mortgage Loan Detail | |||||||||||||||||||
Loan Number | ODCR | Property Type (1) | City | State | Interest Payment | Principal Payment | Gross Coupon | Anticipated Repayment Date | Maturity Date | Neg. Amort (Y/N) | Beginning Scheduled Balance | Ending Scheduled Balance | Paid Thru Date | Appraisal Reduction Date | Appraisal Reduction Amount | Res. Strat. (2) | Mod. Code (3) | ||
Totals |
(1) Property Type Code | (2) Resolution Strategy Code | (3) Modification Code | ||||||||||||||||||||
MF | - | Multi-Family | OF | - | Office | 1 | - | Modification | 6 | - | DPO | 10 | - | Deed in Lieu Of | 1 | - | Maturity Date Extension | 6 | - | Capitalization of Interest | ||
RT | - | Retail | MU | - | Mixed Use | 2 | - | Foreclosure | 7 | - | REO | Foreclosure | 2 | - | Amortization Change | 7 | - | Capitalization of Taxes | ||||
HC | - | Health Care | LO | - | Lodging | 3 | - | Bankruptcy | 8 | - | Resolved | 11 | - | Full Payoff | 3 | - | Principal Write-Off | 8 | - | Principal Write-Off | ||
IN | - | Industrial | SS | - | Self Storage | 4 | - | Extension | 9 | - | Pending Return | 12 | - | Reps and Warranties | 4 | - | Blank | 9 | - | Combination | ||
WH | - | Warehouse | OT | - | Other | 5 | - | Note Sale | to Master Servicer | 13 | - | Other or TBD | 5 | - | Termporary Rate Reduction | |||||||
MH | - | Mobile Home Park | ||||||||||||||||||||
Page 11 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
NOI Detail | |||||||||||
Loan Number | ODCR | Property Type | City | State | Ending Scheduled Balance | Most Recent Fiscal NOI (1) | Most Recent NOI (1) | Most Recent NOI Start Date | Most Recent NOI End Date | ||
Total | |||||||||||
(1) The Most Recent Fiscal NOI and Most Recent NOI fields correspond to the financial data reported by the Master Servicer. An NOI of 0.00 means the Master Servicer did not report NOI figures in their loan level reporting. | |||||||||||
Page 12 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Principal Prepayment Detail | ||||||||
Loan Number | Loan Group | Offering Document | Principal Prepayment Amount | Prepayment Penalties | ||||
Cross-Reference | Payoff Amount | Curtailment Amount | Prepayment Premium | Yield Maintenance Premium | ||||
Totals | ||||||||
Page 13 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Historical Detail | |||||||||||||||||||||
Delinquencies | Prepayments | Rate and Maturities | |||||||||||||||||||
Distribution | 30-59 Days | 60-89 Days | 90 Days or More | Foreclosure | REO | Modifications | Curtailments | Payoff | Next Weighted Avg. | ||||||||||||
Date | # | Balance | # | Balance | # | Balance | # | Balance | # | Balance | # | Balance | # | Balance | # | Balance | Coupon | Remit | WAM | ||
Note: Foreclosure and REO Totals are excluded from the delinquencies. | |||||||||||||||||||||
Page 14 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Delinquency Loan Detail | |||||||||||||||
Loan Number | Offering Document Cross-Reference | # of Months Delinq. | Paid Through Date | Current P & I Advances | Outstanding P & I Advances ** | Status of Mortgage Loan (1) | Resolution Strategy Code (2) | Servicing Transfer Date | Foreclosure Date | Actual Principal Balance | Outstanding Servicing Advances | Bankruptcy Date | REO Date | ||
Totals |
(1) Status of Mortgage Loan | (2) Resolution Strategy Code | |||||||||||||||||||
A | - | Payment Not Received | 0 | - Current | 4 | - | Assumed Scheduled Payment | 1 | - | Modification | 6 | - | DPO | 10 | - | Deed In Lieu Of | ||||
But Still in Grace Period | 1 | - One Month Delinquent | (Performing Matured Balloon) | 2 | - | Foreclosure | 7 | - | REO | Foreclosure | ||||||||||
Or Not Yet Due | 2 | - Two Months Delinquent | 5 | - | Non Performing Matured Balloon | 3 | - | Bankruptcy | 8 | - | Resolved | 11 | - | Full Payoff | ||||||
B | - | Late Payment But Less | 3 | - Three or More Months Delinquent | 4 | - | Extension | 9 | - | Pending Return | 12 | - | Reps and Warranties | |||||||
Than 1 Month Delinquent | 5 | - | Note Sale | to Master Servicer | 13 | - | Other or TBD | |||||||||||||
** Outstanding P & I Advances include the current period advance. | ||||||||||||||||||||
Page 15 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Specially Serviced Loan Detail - Part 1 | |||||||||||||||||
Distribution Date | Loan Number | Offering Document Cross-Reference | Servicing Transfer Date | Resolution Strategy Code (1) | Scheduled Balance | Property Type (2) | State | Interest Rate | Actual Balance | Net Operating Income | NOI Date | DSCR | Note Date | Maturity Date | Remaining Amortization Term | ||
(1) Resolution Strategy Code | (2) Property Type Code | ||||||||||||||
1 | - Modification | 6 | - | DPO | 10 | - | Deed In Lieu Of | MF | - | Multi-Family | OF | - | Office | ||
2 | - Foreclosure | 7 | - | REO | Foreclosure | RT | - | Retail | MU | - | Mixed use | ||||
3 | - Bankruptcy | 8 | - | Resolved | 11 | - | Full Payoff | HC | - | Health Care | LO | - | Lodging | ||
4 | - Extension | 9 | - | Pending Return | 12 | - | Reps and Warranties | IN | - | Industrial | SS | - | Self Storage | ||
5 | - Note Sale | to Master Servicer | 13 | - | Other or TBD | WH | - | Warehouse | OT | - | Other | ||||
MH | - | Mobile Home Park | |||||||||||||
Page 16 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Specially Serviced Loan Detail - Part 2 | |||||||||||
Distribution Date | Loan Number | Offering Document Cross-Reference | Resolution Strategy Code (1) | Site Inspection Date | Phase 1 Date | Appraisal Date | Appraisal Value | Other REO Property Revenue | Comment | ||
(1) Resolution Strategy Code | ||||||||||
1 | - | Modification | 6 | - | DPO | 10 | - | Deed In Lieu Of | ||
2 | - | Foreclosure | 7 | - | REO | Foreclosure | ||||
3 | - | Bankruptcy | 8 | - | Resolved | 11 | - | Full Payoff | ||
4 | - | Extension | 9 | - | Pending Return | 12 | - | Reps and Warranties | ||
5 | - | Note Sale | to Master Servicer | 13 | - | Other or TBD | ||||
Page 17 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Advance Summary | ||||||
Current P&I Advances | Outstanding P&I Advances | Outstanding Servicing Advances | Current Period Interest on P&I and Servicing Advances Paid | |||
Totals | 0.00 | 0.00 | 0.00 | 0.00 | ||
Page 18 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Modified Loan Detail | |||||||||
Loan Number | Offering Document Cross-Reference | Pre-Modification Balance | Post-Modification Balance | Pre-Modification Interest Rate | Post-Modification Interest Rate | Modification Date | Modification Description | ||
Totals | |||||||||
Page 19 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Historical Liquidated Loan Detail | ||||||||||||||
Distribution Date | ODCR | Beginning Scheduled Balance | Fees, Advances, and Expenses * | Most Recent Appraised Value or BPO | Gross Sales Proceeds or Other Proceeds | Net Proceeds Received on Liquidation | Net Proceeds Available for Distribution | Realized Loss to Trust | Date of Current Period Adj. to Trust | Current Period Adjustment to Trust | Cumulative Adjustment to Trust | Loss to Loan with Cum Adj. to Trust | ||
Current Total | ||||||||||||||
Cumulative Total | ||||||||||||||
* Fees, Advances and Expenses also include outstanding P & I advances and unpaid fees (servicing, trustee, etc.). | ||||||||||||||
Page 20 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Historical Bond/Collateral Loss Reconciliation Detail | |||||||||||||||||||||||||||||||||||
Distribution Date | Offering Document Cross-Reference | Beginning Balance at Liquidation | Aggregate Realized Loss on Loans | Prior Realized Loss Applied to Certificates | Amounts Covered by Credit Support | Interest (Shortages)/ Excesses | Modification /Appraisal Reduction Adj. | Additional (Recoveries) /Expenses | Realized Loss Applied to Certificates to Date | Recoveries of Realized Losses Paid as Cash | (Recoveries)/ Losses Applied to Certificate Interest | ||||||||||||||||||||||||
Totals | |||||||||||||||||||||||||||||||||||
Page 21 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Interest Shortfall Reconciliation Detail - Part 1 | ||||||||||||||||||||||||||||||||
Offering Document Cross-Reference | Stated Principal Balance at Contribution | Current Ending Scheduled Balance | Special Servicing Fees | ASER | (PPIS) Excess | Non-Recoverable (Scheduled Interest) | Interest on Advances | Modified Interest Rate (Reduction) /Excess | ||||||||||||||||||||||||
Monthly | Liquidation | Work Out | ||||||||||||||||||||||||||||||
Totals | ||||||||||||||||||||||||||||||||
Page 22 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Interest Shortfall Reconciliation Detail - Part 2 | ||||||||
Offering Document Cross-Reference | Stated Principal Balance at Contribution | Current Ending Scheduled Balance | Reimb of Advances to the Servicer | Other (Shortfalls)/ Refunds | Comments | |||
Current Month | Left to Reimburse Master Servicer | |||||||
Totals | ||||||||
Interest Shortfall Reconciliation Detail Part 2 Total | 0.00 | |||||||
Interest Shortfall Reconciliation Detail Part 1 Total | 0.00 | |||||||
Total Interest Shortfall Allocated to Trust | 0.00 | |||||||
Page 23 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Defeased Loan Detail | |||||||
Loan Number | Offering Document Cross-Reference | Ending Scheduled Balance | Maturity Date | Note Rate | Defeasance Status | ||
Totals | |||||||
Page 24 of 25 |
Morgan Stanley Capital I Trust 2015-MS1 Commercial Mortgage Pass-Through Certificates Series 2015-MS1 | For Additional Information please contact | ||
CTSLink Customer Service | |||
1-866-846-4526 | |||
Reports Available www.ctslink.com | |||
Wells Fargo Bank, N.A. | |||
Corporate Trust Services | Payment Date: | 8/17/15 | |
8480 Stagecoach Circle | Record Date: | 7/31/15 | |
Frederick, MD 21701-4747 | Determination Date: | 8/11/15 |
Supplemental Reporting | ||
Other Disclosable Special Servicer Fees | ||
Page 25 of 25 |
(THIS PAGE INTENTIONALLY LEFT BLANK)
APPENDIX V
MORTGAGE LOAN REPRESENTATIONS AND WARRANTIES
As of the Closing Date, the mortgage loan seller will make, with respect to each mortgage loan sold by it that we include in the Issuing Entity, representations and warranties generally to the effect set forth below. The exceptions to the representations and warranties set forth below are set forth in Appendix VI attached to this prospectus supplement. Capitalized terms used but not otherwise defined in this Appendix V will have the meanings set forth in this prospectus supplement or, if not defined in this prospectus supplement, in the mortgage loan purchase agreement or the Pooling and Servicing Agreement.
The mortgage loan purchase agreement, together with the related representations and warranties, serves to contractually allocate risk between the mortgage loan seller, on the one hand, and the Issuing Entity, on the other. Disclosure regarding the representations and warranties is set forth below for the sole purpose of describing some of the terms and conditions of that risk allocation. The presentation of representations and warranties below is not intended as statements regarding the actual characteristics of the mortgage loans, the mortgaged properties or other matters. We cannot assure you that the mortgage loans actually conform to the statements made in the representations and warranties that we present below.
(1)Whole Loan; Ownership of Mortgage Loans. Each Mortgage Loan is a whole loan and not a participation interest in a Mortgage Loan. At the time of the sale, transfer and assignment to Purchaser, no Mortgage Note or Mortgage was subject to any assignment (other than assignments to Seller), participation or pledge, and Seller had good title to, and was the sole owner of, each Mortgage Loan free and clear of any and all liens, charges, pledges, encumbrances, participations, any other ownership interests on, in or to such Mortgage Loan other than any servicing rights appointment or similar agreement. Seller has full right and authority to sell, assign and transfer each Mortgage Loan, and the assignment to Purchaser constitutes a legal, valid and binding assignment of such Mortgage Loan free and clear of any and all liens, pledges, charges or security interests of any nature encumbering such Mortgage Loan.
(2)Mortgage Loan Document Status. Each related Mortgage Note, Mortgage, Assignment of Leases (if a separate instrument), guaranty and other agreement executed by or on behalf of the related Mortgagor, guarantor or other obligor in connection with such Mortgage Loan is the legal, valid and binding obligation of the related Mortgagor, guarantor or other obligor (subject to any non-recourse provisions contained in any of the foregoing agreements and any applicable state anti-deficiency or market value limit deficiency legislation), as applicable, and is enforceable in accordance with its terms, except (i) as such enforcement may be limited by (a) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (b) general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law) and (ii) that certain provisions in such Mortgage Loan documents (including, without limitation, provisions requiring the payment of default interest, late fees or prepayment/yield maintenance fees, charges and/or premiums) are, or may be, further limited or rendered unenforceable by or under applicable law, but (subject to the limitations set forth in clause (i) above) such limitations or unenforceability will not render such Mortgage Loan documents invalid as a whole or materially interfere with the Mortgagee’s realization of the principal benefits and/or security provided thereby (clauses (i) and (ii) collectively, the “Standard Qualifications”).
Except as set forth in the immediately preceding sentences, there is no valid offset, defense, counterclaim or right of rescission available to the related Mortgagor with respect to any of the related Mortgage Notes, Mortgages or other Mortgage Loan documents, including, without limitation, any such valid offset, defense, counterclaim or right based on intentional fraud by Seller in connection with the origination of the Mortgage Loan, that would deny the Mortgagee the principal benefits intended to be provided by the Mortgage Note, Mortgage or other Mortgage Loan documents.
(3)Mortgage Provisions. The Mortgage Loan documents for each Mortgage Loan contain provisions that render the rights and remedies of the holder thereof adequate for the practical realization against the Mortgaged Property of the principal benefits of the security intended to be provided thereby, including realization by judicial or, if applicable, nonjudicial foreclosure subject to the limitations set forth in the Standard Qualifications.
(4)Mortgage Status; Waivers and Modifications. Since origination and except by written instruments set forth in the related Mortgage File (a) the material terms of such Mortgage, Mortgage Note, Mortgage Loan guaranty, and related Mortgage Loan documents have not been waived, impaired, modified, altered, satisfied, canceled, subordinated or rescinded in any respect which materially interferes with the security intended to be provided by such Mortgage; (b) no related Mortgaged Property or any portion thereof has been released from the lien of the related Mortgage in any manner which materially interferes with the security intended to be provided by such Mortgage or the use or operation of the remaining portion of such Mortgaged Property; and (c) neither the related Mortgagor nor the related guarantor has been released from its material obligations under the Mortgage Loan.
(5)Lien; Valid Assignment. Subject to the Standard Qualifications, each assignment of Mortgage and assignment of Assignment of Leases from Seller constitutes a legal, valid and binding assignment from Seller. Each related Mortgage and Assignment of Leases is freely assignable without the consent of the related Mortgagor. Each related Mortgage is a legal, valid and enforceable first lien on the related Mortgagor’s fee (or with respect to those Mortgage Loans described in paragraph (34) hereof, leasehold) interest in the Mortgaged Property in the principal amount of such Mortgage Loan or allocated loan amount (subject only to Permitted Encumbrances (as defined below) and the exceptions to paragraph (6) set forth in Appendix VI attached to this prospectus supplement (each such exception, a “Title Exception”)), except as the enforcement thereof may be limited by the Standard Qualifications. Such Mortgaged Property (subject to and excepting Permitted Encumbrances and the Title Exceptions) as of origination was, and as of the Cut-Off Date, to Seller’s knowledge, is free and clear of any recorded mechanics’ liens, recorded materialmen’s liens and other recorded encumbrances which are prior to or equal with the lien of the related Mortgage, except those which are bonded over, escrowed for or insured against by a lender’s title insurance policy (as described below), and, to Seller’s knowledge and subject to the rights of tenants (as tenants only) (subject to and excepting Permitted Encumbrances and the Title Exceptions), no rights exist which under law could give rise to any such lien or encumbrance that would be prior to or equal with the lien of the related Mortgage, except those which are bonded over, escrowed for or insured against by a lender’s title insurance policy (as
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described below). Notwithstanding anything herein to the contrary, no representation is made as to the perfection of any security interest in rents or other personal property to the extent that possession or control of such items or actions other than the filing of UCC financing statements is required in order to effect such perfection.
(6)Permitted Liens; Title Insurance. Each Mortgaged Property securing a Mortgage Loan is covered by an American Land Title Association loan title insurance policy or a comparable form of loan title insurance policy approved for use in the applicable jurisdiction (or, if such policy is yet to be issued, by a pro forma policy, a preliminary title policy with escrow instructions or a “marked up” commitment, in each case binding on the title insurer) (the “Title Policy”) in the original principal amount of such Mortgage Loan (or with respect to a Mortgage Loan secured by multiple properties, an amount equal to at least the allocated loan amount with respect to the Title Policy for each such property) after all advances of principal (including any advances held in escrow or reserves), that insures for the benefit of the owner of the indebtedness secured by the Mortgage, the first priority lien of the Mortgage, which lien is subject only to (a) the lien of current real property taxes, 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; (c) the exceptions (general and specific) and exclusions set forth in such Title Policy; (d) other matters to which like properties are commonly subject; (e) the rights of tenants (as tenants only) under leases (including subleases) pertaining to the related Mortgaged Property and condominium declarations; and (f) if the related Mortgage Loan constitutes a Crossed Mortgage Loan, the lien of the Mortgage for the related Crossed Mortgage Loan or Crossed Mortgage Loans; provided that none of such items (a) through (f), individually or in the aggregate, materially and adversely interferes with the value or current use of the Mortgaged Property or the security intended to be provided by such Mortgage or the Mortgagor’s ability to pay its obligations when they become due (collectively, the “Permitted Encumbrances”). Except as contemplated by clause (f) of the preceding sentence none of the Permitted Encumbrances are mortgage liens that are senior to or coordinate and co-equal with the lien of the related Mortgage. Such Title Policy (or, if it has yet to be issued, the coverage to be provided thereby) is in full force and effect, all premiums thereon have been paid, no claims have been made by Seller thereunder and no claims have been paid thereunder. Neither Seller nor, to Seller’s knowledge, any other holder of the Mortgage Loan, has done, by act or omission, anything that would materially impair the coverage under such Title Policy.
(7)Junior Liens. It being understood that B Notes secured by the same Mortgage as a Mortgage Loan are not subordinate mortgages or junior liens, except for any Crossed Mortgage Loans, there are, as of origination, and to Seller’s knowledge, as of the Cut-Off Date, no subordinate mortgages or junior liens securing the payment of money encumbering the related Mortgaged Property (other than Permitted Encumbrances and the Title Exceptions, taxes and assessments, mechanics’ and materialmen’s liens (which are the subject of the representation in paragraph (5) above), and equipment and other personal property financing). Except as set forth in Appendix VI attached to this prospectus supplement, Seller has no knowledge of any mezzanine debt secured directly by interests in the related Mortgagor.
(8)Assignment of Leases and Rents. There exists as part of the related Mortgage File an Assignment of Leases (either as a separate instrument or incorporated into the related Mortgage). Subject to the Permitted Encumbrances and the Title Exceptions, each related Assignment of Leases creates a valid first-priority collateral assignment of, or a valid first-priority lien or security interest in, rents and certain rights under the related lease or leases, subject only to a license granted to the related Mortgagor to exercise certain rights and to perform certain obligations of the lessor under such lease or leases, including the right to operate the related leased property, except as the enforcement thereof may be limited by the Standard Qualifications. The related Mortgage or related Assignment of Leases, subject to applicable law, provides that, upon an event of default under the Mortgage Loan, a receiver is permitted to be appointed for the collection of rents or for the related Mortgagee to enter into possession to collect the rents or for rents to be paid directly to the Mortgagee.
(9)UCC Filings. If the related Mortgaged Property is operated as a hospitality property, the Seller has filed and/or recorded or caused to be filed and/or recorded (or, if not filed and/or recorded, has submitted or caused to be submitted in proper form for filing and/or recording), UCC financing statements in the appropriate public filing and/or recording offices necessary at the time of the origination of the Mortgage Loan to perfect a valid security interest in all items of physical personal property reasonably necessary to operate such Mortgaged Property owned by such Mortgagor and located on the related Mortgaged Property (other than any non-material personal property, any personal property subject to a purchase money security interest, a sale and leaseback financing arrangement as permitted under the terms of the related Mortgage Loan documents or any other personal property leases applicable to such personal property), to the extent perfection may be effected pursuant to applicable law by recording or filing, as the case may be. Subject to the Standard Qualifications, each related Mortgage (or equivalent document) creates a valid and enforceable lien and security interest on the items of personalty described above. No representation is made as to the perfection of any security interest in rents or other personal property to the extent that possession or control of such items or actions other than the filing of UCC financing statements are required in order to effect such perfection.
(10)Condition of Property. Seller or the originator of the Mortgage Loan inspected or caused to be inspected each related Mortgaged Property within six months of origination of the Mortgage Loan and within twelve months of the Cut-Off Date.
An engineering report or property condition assessment was prepared in connection with the origination of each Mortgage Loan no more than twelve months prior to the Cut-Off Date. To Seller’s knowledge, based solely upon due diligence customarily performed in connection with the origination of comparable mortgage loans, as of the Closing Date, each related Mortgaged Property was free and clear of any material damage (other than (i) deferred maintenance for which escrows were established at origination and (ii) any damage fully covered by insurance) that would affect materially and adversely the use or value of such Mortgaged Property as security for the Mortgage Loan.
(11)Taxes and Assessments. All taxes, governmental assessments and other outstanding governmental charges (including, without limitation, water and sewage charges), or installments thereof, which could be a lien on the related Mortgaged Property that would be of equal or superior priority to the lien of the Mortgage and that prior to the Cut-Off Date have become delinquent in respect of each related Mortgaged Property have been paid, or an escrow of funds has been established in an amount sufficient to cover such payments and reasonably estimated interest and penalties, if any, thereon. For purposes of this representation and warranty, real estate taxes and governmental assessments and other outstanding governmental charges and installments thereof shall not be considered delinquent until the earlier of (a) the date on which interest and/or penalties would first be payable thereon and (b) the date on which enforcement action is entitled to be taken by the related taxing authority.
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(12)Condemnation. As of the date of origination and to Seller’s knowledge as of the Cut-Off Date, there is no proceeding pending, and, to Seller’s knowledge as of the date of origination and as of the Cut-Off Date, there is no proceeding threatened, for the total or partial condemnation of such Mortgaged Property that would have a material adverse effect on the value, use or operation of the Mortgaged Property.
(13)Actions Concerning Mortgage Loan. As of the date of origination and to Seller’s knowledge as of the Cut-Off Date, there was no pending or filed action, suit or proceeding, arbitration or governmental investigation involving any Mortgagor, guarantor or Mortgagor’s interest in the Mortgaged Property, an adverse outcome of which would reasonably be expected to materially and adversely affect (a) such Mortgagor’s title to the Mortgaged Property, (b) the validity or enforceability of the Mortgage, (c) such Mortgagor’s ability to perform under the related Mortgage Loan, (d) such guarantor’s ability to perform under the related guaranty, (e) the principal benefit of the security intended to be provided by the Mortgage Loan documents or (f) the current principal use of the Mortgaged Property.
(14)Escrow Deposits. All escrow deposits and payments required to be escrowed with lender pursuant to each Mortgage Loan are in the possession, or under the control, of Seller or its servicer, and there are no deficiencies (subject to any applicable grace or cure periods) in connection therewith, and all such escrows and deposits (or the right thereto) that are required to be escrowed with lender under the related Mortgage Loan documents are being conveyed by Seller to Purchaser or its servicer.
(15)No Holdbacks. The principal amount of the Mortgage Loan stated on the Mortgage Loan Schedule has been fully disbursed as of the Closing Date and there is no requirement for future advances thereunder (except in those cases where the full amount of the Mortgage Loan has been disbursed but a portion thereof is being held in escrow or reserve accounts pending the satisfaction of certain conditions relating to leasing, repairs or other matters with respect to the related Mortgaged Property, the Mortgagor or other considerations determined by Seller to merit such holdback).
(16)Insurance. Each related Mortgaged Property is, and is required pursuant to the related Mortgage to be, insured by a property insurance policy providing coverage for loss in accordance with coverage found under a “special cause of loss form” or “all risk form” that includes replacement cost valuation issued by an insurer meeting the requirements of the related Mortgage Loan documents and having a claims-paying or financial strength rating of at least “A-:VIII” from A.M. Best Company or “A3” (or the equivalent) from Moody’s or “A-” from S&P (collectively the “Insurance Rating Requirements”), in an amount (subject to a customary deductible) not less than the lesser of (1) the original principal balance of the Mortgage Loan and (2) the full insurable value on a replacement cost basis of the improvements, furniture, furnishings, fixtures and equipment owned by the Mortgagor and included in the Mortgaged Property (with no deduction for physical depreciation), but, in any event, not less than the amount necessary, or containing such endorsements as are necessary, to avoid the operation of any coinsurance provisions with respect to the related Mortgaged Property.
Each related Mortgaged Property is also covered, and required to be covered pursuant to the related Mortgage Loan documents, by business interruption or rental loss insurance which (subject to a customary deductible) covers a period of not less than 12 months (or with respect to each Mortgage Loan on a single asset with a principal balance of $50 million or more, 18 months).
If any material part of the improvements, exclusive of a parking lot, located on a Mortgaged Property is in an area identified in the Federal Register by the Federal Emergency Management Agency as having special flood hazards, the related Mortgagor is required to maintain insurance in the maximum amount available under the National Flood Insurance Program.
If the Mortgaged Property is located within 25 miles of the coast of the Gulf of Mexico or the Atlantic coast of Florida, Georgia, South Carolina or North Carolina, the related Mortgagor is required to maintain coverage for windstorm and/or windstorm related perils and/or “named storms” issued by an insurer meeting the Insurance Rating Requirements or endorsement covering damage from windstorm and/or windstorm related perils and/or named storms.
The Mortgaged Property is covered, and required to be covered pursuant to the related Mortgage Loan documents, by a commercial general liability insurance policy issued by an insurer meeting the Insurance Rating Requirements including coverage for property damage, contractual damage and personal injury (including bodily injury and death) in amounts as are generally required by the Seller for loans originated for securitization, and in any event not less than $1 million per occurrence and $2 million in the aggregate.
An architectural or engineering consultant has performed an analysis of each of the Mortgaged Properties located in seismic zones 3 or 4 in order to evaluate the structural and seismic condition of such property, for the sole purpose of assessing the scenario expected limit (“SEL”) for the Mortgaged Property in the event of an earthquake. In such instance, the SEL was based on a 475-year return period, an exposure period of 50 years and a 10% probability of exceedance. If the resulting report concluded that the SEL would exceed 20% of the amount of the replacement costs of the improvements, earthquake insurance on such Mortgaged Property was obtained by an insurer rated at least “A:VIII” by A.M. Best Company or “A3” (or the equivalent) from Moody’s or “A-” by S&P in an amount not less than 100% of the SEL.
The Mortgage Loan documents require insurance proceeds in respect of a property loss to be applied either (a) to the repair or restoration of all or part of the related Mortgaged Property, with respect to all property losses in excess of 5% of the then outstanding principal amount of the related Mortgage Loan, the lender (or a trustee appointed by it) having the right to hold and disburse such proceeds as the repair or restoration progresses, or (b) to the payment of the outstanding principal balance of such Mortgage Loan together with any accrued interest thereon.
All premiums on all insurance policies referred to in this section required to be paid as of the Cut-Off Date have been paid, and such insurance policies name the lender under the Mortgage Loan and its successors and assigns as a loss payee under a mortgagee endorsement clause or, in the case of the general liability insurance policy, as named or additional insured. Such insurance policies will inure to the benefit of the Trustee. Each related Mortgage Loan obligates the related Mortgagor to maintain all such insurance and, at such Mortgagor’s failure to do so, authorizes the lender to maintain such insurance at the Mortgagor’s cost and expense and to charge such Mortgagor for related premiums. All such insurance policies (other than commercial liability policies) require at least 10 days’ prior notice to the lender of termination or cancellation arising because of nonpayment of a premium and at least 30 days prior notice to the lender of
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termination or cancellation (or such lesser period, not less than 10 days, as may be required by applicable law) arising for any reason other than non-payment of a premium and no such notice has been received by Seller.
(17)Access; Utilities; Separate Tax Lots. Each Mortgaged Property (a) is located on or adjacent to a public road and has direct legal access to such road, or has access via an irrevocable easement or irrevocable right of way permitting ingress and egress to/from a public road, (b) is served by or has uninhibited access rights to public or private water and sewer (or well and septic) and all requiredutilities, all of which are appropriate for the current use of the Mortgaged Property, and (c) constitutes one or more separate tax parcels which do not include any property which is not part of the Mortgaged Property or is subject to an endorsement under the related Title Policy insuring the Mortgaged Property, or in certain cases, an application has been, or will be, made to the applicable governing authority for creation of separate tax lots, in which case the Mortgage Loan requires the Mortgagor to escrow an amount sufficient to pay taxes for the existing tax parcel of which the Mortgaged Property is a part until the separate tax lots are created.
(18)No Encroachments. To Seller’s knowledge based solely on surveys obtained in connection with origination and the lender’s Title Policy (or, if such policy is not yet issued, a pro forma title policy, a preliminary title policy with escrow instructions or a “marked up” commitment) obtained in connection with the origination of each Mortgage Loan, all material improvements that were included for the purpose of determining the appraised value of the related Mortgaged Property at the time of the origination of such Mortgage Loan are within the boundaries of the related Mortgaged Property, except encroachments that do not materially and adversely affect the value or current use of such Mortgaged Property or for which insurance or endorsements were obtained under the Title Policy. No improvements on adjoining parcels encroach onto the related Mortgaged Property except for encroachments that do not materially and adversely affect the value or current use of such Mortgaged Property or for which insurance or endorsements were obtained under the Title Policy. No improvements encroach upon any easements except for encroachments the removal of which would not materially and adversely affect the value or current use of such Mortgaged Property or for which insurance or endorsements obtained with respect to the Title Policy.
(19)No Contingent Interest or Equity Participation. No Mortgage Loan has a shared appreciation feature, any other contingent interest feature or a negative amortization feature (except that an ARD Loan may provide for the accrual of the portion of interest in excess of the rate in effect prior to the Anticipated Repayment Date) or an equity participation by Seller.
(20)REMIC. The Mortgage Loan is a “qualified mortgage” within the meaning of Section 860G(a)(3) of the Code (but determined without regard to the rule in the U.S. Department of Treasury regulations (the “Treasury Regulations”) Section 1.860G-2(f)(2) that treats certain defective mortgage loans as qualified mortgages), and, accordingly, (A) the issue price of the Mortgage Loan to the related Mortgagor at origination did not exceed the non-contingent principal amount of the Mortgage Loan and (B) either: (a) such Mortgage Loan is secured by an interest in real property (including buildings and structural components thereof, but excluding personal property) having a fair market value (i) at the date the Mortgage Loan was originated at least equal to 80% of the adjusted issue price of the Mortgage Loan on such date or (ii) at the Closing Date at least equal to 80% of the adjusted issue price of the Mortgage Loan on such date, provided that for purposes hereof, the fair market value of the real property interest must first be reduced by (A) the amount of any lien on the real property interest that is senior to the Mortgage Loan and (B) a proportionate amount of any lien that is in parity with the Mortgage Loan; or (b) substantially all of the proceeds of such Mortgage Loan were used to acquire, improve or protect the real property which served as the only security for such Mortgage Loan (other than a recourse feature or other third-party credit enhancement within the meaning of Section 1.860G-2(a)(1)(ii) of the Treasury Regulations). If the Mortgage Loan was “significantly modified” prior to the Closing Date so as to result in a taxable exchange under Section 1001 of the Code, it either (x) was modified as a result of the default or reasonably foreseeable default of such Mortgage Loan or (y) satisfies the provisions of either sub-clause (B)(a)(i) above (substituting the date of the last such modification for the date the Mortgage Loan was originated) or sub-clause (B)(a)(ii), including the proviso thereto. Any prepayment premium and yield maintenance charges applicable to the Mortgage Loan constitute “customary prepayment penalties” within the meaning of Section 1.860G-1(b)(2) of the Treasury Regulations. All terms used in this paragraph shall have the same meanings as set forth in the related Treasury Regulations.
(21)Compliance with Certain Laws. The Mortgage Rate (exclusive of any default interest, late charges, yield maintenance charge, or prepayment premiums) of such Mortgage Loan complied as of the date of origination with, or was exempt from, applicable state or federal laws, regulations and other requirements pertaining to usury.
(22)Authorized to do Business. To the extent required under applicable law, as of the Cut-Off Date or as of the date that such entity held the Mortgage Note, each holder of the Mortgage Note was authorized to transact and do business in the jurisdiction in which each related Mortgaged Property is located, or the failure to be so authorized does not materially and adversely affect the enforceability of such Mortgage Loan by the Trust.
(23)Trustee under Deed of Trust. With respect to each Mortgage which is a deed of trust, as of the date of origination and, to Seller’s knowledge, as of the Closing Date, a trustee, duly qualified under applicable law to serve as such, currently so serves and is named in the deed of trust or has been substituted in accordance with the Mortgage and applicable law or may be substituted in accordance with the Mortgage and applicable law by the related Mortgagee.
(24)Local Law Compliance. To Seller’s knowledge, based upon any of a letter from any governmental authorities, a legal opinion, an architect’s letter, a zoning consultant’s report, an endorsement to the related Title Policy, or other affirmative investigation of local law compliance consistent with the investigation conducted by Seller for similar commercial and multifamily mortgage loans intended for securitization, the improvements located on or forming part of each Mortgaged Property securing a Mortgage Loan as of the date of origination of such Mortgage Loan and as of the Cut-Off Date, there are no material violations of applicable zoning ordinances, building codes and land laws (collectively “Zoning Regulations”) other than those which (i) are insured by the Title Policy or a law and ordinance insurance policy or (ii) would not have a material adverse effect on the Mortgage Loan. The terms of the Mortgage Loan documents require the Mortgagor to comply in all material respects with all applicable governmental regulations, zoning and building laws.
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(25)Licenses and Permits. Each Mortgagor covenants in the Mortgage Loan documents that it shall keep all material licenses, permits and applicable governmental authorizations necessary for its operation of the Mortgaged Property in full force and effect, and to Seller’s knowledge based upon a letter from any government authorities or other affirmative investigation of local law compliance consistent with the investigation conducted by Seller for similar commercial and multifamily mortgage loans intended for securitization, all such material licenses, permits and applicable governmental authorizations are in effect. The Mortgage Loan requires the related Mortgagor to be qualified to do business in the jurisdiction in which the related Mortgaged Property is located.
(26)Recourse Obligations. The Mortgage Loan documents for each Mortgage Loan provide that such Mortgage Loan (a) becomes full recourse to the Mortgagor and guarantor (which is a natural person or persons, or an entity distinct from the Mortgagor (but may be affiliated with the Mortgagor) that has assets other than equity in the related Mortgaged Property that are not de minimis) in any of the following events: (i) if any voluntary petition for bankruptcy, insolvency, dissolution or liquidation pursuant to federal bankruptcy law, or any similar federal or state law, shall be filed by the Mortgagor; (ii) Mortgagor or guarantor shall have colluded with (or, alternatively, solicited or caused to be solicited) other creditors to cause an involuntary bankruptcy filing with respect to the Mortgagor or (iii) voluntary transfers of either the Mortgaged Property or equity interests in Mortgagor made in violation of the Mortgage Loan documents; and (b) contains provisions providing for recourse against the Mortgagor and guarantor (which is a natural person or persons, or an entity distinct from the Mortgagor (but may be affiliated with the Mortgagor) that has assets other than equity in the related Mortgaged Property that are not de minimis), for losses and damages sustained by reason of Mortgagor’s (i) misappropriation of rents after the occurrence of an event of default under the Mortgage Loan; (ii) misappropriation of (A) insurance proceeds or condemnation awards or (B) security deposits or, alternatively, the failure of any security deposits to be delivered to lender upon foreclosure or action in lieu thereof (except to the extent applied in accordance with leases prior to a Mortgage Loan event of default); (iii) fraud or intentional material misrepresentation; (iv) breaches of the environmental covenants in the Mortgage Loan documents; or (v) commission of intentional material physical waste at the Mortgaged Property.
(27)Mortgage Releases. The terms of the related Mortgage or related Mortgage Loan documents do not provide for release of any material portion of the Mortgaged Property from the lien of the Mortgage except (a) a partial release, accompanied by principal repayment, or partial Defeasance (as defined in paragraph (32) below), of not less than a specified percentage at least equal to the lesser of (i) 110% of the related allocated loan amount of such portion of the Mortgaged Property and (ii) the outstanding principal balance of the Mortgage Loan, (b) upon payment in full of such Mortgage Loan, (c) upon a Defeasance (as defined in paragraph (32) below), (d) releases of out-parcels that are unimproved or other portions of the Mortgaged Property which will not have a material adverse effect on the underwritten value of the Mortgaged Property and which were not afforded any material value in the appraisal obtained at the origination of the Mortgage Loan and are not necessary for physical access to the Mortgaged Property or compliance with zoning requirements, or (e) as required pursuant to an order of condemnation. With respect to any partial release under the preceding clauses (a) or (d), either: (x) such release of collateral (i) would not constitute a “significant modification” of the subject Mortgage Loan within the meaning of Section 1.860G-2(b)(2) of the Treasury Regulations and (ii) would not cause the subject Mortgage Loan to fail to be a “qualified mortgage” within the meaning of Section 860G(a)(3)(A) of the Code; or (y) the Mortgagee or servicer can, in accordance with the related Mortgage Loan documents, condition such release of collateral on the related Mortgagor’s delivery of an opinion of tax counsel to the effect specified in the immediately preceding clause (x). For purposes of the preceding clause (x), if the fair market value of the real property constituting such Mortgaged Property after the release is not equal to at least 80% of the principal balance of the Mortgage Loan outstanding after the release, the Mortgagor is required to make a payment of principal in an amount not less than the amount required by the REMIC Provisions.
In the case of any Mortgage Loan, in the event of a taking of any portion of a Mortgaged Property by a State or any political subdivision or authority thereof, whether by legal proceeding or by agreement, the Mortgagor can be required to pay down the principal balance of the Mortgage Loan in an amount not less than the amount required by the loan-to-value ratio and other requirements of the REMIC Provisions and, to such extent, condemnation awards may not be required to be applied to the restoration of the Mortgaged Property or released to the Mortgagor, if, immediately after the release of such portion of the Mortgaged Property from the lien of the Mortgage (but taking into account the planned restoration) the fair market value of the real property constituting the remaining Mortgaged Property is not equal to at least 80% of the remaining principal balance of the Mortgage Loan.
No Mortgage Loan that is secured by more than one Mortgaged Property or that is a Crossed Mortgage Loan permits the release of cross-collateralization of the related Mortgaged Properties or a portion thereof, including due to a partial condemnation, other than in compliance with loan-to-value ratio and other requirements of the REMIC Provisions.
(28)Financial Reporting and Rent Rolls. Each Mortgage requires the Mortgagor to provide the owner or holder of the Mortgage with quarterly (other than for single-tenant properties) and annual operating statements, and quarterly (other than for single-tenant properties) rent rolls for properties that have leases contributing more than 5% of the in-place base rent and annual financial statements, which annual financial statements with respect to each Mortgage Loan with more than one Mortgagor are in the form of an annual combined balance sheet of the Mortgagor entities (and no other entities), together with the related combined statements of operations, members’ capital and cash flows, including a combining balance sheet and statement of income for the Mortgaged Properties on a combined basis.
(29)Acts of Terrorism Exclusion. With respect to each Mortgage Loan over $20 million, the related special-form all-risk insurance policy and business interruption policy (issued by an insurer meeting the Insurance Rating Requirements) do not specifically exclude Acts of Terrorism, as defined in the Terrorism Risk Insurance Act of 2002, as amended by the Terrorism Risk Insurance Program Reauthorization Act of 2007 and the Terrorism Risk Insurance Program Reauthorization Act of 2015 (collectively referred to as “TRIA”), from coverage, or if such coverage is excluded, it is covered by a separate terrorism insurance policy. With respect to each other Mortgage Loan, the related special all-risk insurance policy and business interruption policy (issued by an insurer meeting the Insurance Rating Requirements) did not, as of the date of origination of the Mortgage Loan, and, to Seller’s knowledge, do not, as of the Cut-Off Date, specifically exclude Acts of Terrorism, as defined in TRIA, from coverage, or if such coverage is excluded, it is covered by a separate terrorism insurance policy. With respect to each Mortgage Loan, the related Mortgage Loan documents do not expressly waive or prohibit the Mortgagee from requiring coverage for Acts of Terrorism, as defined in TRIA, or damages related thereto except to the extent that any right to require such coverage may be limited by commercial availability on commercially reasonable terms; provided, that if TRIA or a similar or subsequent statute is not in effect, then, provided that terrorism insurance is commercially available, the Mortgagor under each Mortgage Loan is required to carry terrorism insurance,
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but in such event the Mortgagor shall not be required to spend on terrorism insurance coverage more than two times the amount of the insurance premium that is payable in respect of the property and business interruption/rental loss insurance required under the related Mortgage Loan documents (without giving effect to the cost of terrorism and earthquake components of such casualty and business interruption/rental loss insurance) at the time of the origination of the Mortgage Loan, and if the cost of terrorism insurance exceeds such amount, the Mortgagor is required to purchase the maximum amount of terrorism insurance available with funds equal to such amount.
(30)Due on Sale or Encumbrance. Subject to specific exceptions set forth below, each Mortgage Loan contains a “due on sale” or other such provision for the acceleration of the payment of the unpaid principal balance of such Mortgage Loan if, without the consent of the holder of the Mortgage (which consent, in some cases, may not be unreasonably withheld) and/or complying with the requirements of the related Mortgage Loan documents (which provide for transfers without the consent of the lender which are customarily acceptable to Seller lending on the security of property comparable to the related Mortgaged Property, including, without limitation, transfers of worn-out or obsolete furnishings, fixtures, or equipment promptly replaced with property of equivalent value and functionality and transfers by leases entered into in accordance with the Mortgage Loan documents), (a) the related Mortgaged Property, or any equity interest of greater than 50% in the related Mortgagor, is directly or indirectly pledged, transferred or sold, other than as related to (i) family and estate planning transfers or transfers upon death or legal incapacity, (ii) transfers to certain affiliates as defined in the related Mortgage Loan documents, (iii) transfers of less than, or other than, a controlling interest in the related Mortgagor, (iv) transfers to another holder of direct or indirect equity in the Mortgagor, a specific Person designated in the related Mortgage Loan documents or a Person satisfying specific criteria identified in the related Mortgage Loan documents, such as a qualified equityholder, (v) transfers of stock or similar equity units in publicly traded companies or (vi) a substitution or release of collateral within the parameters of paragraphs (27) and (32) herein or the exceptions thereto set forth in Appendix VI attached to this prospectus supplement, or (vii) by reason of any mezzanine debt that existed at the origination of the related Mortgage Loan, or future permitted mezzanine debt or (b) the related Mortgaged Property is encumbered with a subordinate lien or security interest against the related Mortgaged Property, other than (i) any Serviced Companion Loan or Non-Serviced Companion Loan or any subordinate debt that existed at origination and is permitted under the related Mortgage Loan documents, (ii) purchase money security interests, (iii) any Crossed Mortgage Loan, as set forth on Appendix I to this prospectus supplement or (iv) Permitted Encumbrances. The Mortgage or other Mortgage Loan documents provide that to the extent any Rating Agency fees are incurred in connection with the review of and consent to any transfer or encumbrance, the Mortgagor is responsible for such payment along with all other reasonable fees and expenses incurred by the Mortgagee relative to such transfer or encumbrance.
(31)Single-Purpose Entity. Each Mortgage Loan requires the Mortgagor to be a Single-Purpose Entity for at least as long as the Mortgage Loan is outstanding. Both the Mortgage Loan documents and the organizational documents of the Mortgagor with respect to each Mortgage Loan with a Cut-Off Date Principal Balance in excess of $5 million provide that the Mortgagor is a Single-Purpose Entity, and each Mortgage Loan with a Cut-Off Date Principal Balance of $20 million or more has a counsel’s opinion regarding non-consolidation of the Mortgagor. For this purpose, a “Single-Purpose Entity” shall mean an entity, other than an individual, whose organizational documents (or if the Mortgage Loan has a Cut-Off Date Principal Balance equal to $5 million or less, its organizational documents or the related Mortgage Loan documents) provide substantially to the effect that it was formed or organized solely for the purpose of owning and operating one or more of the Mortgaged Properties securing the Mortgage Loans and prohibit it from engaging in any business unrelated to such Mortgaged Property or Mortgaged Properties, and whose organizational documents further provide, or which entity represented in the related Mortgage Loan documents, substantially to the effect that it does not have any assets other than those related to its interest in and operation of such Mortgaged Property or Mortgaged Properties, or any indebtedness other than as permitted by the related Mortgage(s) or the other related Mortgage Loan documents, that it has its own books and records and accounts separate and apart from those of any other person (other than a Mortgagor for a Crossed Mortgage Loan), and that it holds itself out as a legal entity, separate and apart from any other person or entity.
(32)Defeasance. With respect to any Mortgage Loan that, pursuant to the Mortgage Loan documents, can be defeased (a “Defeasance”), (i) the Mortgage Loan documents provide for Defeasance as a unilateral right of the Mortgagor, subject to satisfaction of conditions specified in the Mortgage Loan documents; (ii) the Mortgage Loan cannot be defeased within two years after the Closing Date; (iii) the Mortgagor is permitted to pledge only United States “government securities” within the meaning of Section 1.860G-2(a)(8)(ii) of the Treasury Regulations, the revenues from which will, in the case of a full Defeasance, be sufficient to make all scheduled payments under the Mortgage Loan when due, including the entire remaining principal balance on the maturity date (or on or after the first date on which payment may be made without payment of a yield maintenance charge or prepayment penalty) or, if the Mortgage Loan is an ARD Loan, the entire principal balance outstanding on the Anticipated Repayment Date, and if the Mortgage Loan permits partial releases of real property in connection with partial Defeasance, the revenues from the collateral will be sufficient to pay all such scheduled payments calculated on a principal amount equal to a specified percentage at least equal to the lesser of (a) 110% of the allocated loan amount for the real property to be released and (b) the outstanding principal balance of the Mortgage Loan; (iv) the Mortgagor is required to provide a certification from an independent certified public accountant that the collateral is sufficient to make all scheduled payments under the Mortgage Note as set forth in clause (iii) above; (v) if the Mortgagor would continue to own assets in addition to the defeasance collateral, the portion of the Mortgage Loan secured by Defeasance collateral is required to be assumed (or the Mortgagee may require such assumption) by a Single-Purpose Entity; (vi) the Mortgagor is required to provide an opinion of counsel that the Mortgagee has a perfected security interest in such collateral prior to any other claim or interest; and (vii) the Mortgagor is required to pay all rating agency fees associated with Defeasance (if rating confirmation is a specific condition precedent thereto) and all other reasonable expenses associated with Defeasance, including, but not limited to, accountant’s fees and opinions of counsel.
(33)Fixed Interest Rates. Each Mortgage Loan bears interest at a rate that remains fixed throughout the remaining term of such Mortgage Loan, except in the case of ARD loans and situations where default interest is imposed.
(34)Ground Leases. For purposes of the Mortgage Loan Purchase Agreement, a “Ground Lease” shall mean a lease creating a leasehold estate in real property where the fee owner as the ground lessor conveys for a term or terms of years its entire interest in the land (or, with respect to air rights leases, the air) and buildings and other improvements, if any, comprising the premises demised under such lease to the ground lessee (who may, in certain circumstances, own the building and improvements on the land), subject to the reversionary interest of the ground lessor as fee owner and does not include industrial development agency or similar leases for purposes of conferring a tax abatement or other benefit.
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With respect to any Mortgage Loan where the Mortgage Loan is secured by a leasehold estate under a Ground Lease in whole or in part, and the related Mortgage does not also encumber the related lessor’s fee interest in such Mortgaged Property, based upon the terms of the Ground Lease and any estoppel or other agreement received from the ground lessor in favor of Seller, its successors and assigns, Seller represents and warrants that:
(a) The Ground Lease or a memorandum regarding such Ground Lease has been duly recorded or submitted for recordation in a form that is acceptable for recording in the applicable jurisdiction. The Ground Lease or an estoppel or other agreement received from the ground lessor permits the interest of the lessee to be encumbered by the related Mortgage and does not restrict the use of the related Mortgaged Property by such lessee, its successors or assigns in a manner that would materially adversely affect the security provided by the related Mortgage;
(b) The lessor under such Ground Lease has agreed in a writing included in the related Mortgage File (or in such Ground Lease) that the Ground Lease may not be amended or modified, or canceled or terminated by agreement of lessor and lessee, without the prior written consent of the lender, and no such consent has been granted by the Seller since the origination of the Mortgage Loan except as reflected in any written instruments which are included in the related Mortgage File;
(c) The Ground Lease has an original term (or an original term plus one or more optional renewal terms, which, under all circumstances, may be exercised, and will be enforceable, by either Mortgagor or the Mortgagee) that extends not less than 20 years beyond the stated maturity of the related Mortgage Loan, or 10 years past the stated maturity if such Mortgage Loan fully amortizes by the stated maturity (or with respect to a Mortgage Loan that accrues on an actual 360 basis, substantially amortizes);
(d) The Ground Lease either (i) is not subject to any liens or encumbrances superior to, or of equal priority with, the Mortgage, except for the related fee interest of the ground lessor and thePermitted Encumbrances, or (ii) is subject to a subordination, non-disturbance and attornment agreement to which the Mortgagee on the lessor’s fee interest in the Mortgaged Property is subject;
(e) The Ground Lease does not place commercially unreasonable restrictions on the identity of the Mortgagee and the Ground Lease is assignable (including pursuant to foreclosure) to the holder of the Mortgage Loan and its successors and assigns without the consent of the lessor thereunder, and in the event it is so assigned, it is further assignable by the holder of the Mortgage Loan and its successors and assigns without the consent of the lessor;
(f) Seller has not received any written notice of material default under or notice of termination of such Ground Lease. To Seller’s knowledge, there is no material default under such Ground Lease and no condition that, but for the passage of time or giving of notice, would result in a material default under the terms of such Ground Lease and to Seller’s knowledge, such Ground Lease is in full force and effect as of the Closing Date;
(g) The Ground Lease or ancillary agreement between the lessor and the lessee requires the lessor to give to the lender written notice of any default, and provides that no notice of default or termination is effective against the lender unless such notice is given to the lender;
(h) A lender is permitted a reasonable opportunity (including, where necessary, sufficient time to gain possession of the interest of the lessee under the Ground Lease through legal proceedings) to cure any default under the Ground Lease which is curable after the lender’s receipt of notice of any default before the lessor may terminate the Ground Lease;
(i) The Ground Lease does not impose any restrictions on subletting that would be viewed as commercially unreasonable by Seller in connection with loans originated for securitization;
(j) Under the terms of the Ground Lease, an estoppel or other agreement received from the ground lessor and the related Mortgage (taken together), any related insurance proceeds or the portion of the condemnation award allocable to the ground lessee’s interest (other than (i)de minimis amounts for minor casualties or (ii) in respect of a total or substantially total loss or taking as addressed in clause (k) below) will be applied either to the repair or to restoration of all or part of the related Mortgaged Property with (so long as such proceeds are in excess of the threshold amount specified in the related Mortgage Loan documents) the lender or a trustee appointed by it having the right to hold and disburse such proceeds as repair or restoration progresses, or to the payment of the outstanding principal balance of the Mortgage Loan, together with any accrued interest;
(k) In the case of a total or substantially total taking or loss, under the terms of the Ground Lease, an estoppel or other agreement and the related Mortgage (taken together), any related insurance proceeds, or portion of the condemnation award allocable to ground lessee’s interest in respect of a total or substantially total loss or taking of the related Mortgaged Property to the extent not applied to restoration, will be applied first to the payment of the outstanding principal balance of the Mortgage Loan, together with any accrued interest; and
(l) Provided that the lender cures any defaults which are susceptible to being cured, the ground lessor has agreed to enter into a new lease with lender upon termination of the Ground Lease for any reason, including rejection of the Ground Lease in a bankruptcy proceeding.
(35)Servicing. The servicing and collection practices used by Seller with respect to the Mortgage Loan have been, in all respects, legal and have met customary industry standards for servicing of commercial loans for conduit loan programs.
(36)Origination and Underwriting. The origination practices of Seller (or the related originator if Seller was not the originator) with respect to each Mortgage Loan have been, in all material respects, legal and as of the date of its origination, such Mortgage Loan and the origination thereof complied in all material respects with, or was exempt from, all requirements of federal, state or local law relating to the origination of such Mortgage Loan; provided, that such representation and warranty does not address or otherwise cover any matters with respect to federal, state or local law otherwise covered in this Appendix V.
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(37)No Material Default; Payment Record. No Mortgage Loan has been more than 30 days delinquent, without giving effect to any grace or cure period, in making required payments since origination, and as of the date hereof, no Mortgage Loan is more than 30 days delinquent (beyond any applicable grace or cure period) in making required payments as of the Closing Date. To Seller’s knowledge, there is (a) no material default, breach, violation or event of acceleration existing under the related Mortgage Loan, or (b) no event (other than payments due but not yet delinquent) 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, which default, breach, violation or event of acceleration, in the case of either clause (a) or clause (b), materially and adversely affects the value of the Mortgage Loan or the value, use or operation of the related Mortgaged Property,provided, that this representation and warranty does not cover any default, breach, violation or event of acceleration that specifically pertains to or arises out of an exception scheduled to any other representation and warranty made by Seller in this Appendix V. No person other than the holder of such Mortgage Loan may declare any event of default under the Mortgage Loan or accelerate any indebtedness under the Mortgage Loan documents.
(38)Bankruptcy. As of the date of origination of the related Mortgage Loan and to the Seller’s knowledge as of the Cut-Off Date, neither the Mortgaged Property (other than any tenants of such Mortgaged Property), nor any portion thereof, is the subject of, and no Mortgagor, guarantor or tenant occupying a single-tenant property is a debtor in state or federal bankruptcy, insolvency or similar proceeding.
(39)Organization of Mortgagor. With respect to each Mortgage Loan, in reliance on certified copies of the organizational documents of the Mortgagor delivered by the Mortgagor in connection with the origination of such Mortgage Loan, the Mortgagor is an entity organized under the laws of a state of the United States of America, the District of Columbia or the Commonwealth of Puerto Rico. Except with respect to any Crossed Mortgage Loan, no Mortgage Loan has a Mortgagor that is an Affiliate of another Mortgagor. An “Affiliate” for purposes of this paragraph (39) means, a Mortgagor that is under direct or indirect common ownership and control with another Mortgagor.
(40)Environmental Conditions. A Phase I environmental site assessment (or update of a previous Phase I and or Phase II site assessment) and, with respect to certain Mortgage Loans, a Phase II environmental site assessment (collectively, an “ESA”) meeting ASTM requirements conducted by a reputable environmental consultant in connection with such Mortgage Loan within 12 months prior to its origination date (or an update of a previous ESA was prepared), and such ESA (i) did not identify the existence of Recognized Environmental Conditions (as such term is defined in ASTM E1527-05 or its successor, hereinafter “Environmental Condition”) at the related Mortgaged Property or the need for further investigation, or (ii) if the existence of an Environmental Condition or need for further investigation was indicated in any such ESA, then at least one of the following statements is true: (A) an amount reasonably estimated by a reputable environmental consultant to be sufficient to cover the estimated cost to cure any material noncompliance with applicable Environmental Laws or the Environmental Condition has been escrowed by the related Mortgagor and is held or controlled by the related lender; (B) if the only Environmental Condition relates to the presence of asbestos-containing materials, radon in indoor air, lead based paint or lead in drinking water, the only recommended action in the ESA is the institution of such a plan, an operations or maintenance plan has been required to be instituted by the related Mortgagor that can reasonably be expected to mitigate the identified risk; (C) the Environmental Condition identified in the related environmental report was remediated, abated or contained in all material respects prior to the date hereof, and, if and as appropriate, a no further action, completion or closure letter or its equivalent, was obtained from the applicable governmental regulatory authority (or the Environmental Condition affecting the related Mortgaged Property was otherwise listed by such governmental authority as “closed” or a reputable environmental consultant has concluded that no further action or investigation is required); (D) an environmental policy or a lender’s pollution legal liability insurance policy that covers liability for the Environmental Condition was obtained from an insurer rated no less than “A-” (or the equivalent) by Moody’s, S&P and/or Fitch; (E) a party not related to the Mortgagor was identified as the responsible party for the Environmental Condition and such responsible party has financial resources reasonably estimated to be adequate to address the situation; or (F) a party related to the Mortgagor having financial resources reasonably estimated to be adequate to address the situation is required to take action. To Seller’s knowledge, except as set forth in the ESA, the Mortgage File or this prospectus supplement, there is no Environmental Condition at the related Mortgaged Property.
(41)Appraisal. The Mortgage File contains an appraisal of the related Mortgaged Property with an appraisal date within 6 months of the Mortgage Loan origination date, and within 12 months of the Closing Date. The appraisal is signed by an appraiser who is a Member of the Appraisal Institute (“MAI”) and that (i) was engaged directly by the originator of the Mortgage Loan or Seller, or a correspondent or agent of the originator of the Mortgage Loan or Seller, and (ii) to Seller’s knowledge, had no interest, direct or indirect, in the Mortgaged Property or the Mortgagor or in any loan made on the security thereof, and whose compensation is not affected by the approval or disapproval of the Mortgage Loan. Each appraiser has represented in such appraisal or in a supplemental letter that the appraisal satisfies the requirements of the “Uniform Standards of Professional Appraisal Practice” as adopted by the Appraisal Standards Board of the Appraisal Foundation.
(42)Mortgage Loan Schedule. The information pertaining to each Mortgage Loan which is set forth in the Mortgage Loan Schedule attached as an exhibit to the Mortgage Loan Purchase Agreement is true and correct in all material respects as of the Cut-Off Date and contains all information required by the Pooling and Servicing Agreement to be contained therein.
(43)Cross-Collateralization. No Mortgage Loan is cross-collateralized or cross-defaulted with any other Mortgage Loan that is outside the Trust, except as set forth onSchedule 2-B ofExhibit 2 to the Mortgage Loan Purchase Agreement.
(44)Advance of Funds by Seller. After origination, no advance of funds has been made by Seller to the related Mortgagor other than in accordance with the Mortgage Loan documents, and, to Seller’s knowledge, no funds have been received from any person other than the related Mortgagor or an affiliate for, or on account of, payments due on the Mortgage Loan (other than as contemplated by the Mortgage Loan documents, such as, by way of example and not in limitation of the foregoing, amounts paid by the tenant(s) into a lender-controlled lockbox if required or contemplated under the related lease or Mortgage Loan documents). Neither Seller nor any affiliate thereof has any obligation to make any capital contribution to any Mortgagor under a Mortgage Loan, other than contributions made on or prior to the date hereof.
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(45)Compliance with Anti-Money Laundering Laws. Seller has complied in all material respects with all applicable anti-money laundering laws and regulations, including without limitation the USA Patriot Act of 2001 with respect to the origination of the Mortgage Loan, the failure to comply with which would have a material adverse effect on the Mortgage Loan.
For purposes of these representations and warranties, the phrases “the Seller’s knowledge” or “the Seller’s belief” and other words and phrases of like import shall mean, except where otherwise expressly set forth herein, the actual state of knowledge or belief of the Seller, its officers and employees directly responsible for the underwriting, origination, servicing or sale of the Mortgage Loans regarding the matters expressly set forth herein.
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APPENDIX VI
EXCEPTIONS TO MORTGAGE LOAN REPRESENTATIONS AND WARRANTIES
APPENDIX I ID# | Mortgage Loan | Representation | Exception | ||||
3 | 32 Old Slip Fee | (1) Whole Loan; Ownership of Mortgage Loans | The related Mortgage Loan also secures three additional promissory notes: promissory note A-1 in the original principal amount of $50,000,000, promissory note A-3 in the original principal amount of $36,000,000 and promissory note A-4 in the original principal amount of $30,000,000, which have a combined outstanding balance of $106,000,000. | ||||
2 | 300 South Riverside Plaza | (1) Whole Loan; Ownership of Mortgage Loans | The related Mortgage Loan also secures one additional promissory note: promissory note A-1 in the original principal amount of $100,000,000. | ||||
5 | Alderwood Mall | (1) Whole Loan; Ownership of Mortgage Loans | The related Mortgage Loan also secures five additional promissory notes: promissory note A-1-1 in the original principal amount of $64,800,000, promissory note A-1-2 in the original principal amount of $63,000,000, promissory note A-1-4 in the original principal amount of $49,000,000, promissory note A-2-1 in the original principal amount of $64,800,000 and promissory note A-2-2 in the original principal amount of $63,000,000, which have a combined outstanding balance of $304,600,000. | ||||
8 | Hilton Garden Inn W 54th Street | (1) Whole Loan; Ownership of Mortgage Loans | The related Mortgage Loan also secures three additional promissory notes: promissory note A-1 in the original principal amount of $75,000,000, promissory note A-3 in the original principal amount of $40,000,000 and promissory note B in the original principal amount of $20,000,000, which have a combined outstanding balance of $135,000,000. | ||||
1 | TKG 3 Retail Portfolio | (1) Whole Loan; Ownership of Mortgage Loans | The related Mortgage Loan also secures two additional promissory notes: promissory note A-2 in the original principal amount of $33,708,750 and promissory note A-3 in the original principal amount of $46,000,000, which have a combined outstanding balance of $79,708,750. | ||||
4 | Waterfront at Port Chester | (1) Whole Loan; Ownership of Mortgage Loans | The related Mortgage Loan also secures one additional promissory note: promissory note A-1 in the original principal amount of $80,000,000. | ||||
3 | 32 Old Slip Fee | (5) Lien; Valid Assignment | There are two encumbrances that would be prior to the lien of the related Mortgage: the related Mortgagor’s fee interest in the Mortgaged Property is encumbered by (i) a Ground Lease and the Mortgage is subordinate to the Ground Lease and (ii) a master lease and the Mortgage is subordinate to the master lease. The master tenant’s leasehold interest under the master lease is additional collateral for the Mortgaged Loan. | ||||
2 | 300 South Riverside Plaza Fee | (5) Lien; Valid Assignment | There is an encumbrance that would be prior to the lien of the related Mortgage, the related Mortgagor’s fee interest in the Mortgaged Property is encumbered by a Ground Lease and the Mortgage is subordinate to the Ground Lease. | ||||
3 | 32 Old Slip Fee | (6) Permitted Liens; Title Insurance | There is an encumbrance that would be prior to the lien of the related Mortgage, the related Mortgagor’s fee interest in the Mortgaged Property is encumbered by a Ground Lease and the Mortgage is subordinate to the Ground Lease. | ||||
2 | 300 South Riverside Plaza Fee | (6) Permitted Liens; Title Insurance | There is an encumbrance that would be prior to the lien of the related Mortgage, the related Mortgagor’s fee interest in the Mortgaged Property is encumbered by a Ground Lease and the Mortgage is subordinate to the Ground Lease. | ||||
8 | Hilton Garden Inn W 54th Street | (7) Junior Liens | A mezzanine loan in the original amount of $25,000,000 was originated simultaneously with the Mortgage Loan. | ||||
9 | Premier Apartments | (7) Junior Liens | A mezzanine loan in the original amount of $5,250,000 was originated simultaneously with the Mortgage Loan. |
VI-1 |
APPENDIX I ID# | Mortgage Loan | Representation | Exception | ||||
3 | 32 Old Slip Fee | (16) Insurance | The Mortgaged Property is permitted to be insured by insurance companies which do not meet the rating requirements (an “Otherwise Rated Insurer”) provided Mortgagor (1) obtains a “cut-through” endorsement (that is, an endorsement which permits recovery against the provider of such endorsement) with respect to any Otherwise Rated Insurer from an insurance company which meets the following insurer financial strength ratings: “A” by S&P and Fitch and/or “A2” by Moody’s (the “Other Required Ratings”), and/or (2) maintain insurance required from an Otherwise Rated Insurer, provided the parent of such Otherwise Rated Insurer, which owns at least fifty-one percent (51%) of such Otherwise Rated Insurer, is otherwise approved by the Rating Agencies.
The Mortgage Loan documents require restoration and use of insurance proceeds in respect of a property loss to be governed by the Ground Lease. The Ground Lease provides that the ground lessee may elect whether or not to restore the improvements at the Mortgaged Property following a casualty. If the ground lessee has elected to restore the improvements at the Mortgaged Property and the insurance proceeds are less than $15,000,000, the insurance proceeds shall be paid to the ground lessee or its qualifying leasehold mortgagee. If the ground lessee has elected to restore the improvements at the Mortgaged Property and the insurance proceeds are $15,000,000 or more, the insurance proceeds shall be paid to a qualifying leasehold mortgagee or, if there is no qualifying leasehold mortgage, to an institutional lender selected by the fee mortgagee, or if there is no fee mortgage, to an institutional lender selected by the ground lessor. In each case, the insurance proceeds shall be held in a trust in an eligible account to be applied to the repair or restoration of the improvements at the Mortgaged Property. If the ground lessee elects not to restore the improvements at the Mortgaged Property, the ground lessee shall receive the insurance proceeds only after it has provided a letter of credit to the landlord under the Ground Lease in an amount equal to the pro rata portion of the present value of all base rent payable through the remainder of the term based on the percentage of space lease revenue affected by the casualty. Pursuant to the Mortgage Loan documents, the lender holds the letter of credit as additional collateral, subject to the terms of the Ground Lease.
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6 | 841-853 Broadway | (16) Insurance | Group coverage provided by a syndicate of five or more insurers is permitted provided that at least 75% of the coverage is with carriers having a financial strength of at least “A” by S&P and the remaining 25% of the coverage is with carriers having a financial strength rating of at least “BBB-” by S&P. | ||||
5 | Alderwood Mall | (16) Insurance | The Mortgaged Property is permitted to be insured by Ironshore Specialty Insurance Company (“Ironshore”), rated “Baa1” by Moody’s and “A:XIV” by A.M. Best, an insurance company which does not meet the rating requirements (an “Otherwise Rated Insurer”), provided the claims-paying or financial strength ratings of Ironshore are not withdrawn or downgraded. In the event that Ironshore’s rating is withdrawn or downgraded, the Mortgage Loan documents require the Mortgagor to notify lender and replace Ironshore with an insurer meeting the Insurance Rating Requirements.
The Mortgaged Property is covered and required to be covered pursuant to the related Mortgage Loan documents, by a commercial general liability insurance policy including coverage for property damage, contractual damage and personal injury with a limit of $1 million per occurrence and $1 million in the aggregate. | ||||
11 | Northeastern Apartments | (16) Insurance | The Mortgage Loan documents require property insurance policies to be issued by insurers having a financial strength rating of at least “A-” from S&P or Fitch.
The Mortgaged Property is covered, and required to be covered pursuant to the related Mortgage Loan documents, by business interruption insurance which covers a period of six (6) months.
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1 | TKG 3 Retail Portfolio | (16) Insurance | The Mortgage Loan documents permit the cancellation or termination of insurance policies (other than commercial liability insurance policies), provided the lender receives at least 10 days prior notice, if such cancellation or termination arises for any of the following reasons: (i) nonpayment of any premium, (ii) conviction of a crime related to a covered loss, (iii) fraud or material misrepresentation in obtaining the insurance policy or pursuing a claim, (iv) a willful or reckless act or omission increasing the likelihood of a covered loss, or (v) as may be required by applicable law. | ||||
35 | Walgreens – Midlothian, IL | (17) Access; Utilities; Separate Tax Lots | The Mortgaged Property’s tax parcel includes property which in not part of the Mortgaged Property but the lender is not escrowing for taxes for this purpose because the sole tenant is responsible for paying the property tax payments directly and the lender expects that separate tax lots will be created before the next property tax payments are due. |
VI-2 |
APPENDIX I ID# | Mortgage Loan | Representation | Exception | ||||
3 | 32 Old Slip Fee | (26) Recourse Obligations | The Mortgage Loan documents (1) contain provisions providing for recourse against the Mortgagor or guarantor for losses and damages sustained in the case of Mortgagor’s fraud or intentional misrepresentation, but only to the extent such intentional misrepresentation is in connection with (i) that certain application letter between 301 West 45th Street, LLC (a partial owner of Mortgagor) and lender, dated December 1, 2014, and any questionnaires delivered in connection therewith, (ii) the closing process of the Mortgage Loan, or (iii) any representation, certification, information or statement contained in the Mortgage Loan documents or otherwise delivered to lender during the term of the Mortgage Loan, and (2) contain provisions providing for recourse against the Mortgagor or guarantor for the commission of material physical waste at the Mortgaged Property but excluding (i) deterioration or (ii) failure to repair to the extent cash flow from the Mortgaged Property is insufficient to make such repairs. | ||||
2 | 300 South Riverside Plaza Fee | (26) Recourse Obligations | The Mortgage Loan documents (1) contain provisions providing for recourse against the Mortgagor or guarantor for written misrepresentation, and (ii) contain provisions providing for recourse against the Mortgagor or guarantor for material breaches of environmental covenants in the Mortgage Loan documents. | ||||
6 | 841-853 Broadway | (26) Recourse Obligations | The Mortgage Loan documents do not contain provisions providing for recourse against the Mortgagor or guarantor for misappropriation of security deposits or, alternatively, the failure of any security deposits to be delivered to lender upon foreclosure or action in lieu thereof. | ||||
5 | Alderwood Mall | (26) Recourse Obligations | The Mortgage Loan documents (i) contain provisions providing for recourse against the Mortgagor or guarantor for voluntary transfers of either the Mortgaged Property or equity interests in Mortgagor made in violation of the Mortgage Loan documents but limit recourse to losses related to such voluntary transfers, and (ii) contain provisions providing for recourse against the Mortgagor or guarantor for material breaches of environmental covenants in the Mortgage Loan documents. | ||||
14 | Grapevine Town Center | (26) Recourse Obligations | The Mortgage Loan documents (i) only contain provisions providing for recourse against the guarantor in the event that Mortgagor (or Mortgagor’s general partner(s), if Mortgagor is a partnership, or its managing members, if Mortgagor is a limited liability company (“SPC Party”)), files a voluntary petition under the Bankruptcy Code or any other federal or state bankruptcy or insolvency law and (ii) do not contain provisions providing for recourse against the guarantor if Mortgagor or any SPC Party that files an answer consenting to or otherwise acquiescing in or joining in any involuntary petition filed against it, by any other Person under the Bankruptcy Code or any other federal or state bankruptcy or insolvency law, or solicits or causes to be solicited petitioning creditors for any involuntary petition from any Person. The Mortgage Loan documents contain all of the standard provisions providing for full recourse against the Mortgagor. | ||||
8 | Hilton Garden Inn W. 54th Street | (26) Recourse Obligations | The Mortgage Loan documents (1) contain provisions providing for recourse against the Mortgagor or guarantor for voluntary transfers of the Mortgaged Property or equity interests in the Mortgagor made in violation of the Mortgage Loan documents for actual losses only, (2) contain provisions providing for recourse against the Mortgagor or guarantor for willful misconduct only if it is material, and (3) do not contain provisions providing for recourse against the Mortgagor or guarantor for commission of material physical waste at the Mortgaged Property. | ||||
10 | West Valley Medical Center | (26) Recourse Obligations | The Mortgage Loan documents contain provisions providing for recourse against the Mortgagor or guarantor for breaches of environmental covenants in the Mortgage Loan documents only if such breaches are material. | ||||
3 | 32 Old Slip Fee | (32) Defeasance | The Mortgage Loan documents contain provisions stating that defeasance payments (including the outstanding principal balance of the Mortgage Loan) are only required to be made through the permitted prepayment date in November 2024, which is six months prior to the maturity date of the Mortgage Loan. | ||||
5 | Alderwood Mall | (32) Defeasance | Pursuant to the Mortgage Loan documents, the Mortgage Loan may be defeased on the date that is the earlier of (a) thirty six (36) months from the Closing Date or (b) two (2) years from the “startup” date within the meaning of Section 1.860G(a)(9) of the Code of the REMIC Trust established in connection with the last securitization involving any portion of the Mortgage Loan. |
VI-3 |
APPENDIX I ID# | Mortgage Loan | Representation | Exception | ||||
24 | San Marcos Civic Center | (34) Ground Lease | The Ground Lease does not provide that the ground lessor must obtain the consent of the lender prior to terminating the Ground Lease, but the lender has the right to enter into a replacement Ground Lease with the ground lessor on the same terms as the terminated Ground Lease provided that the lender provides notice, pays all costs, and remedies all defaults. Under the Ground Lease, in the case of a loss where the reasonable cost estimate to reconstruct the improvements exceeds 50% of the replacement value of the improvements, the Mortgagor may terminate the Ground Lease and in such event, the insurance proceeds allocable to the Mortgagor’s interest must be used to return the Mortgaged Property to a safe and broom clean condition with the remaining insurance proceeds to be paid to the ground lessor and not to the payment of the outstanding principal balance of the Mortgage Loan. However, under the Mortgage Loan documents, the Mortgagor (1) is prohibited form terminating the Ground Lease and (2) is required to rebuild the improvements in the case of a loss. | ||||
25
| Ashleye Village Apartments
| (39) Organization of Mortgagor | The Mortgagors for the two (2) Mortgage Loans are Affiliates. | ||||
30 | Club at Springlake | ||||||
54
| CVS - West Columbia, SC
| (39) Organization of Mortgagor | The Mortgagors for the two (2) Mortgage Loans are Affiliates. | ||||
50 | Walgreens - Panama City Beach | ||||||
27
| Holiday Inn Express & Suites Richmond
| (39) Organization of Mortgagor | The Mortgagors for the two (2) Mortgage Loans are Affiliates. | ||||
22 | Homewood Suites Chester | ||||||
3 | 32 Old Slip Fee | (43) Cross-Collateralization | The related Mortgage Loan also secures three additional promissory notes: promissory note A-1 in the original principal amount of $50,000,000, promissory note A-3 in the original principal amount of $36,000,000 and promissory note A-4 in the original principal amount of $30,000,000, which have a combined outstanding balance of $106,000,000. | ||||
2 | 300 South Riverside Plaza | (43) Cross-Collateralization | The related Mortgage Loan also secures one additional promissory note: promissory note A-1 in the original principal amount of $100,000,000. | ||||
5 | Alderwood Mall | (43) Cross-Collateralization | The related Mortgage Loan also secures five additional promissory notes: promissory note A-1-1 in the original principal amount of $64,800,000, promissory note A-1-2 in the original principal amount of $63,000,000, promissory note A-1-4 in the original principal amount of $49,000,000, promissory note A-2-1 in the original principal amount of $64,800,000 and promissory note A-2-2 in the original principal amount of $63,000,000, which have a combined outstanding balance of $304,600,000. | ||||
8 | Hilton Garden Inn W 54th Street | (43) Cross-Collateralization | The related Mortgage Loan also secures three additional promissory notes: promissory note A-1 in the original principal amount of $75,000,000, promissory note A-3 in the original principal amount of $40,000,000 and promissory note B in the original principal amount of $20,000,000, which have a combined outstanding balance of $135,000,000. | ||||
1 | TKG 3 Retail Portfolio | (43) Cross-Collateralization | The related Mortgage Loan also secures two additional promissory notes: promissory note A-2 in the original principal amount of $33,708,750 and promissory note A-3 in the original principal amount of $46,000,000, which have a combined outstanding balance of $79,708,750. | ||||
4 | Waterfront at Port Chester | (43) Cross-Collateralization | The related Mortgage Loan also secures one additional promissory note: promissory note A-1 in the original principal amount of $80,000,000. |
VI-4 |
APPENDIX VII
Class A-SB Planned Principal Balance
Month | Balance ($) | Month | Balance ($) | Month | Balance($) | |||||
0 | 45,200,000.00 | 40 | 45,200,000.00 | 80 | 29,585,627.91 | |||||
1 | 45,200,000.00 | 41 | 45,200,000.00 | 81 | 28,834,098.54 | |||||
2 | 45,200,000.00 | 42 | 45,200,000.00 | 82 | 28,038,927.89 | |||||
3 | 45,200,000.00 | 43 | 45,200,000.00 | 83 | 27,282,006.52 | |||||
4 | 45,200,000.00 | 44 | 45,200,000.00 | 84 | 26,481,599.45 | |||||
5 | 45,200,000.00 | 45 | 45,200,000.00 | 85 | 25,719,248.70 | |||||
6 | 45,200,000.00 | 46 | 45,200,000.00 | 86 | 24,954,241.13 | |||||
7 | 45,200,000.00 | 47 | 45,200,000.00 | 87 | 24,145,981.21 | |||||
8 | 45,200,000.00 | 48 | 45,200,000.00 | 88 | 23,375,488.24 | |||||
9 | 45,200,000.00 | 49 | 45,200,000.00 | 89 | 22,561,901.20 | |||||
10 | 45,200,000.00 | 50 | 45,200,000.00 | 90 | 21,785,884.81 | |||||
11 | 45,200,000.00 | 51 | 45,200,000.00 | 91 | 21,007,163.56 | |||||
12 | 45,200,000.00 | 52 | 45,200,000.00 | 92 | 20,105,301.13 | |||||
13 | 45,200,000.00 | 53 | 45,200,000.00 | 93 | 19,320,715.11 | |||||
14 | 45,200,000.00 | 54 | 45,200,000.00 | 94 | 18,493,441.67 | |||||
15 | 45,200,000.00 | 55 | 45,200,000.00 | 95 | 17,703,234.52 | |||||
16 | 45,200,000.00 | 56 | 45,200,000.00 | 96 | 16,870,502.14 | |||||
17 | 45,200,000.00 | 57 | 45,200,000.00 | 97 | 16,074,634.89 | |||||
18 | 45,200,000.00 | 58 | 45,200,000.00 | 98 | 15,275,992.96 | |||||
19 | 45,200,000.00 | 59 | 45,200,000.00 | 99 | 14,435,069.18 | |||||
20 | 45,200,000.00 | 60 | 45,120,103.86 | 100 | 13,630,708.68 | |||||
21 | 45,200,000.00 | 61 | 44,397,914.55 | 101 | 12,784,231.34 | |||||
22 | 45,200,000.00 | 62 | 43,673,199.97 | 102 | 11,974,112.63 | |||||
23 | 45,200,000.00 | 63 | 42,901,094.74 | 103 | 11,161,169.11 | |||||
24 | 45,200,000.00 | 64 | 42,171,143.23 | 104 | 10,267,321.97 | |||||
25 | 45,200,000.00 | 65 | 41,393,952.11 | 105 | 9,448,422.47 | |||||
26 | 45,200,000.00 | 66 | 40,658,727.22 | 106 | 8,587,825.63 | |||||
27 | 45,200,000.00 | 67 | 39,920,931.07 | 107 | 7,763,067.10 | |||||
28 | 45,200,000.00 | 68 | 39,047,255.59 | 108 | 6,896,780.29 | |||||
29 | 45,200,000.00 | 69 | 38,303,815.17 | 109 | 6,066,122.10 | |||||
30 | 45,200,000.00 | 70 | 37,513,524.19 | 110 | 5,232,566.84 | |||||
31 | 45,200,000.00 | 71 | 36,764,716.54 | 111 | 4,357,737.12 | |||||
32 | 45,200,000.00 | 72 | 35,969,213.13 | 112 | 3,518,221.20 | |||||
33 | 45,200,000.00 | 73 | 35,215,000.90 | 113 | 2,637,602.80 | |||||
34 | 45,200,000.00 | 74 | 34,458,150.37 | 114 | 1,792,084.89 | |||||
35 | 45,200,000.00 | 75 | 33,654,836.07 | 115 | 943,617.62 | |||||
36 | 45,200,000.00 | 76 | 32,892,525.00 | 116 and | ||||||
37 | 45,200,000.00 | 77 | 32,083,907.66 | thereafter | 0.00 | |||||
38 | 45,200,000.00 | 78 | 31,316,098.07 | |||||||
39 | 45,200,000.00 | 79 | 30,545,602.19 | |||||||
VII-1 |
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APPENDIX VIII
ALDERWOOD MALL MORTGAGE LOAN
AMORTIZATION SCHEDULE
Due Date | Principal ($) | Due Date | Principal ($) | Due Date | Principal ($) | ||||||
8/1/2015 | 117,159.13 | 4/1/2019 | 134,219.69 | 12/1/2022 | 160,016.52 | ||||||
9/1/2015 | 117,510.09 | 5/1/2019 | 141,656.19 | 1/1/2023 | 154,073.44 | ||||||
10/1/2015 | 125,437.17 | 6/1/2019 | 135,046.10 | 2/1/2023 | 154,534.98 | ||||||
11/1/2015 | 118,237.86 | 7/1/2019 | 142,458.34 | 3/1/2023 | 174,129.32 | ||||||
12/1/2015 | 126,143.58 | 8/1/2019 | 135,877.39 | 4/1/2023 | 155,519.53 | ||||||
1/1/2016 | 118,969.93 | 9/1/2019 | 136,284.42 | 5/1/2023 | 162,330.68 | ||||||
2/1/2016 | 119,326.31 | 10/1/2019 | 143,660.30 | 6/1/2023 | 156,471.68 | ||||||
3/1/2016 | 134,716.38 | 11/1/2019 | 137,123.02 | 7/1/2023 | 163,254.88 | ||||||
4/1/2016 | 120,087.32 | 12/1/2019 | 144,474.28 | 8/1/2023 | 157,429.45 | ||||||
5/1/2016 | 127,938.74 | 1/1/2020 | 137,966.57 | 9/1/2023 | 157,901.04 | ||||||
6/1/2016 | 120,830.30 | 2/1/2020 | 138,379.86 | 10/1/2023 | 164,642.28 | ||||||
7/1/2016 | 128,659.91 | 3/1/2020 | 152,594.06 | 11/1/2023 | 158,867.25 | ||||||
8/1/2016 | 121,577.68 | 4/1/2020 | 139,251.50 | 12/1/2023 | 165,580.12 | ||||||
9/1/2016 | 121,941.87 | 5/1/2020 | 146,540.27 | 1/1/2024 | 159,839.16 | ||||||
10/1/2016 | 129,738.84 | 6/1/2020 | 140,107.62 | 2/1/2024 | 160,317.97 | ||||||
11/1/2016 | 122,695.81 | 7/1/2020 | 147,371.25 | 3/1/2024 | 173,178.28 | ||||||
12/1/2016 | 130,470.64 | 8/1/2020 | 140,968.78 | 4/1/2024 | 161,316.99 | ||||||
1/1/2017 | 123,454.19 | 9/1/2020 | 141,391.07 | 5/1/2024 | 167,957.94 | ||||||
2/1/2017 | 123,824.01 | 10/1/2020 | 148,617.03 | 6/1/2024 | 162,303.36 | ||||||
3/1/2017 | 146,307.28 | 11/1/2020 | 142,259.81 | 7/1/2024 | 168,915.35 | ||||||
4/1/2017 | 124,633.21 | 12/1/2020 | 149,460.27 | 8/1/2024 | 163,295.56 | ||||||
5/1/2017 | 132,351.16 | 1/1/2021 | 143,133.69 | 9/1/2024 | 163,784.72 | ||||||
6/1/2017 | 125,403.03 | 2/1/2021 | 143,562.46 | 10/1/2024 | 170,353.22 | ||||||
7/1/2017 | 133,098.38 | 3/1/2021 | 164,188.97 | 11/1/2024 | 164,785.67 | ||||||
8/1/2017 | 126,177.39 | 4/1/2021 | 144,484.36 | 12/1/2024 | 171,324.78 | ||||||
9/1/2017 | 126,555.37 | 5/1/2021 | 151,619.50 | 1/1/2025 | 165,792.51 | ||||||
10/1/2017 | 134,216.89 | 6/1/2021 | 145,371.36 | 2/1/2025 | 166,289.16 | ||||||
11/1/2017 | 127,336.54 | 7/1/2021 | 152,480.46 | 3/1/2025 | 184,777.80 | ||||||
12/1/2017 | 134,975.12 | 8/1/2021 | 146,263.60 | 4/1/2025 | 167,340.81 | ||||||
1/1/2018 | 128,122.31 | 9/1/2021 | 146,701.75 | 5/1/2025 | 173,804.91 | ||||||
2/1/2018 | 128,506.12 | 10/1/2021 | 153,771.79 | 6/1/2025 | 33,182,606.57 | ||||||
3/1/2018 | 150,548.95 | 11/1/2021 | 147,601.85 | ||||||||
4/1/2018 | 129,342.05 | 12/1/2021 | 154,645.46 | ||||||||
5/1/2018 | 136,921.76 | 1/1/2022 | 148,507.25 | ||||||||
6/1/2018 | 130,139.67 | 2/1/2022 | 148,952.12 | ||||||||
7/1/2018 | 137,695.95 | 3/1/2022 | 169,071.63 | ||||||||
8/1/2018 | 130,941.99 | 4/1/2022 | 149,904.79 | ||||||||
9/1/2018 | 131,334.24 | 5/1/2022 | 156,880.79 | ||||||||
10/1/2018 | 138,855.46 | 6/1/2022 | 150,823.79 | ||||||||
11/1/2018 | 132,143.62 | 7/1/2022 | 157,772.81 | ||||||||
12/1/2018 | 139,641.07 | 8/1/2022 | 151,748.22 | ||||||||
1/1/2019 | 132,957.78 | 9/1/2022 | 152,202.80 | ||||||||
2/1/2019 | 133,356.06 | 10/1/2022 | 159,111.33 | ||||||||
3/1/2019 | 154,942.67 | 11/1/2022 | 153,135.37 | ||||||||
VIII-1 |
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EXHIBIT A
Additional Information Regarding the Alderwood Mall
Non-Serviced Loan Combination
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EXHIBIT A – Additional Information regarding the Alderwood mall Non-serviced Loan combination
Description of the Alderwood Mall Mortgaged Property
General
The Alderwood Mall Non-Serviced Loan Combination is secured by, among other things, a first lien mortgage on the Alderwood Mall Borrower’s fee simple interest in a portion of the Alderwood Mall, a 1,281,602 square foot single-level super-regional mall (the “Mall”) located at 3000 184th Street Southwest in Lynnwood, Washington. The Mall is anchored by Macy’s, Sears, JC Penney, Nordstrom and a Loews Cineplex. The parcels occupied by Macy’s, Sears, JC Penney and Nordstrom, representing approximately 705,898 square feet, are anchor owned parcels (except with respect to the Sears parcel which is owned by a joint venture between General Growth Properties, Inc. (“GGP”), an affiliate of Alderwood Mall L.L.C. (the “Alderwood Mall Borrower”) and GGP/Homart II L.L.C. (the “Alderwood Mall Loan Sponsor”), and Sears (together, “Sears-GGP”) and are not part of the collateral for the Alderwood Mall Non-Serviced Loan Combination. The Loews Cineplex anchor parcel is owned by the Alderwood Mall Borrower and is included in the collateral for the Alderwood Mall Non-Serviced Loan Combination. The term “Alderwood Mall Mortgaged Property” as used in this prospectus supplement, refers to the Mall excluding such anchor owned parcels. The Alderwood Mall Mortgaged Property was 96.4% leased as of the February 28, 2015 rent roll.
Third Party Reports
Appraisal: The Alderwood Mall Mortgaged Property was appraised by Cushman & Wakefield of Oregon, Inc. on April 7, 2015 and the resulting appraisal stated that the “as-is” market value of the Alderwood Mall Mortgaged Property as of March 17, 2015, was $693,500,000.
Engineering Report: Partner Assessment Corporation prepared a property condition report dated March 24, 2015 with respect to the Mall. No significant problems with the conditions of the Mall were reported.
Environmental Assessment: Partner Assessment Corporation prepared a Phase I Environmental Site Assessment Report dated March 23, 2015 with respect to the Mall and found no evidence of spills or other environmental liabilities.
Seismic Risk Assessment: Partner Assessment Corporation prepared a seismic risk assessment report dated March 24, 2015 with respect to the Mall. The Mall is located in seismic zone 3 and the regional seismicity of the Mall is primarily controlled by the Seattle Fault Zone and the Western Cascadia Subduction Zone. No significant problems with the stability of the Mall were reported. The seismic risk assessment concluded that the buildings at the Mall will remain stable in-whole and in-part when subject to a future 2012 IBC design-basis ground motion.
The Appraisal, the Engineering Report, the Environmental Assessment and the Seismic Risk Assessment described above are each referred to in this prospectus supplement as a “Third Party Report”.
Reciprocal Easement Agreement Overview
The Alderwood Mall Mortgaged Property is encumbered by a reciprocal easement agreement among the Alderwood Mall Borrower, Nordstrom, Macy’s, Sears-GGP and JC Penney (the “REA”). The REA contains provisions that generally require the Alderwood Mall Borrower and the counterparties to provide the others with rights, privileges and easements and impose certain restrictions and covenants upon their respective parcels of land that are subject to the REA. The REA also provides reciprocal easements for the use of certain common areas, including certain parking areas, parking decks, roadways, various walkways and sidewalks. Furthermore, the REA provides for reciprocal easements among all parties to be granted for, among other things, the purpose of (i) installing, maintaining, repairing, and accessing common utility facilities, and (ii) constructing, reconstructing, erecting and maintaining footings, canopies, roof and building overhangs, awnings, alarm bells, signs, lights and lighting devices and other similar appurtenances. Additional easements were granted among certain parties as follows: (x) JC Penney granted the Alderwood Mall Borrower and Nordstrom certain construction and ingress and egress easements to access certain parking structures on JC Penney’s site, and (y) the Alderwood Mall Borrower and Macy’s granted each other an easement permitting the canopy encroachment that extends upon their adjoining property lines to remain as currently constructed or substantially similar in the event of damage or destruction. The REA also sets forth standards for the use and operation of the Mall and the respective parties’ parcels, maintenance and repairs, and insurance requirements.
The REA provides that the Alderwood Mall Borrower is responsible for all maintenance of the common areas located on the Alderwood Mall Borrower’s property, including, without limitation, the enclosed mall, the parking areas, and signs. The Alderwood Mall Borrower is also obligated to maintain the parking and other common areas
A-1 |
(including any parking decks) located on the JC Penney site, the Macy’s site, the Nordstrom site, and the Sears site. Until a new parking deck contemplated between Macy’s and the Alderwood Mall Borrower is built and opens to the public, the Alderwood Mall Borrower has agreed to reimburse Macy’s for one-half of all taxes payable by Macy’s for the Macy’s site or building. Similarly, in connection with a pedestrian bridge related to the foregoing contemplated parking deck, the Alderwood Mall Borrower must pay the lesser of (i) Macy’s reasonable out-of-pocket costs incurred by Macy’s in connection with its portion of the construction of such bridge, and (ii) one hundred five percent (105%) of the cost of the portion of the bridge constructed by Macy’s. Construction of the contemplated parking deck has not begun and there are currently no plans to begin construction.
Sears-GGP is required to pay to the Alderwood Mall Borrower, for so long as the enclosed mall is standing and the Alderwood Mall Borrower has leased at least eighty-five percent (85%) of the main mall building, an annual sum of $1,500 as contribution towards the expenses of maintaining the enclosed mall. In connection with the Alderwood Mall Borrower performing maintenance on the Sears site, Sears-GGP is obligated to pay the Alderwood Mall Borrower a share of the Alderwood Mall Borrower’s expenses incurred in connection with such maintenance, together with the Alderwood Mall Borrower’s expenses incurred in connection with Nordstrom’s expansion site, in the proportion that the actual floor area of the Sears site bears to the aggregate floor area contained in all sites being maintained by the Alderwood Mall Borrower. Such expenses will include a three percent (3%) management fee.
In connection with the Alderwood Mall Borrower performing maintenance on the JC Penney site, JC Penney is required to pay to the Alderwood Mall Borrower $78,500 per year starting January 1, 2012, adjusted upward by $7,500 each 5-year interval thereafter. If JC Penney expands its building, upon opening the expanded area to the public, its contribution will increase by $25,000 per year (plus the preceding $7,500 at every 5-year interval). JC Penney is also required to pay to the Alderwood Mall Borrower $1,500 in enclosed mall maintenance costs per year. With respect to the parking deck (and related bridge) located on the JC Penney site, the Alderwood Mall Borrower is responsible for all real estate taxes, assessments and impositions attributable to such improvements and is obligated to reimburse JP Penney therefor upon request.
In connection with the Alderwood Mall Borrower performing maintenance on the Nordstrom site, Nordstrom is required to pay to the Alderwood Mall Borrower the annual sum of $20,000.
The REA expires on November 12, 2019, but the parties intend to enter into an amendment to the REA that proposes to extend the term to December 31, 2052 (the “REA Second Amendment”). The following events create recourse liability to the Alderwood Mall Borrower and the Alderwood Mall Loan Sponsor pursuant to the terms of the Alderwood Mall Mortgage Loan Agreement: (i) failure to extend the term of the REA to a date which is at least twenty (20) years beyond the Maturity Date, and (ii) the Alderwood Mall Borrower’s failure to reimburse any party to the REA for real estate taxes (or other undisputed costs) in accordance with the terms of the REA (subject to gross income from the operations of the Alderwood Mall Mortgaged Property).
Pursuant to the REA Second Amendment, Alderwood Mall Borrower will convey to Sears-GGP a small non-income producing parcel of the Alderwood Mall Mortgaged Property site and Sears-GGP will convey to the Alderwood Mall Borrower a similarly small parcel of the Sears site. In addition, each of Macy’s, JC Penney and Sears-GGP has the right to construct additional floor area. To accommodate the expansion of JC Penney and/or Sears-GGP, the Alderwood Mall Borrower may construct an additional multi-level parking structure in order to comply with its parking obligations. The Alderwood Mall Borrower will be obligated to provide 4.5 parking spaces for each 1,000 square feet of floor area within the Mall, exclusive of any theater, plus 750 spaces, which amount will be reduced to 660 spaces if and when Sears-GGP, Macy’s and JC Penney expand their respective floor areas and a new parking deck is completed. Additionally, the REA Second Amendment includes a proposal to revise the minimum floor area requirements for each of the anchor sites. There can be no assurances that the REA Second Amendment will be executed or if it is executed that it will be executed in the form currently contemplated and as described above.
Additional Information Regarding the Alderwood Mall Non-Serviced Loan Combination and the Alderwood Mall Mortgaged Property
Certain additional characteristics and information for the Alderwood Mall Non-Serviced Loan Combination, the Alderwood Mall Mortgage Loan and the Alderwood Mall Mortgaged Property, in each case, as of May 5, 2015 (the “Origination Date”) unless otherwise indicated, are set forth on Annex A to this Exhibit A to this prospectus supplement. The statistics and other data in any tables included in Annex A to this Exhibit A to this prospectus supplement were derived from information primarily provided by the Alderwood Mall Borrower and the Alderwood Mall Loan Sponsor, which information may have been obtained without independent verification. For purposes of this Exhibit A to this prospectus supplement, including certain column headings set forth in tables set forth in this prospectus supplement, the following terms have the meanings set forth below:
A-2 |
“Anchor Tenant” means Nordstrom, Macy’s, JC Penney, Sears and Loews Cineplex.
“Appraisal” means the appraisal prepared by Cushman & Wakefield of Oregon, Inc. for the Alderwood Mall Mortgaged Property dated April 7, 2015.
“Appraised Value” means the “as-is” appraised value of the Alderwood Mall Mortgaged Property as of March 17, 2015 as set forth in the Appraisal of $693,500,000.
“Effective Gross Income” means the sum of Underwritten Base Rental Revenue, Underwritten Rent Steps, Underwritten Percentage Rent In Lieu, Underwritten Overage Rent, Underwritten Expense Reimbursement and Underwritten Other Income less Underwritten Vacancy and Credit Loss.
“In-line” means stores of less than 10,000 SF, excluding kiosk and ATM space.
“In-line Occupancy” means “Occupancy” calculated excluding Anchor Tenants and Major Tenants, kiosk and ATM space unless otherwise specified.
“Major Tenant” means a tenant occupying at least 10,000 SF that is not an Anchor Tenant.
“Occupancy” means (i) for historical periods, leased occupancy and (ii) as of February 28, 2015, leased occupancy including the terms of signed leases with the expansion and relocation tenants, signed not open tenants and the leases out for signature. The Mall is approximately 98.4% occupied based on an underwritten 1,281,602 square feet (including anchor tenants). Per the February 28, 2015 rent roll, the Alderwood Mall Mortgaged Property had a total square footage of 575,704. All calculations in this prospectus supplement are based upon such underwritten square footage.
“PSF” means per square foot.
“SF” means square feet or square foot, and reflects the gross leasable area for the Alderwood Mall Mortgaged Property pursuant to in-place leases.
“TTM” means the trailing twelve month period.
“Underwritten Total Rent” means the sum of Underwritten Base Rental Revenue, Underwritten Overage Rent and Underwritten Expense Reimbursements.
“Underwritten In-Place Expenses” means, with respect to the Alderwood Mall Mortgaged Property, an estimate of operating expenses, which is based on the Underwritten In-Place Assumptions described in Annex A to this Exhibit A to this prospectus supplement described above.
“Underwritten In-Place Net Cash Flow” or “Underwritten In-Place NCF” means Underwritten In-Place NOI less underwritten tenant improvements, leasing commissions and replacement reserves, which is derived based on the Underwritten In-Place Assumptions described in Annex A to this Exhibit A to this prospectus supplement.
“Underwritten In-Place Net Operating Income” or “Underwritten In-Place NOI” means, with respect to the Alderwood Mall Mortgaged Property, Underwritten In-Place Revenues less Underwritten In-Place Expenses.
“Underwritten In-Place Revenues” means an estimate of operating revenues generally derived from the rental revenue, which is derived based on the Underwritten In-Place Assumptions described in Annex A to this Exhibit A to this prospectus supplement.
Description of the Alderwood Mall Borrower and loan sponsor
Alderwood Mall Borrower
Alderwood Mall L.L.C., a Delaware limited liability company (the “Alderwood Mall Borrower”), is a single purpose entity whose primary business is the performance of the obligations under the Alderwood Mall Loan Documents and the ownership and/or operation of the Alderwood Mall Mortgaged Property. The Alderwood Mall Borrower is required to observe certain single purpose entity covenants as described in “Description of the Alderwood Mall Non-Serviced Loan Combination—SPE Covenants.”
The Alderwood Mall Borrower was previously organized for the primary purpose of acquiring, holding and/or operating the Alderwood Mall Mortgaged Property. The Alderwood Mall Borrower is prohibited under the Alderwood
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Mall Loan Documents from having significant assets other than the Alderwood Mall Mortgaged Property (as described in greater detail in “Description of the Alderwood Mall Non-Serviced Loan Combination”).
The organizational structure of the Alderwood Mall Borrower and certain of its affiliates is set forth below:
Alderwood Mall Loan Sponsor
The Alderwood Mall Loan Sponsor is GGP/Homart II L.L.C., a Delaware limited liability company (the “Alderwood Mall Loan Sponsor”). The Alderwood Mall Loan Sponsor is a joint venture between (i) GGP Limited Partnership and GGP Nimbus, LP, which together own approximately 50.0% of the Alderwood Mall Loan Sponsor and (ii) New York State Common Retirement Fund, which owns approximately 50.0% of the Alderwood Mall Loan Sponsor. The Alderwood Mall Loan Sponsor currently owns (along with its relevant joint venture partners) ten malls totaling approximately 12 million sq. ft.
General Growth Properties
The Alderwood Mall Loan Sponsor is an affiliate of General Growth Properties, Inc. (“GGP”), a publicly-traded company listed on the New York Stock Exchange under the ticker symbol GGP. GGP is a fully-integrated, self-managed and self-administered real estate investment trust (REIT) focused on owning, managing, leasing and redeveloping regional malls throughout the United States. As of March 31, 2015, GGP owned, either entirely or with joint venture partners, 129 shopping centers and high street retail properties comprising approximately 127 million sq. ft. of gross leasable area.
GGP is a publicly reporting company and information regarding GGP, its business, properties, liabilities, financial condition and results of operations, as well as a description of risk factors relating to GGP and its financial condition and operations, is contained in annual, quarterly and current reports, proxy statements and other information filed by GGP with the SEC.
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New York State Common Retirement Fund
New York State Common Retirement Fund (“NYSCRF”) owns approximately 50.0% of the Alderwood Mall Loan Sponsor. NYSCRF holds all of the assets of the New York State and Local Retirement System, which has more than one million members, retirees and beneficiaries. NYSCRF had $176.8 billion in audited net assets held in trust for pensions as of March 31, 2014. The Comptroller for the State of New York (currently Thomas P. DiNapoli) is the sole trustee for NYSCRF as well as the administrative head of the New York State and Local Retirement System. NYSCRF was formed under the laws of the State of New York. NYSCRF’s principal place of business is as follows: New York State and Local Retirement System, 110 State Street, Albany, NY 12244-0001.
Description of the Alderwood Mall Non-Serviced Loan Combination
The following is a summary of the principal provisions of the Alderwood Mall Non-Serviced Loan Combination. This summary does not purport to be complete and is qualified in its entirety by reference to the loan agreement, dated as of the Origination Date (as amended from time to time, the “Alderwood Mall Mortgage Loan Agreement”), between the Alderwood Mall Borrower, and Morgan Stanley Bank, N.A. (“MSBNA”) and Citigroup Global Markets Realty Corp. (“CGMRC”), as lenders (together with their respective successors and assigns, the “Alderwood Mall Lender”), and the other documents executed by the Alderwood Mall Borrower and other applicable parties in connection with the closing of the Alderwood Mall Non-Serviced Loan Combination (collectively, the “Alderwood Mall Loan Documents”).
General
The Issuing Entity will own the Alderwood Mall Mortgage Loan made to the Alderwood Mall Borrower by the Alderwood Mall Lender pursuant to the Alderwood Mall Mortgage Loan Agreement. On the Closing Date, MSBNA will assign the Alderwood Mall Mortgage Loan to MSMCH, and MSMCH will then sell the Alderwood Mall Mortgage Loan to the depositor for contribution to the Issuing Entity.
The Alderwood Mall Mortgage Loan (together with the Alderwood Mall Non-Serviced Companion Loan and the Alderwood Mall B Note, the “Alderwood Mall Non-Serviced Loan Combination”) is part of a split loan structure with an aggregate outstanding principal balance as of the Origination Date of $355,000,000. As more particularly described in this prospectus supplement, the Alderwood Mall Non-Serviced Loan Combination has a 10-year term, is secured by the Alderwood Mall Mortgaged Property, was originated on the Origination Date and is evidenced by six fixed-rate promissory notes (each a “Note” and, collectively, the “Notes”).
The Notes evidencing the Alderwood Mall Non-Serviced Loan Combination are designated as Note A-1-1, Note A-1-2, Note A-1-3, Note A-1-4, Note A-2-1 and Note A-2-2. When describing the Notes in this prospectus supplement, (1) Note A-1-1, Note A-1-2, Note A-1-3 and Note A-1-4 are collectively referred to as the “Alderwood Mall Senior Notes”, (2) Note A-1-1, Note A-1-2 and Note A-1-4 are collectively referred to as the “Alderwood Mall Non-Serviced Companion Loan”, and (2) Note A-2-1 and Note A-2-2 are collectively referred to as the “Alderwood Mall B Note”.
The Alderwood Mall Mortgage Loan is evidenced by Note A-1-3. As of May 28, 2015, the outstanding principal balance of the Alderwood Mall Mortgage Loan was $50,400,000 (the “Alderwood Mall Mortgage Loan Amount”).
Prior to the closing date of the MSCCG 2015-ALDR securitization, which securitization currently holds Notes A-1-1, Note A-1-2, Note A-2-1 and Note A-2-2, the Notes comprising the Alderwood Mall Non-Serviced Companion Loan and the Alderwood Mall B Note, respectively were held by the original Note holders in the original principal balances set forth below:
Note | Alderwood Mall Original Note Holders | Original Principal Balance |
Note A-1-1 | MSBNA | $64,800,000 |
Note A-1-2 | CGMRC | $63,000,000 |
Note A-1-4 | CGMRC | $49,000,000 |
Note A-2-1 | MSBNA | $64,800,000 |
Note A-2-2 | CGMRC | $63,000,000 |
The Alderwood Mall Mortgage Loan, the Alderwood Mall Non-Serviced Companion Loan and the Alderwood Mall B Note are collectively secured by the same Mortgage on the Alderwood Mall Mortgaged Property.
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“Maturity Date” means the Loan Payment Date in June 2025, or such other date on which the final payment of principal under the Alderwood Mall Non-Serviced Loan Combination becomes due and payable as provided under the Alderwood Mall Mortgage Loan Agreement, whether at such stated maturity date, by declaration of acceleration, or otherwise.
“Mortgage” means the first priority deed of trust, assignment of leases and rents, security agreement and fixture filing executed and delivered by the Alderwood Mall Borrower as security for the Alderwood Mall Non-Serviced Loan Combination and encumbering the Alderwood Mall Mortgaged Property.
Security
The Alderwood Mall Non-Serviced Loan Combination is secured by, among other things, all assets owned from time to time by the Alderwood Mall Borrower, including its fee simple interest in the Alderwood Mall Mortgaged Property, the revenues from the Alderwood Mall Mortgaged Property and all other tangible and intangible property (including any collateral in connection with a defeasance) in respect of which the Alderwood Mall Lender is granted a lien under the Alderwood Mall Loan Documents, and all proceeds of the foregoing (collectively, the “Collateral”).
Guaranty; Non-Recourse Provisions and Exceptions
On the Origination Date, the Alderwood Mall Loan Sponsor (in such capacity, the “Guarantor”) and the Alderwood Mall Lender entered into a Guaranty (the “Guaranty”), pursuant to which Guaranty the Guarantor agreed to absolutely, irrevocably and unconditionally guaranty as primary obligor for the benefit of the Alderwood Mall Lender and its successors and assigns, the full and timely payment and performance of certain indemnified liabilities of the Alderwood Mall Borrower under the Alderwood Mall Mortgage Loan Agreement (the “Guaranteed Obligations”).
The Guaranteed Obligations include:
(i) any fraud or intentional misrepresentation in connection with the Alderwood Mall Non-Serviced Loan Combination committed by the Alderwood Mall Borrower, the Guarantor or any of their respective affiliates (collectively, “Loan Parties”);
(ii) any gross negligence or willful misconduct by the Loan Parties in connection with the Alderwood Mall Non-Serviced Loan Combination;
(iii) any breach in any material respect of any representation, warranty, material covenant or indemnification provision regarding environmental matters contained in the Alderwood Mall Mortgage Loan Agreement or in the environmental indemnity agreement;
(iv) any physical waste to the Alderwood Mall Mortgaged Property caused by intentional acts or intentional omissions of the Loan Parties or the removal or disposal of any portion of the Alderwood Mall Mortgaged Property other than in the ordinary course of business of owning, operating or managing the Alderwood Mall Mortgaged Property after an Event of Default (as defined below in “—Alderwood Mall Non-Serviced Loan Combination Events of Default”);
(v) the misapplication, misappropriation or conversion by the Loan Parties of (A) any insurance proceeds paid by reason of any loss, damage or destruction to the Alderwood Mall Mortgaged Property, (B) any awards or other amounts received in connection with the condemnation of all or a portion of the Alderwood Mall Mortgaged Property, or (C) any rents following an Event of Default which is continuing, or (D) any tenant security deposits or rents collected in advance, in each case in violation of the Alderwood Mall Loan Documents;
(vi) any personal property taken from the Alderwood Mall Mortgaged Property by or on behalf of any Loan Party and not replaced with personal property of the same utility and of the same or greater value;
(vii) any act of arson by the Loan Parties;
(viii) failure to pay any real estate taxes, charges for labor or materials, or other charges that can create liens on any portion of the Alderwood Mall Mortgaged Property and/or the failure to pay any insurance premiums in accordance with the terms of the Alderwood Mall Loan Documents, unless the same is caused by insufficient gross revenues from the Alderwood Mall Mortgaged Property or Alderwood Mall Borrower’s lack of access to such revenues;
(ix) any security deposits, advance deposits or any other deposits collected with respect to the Alderwood Mall Mortgaged Property which are not delivered to the Alderwood Mall Lender upon a foreclosure of
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the Alderwood Mall Mortgaged Property or action in lieu thereof, except to the extent any such security deposits were applied in accordance with the terms and conditions of any of the leases prior to the occurrence of the Event of Default that gave rise to such foreclosure or action in lieu thereof;
(x) any indemnification obligations of the borrower related to any securitization of all or a portion of the Alderwood Mall Non-Serviced Loan Combination;
(xi) the failure of the Alderwood Mall Borrower to be a single-purpose entity as described under “—SPE Covenants” below (with certain specified exceptions);
(xii) a transfer is made in violation of the terms and provisions contained in the Alderwood Mall Loan Documents that are described under “—Alderwood Mall Mortgaged Property Transfer/Loan Assumption,” “—Permitted Transfers,” “—Permitted Upper-Tier Pledges,” “—Affiliate Transfers/Pledges,” and “—Permitted Mezzanine Loan” below, provided if such violation arises solely from (A) a failure to provide any required notice, no such liability will arise under the Alderwood Mall Mortgage Loan Agreement if the Alderwood Mall Borrower promptly provides such notice after notice from Alderwood Mall Lender or (B) a failure to provide any required delivery, no such liability will arise under the Alderwood Mall Mortgage Loan Agreement if Alderwood Mall Borrower promptly provides such required delivery after notice from Alderwood Mall Lender to the extent, in the case of any required delivery, the contents of such delivery are such that the transfer in question would have been permitted pursuant to the terms and provisions of the Alderwood Mall Loan Documents that are described under “—Alderwood Mall Mortgaged Property Transfer/Loan Assumption,” “—Permitted Transfers,” “—Permitted Upper-Tier Pledges,” “—Affiliate Transfers/Pledges,” and “—Permitted Mezzanine Loan” below;
(xiii) any liens, claim or right to a lien for services, labor or material imposed by law and not shown on public records which are excepted from title insurance coverage due to delinquent general and special taxes for the second half of 2015 and subsequent years with respect to a portion of one parcel of the Alderwood Mall Mortgaged Property;
(xiv) the term of the REA fails to be extended to a date which is at least twenty (20) years beyond the Maturity Date; and
(xv) the Alderwood Mall Borrower’s failure to reimburse any party to the REA for real estate taxes (or other undisputed costs) pursuant to and in accordance with the terms of the REA, provided, if such failure is solely caused by, solely arises from or is otherwise solely attributable to insufficient gross income from operations at the Alderwood Mall Mortgaged Property or Alderwood Mall Borrower’s lack of access to gross income from operations at the Alderwood Mall Mortgaged Property (due to a restriction in favor of Alderwood Mall Lender), then no liability will be borne by Alderwood Mall Borrower or any exculpated party with respect thereto.
In addition, the Alderwood Mall Non-Serviced Loan Combination will be fully recourse to the Alderwood Mall Borrower and the Guarantor, jointly and severally, upon (i) the occurrence of any filing by the Alderwood Mall Borrower under the Bankruptcy Code or any joining or colluding by the Alderwood Mall Borrower or any of its affiliates (including the Guarantor) in the filing of an involuntary case in respect of the Alderwood Mall Borrower under the Bankruptcy Code, or (ii) the failure of the Alderwood Mall Borrower to be a single-purpose entity as described under “—SPE Covenants” below, which failure results in a substantive consolidation of the Alderwood Mall Borrower with any person in a bankruptcy or similar proceeding.
“Person” means any individual, corporation, partnership, limited liability company, joint venture, estate, trust, unincorporated association, any other entity, any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.
Payments on the Alderwood Mall Non-Serviced Loan Combination
Payments on the Alderwood Mall Non-Serviced Loan Combination are required to be made on the 1st day of each calendar month (or if such date is not a Business Day, the immediately succeeding Business Day), until and including the Maturity Date; provided that the Alderwood Mall Borrower is entitled to one grace period of two Business Days once every twelve months (a “Loan Payment Date”).
Principal and Interest Payments
The Alderwood Mall Non-Serviced Loan Combination will bear interest at a rate equal to 3.47875% (the “Mortgage Rate”).
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On the Origination Date the Alderwood Mall Borrower made a payment of interest only through June 1, 2015. Commencing on the Loan Payment Date in July 2015 and on each Loan Payment Date thereafter through and including the Maturity Date, the Alderwood Mall Borrower is required to make a payment to Alderwood Mall Lender of principal and interest in the amount of approximately $1,589,900.63 (the “Monthly Payment Amount”).
The principal balance of the Alderwood Mall Non-Serviced Loan Combination, to the extent not prepaid, will be payable on the Maturity Date, together with all accrued and unpaid interest on the outstanding principal balance of the Alderwood Mall Non-Serviced Loan Combination through the end of the Interest Accrual Period preceding the Maturity Date and all other amounts then due under the Alderwood Mall Loan Documents. The expected principal balloon balance of the Alderwood Mall Non-Serviced Loan Combination on the stated Maturity Date is approximately $277,385,084.
Any payments of interest and/or principal not paid when due under the Alderwood Mall Mortgage Loan Agreement will bear interest at the applicable Default Rate (subject to a grace period of 2 Business Days once every twelve-month period) and, 5 days after demand, in the case of all payments due under the Alderwood Mall Mortgage Loan Agreement other than the repayment of the principal indebtedness on the Maturity Date, when paid, will be required to be accompanied by a late fee in an amount equal to the lesser of (a) 5% of the unpaid sum on such Loan Payment Date and (b) the maximum amount permitted by law, provided that the late fee will not be assessed or incurred with respect to amounts as to which interest at the Default Rate accrues.
Calculations of interest on the Alderwood Mall Non-Serviced Loan Combination will be made by the servicer under the MSCCG 2015-ALDR TSA and will be made on the basis of a 360-day year and the actual number of days elapsed in the related Interest Accrual Period.
In certain instances, the Alderwood Mall Non-Serviced Loan Combination may be required to be prepaid in the event of a casualty or condemnation. See “—Risk Management—Casualty and Condemnation”.
“Business Day” means with respect to references to “Business Day” in any Alderwood Mall Loan Document, any day other than a Saturday, a Sunday or any other day on which federally insured depository institutions in New York, New York are not open for business generally.
“Default Interest” means, during the continuance of an Event of Default, the amount by which interest accrued on the Alderwood Mall Non-Serviced Loan Combination at the Default Rate exceeds the amount of interest that would have accrued on the Alderwood Mall Non-Serviced Loan Combination at the Mortgage Rate.
“Default Rate” means, with respect to the Alderwood Mall Non-Serviced Loan Combination, a rateper annum equal to the greater of (i) 3% per annum in excess of the interest rate applicable to the Alderwood Mall Non-Serviced Loan Combination and (ii) 1% per annum in excess of the prime rate (as published inThe Wall Street Journal from time to time); provided that, if the foregoing would result in an interest rate in excess of the maximum rate permitted by applicable law, the Default Rate will be limited to the maximum rate permitted by applicable law.
“Interest Accrual Period” means, with respect to any Loan Payment Date, the calendar month preceding the calendar month in which such Loan Payment Date occurs.
Cash Management
Lockbox Account
The Alderwood Mall Borrower has established and is required to maintain a cash collateral account (the “Lockbox Account”), as an Eligible Account, with the initial Cash Management Bank. The Lockbox Account is owned by the Alderwood Mall Borrower but controlled by, and pledged to, the Alderwood Mall Lender. So long as no Trigger Period is continuing, on a weekly basis (or a daily basis at Alderwood Mall Borrower’s sole election), all amounts contained in the Lockbox Account will be required to be disbursed to the Alderwood Mall Borrower’s designated operating account or as the Alderwood Mall Borrower otherwise directs.
The Alderwood Mall Borrower is required to deliver to each tenant in the Alderwood Mall Mortgaged Property a written notice instructing that all payments under the leases are to be transmitted by them to a Lockbox Account, provided no notices are required to be sent to tenants under seasonal leases or to tenants who are already paying into the Lockbox Account or whose leases direct them to do so. Furthermore, the Alderwood Mall Borrower is required to cause all other revenues relating to the Alderwood Mall Mortgaged Property and all other money received by the Alderwood Mall Borrower or any property manager with respect to the Alderwood Mall Mortgaged Property (other than non-core income, income derived from sponsorship and advertising, and tenant security deposits required
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to be held in escrow accounts) to be deposited in the Lockbox Account within 2 Business Days following receipt by the Alderwood Mall Borrower or any property manager.
“Cash Management Bank” means a depository institution that is an Eligible Institution and holds the Cash Management Account. As of the Origination Date, the Cash Management Bank is U.S. Bank National Association.
“Eligible Account” means an identifiable account which is separate from all other funds held by the holding institution that is either (i) an account or accounts maintained with a federal or state-chartered depository institution or trust company which complies with the definition of Eligible Institution or (ii) a segregated trust account or accounts maintained with the corporate trust department of a federal or state chartered depository institution or trust company acting in its fiduciary capacity which, in the case of a state chartered depository institution or trust company is subject to regulations substantially similar to 12 C.F.R. § 9.10(b), having in either case a combined capital and surplus of at least $50,000,000 that is rated at least “Baa3” by Moody’s and subject to supervision or examination by federal or state authority. An Eligible Account will not be evidenced by a certificate of deposit, passbook or other instrument.
“Eligible Institution” means (i) any of U.S. Bank, National Association, Harris Bank and Trust, Bank of America N.A., PNC Bank, National Association, JPMorgan Chase Bank, N.A., KeyBank National Association, M&T Bank Corporation and Wells Fargo Bank, National Association, so long as the applicable bank maintains a long-term unsecured debt rating or long-term deposit rating of not less than “A-” by S&P, “A3” from Moody’s and an equivalent rating by the other Rating Agencies (to the extent that such Rating Agency rates such institution), (ii) a depository institution or trust company the deposits of which are insured by the Federal Deposit Insurance Corporation and whose short- term unsecured debt obligations or commercial paper are rated at least “A-1” by S&P, “P-1” by Moody’s, and if rated by Fitch, “F-1+” by Fitch in the case of accounts in which funds are held for 30 days or less (or, in the case of accounts in which funds are held for more than 30 days, the long term unsecured debt obligations of which are rated at least “AA-” by S&P and Fitch (if rated by Fitch) and “A2” by Moody’s) so long as the applicable bank maintains such ratings or (iii) any other depository institution or trust company as to which a Rating Agency Confirmation has been received.
“Rating Agency” means the rating agency or rating agencies rating the securities issued in connection with the MSCCG 2015-ALDR securitization transaction.
“Rating Agency Confirmation” means with respect to any matter in this “Description of the Alderwood Mall Non-Serviced Loan Combination” a written affirmation from each of the Rating Agencies that the credit rating of the securities issued in connection with the MSCCG 2015-ALDR securitization transaction by such Rating Agency immediately prior to the occurrence of the event with respect to which such Rating Agency Confirmation is sought will not be qualified, downgraded or withdrawn as a result of the occurrence of such event, which affirmation may be granted or withheld in such Rating Agency’s sole and absolute discretion. In the event that any Rating Agency in writing, waives, declines or refuses to review or otherwise engage any request for Rating Agency Confirmation under the Alderwood Mall Mortgage Loan Agreement or requires an indemnification from Alderwood Mall Lender, the servicer under the MSCCG 2015-ALDR TSA or any other Person as a condition to considering the request for a Rating Agency Confirmation, then (i) in the case of a request for a Rating Agency Confirmation in connection with a defeasance event, such Rating Agency Confirmation requirement shall be deemed to have been satisfied or (ii) otherwise, such action that would otherwise require a Rating Agency Confirmation shall instead require the consent of Alderwood Mall Lender with respect to such Rating Agency.
Trigger Period
The Alderwood Mall Borrower has established and is required to maintain a cash management account (the “Cash Management Account”), as an Eligible Account, with the Cash Management Bank. The Cash Management Account is owned by the Alderwood Mall Borrower but controlled by, and pledged to, the Alderwood Mall Lender. During the continuance of a Trigger Period, all amounts contained in the Lockbox Account will be required to be transferred to the Cash Management Account on each second Business Day of receipt of such amounts.
“Trigger Period” means (a) the continuance of an Event of Default or (b) any period that the DSCR (based on Adjusted Net Operating Income for the trailing 12-month period (less tenant improvement and leasing commission expenditures equal to $1.00 per square foot of owned, in-line space per annum and capital improvements equal to $0.20 per square foot of owned, in-line space per annum) and debt service on the Alderwood Mall Non-Serviced Loan Combination, falls below 1.40x as of the end of any fiscal quarter until such debt service coverage ratio is at least 1.40x as of the end of a subsequent fiscal quarter.
“DSCR” means, with respect to any 12-month period as of the last day of a fiscal quarter, the ratio of (i) Adjusted Net Operating Income to (ii) the product of (A) twelve (12) times (B) the sum of the aggregate scheduled principal
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and interest payments due and payable with respect to the Alderwood Mall Non-Serviced Loan Combination on such date of determination (if such date is a Loan Payment Date) or on the Loan Payment Date immediately following such date of determination (if such date is not a Loan Payment Date).
“Adjusted Net Operating Income” means, with respect to any 12-month period prior to the date of determination, (x) Operating Income for such 12-month period (less normalized tenant improvement and leasing commission expenditures equal to $1.00 per square foot of owned, in-line space per annum and normalized capital improvements equal to $0.20 per square foot of owned, in-line space per annum) minus (y) Operating Expenses for such 12-month period.
“Operating Income” means, for any period, all income, computed in accordance with GAAP, derived from the ownership and operation of the Alderwood Mall Mortgaged Property from whatever source, including, but not limited to, rents (provided the effects of “straight lining” of rents shall be eliminated), utility charges, escalations, forfeited security deposits, interest on credit accounts, service fees or charges, license fees, parking fees, rent concessions or credits, and other required pass-throughs or other reimbursements of any nature paid by tenants under leases at the Alderwood Mall Mortgaged Property but excluding revenues which are nonrecurring in nature (other than rent termination payments which shall be included in an amount equal to the monthly rent that would have otherwise been due under the terminated lease until such termination payment is fully utilized), sales, use and occupancy or other taxes on receipts required to be accounted for by the Alderwood Mall Borrower to any governmental authority, refunds and uncollectible accounts, proceeds from occasional sales of obsolete furniture, fixtures and equipment, insurance proceeds (other than business interruption or other loss of income insurance), condemnation awards (other than condemnation awards for temporary takings), unforfeited security deposits, utility and other similar deposits and any disbursements to the Alderwood Mall Borrower from the reserve funds.
“Operating Expenses” means the total of all expenditures by the Alderwood Mall Borrower, computed in accordance with GAAP, of whatever kind relating to the operation, maintenance and management of the Alderwood Mall Mortgaged Property for the applicable period, including without limitation, (i) utilities, (ii) repairs and maintenance (other than repairs or maintenance which are capital expenditures), (iii) insurance premiums, (iv) maintenance charges, impositions (other than taxes described in clause (vi) below, and any other charges, including, without limitation, vault charges and license fees for the use of vaults), chutes and similar areas adjoining the Alderwood Mall Mortgaged Property, levied or assessed or imposed against the Alderwood Mall Mortgaged Property or any part thereof, (v) license fees, (vi) real estate and personal property taxes, assessments, water rates or sewer rents, now or hereafter levied or assessed or imposed against the Alderwood Mall Mortgaged Property or part thereof or any adjacent property for which the Alderwood Mall Borrower is required to pay directly to the taxing authority such taxes, assessments, water rates and/or sewer rents pursuant to the terms of any reciprocal easement agreement, (vii) advertising expenses, (viii) management fees equal to the greater of three percent (3%) of base rents and percentage rent and the actual management fees, (ix) payroll and related taxes, (x) computer processing charges, (xi) operational equipment, and (xii) other similar costs, but excluding depreciation, income taxes or other taxes in the nature of income taxes, debt service payments and other amounts due and payable to the Alderwood Mall Lender under the Alderwood Mall Loan Documents, capital expenditures, other non-cash items, equity distributions and contributions to the reserve funds applicable to the Alderwood Mall Mortgaged Property (to the extent such contributions are duplicative with other items that comprise Operating Expenses).
Cash Management/Monthly Reserves
During the continuance of a Trigger Period, the Cash Management Bank will remit to the Alderwood Mall Borrower, at the end of each Loan Payment Date, the amount, if any, by which amounts then contained in the Cash Management Account exceed the aggregate amount required to be paid to or reserved with the Alderwood Mall Lender on the next Loan Payment Date pursuant to the Alderwood Mall Mortgage Loan Agreement (the “Minimum Balance”);provided, however, that the Alderwood Mall Lender will terminate such remittances during the continuance of an Event of Default upon notice to the Cash Management Bank with a copy to the Alderwood Mall Borrower.
On each Loan Payment Date, during the continuance of a Trigger Period, the Alderwood Mall Lender is required to transfer amounts from the Cash Management Account, to the extent available, to make the following payments in the following order of priority:
(i) to a designated reserve account (the “Tax and Insurance Reserve Account”), an amount equal to the sum of (a) 1/12th of projected annual real estate taxes, and (b) 1/12th of projected annual insurance premiums (the foregoing insurance reserve requirement is waived so long as insurance is maintained under a blanket policy) for the purpose of reserving amounts in respect of taxes and insurance premiums;
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(ii) to the Alderwood Mall Lender, the amount of all scheduled or delinquent interest and principal on the Alderwood Mall Non-Serviced Loan Combination and all other amounts then due and payable under the Alderwood Mall Loan Documents (with amounts in respect of principal paid last);
(iii) provided no Enforcement Action has occurred and is continuing, after the occurrence and during the continuance of an Event of Default, to the Alderwood Mall Borrower’s Operating Accounts, an amount equal to the Budgeted Operating Expenses for the month in which such Loan Payment Date occurs, provided that (A) the amounts disbursed to such account pursuant to this clause (iii) will be used by Alderwood Mall Borrower solely to pay Budgeted Operating Expenses for such month, (B) no amounts will be disbursed to Alderwood Mall Borrower in respect of the fees of any manager of the Alderwood Mall Mortgaged Property to the extent such fees exceed 3% of the gross income from operations at the Alderwood Mall Mortgaged Property, (C)(1) no remittances will be made to pay any affiliate of the Alderwood Mall Borrower or the Guarantor pursuant to any contract or agreement from and after such time as the Alderwood Mall Lender requests that the same be terminated (excluding (a) amounts accrued prior to such termination notice and (b) reimbursements for amounts appropriately paid by such affiliate to non-affiliates), (2) the Alderwood Mall Lender may elect, in its sole discretion, to make direct remittances to parties that are owed amounts in accordance with the approved annual budget rather than remitting such amounts to Operating Accounts (which may include the Alderwood Mall Borrower if the Alderwood Mall Borrower is then self-managing the Alderwood Mall Mortgaged Property and the Alderwood Mall Lender has not elected to terminate the Alderwood Mall Borrower in such role) and (3) to the extent that the Alderwood Mall Lender elects to remit amounts to the Operating Accounts, the remittance will be conditioned on the Alderwood Mall Lender’s receipt of a monthly certification confirming that all amounts previously remitted into the Operating Accounts during the continuance of such Event of Default either remain in the Operating Accounts or have been applied toward specified Budgeted Operating Expenses, and (D) during the continuance of an Event of Default, the Alderwood Mall Lender receives a perfected, first-priority security interest in the Operating Account into which such amounts will be funded;
(iv) to a designated reserve account (the “Replacement Reserve Account”), an amount equal to the lesser of (i) $9,595.07 (which is $0.20 per owned rentable square footper annum) or (ii) the amount that would cause the total amount contained in the Replacement Reserve Account to equal $115,140.80 (which is 12 times the monthly required amount set forth in clause (i));
(v) to a designated reserve account (the “Rollover Reserve Account”), an amount equal to the lesser of (i) $32,712.00 (which is approximately $1.00 per owned rentable square footper annum(based on the square footage of owned, in-line space)) or (ii) the amount that would cause the total amount contained in the Rollover Reserve Account to equal $392,541.00 (which is approximately 12 times the monthly required amount set forth in clause (i));
(vi) to the Alderwood Mall Lender, an amount sufficient to pay any other amounts then due and payable on the next succeeding Loan Payment Date; and
(vii) (x) during the continuance of an Event of Default, all remaining amounts shall be retained by the Alderwood Mall Lender to be held as additional collateral for the Alderwood Mall Non-Serviced Loan Combination and, upon acceleration of the Alderwood Mall Non-Serviced Loan Combination, such amounts may be applied in its discretion and (y) if no Event of Default is continuing, all remaining amounts to an account specified by the Alderwood Mall Borrower.
Upon the termination of a Trigger Period, provided no Event of Default is then continuing, the Alderwood Mall Lender will remit to Alderwood Mall Borrower the amounts then on deposit in each of the reserve funds.
If on any Loan Payment Date the amount in the Cash Management Account, is insufficient to make all the transfers described in clauses (i) through (v) above, the Alderwood Mall Borrower is required to deposit into the Cash Management Account on that Loan Payment Date the amount of the deficiency.
The Alderwood Mall Lender has received from the Alderwood Mall Borrower a pledge of all of its interest in and to each of the reserve accounts.
“Budgeted Operating Expenses” means, with respect to any calendar month, (i) an amount equal to the Operating Expenses for such calendar month in the then-applicable approved annual budget, or (ii) such greater amount equal to the actual Operating Expenses of the Alderwood Mall Borrower for such month, provided such greater amount may in no event exceed 110% of the amount specified in clause (i) without the prior written consent of the Alderwood Mall Lender (which, in the absence of a monetary Event of Default or Enforcement Action, will not be unreasonably withheld or delayed;provided,however, in the event that a budget shall not have been approved by the
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Alderwood Mall Lender at any time that a disbursement of funds for Budgeted Operating Expenses is required, then the amount of Budgeted Operating Expenses shall be subject to the reasonable approval of the Alderwood Mall Lender.
“Enforcement Action” means any initiation by the Alderwood Mall Lender of foreclosure proceedings or proceedings for the appointment of a receiver (or the initiation by the Alderwood Mall Lender of any judicial action in respect of the Notes as a predicate to any such proceedings). A filing of a complaint in a court of competent jurisdiction, or a delivery of notice of foreclosure by power of sale in accordance with applicable law, or an application for appointment of a receiver in accordance with applicable law, will each independently constitute an Enforcement Action even if there is a subsequent delay. In addition, an “Enforcement Action” will be deemed to have occurred immediately upon the occurrence of any of the following: (x) the scheduled Maturity Date (unless the Alderwood Mall Lender fails to initiate any of the foregoing actions within 30 days thereafter), (y) any voluntary or involuntary bankruptcy filing or similar proceeding in respect of the Alderwood Mall Borrower or Guarantor (assuming such filing or proceeding is not discharged, stayed or dismissed within 60 days), or (z) any affirmative or collusive action by the Alderwood Mall Borrower, Guarantor or any other person or entity to stay, hinder or delay the Alderwood Mall Lender’s ability to initiate an Enforcement Action.
“Operating Account” means an operating account required to be maintained by the Alderwood Mall Borrower at all times.
Maintenance of Collateral Accounts
Each of the above described reserve accounts is required to be an Eligible Account under the sole dominion and control of Alderwood Mall Lender and is in the name of the Alderwood Mall Borrower, as pledgor, and the Alderwood Mall Lender, as pledgee. The Alderwood Mall Borrower has no right to make withdrawals from any of the reserve accounts. Funds in the reserve accounts may not be commingled with any other monies at any time. So long as no Event of Default is then continuing, funds in the reserve accounts will be invested at the discretion of the Alderwood Mall Borrower, but only in certain investments meeting certain Rating Agency criteria. All income and gains from the investment of funds in the reserve accounts will be for the account of the Alderwood Mall Borrower.
During the continuance of an Event of Default and acceleration of the Alderwood Mall Non-Serviced Loan Combination, the Alderwood Mall Lender may, in its sole discretion, apply funds in the reserve accounts, and funds resulting from the liquidation of permitted investments made with funds contained in the reserve accounts, either toward payment of the Alderwood Mall Non-Serviced Loan Combination and/or for the purposes for which they were held.
Alderwood Mall Mortgaged Property Management
As of the Origination Date, the Alderwood Mall Mortgaged Property was managed by General Growth Services, Inc. (the “Property Manager”, which is an affiliate of the Alderwood Mall Borrower and the Alderwood Mall Loan Sponsor. So long as no Event of Default has occurred and is continuing, the Alderwood Mall Mortgaged Property may in the future be managed by a Qualifying Manager pursuant to a management agreement without Alderwood Mall Lender’s prior written consent, provided that such replacement management agreement is on an arms’-length basis and under which the fees payable shall not exceed 4.5% of gross income from operations at the Alderwood Mall Mortgaged Property (plus reasonable market adjustments as reasonably approved by Alderwood Mall Lender) or if such Qualifying Manager is an affiliate of the Alderwood Mall Borrower, the Alderwood Mall Borrower must deliver a new non-consolidation opinion in accordance with Rating Agency criteria and reasonably acceptable to Alderwood Mall Lender.
If the Alderwood Mall Mortgaged Property is self-managed by the Alderwood Mall Borrower and an Event of Default shall have occurred and be continuing, the Alderwood Mall Borrower will be required to, at the request of the Alderwood Mall Lender, engage a Qualifying Manager which is not an affiliate of the Alderwood Mall Borrower. If the Alderwood Mall Mortgaged Property is managed by a property manager and (i) an Event of Default shall have occurred and be continuing, (ii) the property manager shall become bankrupt or insolvent or (iii) a default occurs under the management agreement, the Alderwood Mall Borrower will be required to, at the request of the Alderwood Mall Lender, terminate such management agreement, and replace the property manager with a Qualifying Manager (which, unless consented to by Alderwood Mall Lender, is not an affiliate of Alderwood Mall Borrower or Alderwood Mall Loan Sponsor).
Any Qualifying Manager will be required to agree that its management agreement and all fees under such agreement are subordinate to the indebtedness under the Alderwood Mall Non-Serviced Loan Combination. The per annum fees of any Qualifying Manager are not permitted to exceed 4.5% of the gross revenues of the Alderwood Mall
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Mortgaged Property subject to commercially reasonable adjustments pursuant to then applicable market standards as reasonably approved by the Alderwood Mall Lender. With respect to a new manager other than a Qualifying Manager, the consent of the Alderwood Mall Lender to the identity of the manager may be conditioned upon Alderwood Mall Borrower delivering a Rating Agency Confirmation as to such new manager and management agreement.
A “Qualifying Manager” means (i) General Growth Services, Inc. or its directly or indirectly wholly-owned affiliate, (ii) GGP Limited Partnership or its directly or indirectly wholly-owned affiliate, or (iii) a reputable and experienced management organization possessing at least 5 years of experience in managing properties similar in size, scope and value to the Alderwood Mall Mortgaged Property, which manages retail properties which include (x) not less than 5 regional shopping center properties (exclusive of the Alderwood Mall Mortgaged Property) and (y) not less than 6,000,000 leasable square feet (exclusive of the Alderwood Mall Mortgaged Property).
Prepayment
The Alderwood Mall Borrower is not permitted to voluntarily prepay the Alderwood Mall Non-Serviced Loan Combination prior to the Loan Payment Date occurring in December 2024 (the “Lockout Period Expiration Date”). On any date on or after the Lockout Period Expiration Date, the Alderwood Mall Borrower is permitted to voluntarily prepay the Alderwood Mall Non-Serviced Loan Combination in whole but not in part without a fee or a prepayment premium on not less than 5 Business Days’ prior written notice;providedthat any prepayment must be accompanied by all interest accrued on the amount prepaid, plus, if the prepayment is not made on a Loan Payment Date, the amount of interest that would have accrued thereon if the Alderwood Mall Non-Serviced Loan Combination had remained outstanding through the end of the Interest Accrual Period in which such prepayment occurs, plus all other amounts then due under the Alderwood Mall Loan Documents.
If all or any portion of the principal balance of the Alderwood Mall Non-Serviced Loan Combination is paid to the Alderwood Mall Lender during the continuance of an Event of Default prior to the Lockout Period Expiration Date, the Alderwood Mall Borrower is required to pay to the Alderwood Mall Lender an amount (a “Yield Maintenance Premium”) equal to the greater of: (i) one percent (1%) of the principal amount of the Alderwood Mall Non-Serviced Loan Combination being prepaid or (ii) the present value of the Calculated Payments from the prepayment date through the Lockout Period Expiration Date as determined by discounting such payments at the Discount Rate.
The term “Calculated Payments” means the monthly payments of interest only which would be due based on the principal amount of the Alderwood Mall Non-Serviced Loan Combination being prepaid on the prepayment date and assuming an interest rate per annum equal to the difference (if such difference is greater than zero) between (y) the regular Mortgage Rate and (z) the Yield Maintenance Treasury Rate.
The term “Discount Rate” means the rate which, when compounded monthly, is equivalent to the Yield Maintenance Treasury Rate, when compounded semi-annually.
The term “Yield Maintenance Treasury Rate” means the yield calculated by the linear interpolation of the yields, as reported in the Federal Reserve Statistical Release H.15-Selected Interest Rates under the heading U.S. Government Securities/Treasury Constant Maturities for the week ending prior to the prepayment date, of U.S. Treasury Constant Maturities with maturity dates (one longer or one shorter) most nearly approximating the first day after the Lockout Period Expiration Date.
In addition, the Alderwood Mall Non-Serviced Loan Combination provides for mandatory prepayment in certain circumstances such as casualty and condemnation of the Alderwood Mall Mortgaged Property without a prepayment penalty or yield maintenance premium. See “—Risk Management—Casualty and Condemnation” below.
Defeasance
If no Event of Default has occurred and is then continuing, on or after the Loan Payment Date that is the earlier of 3 years from the Origination Date and 2 years from the closing date of the last securitization of any Note included in a REMIC Trust, the Alderwood Mall Borrower may obtain the release of the entire Alderwood Mall Mortgaged Property from the lien of the Alderwood Mall Loan Documents by defeasing the entire Alderwood Mall Non-Serviced Loan Combination,provided that all sums then due to the Alderwood Mall Lender under the Alderwood Mall Loan Documents are paid and the following, among other things, are delivered to the Alderwood Mall Lender:
(i) U.S. Obligations (the “Defeasance Collateral”) sufficient to provide payments on or prior to, and in any event as close as possible to, each successive Loan Payment Date in an amount sufficient (x) to pay the interest and principal due on such Loan Payment Dates in respect of the Alderwood Mall Non-Serviced
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Loan Combination and (y) to repay all outstanding principal and interest on the Alderwood Mall Non-Serviced Loan Combination after the date of defesance through and including the Lockout Period Expiration Date;
(ii) writtenconfirmation from an independent certified public accounting firm certifying that such Defeasance Collateral is sufficient to provide the payments described in clause (i) above;
(iii) a security agreement, in form and substance reasonably satisfactory to the Alderwood Mall Lender, creating in favor of the Alderwood Mall Lender a first priority perfected security interest in such Defeasance Collateral;
(iv) an opinion of counsel for the Alderwood Mall Borrower, in form and substance reasonably satisfactory to the Alderwood Mall Lender; and
(v) a Rating Agency Confirmation with respect to such defeasance will have been satisfied or deemed satisfied;provided, that if a Rating Agency has, in writing, waived, declined or refused to review or otherwise engage any such request for such a Rating Agency Confirmation or requires an indemnification in connection therewith, then the Rating Agency Confirmation requirement with respect to such Rating Agency will be deemed satisfied.
“U.S. Obligations” shall mean non-redeemable securities evidencing an obligation to timely pay principal and/or interest in a full and timely manner that are (a) obligations or securities not subject to prepayment, call or early redemption which are direct obligations of, or obligations fully guaranteed as to timely payment by, the United States of America or of any agency or instrumentality of the United States of America, the obligations of which are backed by the full faith and credit of the United States of America, which qualify under § 1.860G-2(a)(8) of the Treasury Regulations, (b) other non-callable “government securities” as defined in Treasury Regulations Section 1.860G-2(a)(8)(ii), as amended, for which a Rating Agency confirmation shall have been received or (c) other non-callable instruments, which if a securitization has occurred, the REMIC Trust formed pursuant to such Securitization will not fail to maintain its status as a “real estate mortgage investment conduit” within the meaning of Section 860D of the Code and for which a Rating Agency confirmation shall have been received. Any obligations or instruments pursuant to clause (b) above and, provided same shall not constitute a “significant modification” for REMIC purposes, clause (c) above, shall be subject to Alderwood Mall Lender’s reasonable approval.
Alderwood Mall Mortgaged Property Transfer/Loan Assumption
Provided that no Event of Default has occurred and is then continuing, the transfer of the Alderwood Mall Mortgaged Property and assumption of the Alderwood Mall Non-Serviced Loan Combination by a new borrower will be permitted, so long as the following conditions are met:
(i) the Alderwood Mall Borrower must provide the Alderwood Mall Lender at least 20 days prior written notice of the proposed transfer;
(ii) the transferee is controlled by a (i) a Qualified Transferee or an affiliate of a Qualified Transferee that is controlled by such Qualified Transferee; (ii) the Alderwood Mall Loan Sponsor or an affiliate of the Alderwood Mall Loan Sponsor that is controlled by the Alderwood Mall Loan Sponsor; (iii) any other person or entity for which a Rating Agency Confirmation shall have been received (each a “Permitted Owner”);
(iii) a replacement guarantor reasonably acceptable to the Alderwood Mall Lender shall assume the obligations of the Guarantor under the Guaranty arising from and after the date of the transfer, provided, if required by the Alderwood Mall Lender, and following a securitization, the approval of any replacement guarantor shall be subject to the receipt of a Rating Agency Confirmation;
(iv) following the transfer, the Alderwood Mall Mortgaged Property will be required to be managed by a Qualifying Manager;
(v) the transferee shall satisfy the requirements of a “special purpose entity” under the Alderwood Mall Loan Documents and the Alderwood Mall Lender shall have received a new non-consolidation opinion reasonably satisfactory to each Rating Agency;
(vi) if required by the Alderwood Mall Lender, the Alderwood Mall Lender shall have received an opinion that the transfer and assumption by the transferee will not constitute a “significant modification” of the Alderwood Mall Non-Serviced Loan Combination under Treasury Regulation Section 1001 of the Code or otherwise cause a tax to be imposed on a “prohibited transaction” on the Trust (a “REMIC Opinion”);
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(vii) the Alderwood Mall Lender shall have received title insurance endorsements in connection with the transfer as may be reasonably requested by the Alderwood Mall Lender; and
(viii) the Alderwood Mall Borrower will be required to pay the Alderwood Mall Lender a transfer fee equal to 0.25% of the outstanding loan amount (unless the Alderwood Mall Non-Serviced Loan Combination is assumed by an affiliate of GGP) and the reasonable out-of-pocket expenses of the Alderwood Mall Lender.
“Qualified Transferee” means any one of the following Persons who is not a Prohibited Person:
(i) a pension fund, pension trust or pension account that (a) has total real estate assets of at least $2,000,000,000 (exclusive of the Alderwood Mall Mortgaged Property) and (b) is managed by a Person who controls at least $4,000,000,000 of real estate equity assets (exclusive of the Alderwood Mall Mortgaged Property);
(ii) a pension fund advisor who (a) immediately prior to such transfer, controls at least $2,000,000,000 of real estate equity assets (exclusive of the Alderwood Mall Mortgaged Property) and (b) is acting on behalf of one or more pension funds that, in the aggregate, satisfy the requirements of clause (i) of this definition;
(iii) any bank, savings and loan association, investment bank, insurance company, trust company, commercial credit corporation, pension plan, pension fund, pension advisory firm, mutual fund, government entity or plan, real estate company, investment fund or institutional entity substantially similar to any of the foregoing and any subsidiary thereof, provided in each case that such institution has total assets (in name or under management) in excess of $3,000,000,000 (exclusive of the Alderwood Mall Mortgaged Property) and (except with respect to a pension advisory firm or similar fiduciary) capital/statutory surplus or shareholder’s equity in excess of $1,500,000,000 (exclusive of the Alderwood Mall Mortgaged Property), in each case excluding the Alderwood Mall Mortgaged Property, and is regularly engaged in the business of owning and operating properties similar to the Alderwood Mall Mortgaged Property;
(iv) GGP or a direct or indirect controlled subsidiary of GGP;
(v) any Person approved by Alderwood Mall Lender and, after a securitization of all or any portion of the Alderwood Mall Non-Serviced Loan Combination, for which Alderwood Mall Lender has received Rating Agency Confirmation;
(vi) any subsidiary that is at least fifty percent (50%) owned and wholly controlled (which control may be subject to the rights of other Persons to approve certain major decisions of Alderwood Mall Borrower (which may include, by way of example, but not limitation thereof, any decisions to sell the Alderwood Mall Mortgaged Property or to refinance the Loan)) by an entity (or entities) satisfying any of clauses (i) through (v) above;
(vii) an entity that owns at least five (5) regional shopping centers in the United States having an aggregate square footage of at least six million (6,000,000) square feet and such entity has a net worth greater than Two Billion Dollars ($2,000,000,000) (exclusive of the Alderwood Mall Mortgaged Property);
(viii) a Qualified Pledgee; or
(ix) NYSCRF, a Person controlling or under common control with NYSCRF or a direct or indirect controlled subsidiary of NYSCRF.
“Prohibited Person” means any Person:
(i) listed in the Annex to, or is otherwise subject to the provisions of, Executive order No. 13224 on Terrorist Financing, effective September 24, 2011 and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (the “Executive Order”);
(ii) that is owned or controlled by, or acting for or on behalf of, any Person that is listed in the Annex to, or is otherwise subject to the provisions of the Executive Order;
(iii) with whom the Alderwood Mall Lender is prohibited from dealing or otherwise engaging in any transaction by any terrorism or money laundering or other legal requirements, including the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56, the “Patriot Act”);
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(iv) that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order;
(v) that is named as a “specifically designated national (SDN) and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, or at any replacement website or other replacement official publication of such list; or
(vi) that is an affiliate (including any principal, officer, immediate family member or close associate) of a Person described in one or more clauses of (i) – (v) of this definition.
Permitted Transfers
In addition to certain permitted transfers among affiliates of the Alderwood Mall Loan Sponsor described below, transfers of direct and indirect equity interests in the Alderwood Mall Borrower will be permitted, so long no Event of Default has occurred and is then continuing and the following conditions are met:
(i) the Alderwood Mall Borrower will be required to give or cause to be given written notice to the Alderwood Mall Lender of the proposed transfer or sale not later than fifteen (15) days prior thereto;
(ii) after such transfer, Alderwood Mall Borrower is a Permitted Owner or is at least fifty percent (50%) owned by one or more Permitted Owner;
(iii) as a condition to any transfer that results in any person or entity not owning at least 49% of the direct or indirect interests in the Alderwood Mall Borrower as of the Origination Date acquiring more than 49% of the direct or indirect equity interest in the Alderwood Mall Borrower, the Alderwood Mall Borrower must deliver to the Alderwood Mall Lender a new non-consolidation opinion reasonably satisfactory to each Rating Agency;
(iv) following the transfer, the Alderwood Mall Mortgaged Property will be required to be managed by a Qualifying Manager;
(v) if after giving effect to such transfer, a person or entity other than Guarantor or its affiliate owns more than 50% of the direct or indirect interests in the Alderwood Mall Borrower or controls the Alderwood Mall Borrower, a replacement guarantor reasonably acceptable to the Alderwood Mall Lender shall assume the obligations of the Guarantor under the Guaranty arising from and after the date of the transfer, provided, that if required by the Alderwood Mall Lender, and following a securitization, the approval of any replacement guarantor shall be subject to the receipt of a Rating Agency Confirmation, and
(vi) the Alderwood Mall Borrower must pay the reasonable out-of-pocket expenses of the Alderwood Mall Lender.
Permitted Upper Tier Pledges
Provided that no Event of Default has occurred and is then continuing, pledges of direct and indirect equity interests in the Alderwood Mall Borrower by GGP and any subsidiary owning either a direct or indirect interest in Alderwood Mall Borrower will be permitted, so long as the following conditions are met:
(i) the pledge shall be in connection with the pledge of all or substantially all of pledgor’s assets to secure the direct obligations or debt of GGP and any subsidiary owning either a direct or indirect interest in the Alderwood Mall Borrower and the net asset value of the pledgor (when aggregated, without duplication, with any of its affiliates which serve as co-borrowers or guarantors in connection with the financing which the pledge secures) shall be at least $1,500,000,000;
(ii) the pledgee shall be (i) a real estate investment trust, bank, saving and loan association, investment bank, insurance company, trust company, commercial credit corporation, pension plan, pension fund or pension advisory firm, mutual fund, government entity or plan provided such entity (A) has total assets (in name or under management) in excess of $3,000,000,000, and (except with respect to a pension advisory firm or similar fiduciary) capital/statutory surplus or shareholder’s equity of $1,500,000,000; and (B) is regularly engaged in the business of making or owning commercial real estate loans or commercial loans secured by a pledge of interests in a mortgage borrower or owning and operating commercial mortgage properties, or (ii) an entity for which Alderwood Mall Lender shall have received Rating Agency Confirmation (a “Qualified Pledgee”);
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(iii) the transfer of direct or indirect equity interests in the Alderwood Mall Borrower in connection with an exercise of any remedies or rights by the Qualified Pledgee pursuant to the pledge will be permitted, without Alderwood Mall Lender consent, provided that the Alderwood Mall Lender shall have received a new non-consolidation opinion reasonably satisfactory to each Rating Agency;
(iv) the transfer of direct or indirect equity interests in the Alderwood Mall Borrower in connection with an exercise of any remedies or rights by the Qualified Pledgee pursuant to the pledge will be conditioned upon a replacement guarantor reasonably acceptable to the Alderwood Mall Lender assuming the obligations of the Alderwood Mall Loan Sponsor under the Guaranty arising from and after the date of the transfer, provided, that if required by the Alderwood Mall Lender, the approval of any replacement guarantor shall be subject to receipt of a Rating Agency Confirmation;
(v) the Qualified Pledgee is only permitted to pledge, sell, assign, further pledge or otherwise transfer such pledge to another Qualified Pledgee; and
(vi) neither the granting of such pledge nor the exercise of any remedies available under such pledge shall result in a change of the property management of the Alderwood Mall Mortgaged Property unless the replacement manager is a Qualifying Manager.
Affiliate Transfers/Pledges
Transfers of direct or indirect interests in the Alderwood Mall Borrower by and among affiliates of the Alderwood Mall Borrower which are controlled by the Alderwood Mall Loan Sponsor are permitted, provided that if as a result of any such transfer more than 49% of the direct or indirect interests in the Alderwood Mall Borrower shall have been transferred to a person or entity not owning at least 49% of the direct or indirect interests in the Alderwood Mall Borrower on the date of closing, (i) the Alderwood Mall Borrower will be required to deliver to the Alderwood Mall Lender a new non-consolidation opinion reasonably satisfactory to each Rating Agency and (ii) the Alderwood Mall Borrower will be required to give or cause to be given written notice to the Alderwood Mall Lender of the proposed transfer not later than (5) Business Days prior thereto, which notice shall set forth the name of the person or entity to which the interest in the Alderwood Mall Borrower is to be transferred and set forth the date the transfer is expected to be effective.
Furthermore, GGP and any subsidiary owning either a direct or indirect interest in Alderwood Mall Borrower may pledge its respective direct or indirect interests in the Alderwood Mall Borrower (each, a “Permitted Affiliated Pledgor”), if any, to another person or entity which qualifies as a Permitted Affiliated Pledgor provided that the following conditions are satisfied:
(i) prior to the exercise of any remedies available under such pledge, if as a result of which (and after giving effect to the exercise of any remedies available under such pledge), more than 49% of the direct or indirect interests in the Alderwood Mall Borrower shall have been transferred to a person or entity not owning at least 49% of the direct or indirect interests in the Alderwood Mall Borrower on the date of closing, Alderwood Mall Borrower shall deliver to the Alderwood Mall Lender a new non-consolidation opinion reasonably satisfactory to each Rating Agency;
(ii) in no event shall the holder of such pledge sell, assign, further pledge or otherwise transfer such pledge or any of the documents which evidence or secure such pledge to a Person other than a Permitted Affiliated Pledgor;
(iii) the exercise of any remedies available under such pledge shall not result in a change of the property management of the Alderwood Mall Mortgaged Property unless the replacement manager is a Qualifying Manager; and
(iv) after such transfer, Alderwood Mall Borrower shall have the same ultimate beneficial owners.
Additional Indebtedness
The Alderwood Mall Loan Documents provide that the Alderwood Mall Borrower will not be permitted to incur any indebtedness other than the following: (i) the Alderwood Mall Non-Serviced Loan Combination under the Alderwood Mall Mortgage Loan Agreement; (ii) tenant allowances and capital expenditure costs required under leases or otherwise permitted to be incurred under the Alderwood Mall Loan Documents that are paid on or prior to the date when due; (iii) trade payables incurred in the ordinary course of business in an amount not to exceed $5,000,000 in
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the aggregate at any time. provided such obligations are not represented by a note and are not more than 60 days past due; (iv) obligations to contractors and other service or materials providers in respect of the capital expenditures or alterations permitted or required pursuant to the provisions of the Alderwood Mall Mortgage Loan Agreement; and (v) taxes and obligations under the REAs that are not yet delinquent (collectively, “Permitted Debt”).
Permitted Mezzanine Loan
The holder(s) of one hundred percent of the direct or indirect beneficial interests in the Alderwood Mall Borrower (a “Permitted Mezzanine Borrower”) may obtain a single mezzanine loan (the “Permitted Mezzanine Loan”), subordinate to the Alderwood Mall Non-Serviced Loan Combination and secured by a pledge of one hundred percent (100%) of the direct or indirect ownership interests in the Alderwood Mall Borrower (and, subject to the terms and provisions of the intercreditor agreement described below, a Permitted Mezzanine Lender may exercise any remedies or rights pursuant to such pledge without Alderwood Mall Lender consent) provided that the following conditions are satisfied:
(i) Alderwood Mall Lender shall have received not less than thirty (30) days’ prior written notice;
(ii) no Default or Event of Default shall have occurred and be continuing at any time through and including the date that the Permitted Mezzanine Loan is advanced;
(iii) the Permitted Mezzanine Loan shall be issued by a Qualified Pledgee (such issuer, the “Permitted Mezzanine Lender”);
(iv) at least ten (10) Business Days prior to the closing of the Permitted Mezzanine Loan, Alderwood Mall Borrower shall have delivered (or cause to have been delivered) to Alderwood Mall Lender a new appraisal;
(v) as of the date the Permitted Mezzanine Loan is advanced, the aggregate LTV Ratio of the Alderwood Mall Non-Serviced Loan Combination and the Permitted Mezzanine Loan is equal to or less than 48.63%;
(vi) as of the date the Permitted Mezzanine Loan is advanced, the aggregate Debt Service Coverage Ratio of the Alderwood Mall Non-Serviced Loan Combination and the Permitted Mezzanine Loan is equal to or greater than 1.79 : 1.00; provided that (a) if the Permitted Mezzanine Loan bears interest at a floating rate, the Debt Service for the Permitted Mezzanine Loan shall be calculated using the greater of the actual floating rate index and the strike price of the interest rate cap and (b) the Debt Service for the Permitted Mezzanine Loan shall include the greater of (x) actual principal payments required under the Permitted Mezzanine Loan and (y) assumed monthly payments of principal based upon a 30-year amortization schedule;
(vii) the term of the Permitted Mezzanine Loan shall have a term which is either co-terminus with the Alderwood Mall Non-Serviced Loan Combination or the Permitted Mezzanine Loan is freely prepayable without premium or penalty after the Maturity Date (of the Alderwood Mall Non-Serviced Loan Combination) and the Permitted Mezzanine Loan and all other terms, provisions and conditions of the Permitted Mezzanine Loan, including, without limitation, the loan documents evidencing and securing the Permitted Mezzanine Loan (“Permitted Mezzanine Loan Documents”) shall be acceptable to Alderwood Mall Lender in its reasonable discretion;
(viii) the Permitted Mezzanine Lender shall enter into a customary intercreditor agreement in such form acceptable to the Alderwood Mall Lender in its reasonable discretion, which intercreditor agreement shall provide, among other things, that as a condition to the foreclosure of the Permitted Mezzanine Lender’s pledge, acceptance of a deed in lieu of foreclosure or any other realization by the Permitted Mezzanine Lender upon the equity interests securing the Permitted Mezzanine Loan, the Alderwood Mall Lender shall have received a replacement of the Guaranty from the Permitted Mezzanine Lender (meeting the financial requirements included in the definition of Qualified Pledgee) or another creditworthy entity meeting Alderwood Mall Lender’s then-current underwriting standards;
(ix) the Permitted Mezzanine Loan shall be a fixed rate loan or a floating rate loan (in which event Permitted Mezzanine Borrower shall purchase an interest rate cap with a notional amount equal to the original principal balance of the Permitted Mezzanine Loan and a strike price reasonably acceptable to the Alderwood Mall Lender), with interest due and payable monthly (i.e., interest does not accrue) and, other
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than the changes in the base rate in connection with a floating rate loan, such interest rate shall not be subject to adjustment except after an event of default;
(x) if requested by the Alderwood Mall Lender, the Alderwood Mall Borrower shall execute amendments to the Alderwood Mall Loan Documents reasonably requested by the Alderwood Mall Lender, to reflect the existence of the Permitted Mezzanine Loan, provided that any such amendments or agreements shall not alter the interest rate or other payment terms of the Alderwood Mall Non-Serviced Loan Combination set forth in the Alderwood Mall Mortgage Loan Agreement or the other Alderwood Mall Loan Documents or otherwise adversely affect the Alderwood Mall Borrower or impose additional obligations or liabilities upon or diminish the rights of the Alderwood Mall Borrower;
(xi) if required by the Alderwood Mall Lender, the Alderwood Mall Borrower shall deliver (i) updated opinions of counsel as to non-consolidation, and if the Alderwood Mall Loan Documents are amended pursuant to clause (x) above, due execution and enforceability with respect to the Alderwood Mall Loan Documents, and (ii) revised organizational documents for the Alderwood Mall Borrower, which opinions and organizational documents shall be reasonably satisfactory to the Alderwood Mall Lender;
(xii) if required by the Alderwood Mall Lender, the Alderwood Mall Borrower shall have delivered to the Alderwood Mall Lender a Rating Agency Confirmation in connection with the Permitted Mezzanine Loan; and
(xiii) all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) incurred by the Alderwood Mall Lender, shall be paid by the Alderwood Mall Borrower.
“LTV Ratio” means the ratio of (i) the outstanding principal balance of (a) the Alderwood Mall Non-Serviced Loan Combination, plus (b) the Permitted Mezzanine Loan to (ii) the value of the Alderwood Mall Mortgaged Property as determined pursuant to a new Appraisal.
Alterations
The Alderwood Mall Borrower may not perform, undertake, contract to perform or consent to any alteration that would be reasonably expected to have a Material Adverse Effect without the prior written consent of the Alderwood Mall Lender, which consent will not be unreasonably withheld. Notwithstanding the foregoing, the Alderwood Mall Lender’s consent is not required in connection with (i) tenant improvements required to be performed pursuant to the terms of any lease executed on or before the date of the Alderwood Mall Loan Documents, (ii) the tenant improvements required to be performed pursuant to the terms and provisions of a lease entered into in accordance with the terms and provisions of the Alderwood Mall Loan Documents and not materially adversely affecting any structural component of any improvements at the Alderwood Mall Mortgaged Property, any utility or HVAC system contained in any such improvements or the exterior of any building constituting a part of any such improvements, (iii) alterations performed in connection with the restoration of the Alderwood Mall Mortgaged Property after the occurrence of a casualty or condemnation in accordance with the terms and provisions of the Alderwood Mall Loan Documents, and (iv) alterations performed pursuant to the terms of any lease approved by the Alderwood Mall Lender after the Origination Date.
If at any time the anticipated remaining cost of alterations at the Alderwood Mall Mortgaged Property (other than amounts to be paid or reimbursed by tenants), as reasonably determined by the Alderwood Mall Borrower and agreed to by the Alderwood Mall Lender, exceeds $17,750,000 (such excess, the “Alterations Excess”), the Alderwood Mall Borrower will be required to deliver to the Alderwood Mall Lender (A) an amount (in cash or certain permitted investments) equal to the Alterations Excess, (B) a letter of credit meeting the requirements under the Alderwood Mall Loan Documents in such amount, (C) a completion bond issued by an entity having a rating that is reasonably acceptable to the Alderwood Mall Lender and for which a Rating Agency Confirmation is received, or (D) an alteration indemnity meeting the requirements of the Alderwood Mall Loan Documents in respect thereof from an Acceptable Indemnitor. The amount so reserved, or the amount of such qualified letter of credit or completion bond, as applicable, may be reduced from time to time at the request of the Alderwood Mall Borrower to reflect any reduction in the Alterations Excess, as estimated by the Alderwood Mall Borrower and reasonably approved by the Alderwood Mall Lender.
“Acceptable Indemnitor” means Guarantor or a direct or indirect equityholder of at least fifty percent (50% of the beneficial interest in Guarantor in either case if and for so long as either of the following conditions is satisfied: (a) Guarantor or such majority equityholder, as applicable, has a long term unsecured debt rating of not less than “BBB” by S&P, “BBB” by Fitch, or “Baa3” by Moody’s, or (b) Guarantor or such majority equityholder, as applicable, has (i)
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liquid assets (including availability under lines of credit that may not be revoked by the Alderwood Mall Lender thereunder in the absence of a default by the borrower thereunder) in an aggregate amount equal to at least 120% of the aggregate amount guaranteed by such Acceptable Indemnitor, (ii) has (or has a 100% equityholder that has) an equity market value (determined based on market capitalization) at least equal to five times the amount of the aggregate amount guaranteed by such Acceptable Indemnitor at such time, and (iii) has an effective net worth at least equal to five times the amount of the aggregate amount guaranteed by such Acceptable Indemnitor at such time, provided if an Acceptable Indemnitor (other than General Growth Properties, Inc., GGP Limited Partnership, GGP Nimbus, Guarantor, New York State Common Retirement Fund or any successor by merger to either entity or an acquirer of all, or substantially all, of either of their respective assets) qualifies under clause (b) then a Rating Agency Confirmation will be required with respect to such Acceptable Indemnitor.
“Material Adverse Effect” means any event or condition that has a material adverse effect on (i) the use, value or possession of the Alderwood Mall Mortgaged Property taken as a whole (including the net operating income of the Alderwood Mall Mortgaged Property), (ii) the enforceability, validity, perfection or priority of the lien of the Mortgage or the Alderwood Mall Loan Documents, or (iii) the ability of Alderwood Mall Borrower to repay the principal and interest of the Alderwood Mall Non-Serviced Loan Combination as it becomes due.
Leases and Material Agreements
Leases
All new leases that are Major Leases, and all terminations, renewals, extensions, modifications and amendments of Major Leases (except for any terminations, extensions or renewals of existing Major Leases pursuant to options expressly contained in such Major Leases), will be subject to the prior written consent of the Alderwood Mall Lender, which, unless an Event of Default is then continuing, consent will not be unreasonably withheld or delayed.
All new leases and renewals of leases (except for any extensions or renewals of existing leases pursuant to options expressly contained in such leases) must provide for rental rates that are at least equivalent to then-existing local market rates for similarly situated properties. All proposed leases shall be on terms that are commercially reasonable and not contain any term that would materially adversely affect the Alderwood Mall Lender’s rights under the Alderwood Mall Loan Documents.
The Alderwood Mall Borrower is required to promptly deliver to the Alderwood Mall Lender a copy of each written notice from a tenant under any Major Lease claiming that the Alderwood Mall Borrower is in default in the performance or observance of any of the material terms, covenants or conditions thereof to be performed or observed by the Alderwood Mall Borrower. Together with the quarterly financial statements delivered to the Alderwood Mall Lender pursuant to the Alderwood Mall Mortgage Loan Agreement, the Alderwood Mall Borrower is required to furnish to the Alderwood Mall Lender executed copies of all leases to the extent requested by the Alderwood Mall Lender.
“Major Lease” means (i) any lease that when aggregated with all other leases at the Alderwood Mall Mortgaged Property with the same tenant (unless(i) the tenant is operating the other space under a different trade name and (ii) such other space is not contiguous with the space demised by the lease in question or, if contiguous, such space is operated as a completely separate and distinct business) demises more than 20,000 square feet of contiguous gross leasable area, (ii) any lease that contains an option or preferential right to purchase all or any portion of the Alderwood Mall Mortgaged Property, (iii) any lease that is with an affiliate of the Alderwood Mall Borrower as tenant (excluding the mall management office), or (iv) any instrument guaranteeing or providing credit support for any lease meeting the requirements of any of clauses (i), (ii) or (iii) above.
Material Agreements
The Alderwood Mall Borrower will be required to (i) promptly perform and/or observe, in all material respects, all of the covenants and agreements required to be performed and observed by it under the Material Agreements and do all things necessary to preserve and to keep unimpaired its material rights thereunder if the failure to do any of the foregoing would reasonably be expected to have a Material Adverse Effect; (ii) enforce the performance and observance of all of the covenants and agreements required to be performed and/or observed under the Material Agreements in a commercially reasonable manner if the failure to do so would reasonably be expected to have a Material Adverse Effect; (iii) cause the Alderwood Mall Mortgaged Property to be operated, in all material respects, in accordance with the Material Agreements; and (iv) not, without the reasonable consent of the Alderwood Mall Lender, (A) enter into any new Material Agreement or execute modifications to any existing Material Agreements, or (B) amend, surrender, terminate or cancel the Material Agreements.
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“Material Agreement” means a contract and agreement (other than leases, the reciprocal easement agreements or the management agreement) relating to the ownership, management, development, use, operation, leasing, maintenance, repair or improvement of the Alderwood Mall Mortgaged Property or otherwise imposing obligations on Alderwood Mall Borrower as to which there is an obligation of the Alderwood Mall Borrower to pay more than $1,000,000 per annum and that cannot be terminated by the Alderwood Mall Borrower without cause upon 30 days or less notice without payment of a termination fee of not more than $250,000.
Risk Management
Insurance
The Alderwood Mall Borrower is required to obtain and maintain within respect to the Alderwood Mall Mortgaged Property, for the mutual benefit of the Alderwood Mall Borrower and the Alderwood Mall Lender at all times, the following policies of insurance (which may be obtained or maintained under blanket insurance policies):
(i) comprehensive “special perils” insurance (including increased cost of construction, demolition and debris removal and the undamaged portion of the improvements at the Alderwood Mall Mortgaged Property) in an amount equal to 100% of actual replacement value (exclusive of costs of excavations, foundations, underground utilities and footings) with a waiver of depreciation, which coverage shall contain coverage for law and ordinance and an agreed amount endorsement so as to avoid any coinsurance penalty;
(ii) business income insurance in an amount equal to projected gross income from the Alderwood Mall Mortgaged Property for a period of 18 months from the date of the casualty and covering all risks required to be covered by the insurance provided for in the Alderwood Mall Mortgage Loan Agreement covering the period from the date of any casualty to the date that the Alderwood Mall Mortgaged Property is repaired or replaced and operations are resumed and an extended period of indemnity covering the 6 month period commencing on the date on which the Alderwood Mall Mortgaged Property has been restored;
(iii) if any portion of the improvements at the Alderwood Mall Mortgaged Property is currently or at any time in the future located in a federally designated “special flood hazard area”, flood hazard insurance in an amount equal to the lesser of (1) the outstanding principal balance of the Alderwood Mall Non-Serviced Loan Combination or (2) the maximum amount of such insurance available under the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of 1994, as each may be amended, plus such additional excess flood insurance necessary to address the probable maximum loss as determined by an independent authority;
(iv) comprehensive boiler and machinery insurance, if applicable, in amounts as shall be reasonably required by the Alderwood Mall Lender in an amount not to exceed $25,000,000 in the aggregate;
(v) if the Alderwood Mall Mortgaged Property is located in seismic zone 3 or 4, earthquake insurance with coverage amounts of not less than the product of the “Probable Maximum Loss” applicable to the Alderwood Mall Mortgaged Property, as set forth in the seismic report satisfactory to the Alderwood Mall Lender prepared by a seismic engineer or other qualified consultant, multiplied by the replacement cost of the improvements as such replacement cost may be reasonably estimated by the Alderwood Mall Lender plus business income insurance required under the Alderwood Mall Mortgage Loan Agreement, and with a deductible not to exceed 5% of the total insured value at risk, provided that a deductible at such 5% threshold is available at commercially reasonable rates and, if the deductible at the 5% threshold is not available at commercially reasonable rates, then such deductible shall not exceed 10% of the total insured value at risk if Alderwood Mall Borrower reserves funds with Alderwood Mall Lender for the difference;
(vi) to the extent not insured by the other required insurance policies, insurance against “Wind/Named Storms” and other similar events in an amount equal to the sum of 100% of the “Full Replacement Cost” and 18 months business interruption insurance, and with a deductible not to exceed 5% of the total insured value at risk, provided that a deductible at such 5% threshold is available at commercially reasonable rates and, if the deductible at the 5% threshold is not available at commercially reasonable rates, then such deductible shall not exceed 10% of the total insured value at risk if Alderwood Mall Borrower reserves funds with Alderwood Mall Lender for the difference;
(vii) commercial general liability insurance (including excess or umbrella insurance) on an “occurrence” form with a limit of $100,000,000 per occurrence and in the aggregate;
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(viii) to the extent not insured by the other required insurance policies, insurance against “acts of terrorism” and other similar acts or events (including “fire following”) from an insurance provider meeting the rating requirements set forth in the Alderwood Mall Mortgage Loan Agreement or, if not commercially available, from an insurance provider which maintains at least an investment grade rating of “BBB” from S&P and, if they rate the insurer, at least “Baa2” from Moody’s, (provided Factory Mutual Insurance Company will be an acceptable insurance provider so long as it maintains at least the required S&P and A.M. Best ratings), insuring against all such excluded acts or events and “fire following”, to the extent such policy or endorsement is available, in an amount determined by the Alderwood Mall Lender in its sole discretion but in no event more than an amount equal to the sum of 100% of the “Full Replacement Cost” and 18 months business interruption insurance (provided for so long as the Terrorism Risk Insurance Act of 2002, as extended and modified by TRIPRA is in effect (including any extensions thereof or if another federal governmental program is in effect relating to “acts of terrorism” which provides substantially similar protections as TRIPRA) and continues to cover both domestic and foreign acts of terrorism, terrorism insurance which covers against “covered acts” as defined by TRIPRA (or such other program) will constitute full compliance with this requirement); provided, however, in no event shall Alderwood Mall Borrower be required to expend in any fiscal year on the terrorism insurance premiums more than an amount equal to 2 times the amount of the annual insurance premium that is payable at such time with respect to the required casualty and business interruption coverage (without giving effect to the cost of earthquake insurance or terrorism Insurance) and allocable to the Alderwood Mall Mortgaged Property based on market rates; and
(ix) upon 120 days’ written notice, the Alderwood Mall Borrower is required to obtain such other commercially reasonable insurance and in such reasonable amounts as the Alderwood Mall Lender from time to time may reasonably request against such other insurable hazards which at the time are commonly insured against for property similar to the Alderwood Mall Mortgaged Property located in or around the region in which the Alderwood Mall Mortgaged Property is located.
The insurance policies described above are required to be issued by (a) one or more financially sound and responsible insurance companies authorized to do business in the state in which the Alderwood Mall Mortgaged Property is located and having a rating by (i) S&P not lower than “A”, (ii) Moody’s not lower than “A2” but only if Moody’s rates the securities issued in connection with the MSCCG 2015-ALDR securitization transaction and (iii) A.M. Best not lower than “A:VIII” or (b) a syndicate of insurers through which at least 75% of the coverage (if there are 4 or fewer members of the syndicate) or at least 60% of the coverage (if there are 5 or more members of the syndicate) is with carriers having a rating by (i) S&P not lower than “A” (ii) Moody’s not lower than “A2” but only if Moody’s rates the securities issued in connection with the MSCCG 2015-ALDR securitization transaction and (iii) by A.M. Best not lower than “A:VIII” and the balance of the coverage is, in each case, with insurers having a rating by (i) S&P of not lower than “BBB” (ii) by Moody’s not lower than “Baa2” but only if Moody’s rates the securities issued in connection with the MSCCG 2015-ALDR securitization transaction and (iii) by A.M. Best not lower than “A:VIII”; provided that the flood hazard insurance coverage described above and made available under the Flood Insurance Acts with any insurance company authorized by the United States government to issue such insurance provided such flood hazard insurance is reinsured by the United States government and, provided further that, for the purposes of determining whether the foregoing Moody’s rating requirements have been satisfied, any insurance company that is not rated by Moody’s will be subject to a Rating Agency Confirmation from Moody’s. If the Alderwood Mall Borrower’s insurers or reinsurance carriers fail to provide or maintain these ratings, Alderwood Mall Borrower’s insurance will be subject to the approval by the Alderwood Mall Lender and the Alderwood Mall Lender’s waiver of applicable rating requirements, or the Alderwood Mall Borrower may satisfy the applicable ratings requirement regarding flood hazard insurance coverage under the Alderwood Mall Mortgage Loan Agreement by providing to the Alderwood Mall Lender a “cut-through” endorsement in form and substance approved by the Alderwood Mall Lender issued by an insurer satisfactory to the Alderwood Mall Lender and meeting the rating requirements as set forth above or by such other credit enhancement or guaranty by such other Person, in each event satisfactory to the Alderwood Mall Lender and the Rating Agencies. Notwithstanding the foregoing, the Alderwood Mall Borrower may maintain the required insurance coverage with the specific insurers under the insurance policies approved by the Alderwood Mall Lender in connection with the origination of the Alderwood Mall Non-Serviced Loan Combination provided that such insurers maintain no less than the claims paying ability rating applicable thereto by S&P (and A.M. Best to the extent permitted under the Alderwood Mall Loan Documents) as of the Closing Date. Of the $500,000,000 of casualty insurance coverage under the blanket policy (including, without limitation, coverage for business interruption, terrorism and windstorm): (i) Ironshore Specialty Insurance Company provides $2,625,000 part of $75,000,000 in excess of $50,000,000 (meaning the loss would have to exceed $50,000,000 before such insurer would be required to pay under the policy). As of the Origination Date, (i) Ironshore Specialty Insurance Company had an A.M. Best rating of “A- XIV” and a Moody’s rating of “Baa1.” The Alderwood Mall Borrower may continue to utilize Ironshore Specialty Insurance Company in its respective position and participation amount within the syndicate, for so long as the ratings are not withdrawn or downgraded below such ratings as of
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the Origination Date. In the event either rating is withdrawn or downgraded below this rating, the Alderwood Mall Borrower shall promptly notify the Alderwood Mall Lender and replace Ironshore Specialty Insurance Company with an insurer meeting the rating requirements set forth in the Alderwood Mall Mortgage Loan Agreement. In addition, upon renewal, Ironshore Specialty Insurance Company shall be replaced with an insurer satisfying the rating requirements set forth in the Alderwood Mall Mortgage Loan Agreement.
All insurance policies described above (i) are required to contain deductibles that, in addition to complying with any other requirements described above, are approved by the Alderwood Mall Lender (such approval not to be unreasonably withheld); (ii) are required to be maintained throughout the term of the Alderwood Mall Non-Serviced Loan Combination without cost to the Alderwood Mall Lender and will name the Alderwood Mall Borrower as the named insured; (iii) with respect to casualty policies, are required to contain a standard mortgagee clause naming the Alderwood Mall Lender and its successors and assigns as their interests may appear as first mortgagee and loss payee; (iv) with respect to liability policies, are required to name the Alderwood Mall Lender and its successors and assigns as their interests may appear as additional insureds; (v) with respect to casualty policies, are required to contain an endorsement providing that the Alderwood Mall Lender will receive at least 30 days’ prior written notice of any cancellation thereof (except for non-payment of premiums which will require 10 days’ notice to terminate); (vi) are required to contain an endorsement providing that no act or negligence of the Alderwood Mall Borrower will affect the validity or enforceability of the insurance insofar as the Alderwood Mall Lender is concerned; (vi) are required not to contain any provision that the Alderwood Mall Lender will be liable for any insurance premiums thereon or subject to any assessments thereunder; (vii) may be in the form of a blanket policy, provided such policy provides the same protection as would a separate policy, and (viii) are required to be otherwise reasonably satisfactory in form and substance to the Alderwood Mall Lender.
Casualty and Condemnation
If the Alderwood Mall Mortgaged Property shall be damaged or destroyed, in whole or in material part, by fire or other casualty (a “Casualty”), the Alderwood Mall Borrower is required to give prompt notice to the Alderwood Mall Lender and will be required to promptly commence and diligently prosecute the completion of the restoration of the Alderwood Mall Mortgaged Property as nearly as possible substantially to the condition the Alderwood Mall Mortgaged Property was in immediately prior to such Casualty (a “Restoration”) and otherwise in accordance with the Alderwood Mall Loan Documents. The Alderwood Mall Borrower will be required to pay all costs of such Restoration, whether or not such costs are covered by insurance. The Alderwood Mall Lender may, but shall not be obligated to, make proof of loss if not made promptly by the Alderwood Mall Borrower.
The Alderwood Mall Borrower will be required to promptly give the Alderwood Mall Lender notice of the actual or threatened condemnation of the Alderwood Mall Mortgaged Property (a “Condemnation”) and will be required to deliver to the Alderwood Mall Lender copies of any and all papers served in connection with such proceedings. The Alderwood Mall Lender may participate in any such proceedings to the extent that the award therefrom is reasonably anticipated by the Alderwood Mall Lender to exceed $17,750,000. The Alderwood Mall Borrower will be required as its sole cost and expense to diligently prosecute any such proceedings, and, to the extent the Alderwood Mall Lender is entitled to participate, will consult with the Alderwood Mall Lender, its attorneys and experts, and cooperate with them in the prosecution or defense of any such proceedings. If the Alderwood Mall Mortgaged Property or any portion thereof is taken by a condemning authority, the Alderwood Mall Borrower will be required to promptly commence and diligently prosecute the Restoration of the Alderwood Mall Mortgaged Property, whether or not net proceeds are made available to the Alderwood Mall Borrower.
If the net proceeds from a Casualty or Condemnation or the cost of the Restoration shall be less than $17,750,000 and no Event of Default is continuing, the net proceeds may be disbursed directly to the Alderwood Mall Borrower and, if disbursed to the Alderwood Mall Lender, will be disbursed by the Alderwood Mall Lender to the Alderwood Mall Borrower upon receipt. Subject to the preceding sentence, if the net proceeds and the cost of the Restoration are less than $17,750,000, the net proceeds will be disbursed directly to Alderwood Mall Borrower for a Restoration if the conditions described in clauses (A), (D), (F), (G), (H) and (I) below are satisfied.
If the net proceeds or the cost of the Restoration are equal to or greater than $17,750,000 if the following conditions are satisfied, any net proceeds shall be held by the Alderwood Mall Lender and will be made available to the Alderwood Mall Borrower for a Restoration provided that each of the following conditions are met (provided net proceeds in connection with a casualty or a condemnation will be required to made available to the Alderwood Mall Borrower if required pursuant to the terms of any Major Lease or REA):
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(A) no Event of Default shall have occurred and be continuing;
(B) in the event that the net proceeds are insurance proceeds, less than 25% of the total floor area of the improvements on the Alderwood Mall Mortgaged Property has been damaged, destroyed or rendered unusable as a result of such fire or other casualty or, in the event that the net proceeds are condemnation proceeds, the land constituting the Alderwood Mall Mortgaged Property which is taken is located along the perimeter or periphery of the Alderwood Mall Mortgaged Property, and no material portion of the improvements is located on such land;
(C) each lease for at least 50,000 square feet (each, an “Anchor Lease”) and leases demising in the aggregate a percentage amount equal to or greater than 75% of the total rentable space in the Alderwood Mall Mortgaged Property (other than the space demised pursuant to the Anchor Leases) which has been demised under executed and delivered leases in effect as of the date of the occurrence of such casualty or condemnation or leases obtained in substitution thereof and all REAs shall remain in full force and effect during and after the completion of the Restoration;
(D) the Alderwood Mall Borrower commences the Restoration as soon as reasonably practicable, subject to delays for force majeure (but in no event later than 60 days after net proceeds are received but in no event later than 120 days following such damage or condemnation), and will be required to diligently pursue the same to satisfactory completion;
(E) the Alderwood Mall Lender shall be reasonably satisfied that any operating deficits, including all scheduled payments of principal and interest under the Notes, will be covered out of (1) the net proceeds, (2) the required business interruption insurance coverage, if applicable, or (3) other funds of the Alderwood Mall Borrower;
(F) the Alderwood Mall Lender shall be reasonably satisfied that the Restoration will be completed on or before the earliest to occur of (1) the date which is 6 months prior to the Maturity Date, (2) the earliest date required for such completion under the terms of any applicable leases or reciprocal easement agreements, (3) such time as may be required under applicable zoning law, ordinance, rule or regulation in order to repair and restore the Alderwood Mall Mortgaged Property to substantially the condition it was in immediately prior to such casualty or to as nearly as possible the condition it was in immediately prior to such condemnation, as applicable, or (4) the expiration of the required business interruption insurance coverage;
(G) the Alderwood Mall Mortgaged Property and the use thereof after the Restoration will be in compliance in all material respects with and permitted under all applicable zoning laws, ordinances, rules and regulations, and the requirements of all Major Leases and the REAs;
(H) the Restoration shall be done and completed by the Alderwood Mall Borrower in an expeditious and diligent fashion and in compliance in all material respects with all applicable legal requirements, and the requirements of all Major Leases and the REAs; and
(I) such casualty or condemnation, as applicable, does not result in the loss of access to the Alderwood Mall Mortgaged Property or the related improvements unless substitute access reasonably satisfactory to the Alderwood Mall Lender is available to the Alderwood Mall Mortgaged Property.
The net proceeds will be disbursed by the Alderwood Mall Lender to, or as directed by, the Alderwood Mall Borrower from time to time during the course of the Restoration, upon receipt of evidence reasonably satisfactory to the Alderwood Mall Lender that (A) all materials installed and work and labor performed then to date (except to the extent that they are to be paid for out of the requested disbursement) in connection with the Restoration have been paid for in full, and (B) subject to the rights of contest set forth in the Mortgage, there exist no notices of pendency, stop orders, mechanic’s or materialman’s liens or notices of intention to file same, or any other liens or encumbrances of any nature whatsoever on the Alderwood Mall Mortgaged Property arising out of the Restoration which have not either been fully bonded to the reasonable satisfaction of the Alderwood Mall Lender or discharged of record or in the alternative fully insured to the reasonable satisfaction of the Alderwood Mall Lender by the title company which issued the Alderwood Mall Lender’s title insurance policy. All plans and specifications required in connection with the Restoration reasonably expected to cost in excess of $17,750,000 shall be subject to prior review and acceptance in all respects by the Alderwood Mall Lender and if reasonably required by the Alderwood Mall Lender, by an independent consulting engineer selected by the Alderwood Mall Lender, such acceptance not to be unreasonably withheld or delayed. The identity of the general contractor shall be subject to the reasonable approval of the Alderwood Mall Lender, copies of all contracts pursuant to which all subcontractors and materialmen engaged in any
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Restoration shall be delivered to the Alderwood Mall Lender and its casualty consultant for information purposes only and not for approval. No payment will exceed 90% of the value of the work performed from time to time until such time as 50% of the Restoration has been completed. Provided that no Event of Default has occurred is then continuing, if there remain excess net proceeds from a casualty or condemnation after the proposed restoration has been substantially completed in accordance with the foregoing, such excess will be remitted to the Alderwood Mall Borrower.
If at any time the net proceeds or the undisbursed balance thereof shall not, in the reasonable opinion of the Alderwood Mall Lender in consultation with its casualty consultant, if applicable, be sufficient to pay in full the balance of the costs which are estimated to be incurred in connection with the completion of the Restoration, the Alderwood Mall Borrower will be required to demonstrate to the reasonable satisfaction of the Alderwood Mall Lender the availability of sufficient funds of the Alderwood Mall Borrower to satisfy such deficiency or, at the Alderwood Mall Lender’s election upon notice to the Alderwood Mall Borrower, deposit the deficiency in the form of Restoration Collateral with the Alderwood Mall Lender and will be disbursed for costs actually incurred in connection with the Restoration.
All reasonable out-of-pocket costs and expenses incurred by the Alderwood Mall Lender in connection with making the net proceeds available for the Restoration, including, without limitation, reasonable counsel fees and disbursements and the casualty consultant’s fees, if applicable, shall be paid by the Alderwood Mall Borrower.
If, pursuant to the foregoing provisions, the Alderwood Mall Borrower is not entitled to apply net proceeds from a casualty or condemnation toward the restoration of the Alderwood Mall Mortgaged Property and the Alderwood Mall Lender elects not to permit such net proceeds from a casualty or condemnation to be so applied, such net proceeds from a casualty or condemnation will be applied on the first Loan Payment Date following such election to the prepayment of the Alderwood Mall Non-Serviced Loan Combination (without penalty or premium, including the Yield Maintenance Premium) and will be accompanied by interest on the amount prepaid through the end of the applicable Interest Accrual Period (calculated as if the amount prepaid were outstanding for the entire Interest Accrual Period).
Notwithstanding anything to the contrary set forth in this section, with respect to a Casualty or a Condemnation, if the loan-to-value ratio (such value to be determined by the Alderwood Mall Lender in its sole discretion based on a commercially reasonable valuation method using only the portion of the Alderwood Mall Mortgaged Property which constitutes acceptable real property under the Code for a REMIC) immediately after such Condemnation or Casualty, as the case may be, and prior to any Restoration (but taking into account any planned Restoration of the Alderwood Mall Mortgaged Property as if such planned Restoration were completed) is greater than one hundred and twenty-five percent (125%), the principal balance of the Alderwood Mall Non-Serviced Loan Combination must be paid down by the “qualified amount” as that term is defined in the IRS Revenue Procedure 2010-30, as the same may be amended, modified or supplemented from time to time (and no Yield Maintenance Premium or any other prepayment premium or fee shall be due in connection therewith), in order to meet the foregoing loan-to-value ratio (which loan-to-value ratio must be satisfied with respect to both the Group 1 Notes and Group 2 Notes, determined by treating the Group 1 Notes and Group 2 Notes as two separate debt instruments with the Group 1 Notes having the senior lien), unless the Alderwood Mall Borrower delivers to the Alderwood Mall Lender an opinion of counsel, acceptable to the Alderwood Mall Lender in its sole, but good faith, discretion, that if such amount is not paid, no REMIC trust will fail to qualify as a REMIC trust or otherwise subject such securitization to tax.
“Group 1 Notes” means, collectively, Note A-1-1, Note A-1-2, Note A-1-3 and Note A-1-4.
“Group 2 Notes” means, collectively, Note A-2-1 and Note A-2-2.
“Restoration Collateral” means any of the following: (A) cash, (B) U.S. Obligations, (C) other securities having a rating reasonably acceptable to the Alderwood Mall Lender and for which a Rating Agency Confirmation shall have been received, (D) a completion bond issued by a person or entity having a rating by S&P of not less than A-1+ if the term of such bond is no longer than 3 months or, if such term is in excess of 3 months, Alderwood Mall Lender shall have received a Rating Agency Confirmation, provided that in either case the Alderwood Mall Lender shall have received a Rating Agency Confirmation regarding the form and substance of any such completion bond, (E) a letter of credit, pursuant to the terms of the Alderwood Mall Loan Documents or (F) an indemnity from an Acceptable Indemnitor together with a “bring down” of the non-consolidation opinion.
Annual Budget
Not less than ten (10) days prior to the commencement of each fiscal year during the term of the Alderwood Mall Non-Serviced Loan Combination, the Alderwood Mall Borrower is required to deliver to the Alderwood Mall Lender for informational purposes only an annual budget for the Alderwood Mall Mortgaged Property for the ensuing fiscal year.
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During the continuance of a Trigger Period, the annual budget and any revisions thereto will be subject to the Alderwood Mall Lender’s reasonable approval. For so long as the Alderwood Mall Lender withholds its consent to any approved annual budget or any revisions thereto, the approved annual budget in effect prior to any such request for approval (as increased by CPI) will remain in effect. Without the prior written consent of the Alderwood Mall Lender, which consent will not be unreasonably withheld, during the continuance of an Event of Default, the Alderwood Mall Borrower will not make any extraordinary operating expenditures or capital expenditures that are not provided for in the approved annual budget.
Financial Reporting
Annual Financial Statements
Within 90 days after the close of each fiscal year, the Alderwood Mall Borrower is required to furnish to the Alderwood Mall Lender annual financial statements of the Alderwood Mall Borrower covering the Alderwood Mall Mortgaged Property, including a balance sheet of the Alderwood Mall Borrower (and no other entities), together with statements of profit and loss for Alderwood Mall Borrower and the Alderwood Mall Mortgaged Property. At any time that the Alderwood Mall Borrower is not controlled by GGP or if GGP is not required to file financial statements under the Exchange Act, such annual financial statements shall be audited and shall be accompanied by an opinion of a “Big Four” accounting firm or other firm of independent certified public accountants reasonably acceptable to the Alderwood Mall Lender and shall not be qualified as to going concern status. Together with the annual financial statements of the Alderwood Mall Borrower, the Alderwood Mall Borrower is required to furnish to the Alderwood Mall Lender (i) the then current rent roll; (ii) tenant sales reports for the Alderwood Mall Mortgaged Property (to the extent available); and (iii) such other information as the Alderwood Mall Lender reasonably requests which is material to the Alderwood Mall Non-Serviced Loan Combination.
Quarterly Financial Statements
Within 45 days after the end of each calendar quarter and 90 days after the end of the fourth calendar quarter, the Alderwood Mall Borrower is required to furnish to the Alderwood Mall Lender quarterly and year-to-date unaudited financial statements prepared for such fiscal quarter with respect to the Alderwood Mall Borrower and the Alderwood Mall Mortgaged Property, which statements are required to be accompanied by an officer’s certificate certifying that the same are true, correct and complete in all material respects and fairly present in all material respects the financial condition and results of operations of the Alderwood Mall Borrower and the Alderwood Mall Mortgaged Property. Each such quarterly report is required to be accompanied by the following: (i) the then current rent roll; (ii) tenant sales reports for the Alderwood Mall Mortgaged Property (to the extent available); and (iii) such other information as the Alderwood Mall Lender reasonably requests which is material to the Alderwood Mall Non-Serviced Loan Combination.
Representations and Warranties
The Alderwood Mall Borrower made the representations and warranties in the Alderwood Mall Mortgage Loan Agreement set forth in Annex B of this Exhibit A to this prospectus supplement as of the Origination Date.
SPE Covenants
Alderwood Mall Borrower represented to the Alderwood Mall Lender (i) except with respect to clause (w) below, as of the Origination Date until such time as the debt evidenced by the Alderwood Mall Non-Serviced Loan Combination shall be paid in full and (ii) from and after the date of the formation of Alderwood Mall Borrower with respect to clause (w) below through the Origination Date:
(a) the purpose for which the Alderwood Mall Borrower is organized has been and shall be limited solely to (i) owning, holding, leasing, transferring, operating, financing and managing the Alderwood Mall Mortgaged Property and all business incidental thereto, (ii) entering into or assuming the obligations of the Alderwood Mall Borrower under the Alderwood Mall Non-Serviced Loan Combination, (iii) refinancing the Alderwood Mall Mortgaged Property in connection with a permitted repayment and (iv) transacting any and all lawful business that is incidental, necessary or appropriate to accomplish the foregoing;
(b) the Alderwood Mall Borrower has not owned and will not own any asset or property other than (A) the Alderwood Mall Mortgaged Property, (B) incidental personal property necessary for and used or to be used in connection with the ownership, management or operation of the Alderwood Mall Mortgaged Property and (C) incidental real property related to the Alderwood Mall Mortgaged Property but which has been conveyed to a third party, governmental agency or other entity or person;
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(c) the Alderwood Mall Borrower has not and will not engage in any business other than as described in clause (a) above;
(d) the Alderwood Mall Borrower has not been and is not a party to and will not enter into any contract or agreement with any affiliate of the Alderwood Mall Borrower other than contracts or agreements that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arms-length basis with third parties not so affiliated with Alderwood Mall Borrower, except as provided in the Exceptions To The Representations of the Alderwood Mall Borrower in the Alderwood Mall Mortgage Loan Agreement;
(e) the Alderwood Mall Borrower has not been and is not liable for and will not incur any indebtedness other than (i) the Alderwood Mall Non-Serviced Loan Combination, (ii) trade and operational debt (collectively “Trade Debt”) incurred in the ordinary course of business with trade creditors in amounts as are normal and reasonable under the circumstances, is not evidenced by a note and is not in excess of 60 days past due, (iii) obligations under the REAs that are not yet due and payable, (iv) taxes incurred in accordance with the Alderwood Mall Loan Documents, and (v) capital expenditures that are not yet due and payable; provided that, the aggregate amount of the indebtedness described in clause (ii) above shall not exceed at any time $5,000,000;
(f) the Alderwood Mall Borrower has not made and will not make any advance payments other than in the ordinary course of its business or loans to any person and shall not acquire obligations or securities of any affiliate of the Alderwood Mall Borrower;
(g) the Alderwood Mall Borrower intends to remain solvent and will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same shall become due to the extent there is current sufficient cash flow generated by the Alderwood Mall Mortgaged Property (unless the same is subject to good faith dispute by the Alderwood Mall Borrower, in appropriate proceedings therefor, and for which adequate reserves have been established in accordance with GAAP); provided, however, that (i) this provision shall not be deemed to require any direct or indirect equity owner of the Alderwood Mall Borrower to make any loans or capital contributions to the Alderwood Mall Borrower and (ii) the Alderwood Mall Borrower shall be deemed solvent so long as there is positive net cash flow at the Alderwood Mall Mortgaged Property after the payment of all operating expenses and debt service;
(h) the Alderwood Mall Borrower has done or caused to be done and will do all things necessary to observe organizational formalities and preserve its existence, and will not, nor will it permit any affiliate of the Alderwood Mall Borrower to, amend, modify or otherwise change the operating agreement, as applicable, or other organizational documents of the Alderwood Mall Borrower in any material respect which adversely affects its existence as a single-purpose entity or its other obligations with respect to the Alderwood Mall Non-Serviced Loan Combination without the prior written consent of the Alderwood Mall Lender. Notwithstanding the foregoing, the Alderwood Mall Borrower may convert its organization entity type without prior consent of the Alderwood Mall Lender, provided that (i) the new borrowing entity is a limited liability company (whether single-member or multi-member) or a limited partnership, in either case formed under Delaware law which meets the Rating Agency criteria then applicable to such entities; (ii) the Alderwood Mall Borrower at all times complies with the provisions of the single-purpose entity covenants in the Alderwood Mall Mortgage Loan Agreement; (iii) the Alderwood Mall Borrower delivers the organizational documents in form and substance reasonably satisfactory to the Alderwood Mall Lender evidencing such conversion no later than 10 Business Days prior to the effective date of such conversion; (iv) the Alderwood Mall Borrower delivers amendments to all financing statements filed in connection with the Alderwood Mall Non-Serviced Loan Combination, as may be reasonably requested by the Alderwood Mall Lender; (v) the Alderwood Mall Borrower delivers to Alderwood Mall Lender a Nonconsolidation Opinion and any other document, instrument or certificate that Alderwood Mall Lender shall reasonably require, excluding Rating Agency Confirmation; (vi) the Alderwood Mall Borrower delivers an opinion from a law firm reasonably acceptable to the Alderwood Mall Lender and in form and substance reasonably acceptable to the Alderwood Mall Lender and the Rating Agencies, that such change in organization type will not adversely impact the enforceability of the single-purpose entity provisions of the Alderwood Mall Loan Documents as of the date of such change of organizational type, whether contained in the Alderwood Mall Loan Documents, as amended, or the organizational documents; and (vii) the Alderwood Mall Borrower pays for all of the Alderwood Mall Lender’s reasonable out-of-pocket expense, including but not limited to, Alderwood Mall Lender’s legal fees incurred in connection with the review of such deliveries;
(i) the Alderwood Mall Borrower has and shall maintain all of its books, records, financial statements and bank accounts separate from those of any other person or entity and, except as required or
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permitted under GAAP, its assets have not been and will not be listed as assets on the financial statement of any other person or entity and the Alderwood Mall Borrower has filed and will file its own tax returns and will not file a consolidated federal income tax return with any other person (other than a consolidated federal tax return to the extent (i) required or permitted by applicable law, or (ii) it is treated as a “disregarded” entity for tax purposes and is not required to file tax returns under applicable law); provided, however, that there shall be an appropriate notation indicating the separate existence of the Alderwood Mall Borrower and its assets and liabilities;
(j) except with respect to use and/or reference to any name and/or brand of General Growth Properties, Inc., GGP Limited Partnership and General Growth Services, Inc., the Alderwood Mall Borrower has been and will be, and at all times has and shall hold itself out to the public as, a legal entity separate and distinct from any other person or entity (including any affiliate of the Alderwood Mall Borrower), has and shall correct any known misunderstanding regarding its status as a separate entity, has and shall conduct business in its own name;
(k) the Alderwood Mall Borrower has and intends to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations to the extent there is current sufficient cash flow generated by the Alderwood Mall Mortgaged Property; provided, however, (i) this provision shall not be deemed to require any direct or indirect equity owner of the Alderwood Mall Borrower to make any loans or capital contributions to the Alderwood Mall Borrower, and (ii) the Alderwood Mall Borrower will be deemed to be adequately capitalized for the purpose of this subsection (k) so long as no Event of Default with respect to the Alderwood Mall Borrower’s payment obligations under the Alderwood Mall Loan Documents is continuing;
(l) neither the Alderwood Mall Borrower nor any affiliate of the Alderwood Mall Borrower has sought or will seek (i) the dissolution, winding up, liquidation, consolidation or merger in whole or in part of the Alderwood Mall Borrower or (ii) the sale of material assets of the Alderwood Mall Borrower (except as otherwise permitted under the Alderwood Mall Loan Documents);
(m) the Alderwood Mall Borrower has not and will not commingle its assets with those of any other person or entity and has and shall hold all of its assets in its own name and has and shall maintain and account for its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any other person or entity;
(n) the Alderwood Mall Borrower has not and shall not guarantee or become obligated for the debts of any other Person and shall not hold itself out as being responsible for the debts or obligations of any other Person;
(o) the Alderwood Mall Borrower has and shall allocate fairly and reasonably any overhead expenses that are shared with an affiliate of the Alderwood Mall Borrower, including paying for office space and services performed by any employee of an affiliate of the Alderwood Mall Borrower;
(p) the Alderwood Mall Borrower has not and shall not pledge its assets to secure the obligations of any other person or entity other than with respect to (i) the Alderwood Mall Non-Serviced Loan Combination, and (ii) equipment leases entered into in the ordinary course in connection with the Alderwood Mall Mortgaged Property, only as to the underlying equipment itself; provided, however, that the Alderwood Mall Borrower shall not be obligated to have any employees;
(q) the Alderwood Mall Borrower has and shall maintain a sufficient number of employees in light of its contemplated business operations and pay the salaries of its own employees from its own funds;
(r) if the Alderwood Mall Borrower is a limited partnership or a limited liability company (other than an Acceptable Delaware LLC), each general partner or managing member of the Alderwood Mall Borrower (each, an “SPE Party”) shall be a corporation or Acceptable Delaware LLC (i) whose sole asset is its interest in the Alderwood Mall Borrower, (ii) which has not been and shall not be permitted to engage in any business or activity other than owning an interest in the Alderwood Mall Borrower and any activities incidental, necessary and appropriate to accomplish the foregoing; (iii) which has not been and shall not be permitted to incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (iv) which has and will at all times own a 0.5% equity ownership interest in Alderwood Mall Borrower in accordance with applicable Delaware law;
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(s) (i) in the event that the Alderwood Mall Borrower or the SPE Party is an Acceptable Delaware LLC, the limited liability company agreement of the Alderwood Mall Borrower or the SPE Party (as applicable) (the“LLC Agreement” ) shall provide that (A) upon the occurrence of any event that causes the last remaining member of the Alderwood Mall Borrower or the SPE Party (as applicable) (“Member”) to cease to be the member of the Alderwood Mall Borrower or the SPE Party (as applicable) (other than (1) upon an assignment by the Member of all of its limited liability company interest in the Alderwood Mall Borrower or the SPE Party (as applicable) and the admission of the transferee in accordance with the Alderwood Mall Loan Documents and the LLC Agreement, or (2) the resignation of the Member and the admission of an additional member of the Alderwood Mall Borrower or the SPE Party (as applicable) in accordance with the terms of the Alderwood Mall Loan Documents and the LLC Agreement), any person acting as Independent Director of the Alderwood Mall Borrower or the SPE Party (as applicable) shall, without any action of any other person or entity and simultaneously with the Member ceasing to be the member of the Alderwood Mall Borrower or the SPE Party (as applicable) automatically be admitted to the Alderwood Mall Borrower or the SPE Party (as applicable) as a member with a 0.5% economic interest (“Special Member”) and shall continue the Alderwood Mall Borrower or the SPE Party (as applicable) without dissolution and (ii) the Special Member may not resign from the Alderwood Mall Borrower or the SPE Party (as applicable) or transfer its rights as Special Member unless (x) a successor Special Member has been admitted to the Alderwood Mall Borrower or the SPE Party (as applicable) as a Special Member in accordance with requirements of Delaware law, and (y) after giving effect to such resignation or transfer, there remains at least 2 Independent Directors of the SPE Party or the Alderwood Mall Borrower (as applicable). The LLC Agreement shall further provide that (i) Special Member shall automatically cease to be a member of the Alderwood Mall Borrower or the SPE Party (as applicable) upon the admission to the Alderwood Mall Borrower or the SPE Party (as applicable) of the first substitute member, (ii) Special Member shall be a member of the Alderwood Mall Borrower or the SPE Party (as applicable) that has no interest in the profits, losses and capital of the Alderwood Mall Borrower or the SPE Party (as applicable) and has no right to receive any distributions of the assets of the Alderwood Mall Borrower or the SPE Party (as applicable), (iii) pursuant to the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to the Alderwood Mall Borrower or the SPE Party (as applicable) and shall not receive a limited liability company interest in the Alderwood Mall Borrower or the SPE Party (as applicable), (iv) Special Member, in its capacity as Special Member, may not bind the Alderwood Mall Borrower or the SPE Party (as applicable) and (v) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, the Alderwood Mall Borrower or the SPE Party (as applicable) including, without limitation, the merger, consolidation or conversion of the Alderwood Mall Borrower or the SPE Party (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Alderwood Mall Loan Documents or the LLC Agreement. In order to implement the admission to the Alderwood Mall Borrower or the SPE Party (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to the Alderwood Mall Borrower or the SPE Party (as applicable) as Special Member, Special Member shall not be a member of the Alderwood Mall Borrower or the SPE Party (as applicable), but Special Member may serve as an Independent Director of the Alderwood Mall Borrower or the SPE Party (as applicable); and
(ii) so long as the debt or any portion thereof remains outstanding, the LLC Agreement shall further provide that (i) if, following the application of the provisions set forth in clause (v)(I) above, there shall, for any reason, nevertheless occur any event that causes the Member to cease to be a member of Alderwood Mall Borrower or the SPE Party (as applicable) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Alderwood Mall Borrower or the SPE Party (as applicable) agree in writing (A) to continue Alderwood Mall Borrower or the SPE Party (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Alderwood Mall Borrower or the SPE Party (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Alderwood Mall Borrower or the SPE Party (as applicable), (ii) any Material Action initiated by or brought against Member or Special Member shall not cause Member or Special Member to cease to be a member of Alderwood Mall Borrower or the SPE Party (as applicable) and upon the occurrence of such an event, the business of Alderwood Mall Borrower or the SPE Party (as applicable) shall continue without dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Alderwood Mall Borrower or the SPE Party (as applicable) upon the occurrence of any Material Action initiated by or brought against Member or Special Member, or the occurrence of an event that causes Member or Special Member to cease to be a member of Alderwood Mall Borrower or the SPE Party (as applicable);
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(t) the organizational documents of the Alderwood Mall Borrower (to the extent the Alderwood Mall Borrower is a corporation or an Acceptable Delaware LLC) or the SPE Party, as applicable, shall provide that at all times there shall be at least 2 duly appointed Independent Directors of such entity and the Alderwood Mall Borrower shall not without the unanimous written consent of all of its partners or members, as applicable, and the written consent of 100% of the directors or managers of the Alderwood Mall Borrower or each SPE Party (as applicable), including, without limitation, each Independent Director take any Material Action;
(u) the organizational documents of the Alderwood Mall Borrower or the SPE Party, as applicable, shall provide that (A) the board of directors or managers of the Alderwood Mall Borrower or the SPE Party, as applicable, and the constituent members or principals, shareholders, or beneficiaries of such entities (the “Constituent Members”) shall not take any action which, under the terms of any organizational documents of Alderwood Mall Borrower or the SPE Party, as applicable, requires (1) the unanimous vote of the board of directors or managers or principals, shareholders or beneficiaries of the Alderwood Mall Borrower or the SPE Party or (2) the Constituent Members, unless at the time of such action there shall be at least 2 Independent Directors engaged as provided by the terms of the Alderwood Mall Mortgage Loan Agreement; (B) any resignation, removal or replacement of any Independent Director shall not be effective without 2 Business Days prior written notice to the Alderwood Mall Lender and the Rating Agencies accompanied by evidence that the replacement Independent Director satisfies the applicable terms and conditions of the Alderwood Mall Mortgage Loan Agreement and of the applicable organizational documents; provided, however, to the extent such removal or replacement is effected by the Approved ID Provider, such notice shall not be required, provided that the Alderwood Mall Borrower shall instruct any Approved ID Provider engaged by the Alderwood Mall Borrower to provide independent notice to the Alderwood Mall Lender of any such removal or replacement; (C) to the fullest extent permitted by applicable law and notwithstanding any duty otherwise existing at law or in equity, the Independent Directors’ fiduciary duties shall be limited to only considering the interests of the Constituent Members and the Alderwood Mall Borrower and any SPE Party (including the Alderwood Mall Borrower’s and any SPE Party’s respective creditors) in acting or otherwise voting on the matters provided for in the Alderwood Mall Mortgage Loan Agreement and in the Alderwood Mall Borrower’s and SPE Party’s organizational documents (which such fiduciary duties to the Constituent Members and Alderwood Mall Borrower and any SPE Party (including the Alderwood Mall Borrower’s and any SPE Party’s respective creditors), in each case, shall be deemed to apply solely to the extent of their respective economic interests in the Alderwood Mall Borrower or SPE Party (as applicable) exclusive of (x) all other interests (including, without limitation, all other interests of the Constituent Members), (y) the interests of other affiliates of the Constituent Members, the Alderwood Mall Borrower and SPE Party and (z) the interests of any group of affiliates of which the Constituent Members, the Alderwood Mall Borrower or SPE Party is a part)); (D) other than as provided in subsection (C) above, the Independent Directors shall not have any fiduciary duties to any Constituent Members, any directors of the Alderwood Mall Borrower or SPE Party or any other person or entity; (E) the foregoing shall not eliminate the implied contractual covenant of good faith and fair dealing under applicable law; and (F) to the fullest extent permitted by applicable law, an Independent Director shall not be liable to the Alderwood Mall Borrower, SPE Party, any Constituent Member or any other person or entity for breach of contract or breach of duties (including fiduciary duties), unless the Independent Director acted in bad faith or engaged in willful misconduct;
(v) Other than trade payables entered into in the ordinary course of the Alderwood Mall Borrower’s business, there exist no debts or liabilities of the Alderwood Mall Borrower that have not been fully discharged or otherwise satisfied; and
(w) Alderwood Mall Borrower represents, warrants, and covenants with Alderwood Mall Lender that it has complied in all material respects with each of the following representations, warranties and covenants: Alderwood Mall Borrower will not (subject however to the rights of Alderwood Mall Borrower under the Alderwood Mall Mortgage Loan Agreement): (i) engage in business other than owning and operating the Alderwood Mall Mortgaged Property and such other personal property which is related to, incidental to or used in connection with the Alderwood Mall Mortgaged Property; (ii) acquire or own a material asset other than the Alderwood Mall Mortgaged Property and incidental personal property; (iii) maintain assets in a way difficult to segregate and identify, or commingle its assets with the assets of any other person or entity; (iv) fail to hold itself out to the public as a legal entity separate from any other or fail to maintain capital sufficient therefor; (v) fail to conduct business solely in its name or fail to maintain records, accounts or bank accounts separate from any other person or entity; (vi) file or consent to a petition pursuant to applicable bankruptcy, insolvency, liquidation or reorganization statutes, or make an assignment for the benefit of creditors without the unanimous consent of its partners or members, as applicable; (vii) incur additional indebtedness except for trade payables in the ordinary course of business of owning and operating the
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Alderwood Mall Mortgaged Property, provided that such indebtedness is paid within sixty (60) days after incurred; (viii) dissolve, liquidate, consolidate, merge or sell all or substantially all of its assets; or (ix) modify, amend or revise its organizational documents in any material respect which adversely affects its existence as a single purpose entity or its performance of Alderwood Mall Borrower’s obligations with respect to the Loan.
“Acceptable Delaware LLC” means a limited liability company formed under Delaware law which (A) has at least one springing member, which, upon the dissolution of all of the members or the withdrawal or the disassociation of all of the members from such limited liability company, shall immediately become the sole member of such limited liability company, and (B) otherwise meets the Rating Agency criteria then applicable to such entities.
“Approved ID Provider” means each of CT Corporation, Corporation Service Company, National Registered Agents, Inc., Wilmington Trust Company, Stewart Management Company and Lord Securities Corporation; provided, that (A) the foregoing shall only be deemed Approved ID Providers to the extent acceptable to the Rating Agencies, and (B) additional national providers of Independent Directors may be deemed added to the foregoing under the Alderwood Mall Mortgage Loan Agreement to the extent reasonably approved by the Alderwood Mall Lender and which are acceptable to the Rating Agencies.
“Independent Director” means a natural person who (A) has not been at the time of such individual’s initial appointment, and shall not have been at any time during the preceding 5 years, and shall not be at any time while serving as Independent Director, either (i) a shareholder (or other equity owner) of, or an officer, director, partner, member or employee of, the Alderwood Mall Borrower or any of its respective shareholders, partners, members, subsidiaries or affiliates (with the exception of serving as an independent manager, independent director or independent trustee, as the case may be, of the Alderwood Mall Borrower or any affiliate of the Alderwood Mall Borrower), (ii) a customer of, or supplier to, or other person who derives any of its purchases or revenues from its activities with, the Alderwood Mall Borrower or any of its respective shareholders, partners, members, subsidiaries or affiliates (except for (a) fees received for acting as an independent manager, independent director or independent trustee, as the case may be, of the Alderwood Mall Borrower or any affiliate of the Alderwood Mall Borrower, and (b) any fees paid by the Alderwood Mall Borrower or any affiliate of the Alderwood Mall Borrower to the Approved ID Provider for such Independent Director), (iii) a person who controls or is under common control with any such shareholder, officer, director, partner, member, employee, supplier, customer or other person (provided that, acting as an independent manager, independent director or independent trustee of the Alderwood Mall Borrower or any affiliate of the Alderwood Mall Borrower shall not constitute control of the Alderwood Mall Borrower or any such affiliate of the Alderwood Mall Borrower), or (iv) a member of the immediate family of any such shareholder, officer, director, partner, member, employee, supplier, customer or other person and (B) is employed by, in good standing with and engaged by the Alderwood Mall Borrower in connection with, in each case, an Approved ID Provider.
“Material Action” means to (A) file any insolvency, or reorganization case or proceeding, to institute proceedings to have the Alderwood Mall Borrower be adjudicated bankrupt or insolvent, (B) institute proceedings under any applicable insolvency law respecting the Alderwood Mall Borrower, (C) seek any relief for the Alderwood Mall Borrower under any law relating to relief from debts or the protection of debtors, (D) consent to the filing or institution of bankruptcy or insolvency proceedings against the Alderwood Mall Borrower, (E) file a petition seeking, or consent to, reorganization or relief with respect to the Alderwood Mall Borrower under any applicable federal or state law relating to bankruptcy or insolvency, (F) seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any similar official of or for the Alderwood Mall Borrower or a substantial part of its property, (G) make any assignment for the benefit of creditors of the Alderwood Mall Borrower, (H) to sell all, or substantially all, of the assets of the Alderwood Mall Borrower (except as otherwise permitted pursuant to the terms and provisions of the Alderwood Mall Loan Documents), or (I) consent to the dissolution, winding up, liquidation, consolidation or merger, in whole or in part, of the Alderwood Mall Borrower.
“Nonconsolidation Opinion” means an opinion of Wachtel Masyr & Missry LLP or other competent counsel selected by the Alderwood Mall Borrower in form and substance reasonably satisfactory to Alderwood Mall Lender and, after a securitization of any portion of the Alderwood Mall Non-Serviced Loan Combination, satisfactory to the Rating Agencies stating that, in the event a case were to be instituted in respect of certain holder(s) of direct or indirect equity interests in the Alderwood Mall Borrower under the Bankruptcy Code, Title 11 of the United States Code, the court having jurisdiction over the case would not order the substantive consolidation of such holder(s) with the Alderwood Mall Borrower.
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Other Covenants of the Alderwood Mall Borrowers
The Alderwood Mall Borrower is required to comply with certain covenants including without limitation to comply in all material respects with all legal requirements, insurance requirements and all material contractual obligations by which the Alderwood Mall Borrower is legally bound.
The Alderwood Mall Borrower is required to give the Alderwood Mall Lender prompt notice (containing reasonable detail) of, among other things, (i) any termination or cancellation of terrorism or other insurance required by the Alderwood Mall Mortgage Loan Agreement, (ii) any litigation or governmental proceedings pending or threatened in writing against the Alderwood Mall Borrower or the Alderwood Mall Mortgaged Property that is reasonably expected to result in a Material Adverse Effect, and (iii) any other circumstance or event reasonably expected to result in a Material Adverse Effect.
Alderwood Mall Non-Serviced Loan Combination Events of Default
Events of default under the Alderwood Mall Loan Documents (each, an “Event of Default”) include, with respect to the Alderwood Mall Non-Serviced Loan Combination and the Alderwood Mall Borrower, among other items, the following:
(a) the Alderwood Mall Borrower defaults in the payment when due of (i) any principal and/or interest owing under the Alderwood Mall Mortgage Loan Agreement or under the Notes, provided that one grace period of 2 Business Days will be permitted once every 12 month period, (ii) the payment due on the Maturity Date, and (iii) any other amounts owing under the Alderwood Mall Mortgage Loan Agreement, under the Notes or under any of the other Alderwood Mall Loan Documents (other than principal and interest owing under the Alderwood Mall Mortgage Loan Agreement or under the Notes) and such default described in clause (iii) continues for 5 days after receipt of written notice that the same is due;
(b) if any taxes or similar charges are not paid on or prior to the date when the same become delinquent unless being contested in accordance with the terms of the Alderwood Mall Loan Documents or if there are sufficient funds on deposit in the Tax and Insurance Reserve Account and Alderwood Mall Lender’s access to such funds has not, due to any act or omission of Alderwood Mall Borrower or any of its affiliates, been restrained or restricted in any manner;
(c) the required insurance policies are not kept in full force and effect;
(d) the Alderwood Mall Borrower transfers or encumbers any portion of the Alderwood Mall Mortgaged Property without the Alderwood Mall Lender’s prior written consent in violation of the Alderwood Mall Loan Documents;
(e) any representation made by the Alderwood Mall Borrower in any of the Alderwood Mall Loan Documents, or in any report, certificate, financial statement or other instrument, agreement or document furnished to the Alderwood Mall Lender was false or misleading in any material respect as of the date such representation was made;
(f) (i) the Alderwood Mall Borrower, the Guarantor or any Acceptable Indemnitor (at any time that a guaranty from such Acceptable Indemnitor shall be in effect) (each, a “Credit Party”) shall make an assignment for the benefit of creditors, (ii) a receiver, liquidator or trustee shall be appointed for any Credit Party, (iii) any Credit Party shall be adjudicated bankrupt or insolvent, or if any petition for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or any similar federal or state law, shall be filed by or against, consented to, or acquiesced in by, any Credit Party or if any proceeding for the dissolution or liquidation of any Credit Party shall be instituted; provided, however, if such appointment, adjudication, petition or proceeding was involuntary and not consented to by the applicable any Credit Party, upon the same not being discharged, stayed or dismissed within 60 days, in each instance, subject to the Alderwood Mall Borrower’s ability to replace the Guarantor or an Acceptable Indemnitor;
(g) the Alderwood Mall Borrower attempts to assign its rights under any of the Alderwood Mall Loan Documents or any interest in the Alderwood Mall Mortgage Loan Agreement or the Alderwood Mall Loan Documents in contravention of the terms of the Alderwood Mall Loan Documents;
(h) the breach by Alderwood Mall Borrower of certain negative covenants contained in the Alderwood Mall Loan Documents;
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(i) any of the factual assumptions regarding the Alderwood Mall Borrower contained in any non-consolidation opinion delivered to the Alderwood Mall Lender in connection with the origination of the Alderwood Mall Non-Serviced Loan Combination or thereafter pursuant to the terms of the Alderwood Mall Loan Documents is or becomes untrue in any material respect (subject to Alderwood Mall Borrower’s limited cure right set forth in Alderwood Mall Mortgage Loan Agreement);
(j) the Alderwood Mall Mortgaged Property becomes subject to any mechanic’s, materialman’s or other lien (other than a lien for local real estate taxes and assessments not then due and payable or a lien being contested in good faith) and the lien remains undischarged of record (by payment, bonding or otherwise) for a period of 30 days; provided, however, that such 30-day period shall be extended so long as the Alderwood Mall Borrower is diligently and in good faith contesting the validity of such lien in accordance with the terms of the Alderwood Mall Mortgage Loan Agreement and such contest suspends the collection thereof;
(k) the Alderwood Mall Borrower defaults under any REA beyond the expiration of applicable notice and grace periods, if any, thereunder, to the extent such default causes a termination, or an imminent threat of a termination, of such REA or of any of the Alderwood Mall Borrower’s material rights thereunder or if the term of the REA fails to be extended and such failure causes the Alderwood Mall Mortgaged Property to contravene any applicable laws (subject to Alderwood Mall Borrower diligent attempt to cure required by any governmental authority); and
(l) the Alderwood Mall Borrower shall continue to be in default under any of the other terms, covenants or conditions of the Alderwood Mall Loan Documents for 10 days after notice from the Alderwood Mall Lender, in the case of any default which can be cured by the payment of a sum of money, or for 30 days after notice from the Alderwood Mall Lender in the case of any other default, provided if any such non-monetary default is susceptible of cure but cannot reasonably be cured within such 30 day period then such cure period may be extended for up to 90 additional days.
During the continuance of any Event of Default (including an Event of Default resulting from a failure to satisfy the insurance requirements), the Alderwood Mall Lender may, but without any obligation to do so and without notice to or demand on the Alderwood Mall Borrower and without releasing the Alderwood Mall Borrower from any obligation, take any action to cure such Event of Default. The Alderwood Mall Lender may enter upon any or all of the Alderwood Mall Mortgaged Property upon reasonable notice to the Alderwood Mall Borrower for such purposes or appear in, defend, or bring any action or proceeding to protect its interest in any collateral securing the Alderwood Mall Non-Serviced Loan Combination or to foreclose the mortgage or collect the indebtedness. The reasonable out-of-pocket costs and expenses incurred by the Alderwood Mall Lender in exercising rights under this and the immediately preceding paragraphs (including reasonable, out-of-pocket attorneys’ fees), with interest at the Default Rate for the period after notice from the Alderwood Mall Lender that such costs or expenses were incurred to the date of payment to the Alderwood Mall Lender, will constitute a portion of the indebtedness, will be secured by the related mortgage and other Alderwood Mall Loan Documents and will be due and payable to the Alderwood Mall Lender upon demand therefor.
Environmental Indemnity
The Guarantor and the Alderwood Mall Borrower have entered into an environmental indemnity agreement for the benefit of the Alderwood Mall Lender. Under the environmental indemnity agreement, the Guarantor and the Alderwood Mall Borrower (together, the “Environmental Indemnitors”) have agreed to protect, defend, indemnify, release and hold harmless the Alderwood Mall Lender and other indemnified parties (including the master servicer, the special servicer and the trustee under the Pooling and Servicing Agreement, and the servicer, the special servicer and the trustee under the MSCCG 2015-ALDR TSA) (collectively, the “Environmental Indemnitees”) from and against any and all losses and reasonable costs of remediation (whether or not performed voluntarily) imposed upon, or incurred by or asserted against any of the Environmental Indemnitees and directly or indirectly arising out of or in any way relating to any one or more of the following:
(a) any presence of any Hazardous Substances in, on, above or under the Alderwood Mall Mortgaged Property;
(b) any present or threatened release of Hazardous Substances in, on, above, under or from the Alderwood Mall Mortgaged Property;
(c) any use, treatment, storage, holding, existence, disposition or other release, generation, production, manufacturing, processing, refining, control, management, abatement, removal, handling on or at or transfer or transportation to or from the Alderwood Mall Mortgaged Property by the Alderwood Mall
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Borrower, any affiliate of the Alderwood Mall Borrower or any tenant of the Alderwood Mall Borrower or other user of the Alderwood Mall Mortgaged Property of any Hazardous Substances, other than in compliance in all material respects with environmental law, at any time located in, under, on or above the Alderwood Mall Mortgaged Property;
(d) any actual or proposed remediation of any Hazardous Substances by the Alderwood Mall Borrower, any affiliate of the Alderwood Mall Borrower or any tenant of the Alderwood Mall Borrower at any time located in, under, on or above the Alderwood Mall Mortgaged Property, whether or not such remediation is voluntary or pursuant to court or administrative order, including but not limited to any removal, remedial or corrective action;
(e) any present or overtly threatened non-compliance or violations of any environmental laws (or permits issued pursuant to any environmental laws) in connection with the Alderwood Mall Mortgaged Property or operations thereon, including but not limited to any failure by the Alderwood Mall Borrower, any person affiliated with the Alderwood Mall Borrower, or any tenant or other user of the Alderwood Mall Mortgaged Property to comply with any order of any governmental authority in connection with any Environmental Laws;
(f) the imposition, recording or filing or the overtly threatened imposition, recording or filing of any environmental lien encumbering the Alderwood Mall Mortgaged Property;
(g) any administrative processes or proceedings or judicial proceedings in any way connected with any matter addressed in the environmental indemnity agreement;
(h) any present or overtly threatened injury to, destruction of or loss of natural resources in any way connected with the Alderwood Mall Mortgaged Property, including but not limited to reasonable out-of-pocket costs to investigate and assess such injury, destruction or loss due to any Hazardous Substances in, on, above, or under the Alderwood Mall Mortgaged Property;
(i) any act of the Alderwood Mall Borrower, any person affiliated with the Alderwood Mall Borrower, or any tenant or other user of the Alderwood Mall Mortgaged Property in arranging for disposal or treatment, or arranging with a transporter for transport, disposal or treatment, of Hazardous Substances relating to the Alderwood Mall Mortgaged Property, in each case, at any disposal or treatment facility or incineration vessels containing those or any similar Hazardous Substances;
(j) any act of the Alderwood Mall Borrower, any person affiliated with the Alderwood Mall Borrower, or any tenant or other user of the Alderwood Mall Mortgaged Property in accepting any Hazardous Substances for transport to disposal or treatment facilities, incineration vessels or sites from which there is a release, or a threatened release of any hazardous substance that causes the incurrence of costs for remediation;
(k) any personal injury, wrongful death, or property or other damage related to environmental matters arising under any statutory or common law or tort law theory to the extent arising out of any action or condition set forth in the preceding clauses (a) through (j), including but not limited to damages assessed for private or public nuisance or for the conducting of an abnormally dangerous activity on or near the Alderwood Mall Mortgaged Property; and
(l) any material misrepresentation or inaccuracy in any representation or warranty in the environmental indemnity agreement or material breach or failure to perform any covenants or other obligations of the Environmental Indemnitors pursuant to the environmental indemnity agreement.
However, the foregoing indemnification will not apply to any losses, costs of remediation or other liabilities of Environmental Indemnitees (i) arising solely from Hazardous Substances which were not on the Alderwood Mall Mortgaged Property prior to the date the Alderwood Mall Borrower ceases to be in possession of the Alderwood Mall Mortgaged Property as a result of the exercise by the Alderwood Mall Lender of any remedies provided in the Alderwood Mall Loan Documents, or (ii) arises out of or as a result of the Alderwood Mall Lender’s or another Environmental Indemnitee’s gross negligence, willful misconduct, illegal acts or fraud and, in each case, that were not the result of any act or negligence of Environmental Indemnitors or any of Environmental Indemnitors’ affiliates, agents or contractors.
“Environmental Laws” means any present and future federal, state and local laws, statutes, ordinances, rules and regulations, as well as common law, applicable to the Alderwood Mall Mortgaged Property, relating to protection
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of human health or the environment, relating to Hazardous Substances, relating to liability for or costs of other actual or overtly threatened danger to human health or the environment, including the following statutes, as amended, any successor thereto, and any regulations promulgated pursuant thereto, and any state or local statutes, ordinances, rules and regulations addressing similar issues; the Comprehensive Environmental Response, Compensation and Liability Act; the Emergency Planning and Community Right-to-Know Act; the Hazardous Substances Transportation Act; the Resource Conservation and Recovery Act (including but not limited to Subtitle I relating to underground storage tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational Safety and Health Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the National Environmental Policy Act; and the River and Harbors Appropriation Act, and any other present and future federal, state and local laws, statutes ordinances, rules and regulations, as well as common law; conditioning transfer of property upon a negative declaration or other approval of a Governmental Authority of the environmental condition of the Alderwood Mall Mortgaged Property or requiring notification or disclosure of Releases of Hazardous Substances or other environmental condition of the Alderwood Mall Mortgaged Property to any Governmental Authority or other person, whether or not in connection with transfer of title to or interest in property.
“Hazardous Substances” includes but is not limited to (a) any and all substances (whether solid, liquid or gas) in such form or amount as is defined, listed, or otherwise classified as pollutants, hazardous wastes, hazardous substances, hazardous materials, extremely hazardous wastes, or words of similar meaning or regulatory effect under any present or future Environmental Laws or that would reasonably be expected to have a negative impact on human health or the environment, the presence of which at the Alderwood Mall Mortgaged Property is unauthorized by and not in material compliance with Environmental Laws, including but not limited to petroleum and petroleum products, asbestos and asbestos-containing materials, polychlorinated biphenyls, lead, radon, radioactive materials, flammables and explosives, and (b) mold, mycotoxins, microbial matter, airborne pathogens (naturally occurring or otherwise) that pose an imminent threat to human health or the environment, or materially adversely affect the Alderwood Mall Mortgaged Property, but excluding (i) substances of kinds and in amounts ordinarily and customarily used or stored in similar properties for the purposes of cleaning or other maintenance or operations and otherwise in compliance with all Environmental Laws; (ii) gas, oil and other ordinary automotive fluids contained in an ordinary manner in motor vehicles visiting the Alderwood Mall Mortgaged Property; and (iii) inventory generally held for resale in typical shopping centers and items on the Alderwood Mall Mortgaged Property in the ordinary and regular business of a tire, battery and accessories store.
“Governmental Authority” means any court, board, agency, commission, office or other authority of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city or otherwise) whether now or hereafter in existence having jurisdiction over the Alderwood Mall Mortgaged Property or Alderwood Mall Borrower.
Release/Substitution of Vacant, Non-Income Producing Parcels
Provided an Event of Default is not then continuing, the Alderwood Mall Borrower has the right to cause the release from the lien of the Alderwood Mall Loan Documents a portion of the Alderwood Mall Mortgaged Property that is vacant, non-income producing and unimproved (or improved only by landscaping, utility facilities that are readily re-locatable or surface parking areas), upon satisfaction of the following conditions (among others):
(a) the Alderwood Mall Borrower must provide the Alderwood Mall Lender at least 10 days prior written notice of the proposed release;
(b) the Alderwood Mall Borrower will have delivered to the Alderwood Mall Lender evidence that (i) the release parcel may be readily separated from the applicable Alderwood Mall Mortgaged Property without a material diminution in the value of the Alderwood Mall Mortgaged Property, (ii) the release parcel has been legally subdivided from the remainder of the Alderwood Mall Mortgaged Property, (iii) the balance of the Alderwood Mall Mortgaged Property constitutes a separate tax lot, (iv) the release parcel is not necessary for the Alderwood Mall Mortgaged Property to comply with any zoning, building, land use or parking or other legal requirements, including without limitation for access, driveways, parking, utilities or drainage or, a reciprocal easement agreement or other agreement has been executed and recorded that would allow the owner of the balance of the Alderwood Mall Mortgaged Property to continue to use the release parcel to the extent necessary, (v) the Alderwood Mall Borrower has complied with any requirements applicable to the release in the leases, the REAs, operating agreements, parking agreements or other similar agreements affecting the Alderwood Mall Mortgaged Property, (vi) ingress to and egress from the balance of the Alderwood Mall Mortgaged Property shall be over physically open and fully dedicated public roads or vehicle and pedestrian easements, and (vii) delivery of an endorsement to the Alderwood Mall Lender’s title insurance policy (if the release would reasonably be expected to materially and adversely affect the Alderwood Mall Lender’s rights thereunder);
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(c) the Alderwood Mall Borrower shall simultaneously with the release of the release parcel transfer title thereto to a person or entity other than Alderwood Mall Borrower;
(d) a Rating Agency Confirmation shall have been received in connection with the release and, upon request by the Alderwood Mall Lender, Alderwood Mall Borrower shall deliver a REMIC Opinion;
(e) the loan-to-value ratio (such value to be determined by the Alderwood Mall Lender in its sole discretion on a commercially reasonable valuation method using only the portion of the remaining Alderwood Mall Mortgaged Property which constitutes acceptable real estate collateral under the Code for a REMIC) immediately after the release of the release parcel shall be less than or equal to one hundred and twenty-five percent (125%), provided that Alderwood Mall Borrower may prepay the “qualified amount” as that term is defined in the IRS Revenue Procedure 2010-30, as the same may be amended, modified or supplemented from time to time (with payment of the Yield Maintenance Premium calculated based upon the amount prepaid), in order to meet the foregoing loan-to-value ratio, and provided further that such loan-to-value ratio must be satisfied with respect to both the Group 1 Notes and Group 2 Notes, determined by treating the Group 1 Notes and Group 2 Notes as two separate debt instruments with the Group 1 Notes having the senior lien; and
(f) Alderwood Mall Borrower shall have paid all reasonable out-of-pocket costs and expenses incurred by the Alderwood Mall Lender and a fee in the amount of $25,000.
Furthermore, the Alderwood Mall Borrower has the right to add additional parcels of property that are adjacent to or relate to the Alderwood Mall Mortgaged Property to the collateral for the Alderwood Mall Non-Serviced Loan Combination and subject such additional parcels to the lien of the Alderwood Mall Loan Documents, which, at Alderwood Mall Borrower’s option, may be in connection with the release of vacant, non-income producing land as described above. The addition of any new parcels to the Alderwood Mall Mortgaged Property shall be subject to the satisfaction of certain conditions pursuant to the Alderwood Mall Loan Documents which include, among other things, the receipt by the Alderwood Mall Lender of materials generally required by Alderwood Mall Lender upon the origination of a new loan (for example, title insurance and an environmental report).
Expense Reimbursement
The Alderwood Mall Borrower is required to pay or reimburse all actual out-of-pocket costs, expenses and fees of the Alderwood Mall Lender, the servicer, the special servicer and the trustee under the MSCCG 2015-ALDR TSA, resulting from any Event of Default or reasonably imminent Event of Default by the Alderwood Mall Borrower (including enforcement expenses and any liquidation fees, workout fees, special servicing fees, or any other similar fees and interest payable on advances made by the master servicer or the trustee under the Pooling and Servicing Agreement or the servicer or the trustee under the MSCCG 2015-ALDR TSA with respect to delinquent debt service payments or expenses of curing the Alderwood Mall Borrower’s defaults under the Alderwood Mall Loan Documents, and any expenses paid by the servicer, the special servicer or the trustee under the MSCCG 2015-ALDR TSA in respect of the protection and preservation of the Alderwood Mall Mortgaged Property, such as payment of taxes and insurance premiums); and the costs of all property inspections and/or appraisals (or any updates to any existing inspection or appraisal) that the servicer or the special servicer under the MSCCG 2015-ALDR TSA may be required to obtain due to a request by the Alderwood Mall Borrower or an Event of Default or reasonably imminent Event of Default under the Alderwood Mall Non-Serviced Loan Combination.
“Default” means the occurrence of any event that, but for the giving of notice or the passage of time, or both, would be an Event of Default.
Governing Law
The Alderwood Mall Loan Documents are governed by the laws of the State of New York except with respect to the creation and enforcement of the mortgage lien and certain rights under the Assignment of Leases and Rents, which is governed by the laws of the State of Washington.
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The following is an index of significant terms used in this Exhibit A to this prospectus supplement. Capitalized terms used but not otherwise defined in this Exhibit A will have the meanings assigned to such terms elsewhere in this prospectus supplement.
INDEX OF SIGNIFICANT TERMS
A | ||
Acceptable Delaware LLC | 31 | |
Acceptable Indemnitor | 19 | |
Act | 29 | |
Adjusted Net Operating Income | 10 | |
Alderwood Mall B Note | 5 | |
Alderwood Mall Borrower | 1, 3 | |
Alderwood Mall Lender | 5 | |
Alderwood Mall Loan Documents | 5 | |
Alderwood Mall Loan Sponsor | 1, 4 | |
Alderwood Mall Mortgage Loan Agreement | 5 | |
Alderwood Mall Mortgage Loan Amount | 5 | |
Alderwood Mall Mortgaged Property | 1 | |
Alderwood Mall Non-Serviced Companion Loan | 5 | |
Alderwood Mall Non-Serviced Loan Combination | 5 | |
Alderwood Mall Senior Notes | 5 | |
Alterations Excess | 19 | |
Anchor Lease | 24 | |
Anchor Tenant | 3 | |
Appraisal | 3 | |
Appraised Value | 3 | |
Approved ID Provider | 31 | |
B | ||
Budgeted Operating Expenses | 11 | |
Business Day | 8 | |
C | ||
Calculated Payments | 13 | |
Cash Management Account | 9 | |
Cash Management Bank | 9 | |
Casualty | 23 | |
CGMRC | 5 | |
Collateral | 6 | |
Condemnation | 23 | |
Constituent Members | 30 | |
Credit Party | 32 | |
D | ||
Default | 36 | |
Default Interest | 8 | |
Default Rate | 8 | |
Defeasance Collateral | 13 | |
Discount Rate | 13 | |
DSCR | 9 |
E | ||
Effective Gross Income | 3 | |
Eligible Account | 9 | |
Eligible Institution | 9 | |
Enforcement Action | 12 | |
Environmental Indemnitees | 33 | |
Environmental Indemnitors | 33 | |
Environmental Laws | 34 | |
Event of Default | 32 | |
Executive Order | 15 | |
G | ||
GGP | 1, 4 | |
Governmental Authority | 35 | |
Group 1 Notes | 25 | |
Group 2 Notes | 25 | |
Guaranteed Obligations | 6 | |
Guaranty | 6 | |
H | ||
Hazardous Substances | 35 | |
I | ||
Independent Director | 31 | |
In-line | 3 | |
In-line Occupancy | 3 | |
Interest Accrual Period | 8 | |
L | ||
LLC Agreement | 29 | |
Loan Parties | 6 | |
Loan Payment Date | 7 | |
Lockbox Account | 8 | |
Lockout Period Expiration Date | 13 | |
LTV Ratio | 19 | |
M | ||
Major Lease | 20 | |
Major Tenant | 3 | |
Mall | 1 | |
Material Action | 31 | |
Material Adverse Effect | 20 | |
Material Agreement | 21 | |
Maturity Date | 6 |
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Member | 29 | |
Minimum Balance | 10 | |
Monthly Payment Amount | 8 | |
Mortgage | 6 | |
Mortgage Rate | 7 | |
MSBNA | 5 | |
N | ||
Nonconsolidation Opinion | 31 | |
Notes | 5 | |
NYSCRF | 5 | |
O | ||
Occupancy | 3 | |
Operating Account | 12 | |
Operating Expenses | 10 | |
Operating Income | 10 | |
Origination Date | 2 | |
P | ||
Patriot Act | 15 | |
Permitted Affiliated Pledgor | 17 | |
Permitted Debt | 18 | |
Permitted Mezzanine Borrower | 18 | |
Permitted Mezzanine Lender | 18 | |
Permitted Mezzanine Loan | 18 | |
Permitted Mezzanine Loan Documents | 18 | |
Permitted Owner | 14 | |
Person | 7 | |
Prohibited Person | 15 | |
Property Manager | 12 | |
PSF | 3 | |
Q | ||
Qualified Pledgee | 16 | |
Qualified Transferee | 15 | |
Qualifying Manager | 13 |
R | ||
Rating Agency | 9 | |
Rating Agency Confirmation | 9 | |
REA | 1 | |
REA Second Amendment | 2 | |
REMIC Opinion | 14 | |
Replacement Reserve Account | 11 | |
Restoration | 23 | |
Restoration Collateral | 25 | |
Rollover Reserve Account | 11 | |
S | ||
Sears-GGP | 1 | |
SF | 3 | |
SPE Party | 28 | |
Special Member | 29 | |
T | ||
Tax and Insurance Reserve Account | 10 | |
Third Party Report | 1 | |
Trade Debt | 27, 5 | |
Trigger Period | 9 | |
TTM | 3 | |
U | ||
U.S. Obligations | 14 | |
Underwritten In-Place Expenses | 3 | |
Underwritten In-Place NCF | 3 | |
Underwritten In-Place Net Cash Flow | 3 | |
Underwritten In-Place Net Operating Income | 3 | |
Underwritten In-Place NOI | 3 | |
Underwritten In-Place Revenues | 3 | |
Underwritten Total Rent | 3 | |
Y | ||
Yield Maintenance Premium | 13 | |
Yield Maintenance Treasury Rate | 13 |
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Annex A
ADDITIONAL INFORMATION REGARDING THE PROPERTY
(THIS PAGE INTENTIONALLY LEFT BLANK)
Annex A-1 |
Annex A-2 |
Annex A-3 |
Annex A-4 |
Annex A-5 |
I. | Executive Summary |
■ Background:On May 5, 2015, Morgan Stanley Bank, N.A. (“MSBNA”) and Citigroup Global Markets Realty Corp. (“CGMRC”, and together with MSBNA, the “Alderwood Mall Lender”) funded a $355,000,000, ten-year, fixed-rate amortizing mortgage loan (the “Alderwood Mall Non-Serviced Loan Combination”) to a special purpose entity (the “Alderwood Mall Borrower”) that is an indirectly 99.5%-owned subsidiary of GGP/Homart II L.L.C (the “Alderwood Mall Loan Sponsor”). The Alderwood Mall Loan Sponsor is owned approximately 50% by GGP Limited Partnership and GGP Nimbus, LP (together, “GGP Partners”) and 50% by New York State Common Retirement Fund (“NYSCRF”). The proceeds of the Alderwood Mall Non-Serviced Loan Combination were used to refinance a prior $240,000,000 mortgage loan, fund closing costs, and return equity to the Alderwood Mall Loan Sponsor.
■ Alderwood Mall Mortgaged Property:The Alderwood Mall Non-Serviced Loan Combination is secured by Alderwood Mall Borrower’s fee interest in a portion (the “Alderwood Mall Mortgaged Property”) of the Alderwood Mall, located at 3000 184th Street Southwest, Lynnwood, WA, approximately 17 miles north of downtown Seattle (the “Alderwood Mall”).
- The Alderwood Mall is a 1,281,602 square foot (“SF”) super-regional single-level mall that includes 1,006,622 SF of leasable area in the enclosed portion of the mall and 274,980 SF of adjacent open air retail, restaurant and theater space. The Alderwood Mall features four non-owned anchors (which are not collateral for the Alderwood Mall Non-Serviced Loan Combination) and one owned 16-screen theater (which is collateral for the Alderwood Mall Non-Serviced Loan Combination). The Alderwood Mall Mortgaged Property’s square footage that is collateral for the Alderwood Mall Non-Serviced Loan Combination totals 575,704 SF. The Alderwood Mall Mortgaged Property is located just west of the interchange of Interstate 5 and Interstate 405, which has an average daily traffic count of 138,000 vehicles.
- Anchors: The Alderwood Mall is anchored by Macy’s (approximately 235,213 SF), JC Penney (approximately 148,949 SF) and Nordstrom (approximately 144,057 SF), which are owned by such anchors, and a 16-screen AMC Loews Cineplex (approximately 79,330 SF), which is part of the collateral for the Alderwood Mall Non-Serviced Loan Combination. The Alderwood Mall is also anchored by a Sears store (approximately 177,679 SF), which was recently transferred by Sears to a joint venture entity wholly owned by Sears and GGP which was formed to own and maximize the value of 12 Sears stores located in GGP-owned malls.
- Sales: For the trailing 12 months (“TTM”) ending January 2015, it is estimated that the Alderwood Mall generated total sales of approximately $419,467,761 (based on actual in-line reporting for TTM January 2015 and the Alderwood Mall Loan Sponsor’s estimated anchor tenant sales for 2014). During the same period, comparable in-line sales PSF were approximately $625 PSF ($513 PSF excluding the Apple store). The Alderwood Mall Loan Sponsor’s estimated non-collateral anchor sales for such period are approximately $54,000,000 ($230 PSF) for Macy’s, $18,800,000 ($106 PSF) for Sears, $30,000,000 ($201 PSF) for JC Penney and $62,500,000 ($434 PSF) for Nordstrom.
- Occupancy:As of May 5, 2015, the Alderwood Mall is 98.4% leased and the Alderwood Mall Mortgaged Property is 96.4% leased. In-line occupancy is 94.6%. Over the past 4 years, the Alderwood Mall Mortgaged Property has had an average occupancy of approximately 97.4%.
- Demographics: According to the appraisal, between 2003 and 2013, the Seattle MSA, with a current population of 3.6 million, grew 13.9% and Snohomish County, with a population of approximately 773,000, grew 16.1% while the U.S. grew 9.0%.
- Private Sector: The Seattle MSA benefits from substantial private sector employment and growth. The Seattle MSA is home to the corporate headquarters of nine Fortune 500 companies including Microsoft, Amazon.com, Costco, Starbucks and Nordstrom. While Boeing moved its corporate headquarters to Chicago in 2001, the company’s primary engineering and manufacturing headquarters remain in the region. As a result, the housing market is steadily improving, with the median sale price for single family homes increasing 1.5% to $359,900 as of the third quarter of 2014.
■ Mortgage Loan: The Alderwood Mall Non-Serviced Loan Combination consists of (a) one note that will be contributed to the Morgan Stanley Capital I Trust 2015-MS1 (the “Trust”) with an original principal amount of $50,400,000 (the “Alderwood Mall Mortgage Loan”), which is evidenced by Note A-1-3, (b) three promissory notes (Note A-1-1, Note A-1-2 and Note A-1-4) in the aggregate original principal amount of $176,800,000 (collectively, the “Alderwood Mall Non-Serviced Companion Loan”), and (c) two promissory notes (Note A-2-1 and Note A-2-2), in the aggregate original principal amount of $127,800,000 (collectively, the “Alderwood Mall B Note”). Note A-1-1, Note A-1-2, Note A-2-1 and Note A-2-2 are currently held in the MSCCG 2015-ALDR securitization trust. Note A-1-4 is currently held by CGMRC and is expected (but not required) to be contributed to one or more future securitizations. As and to the extent described below and in the prospectus supplement, the Alderwood Mall Mortgage Loan and the Alderwood Mall Non-Serviced Companion Loan arepari passu in right of payment with each other and the Alderwood Mall B Note is generally subordinate in right of payment to both the Alderwood Mall Mortgage Loan and the Alderwood Mall Non-Serviced Companion Loan. The entire Alderwood Mall Non-Serviced Loan Combination (including the Alderwood Mall Non-Serviced Companion Loan and the Alderwood Mall B Note) will be serviced and administered by the servicer, the special servicer, the certificate administrator and the trustee under the MSCCG 2015-ALDR TSA.
■ Interest Rate and Amortization: The Alderwood Mall Non-Serviced Loan Combination requires regularly scheduled payments of principal and interest in the amount of approximately $1,589,900.63 commencing in July 2015. Interest will accrue on the Alderwood Mall Non-Serviced Loan Combination at aper annumrate equal to 3.47875% (the “Interest Rate”).
Annex A-6 |
■ Alderwood Mall Loan Sponsor:The Alderwood Mall Mortgaged Property is owned indirectly by GGP/Homart II L.L.C., a joint venture between GGP Partners and NYSCRF and managed by a subsidiary of General Growth Properties, Inc. (NYSE: GGP). GGP/Homart II L.L.C. currently indirectly owns (along with its relevant JV partners) ten malls totaling approximately twelve million SF. GGP is a fully integrated, self-managed and self-administered real estate investment trust focused on owning, managing, leasing and redeveloping regional malls throughout the United States. As of March 31, 2015, GGP owned, either entirely or with joint venture partners, 129 shopping centers and high street retail properties comprising approximately 127 million square feet of gross leasable area. NYSCRF holds all of the assets of the New York State and Local Retirement System, which has more than one million members, retirees and beneficiaries. NYSCRF had $176.8 billion in audited net assets held in trust for pension as of March 31, 2014.
■ Credit Statistics(1):
Alderwood Mall Non-Serviced Loan Combination Balance | Interest Rate | Origination Date LTV(2) | Maturity LTV(2) | Loan PSF(3) | UW DSCR(4) | NOI Debt Yield(5) |
$355,000,000 | 3.47875% | 51.2% | 40.0% | $617 | 1.71x | 9.6% |
(1) All Credit Statistics are based on the Alderwood Mall Non-Serviced Loan Combination (including the Alderwood Mall Non-Serviced Companion Loan and the Alderwood Mall B Note).
(2) Based on appraised value of $693,500,000 as of March 17, 2015. Maturity LTV is based on expected Maturity Balance of $277,385,084.
(3) Excludes non-owned anchors.
(4) Based on UW NCF of $32,610,281.
(5) Based on UW NOI of $34,130,830.
■ Sources and Uses:
Sources | Proceeds | % of Total | Uses | Proceeds | % of Total | |
Alderwood Mall Non-Serviced Loan Combination | $355,000,000 | 100.0% | Loan Payoff | $243,293,021 | 68.5% | |
Closing Costs | $1,160,730 | 0.3% | ||||
Return of Equity | $110,546,249 | 31.1% | ||||
Total Sources | $355,000,000 | 100.0% | Total Uses | $355,000,000 | 100.0% |
■ Capital Structure
Cumulative Balance | Cumulative Loan PSF(1) | Cumulative LTV | Cumulative NOI DY(2) | Cumulative NCF DSCR(2) | ||
Mortgage Loan $50,400,000 | Non-Serviced Companion Loan $176,800,000 Notes A-1-1, A-1-2 and A-1-4 | $227,200,000 | $395 | 32.8% | 15.0% | 2.24x |
B Note $127,800,000 Notes A-2-1 and A-2-2 | $355,000,000 | $617 | 51.2% | 9.6% | 1.71x | |
Implied Equity(3) | $338,500,000 | |||||
(1) Based on collateral square footage of 575,704.
(2) Based on UW NOI of $34,130,830 and UW NCF of $32,610,281 and actual debt service.
(3) Based on $693,500,000 appraised value as of March 17, 2015.
Annex A-7 |
II. Alderwood Mall Mortgaged Property Information
■ Overview: The Alderwood Mall is an approximately 1,281,602 SF single-level super-regional mall with a combination of enclosed retail space and outdoor retail shops. The outdoor component is designed with various seating areas, decorative fountains and attractive landscaping. The Alderwood Mall includes 6,419 parking spaces, for a parking ratio of 5.00 per 1,000 SF, within one three-level and one four-level parking structure and various surface lots.
■ Asset History / Expansions: The Alderwood Mall was originally constructed in 1979 and was expanded and/or renovated in 1995, 2003-2004 and 2009-2013. GGP purchased the portion of the Alderwood Mall that constitutes the Alderwood Mall Mortgaged Property in 1999 for $162 million and subsequently invested an additional $162 million in capital expenditures throughout the Alderwood Mall Mortgaged Property.
- A major renovation of the Alderwood Mall was completed from 2003-2004 at a cost of approximately $145.5 million. Capital improvements included the relocation of Nordstrom to a newly constructed store, the addition of the outdoor shops in the former Nordstrom location, the addition of two parking decks, a new wing featuring a food court, the 16-screen movie theatre and five exterior facing retail spaces.
- The latest renovation to the Alderwood Mall included the expansion of the parking garage and the upgrade and refresh of the food court and common areas. Total cost for this renovation was approximately $16.5 million.
■ Anchors: The Alderwood Mall is anchored by Macy’s, Sears, JC Penney, Nordstrom and Loews Cineplex, and is leased to over 140 tenants including Apple, American Girl, H&M, Victoria’s Secret, Michael Kors and Lululemon, as well as 10 food court tenants. Macy’s, JC Penney and Nordstrom own their respective spaces. Sears occupies a building that was sold by Sears in March 2015 to a joint venture owned by Sears and an affiliate of GGP. The department store anchors have been at the Alderwood Mall since its inception in 1979 or shortly thereafter. Loews Cineplex leases from the Alderwood Mall Borrower a building that was constructed for it in 2005.
- Macy’s opened in October 1979.
- Sears opened in July 1980.
- JC Penney opened in March 1980.
- Nordstrom opened in 1979. In September 2003 Nordstrom moved to a newly constructed box located in the former Lamont’s store location, following which the former Nordstrom store was demolished and the outdoor retail component of the Alderwood Mall Mortgaged Property was built in its place.
■ Tenancy: As of February 28, 2015, the Alderwood Mall Mortgaged Property had in-line occupancy of 94.6% and collateral occupancy of 96.4%. Average historical occupancy averaged 97.4% for 2011, 2012, 2013 and TTM February 2015.
Year | Collateral Occupancy (%) |
2011 | 97.7% |
2012 | 97.9% |
2013 | 97.8% |
TTM Feb 2015 | 96.4% |
■ Location: The Alderwood Mall is located 17 miles north of the Seattle Central Business District, in close proximity to the city’s affluent neighborhoods. As of 2014, the Alderwood Mall’s 7-mile radius primary trade area exhibits 192,896 households with an average household income of $82,965. Located just west of the interchange of Interstate 5 and Interstate 405, the Alderwood Mall has local and regional access, enabling it to serve the greater Seattle market. The Alderwood Mall serves as the commercial hub for the suburban communities north of Seattle, anchoring other commercial and retail development in the surrounding areas.
Annex A-8 |
III. | Tenant Information |
The following table presents certain information relating to the Anchor Tenants and Major Tenants. Certain tenants may have co-tenancy provisions permitting the early termination of their leases based on sales performance and/or occupancy at the Alderwood Mall.
Sales (TTM 1/31/2015)(4) | |||||||||||||
Tenant Name | Credit Rating (Mdys/S&P/Fitch)(1) | Tenant SF | Occ. % | % of Collateral SF | UW Base Rent(2) | PSF(3) | Occ. Cost %(5) | Lease Expiration | |||||
$ | PSF(3) | ||||||||||||
Anchors (non-collateral) | |||||||||||||
Macy’s(6) | Baa2 / BBB+ / BBB | 235,213 | - | - | - | $54,000,000 | $230 | 0.0% | NAP | ||||
Sears(7) | Caa1/ CCC+ / CC | 177,679 | - | - | - | 18,800,000 | 106 | 0.7 | NAP | ||||
JC Penney(8) | Caa1 / CCC+ / CCC | 148,949 | - | - | - | 30,000,000 | 201 | 0.3 | NAP | ||||
Nordstrom(9) | Baa1 / A- / BBB+ | 144,057 | - | - | - | 62,500,000 | 434 | 0.0 | NAP | ||||
Total Anchor (non-collateral) | 705,898 | 100.0% | - | - | - | $165,300,000 | $234 | 0.1% | |||||
Anchor/Major (collateral) | |||||||||||||
Loews Cineplex(10) | NR / NR / NR | 79,330 | 13.8% | $2,657,555 | $166,097 | $9,701,563 | $606,348 | 29.4% | 12/31/2025 | ||||
REI | NR / NR / NR | 25,543 | 4.4 | 823,762 | 32.25 | NA | NA | NA | 1/31/2020 | ||||
Forever 21 | NR / NR / NR | 24,320 | 4.2 | 874,061 | 35.94 | 4,908,691 | 202 | 17.8 | 1/31/2022 | ||||
H&M(11) | NR / NR / NR | 18,000 | 3.1 | 764,100 | 42.45 | 8,655,518 | 481 | 11.1 | 1/31/2023 | ||||
Claim Jumper | NR / NR / NR | 12,641 | 2.2 | 412,981 | 32.67 | 4,323,983 | 342 | 13.2 | 10/31/2024 | ||||
American Girl | NR / NR / NR | 12,500 | 2.2 | 576,875 | 46.15 | 7,962,206 | 637 | 7.2 | 2/28/2022 | ||||
Urban Outfitters | NR / NR / NR | 10,829 | 1.9 | 249,067 | 23.00 | 2,892,421 | 267 | 19.9 | 1/31/2017 | ||||
Total Anchor/Major (collateral) | 183,163 | 100.0% | 31.8% | $6,358,401 | $34.71 | $38,444,381 | $210 | 19.7% | |||||
Select Top 10 In-Line(12) | |||||||||||||
Pottery Barn | NR / NR / NR | 9,058 | 1.6 | 436,052 | 48.14 | 4,743,241 | 524 | 9.2 | 1/31/2017 | ||||
Victoria’s Secret | Ba1 / BB+ / BB+ | 9,131 | 1.6 | 427,331 | 46.80 | 5,446,221 | 596 | 12.3 | 1/31/2025 | ||||
Abercrombie & Fitch | B1 / BB- / NR | 9,180 | 1.6 | 400,064 | 43.58 | 2,040,704 | 222 | 19.6 | 2/28/2019 | ||||
Gap | Baa3 / BBB- / BBB- | 5,438 | 0.9 | 385,772 | 70.94 | 1,607,416 | 296 | 25.2 | 1/31/2017 | ||||
Ben Bridge Jeweler | Aa2 / AA / AA- | 2,714 | 0.5 | 374,478 | 137.98 | 4,500,798 | 1,658 | 8.5 | 12/31/2021 | ||||
Zumiez | NR / NR / NR | 4,062 | 0.7 | 364,686 | 89.78 | 2,347,810 | 578 | 16.1 | 5/31/2018 | ||||
Express | NR / NR / NR | 7,316 | 1.3 | 362,800 | 49.59 | 2,482,519 | 339 | 28.5 | 1/31/2019 | ||||
Champs Sports | NR / NR / NR | 5,376 | 0.9 | 354,063 | 65.86 | 2,373,254 | 441 | 15.6 | 3/31/2016 | ||||
Lane Bryant | NR / NR / NR | 5,967 | 1.0 | 346,384 | 58.05 | 1,497,365 | 251 | 27.1 | 1/31/2020 | ||||
American Eagle Outfitters | NR / NR / NR | 6,000 | 1.0 | 336,000 | 56.00 | 2,626,021 | 438 | 21.6 | 1/31/2017 | ||||
All In-line < 10,000 SF | 392,541 | 94.6% | 68.2% | 19,341,918 | 52.06 | 215,723,380 | |||||||
Total Collateral SF | 575,704 | 96.4% | 100.0% | $25,700,319 | $46.33 | $254,167,761 | |||||||
Total Alderwood Mall SF | 1,281,602 | 98.4% | $419,467,761 | ||||||||||
Comparable In-Line | 331,852 | $207,410,095 | $625 | 12.7% | |||||||||
Comparable In-Line Without Apple(13) | 327,898 | $168,271,996 | $513 | 15.6% | |||||||||
(1) | Certain ratings are those of the parent company whether or not the parent company guarantees the lease. |
(2) | Base rental revenue reflects the following: (a) annualized base rent from signed leases as of the 2/28/2015 rent roll, (b) annualized contractual base rent steps through 1/1/2016 and (c) The Art Of Shaving (659 SF, $68,062 of UW Base Rent) and Young Art Lessons & Gallery (1,427 SF, $68,981 of UW Base Rent), both of which have signed leases but are not yet open for business. See “Underwritten Base Rental Revenue” in the notes to the Cash Flow Analysis on page A-15 for additional detail. |
(3) | PSF figures exclude vacant space. |
(4) | Tenant sales for TTM ended 1/31/2015, except for anchors which are based on the Alderwood Mall Borrower’s estimate for 2014. |
(5) | Occupancy Cost % calculations are based on UW Total Rent (UW base rent, recoveries, % rent in lieu and overage rent) excluding utilities/HVAC recoveries, divided by 1/31/15 TTM Sales. |
(6) | Macy’s owns its land and improvements. Macy’s has been operating at the Alderwood Mall since it opened in 1979 as The Bon Marché before being rebranded as a Macy’s in 2005. Sales data shown is based on Alderwood Mall Loan Sponsor estimates for 2014. |
(7) | A JV between Sears and GGP owns the Sears land and improvements and it does not serve as collateral for the Alderwood Mall Non-Serviced Loan Combination. Sears has been operating at the Alderwood Mall since 1980, shortly after it opened. Sears is required to pay an annual payment of $131,460 for its share of common area maintenance. Sales data shown is based on Alderwood Mall Loan Sponsor estimates for 2014. |
(8) | JC Penney owns its land and improvements. JC Penney has been operating at the Alderwood Mall since 1980, shortly after it opened. JC Penney is required to pay $80,000 for its share of common area maintenance. Sales data shown is based on Alderwood Mall Loan Sponsor estimates for 2014. |
(9) | Nordstrom owns its own land and improvements. Nordstrom has been operating at the Alderwood Mall since it opened in 1979. Sales data is based on Alderwood Mall Loan Sponsor estimates for 2014. |
(10) | Sales PSF for Loews Cineplex are based on 16 screens. |
(11) | H&M has a termination right for 180 days following December 31, 2016 with 6 months’ notice and the payment of a termination fee equal to 50% of unamortized tenant improvements if sales fail to exceed $6,000,120 during 2016. As of T-12 January 2015, H&M’s sales were $8,655,518. |
(12) | Select Top 10 In-Line tenants based on UW base rent. |
(13) | Apple leases approximately 3,954 SF (0.7% of NRA) of in-line space at the Alderwood Mall Mortgaged Property. |
Annex A-9 |
■ Anchor Sales: According to estimates provided by Alderwood Mall Loan Sponsor:
- The anchors outperform the national gross sales averages for their respective chains. The Alderwood Mall’s four non-owned Anchor Tenants produced aggregate sales of approximately $165 million as of 2014.
The following table presents certain information relating to Anchor Tenant sales:
Anchor | Tenant SF | 2014 Sales PSF | 2014 Sales(1) | TTM February 2014 National Average Sales(2) | TTM February 2014 National Average Sales PSF(2) |
Macy’s | 235,213 | $230 | $54,000,000 | $30,258,583 | $169 |
Sears | 177,679 | $106 | $18,800,000 | $12,837,021 | $133 |
JC Penney | 148,949 | $201 | $30,000,000 | $9,831,281 | $97 |
Nordstrom | 144,057 | $434 | $62,500,000 | $42,623,145 | $410 |
Totals | 705,898 | $234 | $165,300,000 | $95,550,030 | $135 |
(1) | Sales amounts are based on Alderwood Mall Loan Sponsor estimates. |
(2) | Source: Retail industry report. |
■ High In-line Sales: Comparable tenants produced TTM January 2015 sales of approximately $625 PSF, slightly higher than the national average mall shop average in-line sales of $607 PSF in the same period (as reported in the Appraisal). Without Apple, the Alderwood Mall Mortgaged Property’s comparable sales were approximately $513 PSF, slightly higher than the national average mall shop average in-line sales of $508 PSF in the same period (as reported in the Appraisal).
■ Occupancy Cost: Comparable tenant occupancy cost is only 12.7% (15.6% excluding Apple) as compared to the industry average for other super-regional malls of comparable sales productivity, which typically command in-line occupancy costs of 15-18%.
The following table presents certain information relating to historical sales and occupancy costs at the Alderwood Mall:
Historical In-line Sales, Occupancy Cost and Total Mall Sales
Comparable In-line Tenant Sales PSF | Comparable In-line Tenant Occupancy Cost(1) | Total Comparable In-line Sales | |||||
Year | w/ Apple | w/o Apple | w/ Apple | w/o Apple | Total Mall Sales(2) | ||
2011 | $511 | $421 | 15.6% | 19.0% | $169,438,090 | - | |
2012 | $588 | $474 | 13.5% | 16.8% | $194,981,753 | $401,708,831 | |
2013 | $613 | $500 | 13.0% | 16.0% | $203,332,705 | $411,076,148 | |
1/31/2015 TTM(3) | $625 | $513 | 12.7% | 15.6% | $207,410,095 | $419,467,761 |
(1) | Occupancy Cost % calculations are based on UW Total Rent (base rent, recoveries, % rent in lieu and overage rent) excluding utilities/HVAC recoveries, divided by 1/31/15 TTM Sales. |
(2) | Total Mall Sales include Alderwood Mall Loan Sponsor provided estimates for Anchor tenants. Anchor sales estimates for 2011 were unavailable. |
(3) | For TTM figures, comparable in-line tenants are defined as all stores less than 10,000 SF with at least 12 months of sales data. |
Annex A-10 |
The following table presents certain information relating to the lease rollover scheduled based on initial lease expirations at the Alderwood Mall Mortgaged Property:
Lease Expiration Summary
Year | Expiring SF(1) | % of SF | Cumulative % of SF | UW Base Rent(2) | UW Base Rent PSF(3) | % of UW Base Rent | Cumulative % of UW Base Rent | # Expiring Leases |
Vacant | 21,006 | 3.6% | 3.6% | - | - | - | - | - |
MTM | 7,923 | 1.4 | 5.0 | $560,700 | $70.77 | 2.2% | 2.2% | 4 |
2015 | 9,683 | 1.7 | 6.7 | 554,401 | $57.26 | 2.2 | 4.3 | 5 |
2016 | 47,030 | 8.2 | 14.9 | 2,181,590 | $46.39 | 8.5 | 12.8 | 14 |
2017 | 59,409 | 10.3 | 25.2 | 3,265,906 | $54.97 | 12.7 | 25.5 | 18 |
2018 | 40,542 | 7.0 | 32.2 | 2,482,945 | $61.24 | 9.7 | 35.2 | 15 |
2019 | 67,484 | 11.7 | 44.0 | 3,180,964 | $47.14 | 12.4 | 47.6 | 18 |
2020 | 48,551 | 8.4 | 52.4 | 2,048,765 | $42.20 | 8.0 | 55.5 | 11 |
2021 | 21,232 | 3.7 | 56.1 | 1,465,167 | $69.01 | 5.7 | 61.2 | 11 |
2022 | 61,540 | 10.7 | 66.8 | 2,594,749 | $42.16 | 10.1 | 71.3 | 12 |
2023 | 28,592 | 5.0 | 71.7 | 1,397,950 | $48.89 | 5.4 | 76.8 | 6 |
2024 | 35,340 | 6.1 | 77.9 | 1,427,008 | $40.38 | 5.6 | 82.3 | 11 |
2025 | 119,172 | 20.7 | 98.6 | 4,359,774 | $36.58 | 17.0 | 99.3 | 15 |
2026 | 8,200 | 1.4 | 100.0 | 180,400 | $22.00 | 0.7 | 100.0 | 1 |
Total / Wtd. Avg. | 575,704 | 100.0% | $25,700,319 | $46.33 | 100.0% | 141 |
(1) | Based on Alderwood Mall Borrower’s owned space. Excludes storage space. |
(2) | UW Base Rent reflects the following: (a) annualized base rent from signed leases as of the 2/28/2015 rent roll, (b) annualized contractual base rent steps through January 1, 2016 and (c) The Art Of Shaving (659 SF, $68,062 of UW Base Rent) and Young Art Lessons & Gallery (1,427 SF, $68,981 of UW Base Rent), both of which have signed leases but are not yet open for business. See “Underwritten Base Rental Revenue” in the notes to the Cash Flow Analysis on page A-15 for additional detail. |
(3) | UW Base Rent PSF excludes vacant space. |
Annex A-11 |
IV. | Market Overview |
■ Alderwood Mall is located in Lynnwood, Washington in southwestern Snohomish County, within the northern portion of the Seattle-Tacoma CBSA, which is part of the larger Seattle-Tacoma-Bellevue Metropolitan Statistical Area (the “Seattle MSA”). The Alderwood Mall is situated along the western side of Interstate 5, within the southwest quadrant of Alderwood Mall Parkway and 184th Street Southwest in the City of Lynnwood, Washington. This location is approximately 17.0 miles north of downtown Seattle, approximately 13.5 miles south of Everett, WA, approximately 20.0 miles northwest of Bellevue, WA and approximately 96.0 miles south of the Canadian border. The Alderwood Mall is located just west of the Interstate 5 and Interstate 405 exchange, which has an annual traffic count that averages approximately 138,000 vehicles per day (over 50 million per year). Alderwood Mall acts as a commercial/retail hub for the area, with additional retail development in the area consisting of multiple community, power and strip centers.
■ The Seattle MSA is the 15th largest MSA in the United States, with an estimated 2014 population of approximately 3.6 million, and is the primary economic and cultural center of Washington, and the largest MSA in the Pacific Northwest. The Seattle MSA has a diverse economy, with trade, transportation & utilities, professional & business services providing the majority of jobs, along with higher concentrations of jobs in the construction and manufacturing jobs than the nation as a whole. Trade, transportation & utilities jobs are primarily driven by the Port of Tacoma and the Port of Seattle, which are the fourth and sixth largest seaports on the West Coast by tonnage, with 16.3 million and 15.0 million metric tons traded through each port, respectively, in 2013. In aggregate, the ports represent the third-largest container gateway in North America. The two largest employers in the region are Boeing and Microsoft. Boeing’s primary engineering and manufacturing facilities are located in Everett and Renton, while Microsoft is headquartered in Redmond.
■ The Seattle MSA annual unemployment rate was generally lower than the unemployment rates of Washington and the United States between 2003 and 2013, averaging 6.5% for that time period, and reaching a low of 3.6% in 2007. The average state and national unemployment rates for the same time period were 7.1% and 6.7%, respectively. Snohomish County and King County, which contain the primary and secondary trade area of the Alderwood Mall, had the lowest unemployment rates in the state at 4.8% and 4.4%, respectively, as of November 2014, per the appraisal. As of February 2015, the Seattle MSA had a 5.5% unemployment rate, in line with the national rate of 5.5% and below the Washington rate of 6.8%.
■ The appraiser concluded a primary trade area of a 7.0 mile radius around the Alderwood Mall and a secondary trade area of a 10.0 mile radius around the Alderwood Mall. A summary of demographics in the primary and secondary trade areas compared to the Seattle MSA, Washington and the United States is presented below.
Demographic Summary | ||||||
Statistic | 7.0-mile Radius | 10.0-mile Radius | Seattle MSA | Washington | United States | |
Population | ||||||
2000 | 410,960 | 617,940 | 3,043,887 | 5,893,709 | 281,394,317 | |
2014 | 493,697 | 721,138 | 3,606,693 | 7,005,333 | 317,178,116 | |
2019 (projected) | 520,901 | 760,213 | 3,818,212 | 7,374,927 | 328,287,020 | |
% Increase 2000-2014 | 20.1% | 16.7% | 18.5% | 18.9% | 12.7% | |
% Increase 2014-2019 | 5.5% | 5.4% | 5.9% | 5.3% | 3.5% | |
Average Household Income | ||||||
2000 | $65,771 | $66,073 | $65,808 | $58,580 | $56,674 | |
2014 | $82,965 | $84,752 | $86,667 | $76,632 | $71,318 | |
2019 (projected) | $90,750 | $93,349 | $96,259 | $84,256 | $75,940 | |
% Increase 2000-2014 | 26.1% | 28.3% | 31.7% | 30.8% | 25.8% | |
% Increase 2014-2019 | 9.4% | 10.1% | 11.1% | 9.9% | 6.5% | |
Household Statistics | ||||||
2000 | 158,368 | 244,617 | 1,196,570 | 2,271,081 | 105,466,823 | |
2014 | 192,896 | 290,182 | 1,425,525 | 2,736,650 | 120,151,595 | |
2019 (projected) | 204,102 | 307,074 | 1,511,896 | 2,889,425 | 124,610,342 | |
% Increase 2000-2014 | 21.8% | 18.6% | 19.1% | 20.5% | 13.9% | |
% Increase 2014-2019 | 5.8% | 5.8% | 6.1% | 5.6% | 3.7% | |
■ Demographics:Between 2000 and 2014, the Seattle MSA, with a current population of approximately 3.6 million, grew at an average compound annual growth rate of 1.22%, in excess of the national average of 0.86%. Through 2019, the Seattle MSA is expected to grow at a compound annual growth rate of 1.15%, above the national average of 0.69%.
■ Household Income:Average household income in the Alderwood Mall primary trade was $82,965 for 2014, approximately 16.3% above the national average. Household income is projected to grow at a compound annual growth rate of 1.81% per year through 2019, in excess of 1.26% for the United States as a whole.
■ Primary Competition: The 5 primary competitors to the Alderwood Mall, as identified by the Appraisal, are shown below. The appraiser identified University Village and Bellevue Square as the two most competitive centers in terms of competition for tenants and shoppers. University Square is located near the University of Washington and the central portion of Seattle and competes for
Annex A-12 |
lifestyle center tenants and shoppers. Bellevue Square includes an upscale merchandising mix and flagship department store locations for Nordstrom and Macy’s and competes with the Alderwood Mall for upscale tenants and shoppers. Westfield Southcenter is located outside the Alderwood Mall’s primary retail market, but is considered similar to the subject in terms of merchandising mix, quality and location.
Alderwood Mall Mortgaged Property Name | Center Type | Proximity | Total GLA | Year Built | Year Renovated | Anchor Tenants | Occupancy | In-line Sales PSF |
Alderwood Mall | Super Regional | - | 1,281,602 | 1979 | 1995, 2003-2004, 2009-2013 | Macy’s Nordstrom | 98% | $619 |
Everett Mall | Regional | 7 miles N | 716,053 | 1968 | 1988 | Macy’s Sears Regal Cinemas | 93% | $350 |
Northgate Mall | Super Regional | 11 miles S | 1,021,989 | 1950 | 1997, 2007 | Macy’s JC Penney Nordstrom Bed Bath & Beyond | 100% | $425 |
University Village | Lifestyle | 15 miles SE | 368,965 | 1956 | 2003 | Crate & Barrel H&M Barnes & Noble | 92% | $720 |
Bellevue Square | Super Regional | 18 miles SE | 1,577,889 | 1946 | 2001, 2005, 2009, 2014 | Macy’s Nordstrom Crate & Barrel | 96% | $855 |
Westfield Southcenter | Super Regional | 30 miles S | 1,843,292 | 1968 | 1998, 2008 | Macy’s JC Penney Nordstrom Sears | 96% | $650 |
Source: Appraisal
■ Secondary Competition: The 4 secondary competitors to the Alderwood Mall identified by the Appraisal are presented below. The appraiser noted Seattle Premium Outlets as a competitor due to its performance and upscale tenancy including Coach, Burberry, Banana Republic and Restoration Hardware, among others.
Alderwood Mall Mortgaged Property Name | Center Type | Proximity | Total GLA | Year Built | Year Renovated | Anchor Tenants | Occupancy | In-line Sales PSF |
Seattle Premium Outlets | Outlet | 20 miles N | 400,929 | 1997 | 2013 | NAP | 99% | $700 |
Redmond Town Center | Regional | 16 miles SE | 709,294 | 1982 | 2013 | Macy’s Bed Bath & Beyond | 94% | $350 |
The Meridian | Theme/ Festival | 12 miles S | 227,356 | 1929 | 1987 | Regal Cinemas Niketown | 100% | NAP |
The Bravern | Lifestyle | 17 miles SE | 309,000 | 1992 | NAP | Neiman Marcus | 85% | $550 |
Source: Appraisal
■ Proposed Competition: The appraiser identified one proposed development, Lynnwood Place, which is under construction directly to the north of the Alderwood Mall on the north side of 184th Street. The first phase of Lynnwood Place, which consists of a 150,000 SF Costco warehouse club, is expected to be completed in late summer 2015 at which time the second phase is expected to begin construction. The second phase is expected to include approximately 89,500 SF of retail, restaurant and entertainment uses, as well as 330 residential units. The appraiser noted that though the retail and restaurant component of Lynnwood Place development will compete with the Alderwood Mall, it may enhance the local area as the retail hub of northern Seattle and additional residential uses should benefit the Alderwood Mall.
Annex A-13 |
V. | Cash Flow Analysis |
The following table presents certain information relating to historical operating performance and the Underwritten Cash Flow at the Alderwood Mall Mortgaged Property:
Revenue and Expense Category | 2012 | 2013 | 2014 | TTM Feb 2015 | 2015 Budget | Underwritten | Underwritten PSF |
Base Rental Revenue | $23,476,011 | $24,559,648 | $24,754,619 | $24,822,238 | $25,908,706 | $25,079,936 | $43.56 |
Rent Steps | - | - | - | - | - | 620,383 | 1.08 |
Percentage Rent In Lieu | 256,172 | 5,806 | 7,031 | - | - | - | - |
Overage Rent | 482,178 | 819,075 | 765,279 | 797,840 | 524,986 | 908,826 | 1.58 |
Total Minimum Rent | $24,214,361 | $25,384,529 | $25,526,929 | $25,620,079 | $26,433,692 | $26,609,145 | $46.22 |
Expense Reimbursements | 9,036,763 | 9,763,161 | 10,376,772 | 10,346,091 | 11,126,806 | 11,126,806 | 19.33 |
Other Income | 4,371,352 | 4,536,973 | 3,860,837 | 4,192,829 | 4,000,200 | 4,000,200 | 6.95 |
Total Gross Income | $37,622,477 | $39,684,663 | $39,764,538 | $40,158,998 | $41,560,698 | $41,736,151 | $72.50 |
Vacancy and Credit Loss | (94,056) | (99,212) | (99,411) | (100,397) | (103,902) | - | - |
Effective Gross Income | $37,528,421 | $39,585,451 | $39,665,127 | $40,058,601 | $41,456,797 | $41,736,151 | $72.50 |
Recoverable Expenses | |||||||
Repairs & Maintenance | 673,329 | 625,849 | 624,127 | 626,024 | 693,756 | 693,756 | 1.21 |
Security | 756,070 | 762,411 | 728,042 | 753,171 | 787,825 | 787,825 | 1.37 |
Cleaning Expense | 874,805 | 766,314 | 727,040 | 741,579 | 761,218 | 761,218 | 1.32 |
Utilities | 887,974 | 891,600 | 901,520 | 895,775 | 880,889 | 880,889 | 1.53 |
Landscaping | 151,403 | 145,640 | 162,439 | 160,709 | 172,669 | 172,669 | 0.30 |
Insurance | 295,737 | 236,145 | 143,190 | 155,927 | 134,218 | 134,218 | 0.23 |
Miscellaneous Recoverable | 726,906 | 733,027 | 712,225 | 716,247 | 764,279 | 764,279 | 1.33 |
Marketing | 471,216 | 357,583 | 525,872 | 573,335 | 648,335 | 648,335 | 1.13 |
Real Estate Taxes | 1,597,639 | 1,649,990 | 1,580,795 | 1,548,720 | 1,536,977 | 1,536,977 | 2.67 |
Non-Recoverable Expenses | |||||||
General & Administrative | 237,179 | 192,182 | 190,268 | 185,918 | 225,154 | 225,154 | 0.39 |
Management Fees | 1,524,830 | 1,580,881 | 1,477,417 | 1,532,600 | 1,467,488 | 1,000,000 | 1.74 |
Total Expenses | $8,197,087 | $7,941,621 | $7,772,933 | $7,890,005 | $8,072,809 | $7,605,321 | $13.21 |
Net Operating Income | $29,331,334 | $31,643,830 | $31,892,193 | $32,168,596 | $33,383,988 | $34,130,830 | $59.29 |
Capital Reserves | - | - | - | - | - | 86,356 | 0.15 |
Tenant Improvements | - | - | - | - | - | 476,142 | 0.83 |
Leasing Commissions | - | - | - | - | - | 958,052 | 1.66 |
Net Cash Flow | $29,331,334 | $31,643,830 | $31,892,193 | $32,168,596 | $33,383,988 | $32,610,281 | $56.64 |
Annex A-14 |
Underwriting Notes:
■ Underwritten In-Place Assumptions
Revenues:
- Underwritten Occupancy is based on 575,704 SF (based on February 28, 2015 rent roll) and reflects in place occupancy, including The Art of Shaving and Young Art Lessons & Gallery (in aggregate representing 0.4% of collateral SF), which have executed leases but have not yet taken occupancy or commenced paying rent.
- UnderwrittenBase Rental Revenue is based on the rent roll as of February 28, 2015 and includes The Art Of Shaving (659 SF, $68,062 of UW Base Rent) and Young Art Lessons & Gallery (1,427 SF, $68,981 of UW Base Rent), which have executed leases but have not yet taken occupancy or commenced paying rent.
- Underwritten Expense Reimbursements have been underwritten based on the 2015 Budget.
- Underwritten Other Incomeis underwritten per the2015 budget and includes specialty leasing income & recoveries, other rental income and miscellaneous income.
Expenses:
- Underwritten Expensesreflect the Alderwood Mall Borrower’s 2015 budget for the Alderwood Mall Mortgaged Property, unless otherwise noted.
- Underwritten Real Estate Taxes are based on the Alderwood Mall Borrower’s 2015 Budget and include local improvement bonds debt service of approximately $209,000. Such improvement bonds are subordinate to real estate taxes and require equal annual payments up to and including the payment date in July 2019, following which they will be fully discharged and the related expense will cease. Underwritten Real Estate Taxes exclude contingent partial real estate tax liabilities to JC Penney and Macy’s which are due under their respective REAs but which the Alderwood Mall Borrower has not historically paid. If Alderwood Mall Borrower were to make such payments, they would be reimbursable per the terms of most inline tenants’ leases. Lender has recourse to the Alderwood Mall Borrower and Guarantor for losses resulting from Alderwood Mall Borrower’s failure to reimburse any party to the REA for real estate taxes in accordance with the terms of the REA, unless such failure is solely caused by a lack of cash flow at the Alderwood Mall Mortgaged Property.
- Underwritten Management Fee reflects a management fee of 5.0% of effective gross income less recoveries, capped at $1,000,000.
- Underwritten Tenant Improvements reflect $18.00 PSF for new leases and $9.00 per square foot for renewals for in-line tenants and $2.00 PSF for new leases and $1.00 PSF for renewals for anchor/major tenants. Based on a 65% renewal probability and 10-year lease terms, this equates to a blended annual expense of $0.83 PSF for all collateral space.
- Underwritten Leasing Commissions reflect leasing commissions of 4.0% of average base rent and recoveries for new leases and 2.0% of average base rent and recoveries for renewals. Based on a 65% renewal probability, this equates to a blended annual expense of $1.66 PSF for all collateral space.
- Underwritten Replacement Reserves reflects $0.15 per square foot for all underwritten square footage at the Alderwood Mall Mortgaged Property. The IVI Assessment Services, Inc. property condition report prepared March 24, 2015 estimated un-inflated annual reserve expenditures of $0.33 per square foot per year.
Annex A-15 |
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Annex B
REPRESENTATIONS AND WARRANTIES OF THE ALDERWOOD MALL BORROWER
The Alderwood Mall Borrower represented to the Alderwood Mall Lender as follows under the Alderwood Mall Mortgage Loan Agreement (except as set forth in the exception report attached as Schedule I to this Annex B). Capitalized terms used in this Annex B have the meanings assigned to such terms in the Alderwood Mall Mortgage Loan Agreement.
(1) Organization. (a) Borrower has been duly formed and is validly existing and in good standing with the requisite organizational power and authority to own the Property and to transact the businesses in which it is now engaged. Borrower is duly qualified to do business and is in good standing in each jurisdiction where it is required to be so qualified in connection with the Property, businesses and operations except where the failure to do same would not reasonably be expected to have a Material Adverse Effect thereon. Borrower possesses all rights, licenses, permits and authorizations, governmental or otherwise, necessary to entitle it to own its properties and to transact the businesses in which it is now engaged, except where the failure to do same would not reasonably be expected to have a Material Adverse Effect thereon. The organizational structure of Borrower as of the Origination Date is depicted onSchedule I of the Mortgage Loan Agreement.
(b) Borrower’s exact legal name is correctly set forth in the first paragraph of the Mortgage Loan Agreement. Borrower is an organization of the type specified in the first paragraph of the Mortgage Loan Agreement. Borrower is incorporated or organized under the laws of the state specified in the first paragraph of the Mortgage Loan Agreement. Borrower’s principal place of business and chief executive office, and the place where Borrower keeps its books and records (in addition to at the Property), including recorded data of any kind or nature, regardless of the medium of recording, including software, writings, plans, specifications and schematics, has been for the preceding four (4) months (or, if less than four (4) months, the entire period of the existence of Borrower) and will continue to be the address of Borrower set forth in the first paragraph of the Mortgage Loan Agreement (unless Borrower notifies Lender in writing at least thirty (30) days prior to the date of such change). Borrower’s organizational identification number assigned by the state of its incorporation or organization is 3119098. Borrower is a disregarded entity for tax purposes and the federal tax identification number of Borrower’s direct parent entity is 20-2975958.
(c) No consent, approval, authorization or order of any court or Governmental Authority is required for the execution, delivery and performance by Borrower of, or compliance by Borrower with, the Mortgage Loan Agreement or the other Loan Documents or the consummation of the transactions contemplated hereby, other than those which have been obtained by Borrower.
(2) Proceedings. Borrower has taken all necessary limited liability company action required by Borrower’s organizational documents to authorize the execution, delivery and performance by it of the Mortgage Loan Agreement and the other Loan Documents, to the extent it is a party thereto. The Mortgage Loan Agreement and such other Loan Documents have been duly executed and delivered by or on behalf of Borrower and constitute legal, valid and binding obligations of Borrower, enforceable against it in accordance with their respective terms, subject to applicable bankruptcy, insolvency and similar laws affecting rights of creditors generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(3) No Conflicts. The execution, delivery and performance of the Mortgage Loan Agreement and the other Loan Documents to which it is a party by Borrower will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any Lien, charge or encumbrance (other than pursuant to the Loan Documents) upon any of the property or assets of Borrower pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, operating agreement, or other material agreement or instrument to which Borrower is a party or by which any of Borrower’s property or assets is subject, nor will such action result in any violation of the provisions of any statute or any order, rule or regulation of any Governmental Authority having jurisdiction over Borrower as the case may be, or any of Borrower’s properties or assets, and any consent, approval, authorization, order, registration or qualification of or with any Governmental Authority required for the execution, delivery and performance by Borrower of the Mortgage Loan Agreement or any other Loan Documents has been obtained and is in full force and effect.
(4) Litigation. Except as otherwise set forth onSchedule V of the Mortgage Loan Agreement, there are no actions, suits or proceedings at law or in equity by or before any Governmental Authority now pending or, to Borrower’s knowledge, threatened against or affecting Borrower or the Property, which actions, suits or proceedings, if determined against Borrower or the Property, would reasonably be expected to have a Material Adverse Effect.
(5) Agreements. Borrower is not a party to any agreement or instrument or subject to any restriction which would reasonably be expected to have a Material Adverse Effect. Borrower is not in default with respect to any order or decree of any court or any order, regulation or demand of any Governmental Authority, which default would reasonably be expected to have a Material Adverse Effect. Borrower is not in default in any material respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Permitted Encumbrance or any other material agreement or instrument to which it is a party or by which it or the Property is bound. Borrower has no material financial obligation (contingent or otherwise) under any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which Borrower is a party or by which Borrower or the Property is otherwise bound, other than (a) obligations incurred in the ordinary course of the operation of the Property, (b) obligations under the Loan Documents, (c) any obligations under the Leases and Reciprocal Easement Agreement, and (d) any obligations related to trade payables incurred in accordance with the terms and provisions of the Mortgage Loan Agreement.
(6) Title. Except as disclosed in the Title Insurance Policy, Borrower has good and insurable fee simple title to the real estate comprising the Property and good title to the balance of the Property owned by it, free and clear of all Liens whatsoever except the Permitted Encumbrances and the Liens created by the Loan Documents. The Mortgage when properly recorded in the appropriate records, together with any Uniform Commercial Code financing statements required to be filed in connection therewith, will create (i) a valid, perfected and enforceable lien on the Property in the amount of the Loan, subject only to Permitted Encumbrances and the Liens created by the Loan Documents and (ii) perfected security interests in and to, and perfected collateral assignments of, all personalty (including the Leases), all in accordance with the terms thereof, to the extent such security interests and assignment can be perfected by such recordations or filings in each case subject only to applicable law, any applicable Permitted Encumbrances and the Liens created by the Loan Documents. There are no claims of record against Borrower’s interests in the Property for payment which presently is due and payable by Borrower for work, labor or materials affecting any of Borrower’s property which are or may become a Lien prior to, or of equal priority with, the Liens created by the Loan Documents.
(7) No Bankruptcy Filing. Borrower is not contemplating either the filing of a petition by it under any state or federal bankruptcy or insolvency laws or the liquidation of all or a major portion of Borrower’s assets or property, and Borrower has no knowledge of any Person contemplating the filing of any such petition against it.
(8) Full and Accurate Disclosure. No statement of fact made by Borrower in the Mortgage Loan Agreement or in any of the other Loan Documents contains any untrue statement of a material fact or omits to state any material fact necessary to make statements contained in the Mortgage Loan Agreement not misleading in all material respects. There is no material fact presently known to Borrower which has not been disclosed to Lender which adversely affects, nor as far as Borrower can foresee, would reasonably be expected to adversely affect in any material respect, the Property or the business or operations of Borrower at or with respect to the Property.
(9) No Plan Assets. Borrower and each ERISA Affiliate is not an “employee benefit plan,” as defined inSection 3(3) of ERISA, subject to Title I of ERISA, and none of the assets of Borrower or any ERISA Affiliate constitutes or will constitute “plan assets” of one or more such plans within the meaning of the Plan Asset Regulations. In addition, (i) Borrower and each ERISA Affiliate is not a “governmental plan” within the meaning ofSection 3(32) of ERISA and (ii) to Borrower’s knowledge, transactions by or with Borrower and each ERISA Affiliate are not subject to state statutes regulating investment of, and fiduciary obligations with respect to, governmental plans or, if subject to such statutes, such statutes do not in any manner affect the ability of Borrower to perform its obligations under the Mortgage Loan Agreement or the ability of Lender to enforce any and all of its rights under the Agreement.
(10) Compliance. To Borrower’s knowledge, Borrower, the Property and the use thereof comply in all material respects with all applicable Legal Requirements, including, without limitation, building and zoning laws, ordinances, regulations and codes. Borrower has not received written notice of any default or violation of any order, writ, injunction, decree or demand of any Governmental Authority, the violation of which would reasonably be expected to have a Material Adverse Effect. There has not been committed by Borrower or any other Person in occupancy of or involved with the operation or use of the Property any act or omission affording any Governmental Authority the right of forfeiture as against Borrower’s interests in the Property or any part thereof or any monies paid in performance of Borrower’s obligations under any of the Loan Documents. To Borrower’s knowledge, in the event that all or any part of the Improvements are destroyed or damaged, said Improvements can be legally reconstructed to their condition prior to such damage or destruction, and thereafter exist for the same use without violating any zoning or other ordinances applicable thereto and without the necessity of obtaining any variances or, except as disclosed to Lender, special permits.
(11) Financial Information. All financial statements, including, without limitation, the statements of cash flow and income and operating expense, that have been prepared and delivered to Lender in respect of the Property (i) are true, complete and correct in all material respects, (ii) to Borrower’s knowledge, accurately represent the financial condition of
the Property as of the respective date or period to which such reports relate, and (iii) to the extent prepared or audited by an independent certified public accounting firm, have been prepared in accordance with GAAP throughout the periods covered, except as disclosed therein. Borrower does not have any contingent liabilities, liabilities for taxes, unusual forward or long- term commitments or unrealized or anticipated losses from any unfavorable commitments that would reasonably be expected to have a Material Adverse Effect on the Property or the operation thereof as a shopping center (other than remaining liabilities and obligations for environmental and other limited, customary obligations in connection with the Prior Loan), except as referred to or reflected in said financial statements. Since the date of such financial statements, there has been no material adverse change in the financial condition, operations or business of Borrower from that set forth in said financial statements.
(12) Condemnation. No Condemnation or other proceeding has been commenced or, to Borrower’s knowledge, is contemplated with respect to all or any portion of the Property or for the relocation of roadways providing access to the Property.
(13) Federal Reserve Regulations. No part of the proceeds of the Loan will be used for the purpose of purchasing or acquiring any “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or for any other purpose which would be inconsistent with such Regulation U or any other applicable Regulations of such Board of Governors, or for any purposes prohibited by Legal Requirements or by the terms and conditions of the Mortgage Loan Agreement or the other Loan Documents.
(14) Utilities and Public Access. The Property has rights of access to public ways and is served by water, sewer, sanitary sewer and storm drain facilities adequate to service the Property for its current use. To Borrower’s knowledge, all public utilities necessary for the use and enjoyment of the Property for its current use are located either in the public right of way abutting the Property (which are connected so as to serve the Property without passing over other property) or in recorded easements serving the Property. All roads necessary for the use of the Property for its current purposes have been completed and, unless disclosed on the Survey or in the Title Insurance Policy, dedicated to public use and accepted by all Governmental Authorities.
(15) Not a Foreign Person. Borrower is not a “foreign person” within the meaning of § 1445 of the Code.
(16) Separate Lots. The Property is comprised of one (1) or more parcels which constitute a separate tax lot or lots and does not constitute a portion of any other tax lot not a part of the Property. Borrower has not suffered, permitted or initiated the joint assessment of the Property with (i) any other real property constituting a separate tax lot or (ii) any personal property, or any other procedure whereby the Lien of any Taxes that may be levied against such other real property or personal property shall be assessed or levied or charged to the Property as a single Lien.
(17) Assessments. There are no pending or, to Borrower’s knowledge, proposed special or other assessments for public improvements or otherwise affecting the Property, nor are there any contemplated improvements to the Property that may result in such special or other assessments.
(18) Enforceability. The Loan Documents are not subject to any right of rescission, set off, counterclaim or defense by Borrower, including the defense of usury, nor would the operation of any of the material terms of the Loan Documents, or the exercise of any right thereunder, render the Loan Documents unenforceable (subject to applicable bankruptcy, insolvency and similar laws affecting rights of creditors generally and subject, as to enforceability, to general principles of equity, regardless whether enforcement is sought in a proceeding in equity or at law), and Borrower has not asserted any right of rescission, set off, counterclaim or defense with respect thereto.
(19) No Prior Assignment. There are no prior assignments of the Leases or any portion of the Rents due and payable or to become due and payable which are presently outstanding.
(20) Insurance. Borrower has obtained and has delivered to Lender certificates of insurance reflecting the insurance coverages, amounts and other insurance requirements set forth in the Mortgage Loan Agreement. The Insurance Premiums for such insurance through the Closing Date have been paid by Borrower or its Affiliates to the extent invoiced and payable. No Person acting on behalf of Borrower, including Borrower, has done, by act or omission, anything which would impair the coverage of any such policy and Borrower has not received any notice of termination or cancellation with respect to such insurance.
(21) Use of Property. The Property is used by Borrower exclusively for retail shopping center purposes and other appurtenant and related uses.
(22) Certificate of Occupancy; Licenses. All material certifications, permits, licenses and approvals, including without limitation, certificates of completion and occupancy permits required for the legal use, occupancy and
operation of the Property as a regional shopping center (collectively, the “Licenses”) have been obtained and are in full force and effect except where the failure to do same would not reasonably be expected to have a Material Adverse Effect thereon. The Borrower shall keep and maintain all such Licenses necessary for the operation of the Property as a regional shopping center. The use being made of the Property is in conformity in all material respects with the certificate of occupancy, if any, issued for the Property.
(23) Flood Zone. Except as shown on the Survey, none of the Improvements on the Property are located in an area identified by the Federal Emergency Management Agency as an area having special flood hazards.
(24) Physical Condition. Except as otherwise set forth onSchedule V of the Mortgage Loan Agreement, the Property, including, without limitation, all buildings, Improvements, parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems, fire protection systems, electrical systems, equipment, elevators, exterior sidings and doors, landscaping, irrigation systems and all structural components, is in good condition, order and repair in all material respects; there exists no structural or other material defects or damages in the Property, whether latent or otherwise, and Borrower has not received written notice from any insurance company or bonding company of any defects or inadequacies in the Property, or any material part thereof, which would reasonably be expected to materially adversely affect the insurability of the same or cause the imposition of extraordinary Insurance Premiums or charges thereon or of any termination or threatened termination of any policy of insurance or bond.
(25) Boundaries. Except as otherwise disclosed on the Survey or Title Insurance Policy, all of the Improvements lie wholly within the boundaries and building restriction lines of the Property, and no improvements on adjoining properties encroach upon the Property, and no easements or other encumbrances upon the Property encroach upon any of the Improvements, so as to materially adversely affect the value or marketability of the Property.
(26) Leases. The Property is not subject to any Leases other than the Leases described in the rent roll(s) certified to Lender pursuant toSchedule III of the Mortgage Loan Agreement (other than tenant’s subleases, if any, and Seasonal Leases). No person has any possessory interest in the Property or right to occupy the same except under and pursuant to the provisions of the Leases, the Reciprocal Easement Agreement and as otherwise disclosed in the Title Insurance Policy. The current Leases are in full force and effect and except as disclosed in any tenant estoppels delivered to Lender in connection with the closing of the Loan prior to the Closing Date or in Item 19 onSchedule V of the Mortgage Loan Agreement, there are no material defaults thereunder by either party and there are no conditions that, with the passage of time or the giving of notice, or both, would constitute material defaults thereunder. No Rent (other than security deposits and amounts that may be reimbursed or credited to tenants in connection with later reconciliations (e.g., common area maintenance charges)) has been paid more than one (1) month in advance of its due date. To Borrower’s knowledge, except as disclosed in any tenant estoppels delivered to Lender in connection with the closing of the Loan prior to the Closing Date, all work to be performed to date by Borrower under each Lease has been performed in all material respects as required, and except as disclosed in Item 16 onSchedule V of the Mortgage Loan Agreement any payments, free rent, partial rent, rebate of rent or other payments, credits, allowances or abatements required to be given by Borrower to any tenant already have been received by such tenant. There has been no prior sale, transfer or assignment, hypothecation or pledge of Borrower’s interest in any Lease or of the Rents received therein which is presently outstanding. Except as otherwise set forth in any tenant estoppel certificate delivered to Lender prior to the Closing Date, in the Title Insurance Policy or in Item 17 onSchedule V of the Mortgage Loan Agreement, no tenant under any Lease has a right or option pursuant to such Lease or otherwise to purchase all or any part of the leased premises or the building of which the leased premises are a part. Except as disclosed in Item 12 onSchedule V of the Mortgage Loan Agreement, no Hazardous Substances (as defined in the Environmental Indemnity) have been disposed, stored or treated in any unauthorized manner, to Borrower’s knowledge, by any tenant under any Lease on or about the leased premises nor does Borrower have any knowledge of any tenant’s intention to use its leased premises for any activity which, directly or indirectly, involves the unauthorized use, generation, treatment, storage, disposal or transportation of any Hazardous Substance (as defined in the Environmental Indemnity). All security deposits are being held in accordance with Legal Requirements. Other than with respect to the mall management office, no tenant under any Lease (or any sublease) is an Affiliate of Borrower.
(27) Survey. The Survey for the Property delivered to Lender in connection with the Mortgage Loan Agreement does not fail to reflect any material matter materially affecting the Property or the title thereto of the type normally disclosed by surveys.
(28) Material Agreements. There are no Material Agreements with respect to the Property except as described onSchedule V of the Mortgage Loan Agreement and Borrower has provided true, correct and materially complete copies of all Material Agreements. Each Material Agreement has been entered into on an arms’-length basis in the ordinary course of business by or on behalf of Borrower. Except as described onSchedule V of the Mortgage Loan Agreement, the Material Agreements are in full force and effect and there are no material defaults thereunder by
Borrower or, to Borrower’s knowledge, any other party thereto and Borrower is not in default in any material respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Material Agreement.
(29) Filing and Recording Taxes; Payment of Taxes. All mortgage, mortgage recording, stamp, intangible or other similar tax required to be paid by any Person under applicable Legal Requirements currently in effect in connection with the execution, delivery, recordation, filing, registration, perfection or enforcement of any of the Loan Documents, including, without limitation, the Mortgage encumbering the Property have been paid (or will be paid on or prior to the date due), and, under current Legal Requirements, the Mortgage encumbering the Property is enforceable in accordance with its terms by Lender (or any subsequent holder thereof) (subject to applicable bankruptcy, insolvency and similar laws affecting rights of creditors generally and subject, as to enforceability, to general principles of equity, regardless of whether enforcement is sought in a proceeding in equity or at law). Borrower has filed, or caused to have been filed, all federal, state and other material tax returns required to be filed and paid all amounts of taxes due (including interest and penalties) except for taxes that are not yet delinquent.
(30) Single Purpose Entity/Separateness. Borrower represents, warrants and covenants (i) as of the Origination Date until such time as the Debt shall be paid in full and (ii) from the date of formation through the Origination Date:
a) | The purpose for which Borrower is organized has been and shall be limited solely to (A) owning, holding, leasing, transferring, operating, financing and managing the Property and all business incidental thereto, (B) entering into or assuming the obligations of Borrower under the Mortgage Loan Agreement with the Lender, (C) refinancing the Property in connection with a permitted repayment of the Loan and the Prior Loan and (D) transacting any and all lawful business for which Borrower may be organized under its constitutive law that is incidental, necessary or appropriate to accomplish the foregoing. |
b) | Borrower will not own any asset or property other than (A) the Property, (B) incidental personal property necessary for and used or to be used in connection with the ownership, management or operation of the Property and (C) incidental real property related to the Property but which has been conveyed to a third party, governmental agency or other entity or person. |
c) | Borrower has not and will not engage in any business other than as described in the Mortgage Loan Agreement. |
d) | Borrower has not been and is not a party to and will not enter into any contract or agreement with any Affiliate of Borrower other than contracts or agreements that are intrinsically fair, commercially reasonable and substantially similar to those that would be available on an arms-length basis with third parties not so affiliated with Borrower, except as provided onSchedule V to the Mortgage Loan Agreement. |
e) | Borrower has not been and is not liable for and will not incur any Indebtedness other than (i) the Loan, (ii) trade and operational debt (collectively “Trade Debt”) incurred in the ordinary course of business with trade creditors in amounts as are normal and reasonable under the circumstances, is not evidenced by a note and is not in excess of sixty (60) days past due (unless the same is subject to good faith dispute by Borrower, in appropriate proceedings therefor, and for which adequate reserves have been established in accordance with GAAP), (iii) obligations under the Reciprocal Easement Agreement that are not yet due and payable, (iv) Taxes incurred in accordance with the Mortgage Loan Documents, and (v) Capital Expenditures that are not yet due and payable; provided that, the aggregate amount of the Indebtedness described in clause (ii) above shall not exceed Five Million and No/100 Dollars ($5,000,000.00) at any time during the term of the Mortgage Loan. No Indebtedness other than the Debt may be secured (senior, subordinate orpari passu) by the Property (other than indebtedness, if any, secured by Permitted Encumbrances and such other Liens approved by Mortgage Lender or permitted pursuant to the Mortgage Loan Agreement or the other Mortgage Loan Documents). With respect to the Prior Loan, Borrower hereby represents, warrants and covenants that (x) the Prior Loan will be repaid in full on the Origination Date, and (y) there are no remaining liabilities or obligations in connection with the Prior Loan (other than environmental and other limited and customary obligations); |
f) | Borrower has not made and will not make any advance payments other than in the ordinary course of its business or loans to any Person and shall not acquire obligations or securities of any Affiliate of Borrower. |
g) | Borrower intends to remain solvent and will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same shall become due to the extent there is current sufficient cash flow generated by the Property (unless the same is subject to good faith dispute by Borrower, in appropriate proceedings therefor, and for which adequate reserves have been established in accordance with GAAP); provided, however, that (i) this provision shall not be deemed to require any direct or indirect equity owner of Borrower to make any loans or capital contributions to Borrower and (ii) Borrower shall be deemed solvent so long as there is positive net cash flow at the Property after the payment of all operating expenses and debt service. |
h) | Borrower has done or caused to be done and will do all things necessary to observe organizational formalities and preserve its existence, and will not, nor will it permit any Affiliate of Borrower to, amend, modify or otherwise change the operating agreement, as applicable, or other organizational documents of Borrower in any material respect which adversely affects its existence as a single purpose entity or its other obligations with respect to the Loan without the prior written consent of Mortgage Lender. Notwithstanding the foregoing, Borrower may convert its organization entity type without prior consent of Mortgage Lender, provided that (i) the new borrowing entity is a limited liability company (whether single-member or multi-member) or a limited partnership, in either case formed under Delaware law which meets the Rating Agency criteria then applicable to such entities; (ii) Borrower at all times complies with the provisions of the Mortgage Loan Agreement; (iii) Borrower delivers, at Borrower’s cost and expense, to Lender the organizational documents in form and substance reasonably satisfactory to Lender evidencing such conversion no later than ten (10) Business Days prior to the effective date of such conversion; (iv) Borrower delivers, at Borrower’s cost and expense, such amendments to all financing statements filed in connection with the Loan, as may be reasonably requested by Lender; (v) Borrower delivers, at Borrower’s cost and expense, to Lender a Nonconsolidation Opinion and any other document, instrument or certificate that Lender shall reasonably require, excluding Rating Agency Confirmation; (vi) Borrower delivers to Lender an opinion from a law firm reasonably acceptable to Lender and in form and substance reasonably acceptable to Lender and, following a Securitization, the Rating Agencies, that such change in organization type will not adversely impact the enforceability of these single purpose entity provisions as of the date of such change of organizational type, whether contained in the Mortgage Loan Documents, as amended, or the organizational documents; and (vii) Borrower pays for all of Lender’s reasonable out-of-pocket expense, including but not limited to, Lender’s legal fees incurred in connection with the review of such deliveries. |
i) | Borrower has and shall maintain all of its books, records, financial statements and bank accounts separate from those of any other Person and, except as required or permitted under GAAP, its assets have not been and will not be listed as assets on the financial statement of any other Person. Borrower has filed and will file its own tax returns and will not file a consolidated federal income tax return with any other Person (except that Borrower may file or may be part of a consolidated federal tax return to the extent (i) required or permitted by applicable law, or (ii) it is treated as a “disregarded” entity for tax purposes and is not required to file tax returns under applicable law); provided, however, that there shall be an appropriate notation indicating the separate existence of Borrower and its assets and liabilities. |
j) | Except with the respect to use and/or reference to any name and/or brand of Manager or any parent of Borrower for certain trade and branding purposes, Borrower has been and will be, and at all times has and shall hold itself out to the public as, a legal entity separate and distinct from any other Person (including any Affiliate of Borrower), has and shall correct any known misunderstanding regarding its status as a separate entity, has and shall conduct business in its own name. |
k) | Borrower has and intends to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations to the extent there is current sufficient cash flow generated by the Property; provided, however, (i) this provision shall not be deemed to require any direct or indirect equity owner of Borrower to make any loans or capital contributions to Borrower, and (ii) Borrower will be deemed to be adequately capitalized for the purpose of this subsection (k) so long as no Event of Default with respect to Borrower’s payment obligations under the Loan Documents is continuing. |
l) | Neither Borrower nor any Affiliate of Borrower has sought or will seek (i) the dissolution, winding up, liquidation, consolidation or merger in whole or in part of Borrower, except as Borrower is expressly permitted pursuant to Subsection (h) of thisSection 30 and/or in connection with a transfer permitted pursuant to the terms and provisions ofSection 5.2.12 of the Mortgage Loan Agreement, or (ii) the sale of material assets of Borrower, except as expressly permitted pursuant toSection 5.1.12 of the Mortgage Loan Agreement. |
m) | Borrower has not and will not commingle its assets with those of any other Person and has and shall hold all of its assets in its own name and has and shall maintain and account for its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any other person or entity. |
n) | Borrower has not and shall not guarantee or become obligated for the debts of any other Person and shall not hold itself out as being responsible for the debts or obligations of any other Person. |
o) | Borrower has and shall allocate fairly and reasonably any overhead expenses that are shared with an Affiliate of Borrower, including paying for office space and services performed by any employee of an Affiliate of Borrower. |
p) | Borrower has not and shall not pledge its assets to secure the obligations of any other Person other than with respect to (i) the Loan, and (ii) equipment leases entered into in the ordinary course in connection with the Property, only as to the underlying equipment itself. |
q) | Borrower has and shall maintain a sufficient number of employees in light of its contemplated business operations and pay the salaries of its own employees from its own funds; provided, however, that Borrower shall not be obligated to have any employees. |
r) | Intentionally omitted. |
s) | Intentionally omitted. |
t) | If Borrower is a limited partnership or a limited liability company (other than an Acceptable Delaware LLC), each general partner or managing member of Borrower (each, an “SPE Party”) shall be a corporation or Acceptable Delaware LLC (I) whose sole asset is its interest in Borrower, (II) which has not been and shall not be permitted to engage in any business or activity other than owning an interest in Borrower and any activities incidental, necessary and appropriate to accomplish the foregoing; (III) which has not been and shall not be permitted to incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation); and (IV) which has and will at all times own a 0.5% equity ownership interest in Borrower in accordance with applicable Delaware law. Each such SPE Party will at all times comply, and will cause Borrower to comply, with each of the representations, warranties, and covenants contained in thisSection 4.1.30 (to the extent applicable) as if such representation, warranty or covenant was made directly by such SPE Party. Upon the withdrawal or the disassociation of an SPE Party from Borrower, Borrower shall immediately appoint a new SPE Party whose articles of incorporation or organization are substantially similar to those of such SPE Party and deliver a new Nonconsolidation Opinion to Lender with respect to the new SPE Party and its equity owners. |
u) | (I) In the event Borrower or the SPE Party is an Acceptable Delaware LLC, the limited liability company agreement of Borrower or the SPE Party (as applicable) (the “LLC Agreement”) shall provide that (i) upon the occurrence of any event that causes the last remaining member of Borrower or the SPE Party (as applicable) (“Member”) to cease to be the member of Borrower or the SPE Party (as applicable) (other than (A) upon an assignment by Member of all of its limited liability company interest in Borrower or the SPE Party (as applicable) and the admission of the transferee in accordance with the Loan Documents and the LLC Agreement, or (B) the resignation of Member and the admission of an additional member of Borrower or the SPE Party (as applicable) in accordance with the terms of the Loan Documents and the LLC Agreement), any person acting as Independent Director of Borrower or the SPE Party (as applicable) shall, without any action of any other Person and simultaneously with the Member ceasing to be the member of Borrower or the SPE Party (as applicable) automatically be admitted to Borrower or the SPE Party (as applicable) as a member with a 0.5% economic interest (“Special Member”) and shall continue Borrower or the SPE Party (as applicable) without dissolution and (ii) Special Member may not resign from Borrower or the SPE Party (as applicable) or transfer its rights as Special Member unless (A) a successor Special Member has been admitted to Borrower or the SPE Party (as applicable) as a Special Member in accordance with requirements of Delaware law and (B) after giving effect to such resignation or transfer, there remains at least two (2) Independent Directors of the SPE Party or Borrower (as applicable) in accordance with the Mortgage Loan Agreement. The LLC Agreement shall further provide that (i) Special Member shall automatically cease to be a member of Borrower or the SPE Party (as applicable) upon the admission to Borrower or the SPE Party (as applicable) of the first substitute member, (ii) Special Member shall be a member of Borrower or the SPE Party (as applicable) that has no interest in the profits, losses and capital of |
Borrower or the SPE Party (as applicable) and has no right to receive any distributions of the assets of Borrower or the SPE Party (as applicable), (iii) pursuant to the applicable provisions of the limited liability company act of the State of Delaware (the “Act”), Special Member shall not be required to make any capital contributions to Borrower or the SPE Party (as applicable) and shall not receive a limited liability company interest in Borrower or the SPE Party (as applicable), (iv) Special Member, in its capacity as Special Member, may not bind Borrower or the SPE Party (as applicable) and (v) except as required by any mandatory provision of the Act, Special Member, in its capacity as Special Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter relating to, Borrower or the SPE Party (as applicable) including, without limitation, the merger, consolidation or conversion of Borrower or the SPE Party (as applicable); provided, however, such prohibition shall not limit the obligations of Special Member, in its capacity as Independent Director, to vote on such matters required by the Loan Documents or the LLC Agreement. In order to implement the admission to Borrower or the SPE Party (as applicable) of Special Member, Special Member shall execute a counterpart to the LLC Agreement. Prior to its admission to Borrower or the SPE Party (as applicable) as Special Member, Special Member shall not be a member of Borrower or the SPE Party (as applicable), but Special Member may serve as an Independent Director of Borrower or the SPE Party (as applicable). (II) So long as the Debt or any portion thereof remains outstanding, the LLC Agreement shall further provide that (i) if, following the application of the provisions set forth in clause (v)(I) above, there shall, for any reason, nevertheless occur any event that causes the Member to cease to be a member of Borrower or the SPE Party (as applicable) to the fullest extent permitted by law, the personal representative of Member shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Party (as applicable) agree in writing (A) to continue Borrower or the SPE Party (as applicable) and (B) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute member of Borrower or the SPE Party (as applicable) effective as of the occurrence of the event that terminated the continued membership of Member in Borrower or the SPE Party (as applicable), (ii) any Material Action initiated by or brought against Member or Special Member shall not cause Member or Special Member to cease to be a member of Borrower or the SPE Party (as applicable) and upon the occurrence of such an event, the business of Borrower or the SPE Party (as applicable) shall continue without dissolution and (iii) each of Member and Special Member waives any right it might have to agree in writing to dissolve Borrower or the SPE Party (as applicable) upon the occurrence of any Material Action initiated by or brought against Member or Special Member, or the occurrence of an event that causes Member or Special Member to cease to be a member of Borrower or the SPE Party (as applicable). |
v) | The organizational documents of Borrower (to the extent Borrower is a corporation or an Acceptable Delaware LLC) or the SPE Party, as applicable, shall provide that at all times there shall be at least two (2) duly appointed Independent Directors of such entity. Borrower shall not without the unanimous written consent of all of its partners or members, as applicable, and the written consent of 100% of the directors or managers of Borrower or each SPE Party (as applicable), including, without limitation, each Independent Director take any Material Action. |
w) | The organizational documents of Borrower or SPE Party, as applicable, shall further provide that (I) the board of directors or managers of Borrower or SPE Party, as applicable, and the constituent members or principals, shareholders, or beneficiaries of such entities (the “Constituent Members”) shall not take any action which, under the terms of any organizational documents of Borrower or the SPE Party, as applicable, requires (1) the unanimous vote of the board of directors or managers or principals, shareholders or beneficiaries of Borrower or the SPE Party or (2) the Constituent Members, unless at the time of such action there shall be at least two (2) Independent Directors or independent directors engaged as provided by the terms of the Mortgage Loan Agreement; (II) any resignation, removal or replacement of any Independent Director or independent director shall not be effective without two (2) Business Days prior written notice to Lender and the Rating Agencies accompanied by evidence that the replacement Independent Director or independent directors satisfies the applicable terms and conditions of the Mortgage Loan Agreement and of the applicable organizational documents; provided, however, to the extent such removal or replacement is effected by the Approved ID Provider, such notice shall not be required, provided that the Borrower shall instruct any Approved ID Provider engaged by the Borrower to provide independent notice to Lender of any such removal or replacement; (III) to the fullest extent permitted by applicable law, including Section 18-1101(c) of the Act and Title 12, Ch.38, Sections 3801 et seq. of the Delaware Statutory Trust Act and notwithstanding any duty otherwise existing at law or in equity, the Independent Directors’ or independent directors’ fiduciary duties shall be limited to only considering the interests of the Constituent Members and Borrower and |
any SPE Party (including Borrower’s and any SPE Party’s respective creditors) in acting or otherwise voting on the matters provided for in the Mortgage Loan Agreement and in Borrower’s and SPE Party’s organizational documents (which such fiduciary duties to the Constituent Members and Borrower and any SPE Party (including Borrower’s and any SPE Party’s respective creditors), in each case, shall be deemed to apply solely to the extent of their respective economic interests in Borrower or SPE Party (as applicable) exclusive of (x) all other interests (including, without limitation, all other interests of the Constituent Members), (y) the interests of other affiliates of the Constituent Members, Borrower and SPE Party and (z) the interests of any group of affiliates of which the Constituent Members, Borrower or SPE Party is a part)); (IV) other than as provided in subsection (III) above, the Independent Directors or independent directors shall not have any fiduciary duties to any Constituent Members, any directors of Borrower or SPE Party or any other Person; (V) the foregoing shall not eliminate the implied contractual covenant of good faith and fair dealing under applicable law; and (VI) to the fullest extent permitted by applicable law, including Section 18-1101(e) of the Act Title 12, Ch.38, Sections 3801 et seq. of the Delaware Statutory Trust Act, an Independent Director or independent director shall not be liable to Borrower, SPE Party, any Constituent Member or any other Person for breach of contract or breach of duties (including fiduciary duties), unless the Independent Director or independent director acted in bad faith or engaged in willful misconduct. |
x) | Other than trade payables entered into in the ordinary course of Borrower’s business, there exist no debts or liabilities of Borrower that have not been fully discharged or otherwise satisfied. |
y) | Borrower has complied, in all material respects, with each of the representations, warranties and covenants included onSchedule IX to the Mortgage Loan Agreement. |
(31) Unfunded Allowances. On the Closing Date there are no unfunded construction allowances or tenant allowances except as set forth in Item 16 onSchedule V to the Mortgage Loan Agreement.
(32) Illegal Activity. No portion of the Property has been or will be purchased with proceeds of any illegal activity.
(33) No Change in Facts or Circumstances; Disclosure. All information submitted by Borrower to Lender in all financial statements, rent rolls, reports, certificates and other documents prepared and submitted by Borrower to Lender in connection with the Loan or in satisfaction of the terms thereof and all statements of fact made by Borrower in the Mortgage Loan Agreement or in any other Loan Document, are accurate, complete and correct in all material respects. There has been no material adverse change in any condition, fact, circumstance or event that would make any such information inaccurate, incomplete or otherwise misleading in any material respect or that otherwise has a Material Adverse Effect or would reasonably be expected to have a Material Adverse Effect. Borrower has disclosed to Lender all material facts and has not failed to disclose any material fact known to Borrower that could cause any representation or warranty made in the Mortgage Loan Agreement by Borrower to be materially misleading.
(34) Nonconsolidation Opinion Assumptions. All of the assumptions contained in the Nonconsolidation Opinion relating to the Borrower, each of which is set forth onSchedule VI to the Mortgage Loan Agreement, are true and correct in all material respects. Notwithstanding the foregoing, if any of the aforementioned assumptions become untrue in any material respect, such untruth shall not constitute an Event of Default if (A) such untruth was inadvertent, immaterial and non-recurring, (B) such untruth is curable and Borrower shall promptly cure such breach within ten (10) Business Days of notice from Lender and (C) within thirty (30) days of the request by Lender, Borrower shall cause counsel to deliver a new Insolvency Opinion to the effect that the failure of such factual assumption to be true shall not in any material manner impair, negate or amend the opinions rendered in the existing Insolvency Opinion in any material respect, which opinion shall be acceptable to Lender in its reasonable discretion and, in connection with or following a Securitization, the Rating Agencies.
(35) Reciprocal Easement Agreement. The Reciprocal Easement Agreement is in full force and effect and has not been modified, amended or supplemented except as set forth in any estoppel certificate delivered to Lender prior to the Closing Date. Neither the Borrower nor, to Borrower’s knowledge, any other party to the Reciprocal Easement Agreement, is in default under any of the material provisions thereof (other than (i) a technical default with respect to the accuracy of the site plan attached to the Reciprocal Easement Agreement and (ii) a breach of the currently required parking ratio, each of which shall be remedied upon the execution of the Second Amendment to Reciprocal Easement Agreement), and to Borrower’s knowledge, there are no conditions which, with the passage of time or the giving of notice, or both, would constitute a default of any of the material provisions thereof. All sums due and payable under the Reciprocal Easement Agreement has been paid in full and no party to the Reciprocal Easement Agreement has commenced any action or given or received any notice for the purpose of terminating the Reciprocal Easement Agreement, and the representations made in any estoppel or similar document delivered with respect to
the Reciprocal Easement Agreement in connection with the Loan are true, complete and correct and are hereby incorporated by reference as if fully set forth in the Mortgage Loan Agreement.
(36) Permitted Encumbrances. None of the Permitted Encumbrances, in the aggregate, have a Material Adverse Effect.
(37) Anti-Terrorism. (a) Neither Borrower nor Sponsor is in violation of any Legal Requirements or money laundering, including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism, (the “Executive Order”) and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56, the “Patriot Act”).
(b) Neither the Borrower nor Sponsor is a Prohibited Person.
(c) Borrower covenants and agrees that in the event Borrower receives any written notice that Borrower, Sponsor or Guarantor becomes listed on the Annex to Executive Order Nos. 12947, 13099 and 13224 and all modifications thereto and thereof (the “Annex”) or any other list promulgated under the Patriot Act or is indicted, arraigned, or custodially detained on charges involving money laundering or predicate crimes to money laundering, Borrower shall immediately notify Lender. At Lenders’ option, it shall be an Event of Default under the Mortgage Loan Agreement if Borrower, Sponsor, Guarantor or any other party to any Loan Document (other than Lender) becomes listed on any list promulgated under the Patriot Act or is indicted, arraigned or custodially detained on charges involving money laundering or predicate crimes to money laundering.
(38) Bank Holding Company. Borrower is not a “bank holding company” as defined in the Bank Holding Company Act of 1956, as amended, and Regulation Y thereunder of the Board of Governors of the Federal Reserve System.
(39) Investment Company Act. Borrower is not (1) an “investment company” or a company “Controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended; (2) a “holding company” or a “subsidiary company” of a “holding company” or an “affiliate” of either a “holding company” or a “subsidiary company” within the meaning of the Public Utility Holding Company Act of 1935, as amended; or (3) subject to any other federal or state law or regulation which purports to restrict or regulate its ability to borrow money.
(40) Construction Obligations. Except as set forth in Item 16 onSchedule V to the Mortgage Loan Agreement, Borrower has completed all work in connection with any material construction obligations Borrower has under any Leases and/or Reciprocal Easement Agreement, in a good and workmanlike manner and free and clear of any Liens (other than Liens being contested in accordance with the terms and provisions of the Mortgage Loan Agreement) and Borrower has paid in full all costs incurred by Borrower in connection therewith (or will be paid in full within sixty (60) days from the Origination Date).
(41) Management Agreement. As of the Closing Date, the Property is managed pursuant to the property management provisions set forth in that certain Operating Agreement by and between Guarantor and NYSCRF and such operating agreement is in full force and effect and there is no default thereunder by any party thereto.
Schedule I to Annex B
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES OF THE ALDERWOOD MALL BORROWER
Capitalized terms used in this Schedule I to Annex B have the meanings assigned to such terms in the Alderwood Mall Mortgage Loan Agreement. The representations and warranties contained in the Alderwood Mall Mortgage Loan Agreement are hereby qualified and supplemented with the following:
1. | All matters disclosed in any tenant estoppels provided to Lender in connection with the Loan. |
2. | All matters disclosed in any estoppels pertaining to the Reciprocal Easement Agreement provided to Lender by parties to the Reciprocal Easement Agreement in connection with the Loan. |
3. | All matters disclosed in any estoppels provided to Lender in connection with the Loan, by any service provider, manager or other party to any agreement pertaining to the ownership and operation of any portion of the Property. |
4. | All matters disclosed in the Leases with a demised premises in excess of 10,000 gross leasable square feet at the Property provided to Lender in connection with the Loan. |
5. | All matters disclosed in the Reciprocal Easement Agreement delivered to Lender in connection with the Loan. |
6. | All matters disclosed in the rent roll for the Property, dated as of April 30, 2015, including Processing Option Information and Glossary. |
7. | All matters disclosed in the Operating Co-Tenancy Schedules for the Property, dated as of January 16, 2015, and provided to Lender. |
8. | All matters disclosed in the Summary Package, received by Lender on January 20, 2015, which package is inclusive of the following: |
Income Statement;
Overage Rent Detail;
Termination Income Detail;
Percent in Lieu Detail;
Competition Detail;
Expiration Schedule;
Rent Roll – Retail;
Rent Roll Summary – Retail;
Formatted Rent Roll dated as of December 31, 2014;
Historic Sales and Occupancy;
Property Sales and Occupancy; and
Merchandise Mix Detail.
9. | All matters set forth in any financial statement, income statement, balance sheet or other financial document delivered to Lender in connection with the Loan. |
10. | All matters set forth in the 2015 budget for the Property delivered to the Lender in connection with the Loan. |
11. | All matters disclosed in that certain Property Condition Report, dated March 24, 2015, prepared by Partner Assessment Corporation as Project No. 15-135885.1. |
12. | All matters disclosed in that certain Phase I Environmental Site Assessment, dated March 23, 2015, prepared by Partner Assessment Corporation as Project No. 15-135885.1. |
13. | All matters disclosed in the Zoning and Site Requirements Summary, dated as of 3/10/2015 and revised 4/8/2015 and 4/21/2015, prepared by Bock & Clark as Project No. 7201400993. |
14. | All matters disclosed on that certain ALTA/ACSM Land Title Survey, dated as of April 28, 2015, prepared by Duryea & Associates, P.S. as Project No. 04-808 2015. |
15. | All matters disclosed in that certain ALTA Commitment for an ALTA Loan Policy issued as of May 5, 2015, prepared by Fidelity National Title Insurance Company, as File No. 21021210, and proforma loan policy issued in connection therewith. There are the following material defaults under the current Leases by either party and there are the following conditions that, with the passage of time or the giving of notice, or both, would constitute material defaults thereunder: None. |
16. | As of April 23, 2015, Borrower has the following unfunded monetary obligations, in the total amount of $591,860, under the current Leases at the Property: |
Tenant Name | Amount | |
1 | The Art of Shaving | $17,000 |
2 | Café Rio | $273,000 |
3 | Christopher & Banks | $47,180 |
4 | Garage | $184,680 |
5 | J Jill | $10,000 |
6 | Kukuruza | $10,000 |
7 | Lush Fresh Handmade Cosmetics | $50,000 |
17. | Tenants under the current Lease have the following rights or options pursuant to such Lease or otherwise to purchase all or any part of the leased premises or the building of which the leased premises are a part: None. |
18. | All matters disclosed in the Options to Extend Lease Schedules for the Property, dated as of 1/16/2015, and provided to Lender. |
19. | All matters disclosed in the Termination Right Kickout Schedules for the Property, dated as of 1/16/2015, and provided to Lender. |
20. | All matters disclosed in the Asbestos Operations and Maintenance Program for the Property, dated as of 5/24/2005, and provided to Lender. |
21. | All matters disclosed in the Capital Cash Spend Report, dated as of 1/16/2015, and provided to Lender. |
22. | All matters disclosed in the A/R Details with Aging Report, dated as of 1/13/2015, and provided to Lender. |
(1) | multifamily and/or commercial mortgage loans; |
(2) | commercial mortgage pass-through certificates or other commercial mortgage backed securities; |
(3) | direct obligations of the United States or other governmental agencies; or |
(4) | any combination of the above. |
● | provide for the accrual of interest based on fixed, floating, variable or adjustable rates; |
● | be senior or subordinate to one or more other classes in respect of distributions; |
● | be entitled to principal distributions, with disproportionately low, nominal or no interest distributions; |
● | be entitled to interest distributions, with disproportionately low, nominal or no principal distributions; |
● | provide for distributions of accrued interest commencing only following the occurrence of certain events, such as the retirement of one or more other classes; |
● | provide for sequential distributions of principal; or |
● | provide for distributions based on a combination of any of the above characteristics. |
● | the timing of interest and principal payments; |
● | applicable interest rates; |
● | information about the trust fund’s assets; |
● | information about any credit support or cash flow agreement; |
● | the rating for each class of certificates; |
● | information regarding the nature of any subordination; |
● | any circumstance in which the trust fund may be subject to early termination; |
● | whether any elections will be made to treat the trust fund or a designated portion thereof as a “real estate mortgage investment conduit” for federal income tax purposes; |
● | the aggregate principal amount of each class of certificates; |
● | information regarding any master servicer or special servicer and certain subservicers; |
● | the price to the public for each class of offered certificates, or the method for determining that price; |
● | the applicable lead or managing underwriter(s), if any, together with information regarding the relevant underwriting arrangements and the underwriters’ compensation; |
● | the sponsor or sponsors for the subject securitization transaction; and |
● | whether the certificates will be initially issued in definitive or book-entry form. |
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN | The Trustee | 79 | ||
THIS PROSPECTUS AND THE ACCOMPANYING | Duties of the Trustee | 79 | ||
PROSPECTUS SUPPLEMENT | ii | Matters Regarding the Trustee | 80 | |
SUMMARY OF PROSPECTUS | 1 | Resignation and Removal of the Trustee | 80 | |
RISK FACTORS | 9 | Additional Parties to the Agreements | 80 | |
DESCRIPTION OF THE TRUST FUNDS | 48 | DESCRIPTION OF CREDIT SUPPORT | 80 | |
Assets | 48 | General | 80 | |
Mortgage Loans | 48 | Subordinate Certificates | 81 | |
Loan Combinations | 51 | Cross-support Provisions | 81 | |
Commercial Mortgage Backed Securities | 52 | Insurance or Guarantees for the Mortgage Loans | 81 | |
Acquisition, Removal and Substitution of Mortgage | Letter of Credit | 81 | ||
Assets | 53 | Insurance Policies and Surety Bonds | 81 | |
Government Securities | 54 | Reserve Funds | 82 | |
Accounts | 55 | Credit Support for CMBS | 82 | |
Credit Support | 55 | LEGAL ASPECTS OF THE MORTGAGE LOANS AND THE | ||
Cash Flow Agreements | 55 | LEASES | 82 | |
USE OF PROCEEDS | 55 | General | 82 | |
YIELD CONSIDERATIONS | 55 | Types of Mortgage Instruments | 82 | |
General | 55 | Interest in Real Property | 83 | |
Pass-through Rate | 55 | Leases and Rents | 83 | |
Timing of Payment of Interest | 56 | Personalty | 83 | |
Payments of Principal; Prepayments | 56 | Foreclosure | 84 | |
Prepayments—Maturity and Weighted Average Life | 57 | Bankruptcy Laws | 87 | |
Other Factors Affecting Weighted Average Life | 57 | Junior Mortgages; Rights of Senior Lenders or | ||
THE DEPOSITOR | 58 | Beneficiaries | 89 | |
THE SPONSOR | 58 | Environmental Legislation | 90 | |
General | 58 | Due-on-Sale and Due-on-Encumbrance | 92 | |
OTHER SPONSORS, MORTGAGE LOAN SELLERS AND | Subordinate Financing | 92 | ||
ORIGINATORS | 58 | Default Interest, Prepayment Premiums and | ||
DESCRIPTION OF THE CERTIFICATES | 59 | Prepayments | 92 | |
General | 59 | Acceleration on Default | 92 | |
Distributions | 59 | Applicability of Usury Laws | 93 | |
Available Distribution Amount | 60 | Laws and Regulations; Types of Mortgaged | ||
Distributions of Interest on the Certificates | 60 | Properties | 93 | |
Determination of Interest Rates | 61 | Americans With Disabilities Act | 93 | |
Distributions of Principal of the Certificates | 64 | Servicemembers Civil Relief Act | 93 | |
Components | 64 | Forfeitures in Drug, RICO and Patriot Act | ||
Distributions on the Certificates of Prepayment | Proceedings | 94 | ||
Premiums or in Respect of Equity Participations | 64 | FEDERAL INCOME TAX CONSEQUENCES | 94 | |
Allocation of Losses and Shortfalls | 64 | General | 94 | |
Advances | 64 | REMICs | 94 | |
Reports to Certificateholders | 65 | Prohibited Transactions and Other Taxes | 104 | |
Termination | 65 | Liquidation and Termination | 104 | |
Book-Entry Registration and Definitive Certificates | 65 | Administrative Matters | 105 | |
Exchangeable Certificates | 66 | Tax Exempt Investors | 105 | |
DESCRIPTION OF THE AGREEMENTS | 68 | Residual Certificate Payments—Non-U.S. Persons | 105 | |
Assignment of Assets; Repurchases | 68 | Tax Related Restrictions on Transfers of REMIC | ||
Representations and Warranties; Repurchases | 69 | Residual Certificates | 105 | |
Certificate Account and Other Collection Accounts | 70 | Grantor Trust Funds | 107 | |
Collection and Other Servicing Procedures | 72 | Taxation of Classes of Exchangeable Certificates | 113 | |
Subservicers | 73 | STATE AND LOCAL TAX CONSIDERATIONS | 113 | |
Special Servicers | 73 | ERISA CONSIDERATIONS | 114 | |
Realization Upon Defaulted Mortgage Loans | 73 | General | 114 | |
Hazard Insurance Policies | 75 | Prohibited Transactions | 114 | |
Rental Interruption Insurance Policy | 76 | Review by Plan Fiduciaries | 115 | |
Fidelity Bonds and Errors and Omissions Insurance | 76 | LEGAL INVESTMENT | 116 | |
Due-on-Sale and Due-on-Encumbrance Provisions | 76 | PLAN OF DISTRIBUTION | 117 | |
Retained Interest; Servicing Compensation and | LEGAL MATTERS | 118 | ||
Payment of Expenses | 76 | FINANCIAL INFORMATION | 118 | |
Evidence as to Compliance | 77 | RATING | 118 | |
Matters Regarding a Master Servicer, a Special | INCORPORATION OF INFORMATION BY REFERENCE | 118 | ||
Servicer and the Depositor | 77 | GLOSSARY OF TERMS | 120 | |
Servicer Termination Events | 78 | |||
Rights Upon Servicer Termination Events | 78 | |||
Amendment | 79 |
SUMMARY OF PROSPECTUS | |||||
This summary highlights selected information from this prospectus. It does not contain all of the information you need to consider in making your investment decision. To understand all of the terms of an offering of certificates, read this entire document and the accompanying prospectus supplement carefully. | |||||
What You Will Own | |||||
Title of Certificates | Commercial Mortgage Pass-Through Certificates, issuable in series. | ||||
Mortgage Pool | Each trust fund will consist primarily of one or more segregated pools of: | ||||
(1) | multifamily and/or commercial mortgage loans; | ||||
(2) | commercial mortgage pass-through certificates or other commercial mortgage backed securities; | ||||
(3) | direct obligations of the United States or other governmental agencies; or | ||||
(4) | any combination of 1-3 above. | ||||
As to some or all of the mortgage loans, each trust fund may also include assignments of the leases of the related mortgaged properties or assignments of the rental payments due under those leases. | |||||
Each trust fund for a series of certificates may also include: | |||||
● | cash or permitted investments; | ||||
● | insurance or guarantees for the loans, letters of credit, insurance policies and surety bonds, one or more reserve funds or any combination of the foregoing; and/or | ||||
● | guaranteed investment contracts, interest rate exchange or interest rate swap, cap, floor or collar agreements or currency exchange or swap agreements. | ||||
Relevant Parties And Dates | |||||
Issuing Entity | The issuing entity with respect to each series will be a New York common law trust formed by the depositor and containing the assets described in this prospectus and specified in the related prospectus supplement. | ||||
Depositor | Morgan Stanley Capital I Inc., a Delaware corporation and a wholly-owned subsidiary of Morgan Stanley. | ||||
Master Servicer | Each master servicer, if any, for each series of certificates, in addition to the duties of and compensation payable to that master servicer, will be described in the related prospectus supplement. A master servicer may be an affiliate of Morgan Stanley Capital I Inc. | ||||
Subservicer | Each subservicer for each series of certificates that, at the time of initial issuance of the subject offered certificates, is (a) affiliated with the depositor, the issuing entity or any sponsor for the subject securitization transaction, or (b) services 10% or more of the related mortgage assets, by balance, will be named in the related prospectus supplement. A subservicer may be an affiliate of Morgan Stanley Capital I Inc. | ||||
Special Servicer | Each special servicer, if any, for each series of certificates (or the circumstances in accordance with which a special servicer will be appointed), in addition to the duties of and compensation payable to that special servicer, will be described in the related prospectus supplement. A special servicer may be an affiliate of Morgan Stanley Capital I Inc., a certificateholder or another party to the pooling and servicing agreement. | ||||
Trustee | The trustee for each series of certificates will be named in the related prospectus supplement. | ||||
Other Parties | If so specified in the prospectus supplement for a series, there may be one or more additional parties to the related pooling and servicing agreement, including, but not limited to, (i) a paying agent, which will make payments and perform other specified duties with respect to the certificates, (ii) a certificate registrar, which will maintain the register of certificates and perform certain duties with respect to certificate transfer, (iii) an | ||||
authenticating agent, which will countersign the certificates on behalf of the trustee and/or (iv) a fiscal agent, which will be required to make advances if the trustee fails to do so when required. | |||||||
Sponsor | The sponsor or sponsors for each series of certificates will be named in the related prospectus supplement. The sponsor will organize and initiate the issuance of a series of certificates and will sell mortgage loans, directly or indirectly, to the depositor. If specified in the related prospectus supplement, a sponsor may be Morgan Stanley Mortgage Capital Holdings LLC (successor-in-interest by merger to Morgan Stanley Mortgage Capital Inc.), an affiliate of the depositor. | ||||||
Sellers | The seller or sellers of the mortgage loans or other assets will be named in the related prospectus supplement. A seller may be an affiliate of Morgan Stanley Capital I Inc. Morgan Stanley Capital I Inc. will purchase the mortgage loans or other assets, on or before the issuance of the related series of certificates. | ||||||
Originators | If the mortgage loans or other assets have been originated by one or more entities other than the related sponsor and/or its affiliates, the prospectus supplement will identify any such originator or group of affiliated originators that originated or is expected to originate mortgage loans representing 10% or more of the related mortgage asset pool, by balance, and set forth certain information with respect thereto. | ||||||
Information About The Mortgage Pool | |||||||
The Trust Fund 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 loans and the commercial mortgage backed securities, or one or the other, with respect to each series of certificates will consist of a pool of: | |||||
● | multifamily and/or commercial mortgage loans; | ||||||
● | commercial mortgage pass-through certificates or other commercial mortgage backed securities evidencing interests in or secured by mortgage loans; or | ||||||
● | a combination of mortgage loans and commercial mortgage backed securities. | ||||||
Following foreclosure, acceptance of a deed in lieu of foreclosure or any other enforcement action, the trust assets with respect to a series of offered certificates will also include real property and other collateral for defaulted mortgage loans. | |||||||
In addition to the asset classes described above in this “—Mortgage Assets” subsection, we may include in the trust with respect to any series of offered certificates other asset classes, provided that such other asset classes in the aggregate will not exceed 10% by principal balance of the related asset pool. | |||||||
The mortgage loans will not be guaranteed or insured by: | |||||||
● | Morgan Stanley Capital I Inc. or any of its affiliates; or | ||||||
● | unless the prospectus supplement so provides, any governmental agency or instrumentality or other person. | ||||||
The mortgage loans will be secured by first liens or junior liens on, or security interests in: | |||||||
● | rental or cooperatively-owned buildings with multiple dwelling units; | ||||||
● | retail properties related to the sale of consumer goods and other products, or related to providing entertainment, recreational or personal services, to the general public; | ||||||
● | office buildings; | ||||||
● | hospitality properties; | ||||||
● | casino properties; | ||||||
● | health care-related facilities; | ||||||
● | industrial facilities; | ||||||
● | warehouse facilities, mini-warehouse facilities and self-storage facilities; | ||||||
● | restaurants, taverns and other establishments involved in the food and beverage industry; | ||||||
● | manufactured housing communities, mobile home parks and recreational vehicle parks; | ||||||
● | recreational and resort properties; | ||||||
● | arenas and stadiums; | ||||||
● | churches and other religious facilities; | ||||||
● | parking lots and garages; | ||||||
● | mixed use properties; | ||||||
● | other income-producing properties; and/or | ||||||
● | unimproved land. | ||||||
Generally, the mortgage loans: | |||||||
● | will be secured by properties located in any of the fifty states, the District of Columbia or the Commonwealth of Puerto Rico; | ||||||
● | will have original terms to maturity of not more than 40 years; and | ||||||
● | will be originated by persons other than Morgan Stanley Capital I Inc. | ||||||
However, some of the mortgage loans may be secured by liens on real properties located outside the United States, its territories and possessions, provided that foreign mortgage loans do not represent more than 10% of the related mortgage asset pool, by balance. | |||||||
Each mortgage loan may provide for the following payment terms: | |||||||
● | Each mortgage loan may provide for no accrual of interest or for accrual of interest at a fixed or adjustable rate or at a rate that may be converted from adjustable to fixed, or vice versa, from time to time at the borrower’s election. Adjustable mortgage rates may be based on one or more indices. | ||||||
● | Each mortgage loan may provide for scheduled payments to maturity or payments that adjust from time to time to accommodate changes in the interest rate or to reflect the occurrence of certain events. | ||||||
● | Each mortgage loan may provide for negative amortization or accelerated amortization. | ||||||
● | Each mortgage loan may be fully amortizing or require a balloon payment due on the loan’s stated maturity date. | ||||||
● | Each mortgage loan may contain prohibitions on prepayment or require payment of a premium or a yield maintenance penalty in connection with a prepayment. | ||||||
● | Each mortgage loan may provide for payments of principal, interest or both, on due dates that occur monthly, quarterly, semi-annually or at another interval as specified in the related prospectus supplement. | ||||||
B | Government Securities | If the related prospectus supplement so specifies, the trust fund may include direct obligations of the United States, agencies of the United States or agencies created by government entities which provide for payment of interest or principal or both. | |||||
C | Collection Accounts | Each trust fund will include one or more accounts established and maintained on behalf of the certificateholders. The person(s) designated in the related prospectus supplement will, to the extent described in this prospectus and the prospectus supplement, deposit into this account all payments and collections received or advanced with respect to the trust fund’s assets. The collection account may be either interest-bearing or non-interest-bearing, and funds may be held in the account as cash or invested in short-term, investment grade obligations, or other permitted investments. | |||||
D | Credit Support | If the related prospectus supplement so specifies, one or more classes of certificates may be provided with partial or full protection against certain defaults and losses on a trust fund’s mortgage loans and commercial mortgage backed securities. | |||||
This protection may be provided by one or more of the following means: | |||||||
● | subordination of one or more other classes of certificates, | ||||||
● | cross-support provisions, | ||||||
● | loan insurance policies or guarantees, | ||||||
● | letters of credit, | ||||||
● | certificate insurance policies or surety bonds, | ||||||
● | reserve fund or funds, or | ||||||
● | a combination thereof. | ||||||
The related prospectus supplement will describe the amount and types of credit support, the entity providing the credit support, if applicable, and related information. If a particular trust fund includes commercial mortgage backed securities, the related prospectus supplement will describe any similar forms of credit support applicable to those commercial mortgage backed securities. | |||||||
E | Cash Flow Agreements | If the related prospectus supplement so provides, the trust fund may include guaranteed investment contracts pursuant to which moneys held in the collection accounts will be invested at a specified rate. The trust fund also may include agreements (as described below) designed to reduce the effects of interest rate or currency exchange rate fluctuations on the trust fund’s assets or on one or more classes of certificates. | |||||
Agreements of this sort may include: | |||||||
● | interest rate exchange or interest rate swap agreements, | ||||||
● | interest rate cap, floor or collar agreements, | ||||||
● | currency exchange or swap agreements, or | ||||||
● | other interest rate or currency agreements. Currency exchange or swap agreements might be included in a trust fund if some or all of the mortgage loans or commercial mortgage backed securities, such as mortgage loans secured by mortgaged properties located outside the United States, are denominated in a non United States currency. | ||||||
The related prospectus supplement will describe the principal terms of any guaranteed investment contract or other such agreement and provide information with respect to the obligor. If a particular trust fund includes commercial mortgage backed securities, the related prospectus supplement will describe any guaranteed investment contract or other agreements applicable to those commercial mortgage backed securities. | |||||||
Repurchases and Substitutions of Mortgage Assets; Acquisition of Additional Mortgage Assets | If and to the extent described in the related prospectus supplement, Morgan Stanley Capital I Inc. a mortgage asset seller or another specified person or entity may make or assign to or for the benefit of one of our trusts various representations and warranties, or may be obligated to deliver to one of our trusts various documents, in either case relating to some or all of the mortgage assets transferred to that trust. A material breach of one of those representations and warranties or a failure to deliver a material document may, under the circumstances described in the related prospectus supplement, give rise to an obligation to repurchase the affected mortgage asset(s) out of the subject trust or to replace the affected mortgage asset(s) with other mortgage asset(s) that satisfy the criteria specified in the related prospectus supplement or to reimburse the related trust fund for any related losses.See “Description of the Agreements—Assignment of Assets—Repurchases” and “—Representations and Warranties—Repurchases” herein. | ||||||
In addition, if so specified in the related prospectus supplement, if a mortgage loan backing a series of offered certificates defaults, then it may be subject to (a) a purchase option on the part of another lender whose loan is secured by a lien on the same real estate collateral or by a lien on a direct or indirect equity interest in the related borrower, (b) a purchase option on the part of the holder(s) or beneficial owner(s) of all or a specified portion of particular certificates, or a particular group or class of certificates, of the subject series and/or (c) a fair value purchase option under the applicable governing document(s) for the subject securitization transaction or another servicing agreement. Any such option granted to the holder of an offered certificate will be described in the related prospectus supplement. Any such option may be assignable to any person or entity. If so specified in | |||||||
the related prospectus supplement, additional or alternative procedures may be used to sell a defaulted mortgage loan. Further, if so specified in the related prospectus supplement, a special servicer or other specified party for one of our trusts may be obligated or may deem it advisable, under the circumstances described in that prospectus supplement, to sell on behalf of the trust a delinquent or defaulted mortgage asset. See“Description of the Agreements—Realization Upon Defaulted Mortgage Loans” herein. | ||||||||
In general, the initial total principal balance of the mortgage assets in a trust will equal or exceed the initial total principal balance of the related certificates. If the initial total principal balance of the related mortgage assets is less than the initial total principal balance of any series, we may arrange an interim deposit of cash or liquid investments with the trustee to cover the shortfall. For the period specified in the related prospectus supplement, following the initial issuance of that series, we will be entitled to obtain a release of the deposited cash or investments in exchange for the deposit of a corresponding amount of mortgage assets. If we fail to deliver mortgage assets sufficient to make up the entire shortfall within that specified period, any of the cash or investments remaining on deposit with the related trustee will be used to pay down the principal balance of the related certificates, as described in the related prospectus supplement. | ||||||||
If so specified in the related prospectus supplement, the related trustee may be authorized or required to apply collections on the mortgage assets underlying a series of offered certificates to acquire new mortgage assets that conform to the description of mortgage assets in this prospectus, and satisfy the criteria set forth in the related prospectus supplement. | ||||||||
If the subject securitization transaction involves a prefunding or revolving period, then we will indicate in the related prospectus supplement, among other things, (i) the term or duration of the prefunding or revolving period, (ii) for prefunding periods, the amount of proceeds to be deposited in the prefunding account, (iii) for revolving periods, the maximum amount of additional assets that may be acquired during the revolving period, if applicable, (iv) the percentage of the mortgage asset pool and any class or series of certificates represented by the prefunding account or the revolving period, if applicable, (v) any limitation on the ability to add pool assets, and (vi) the requirements for assets that may be added to the pool. | ||||||||
If so specified in the related prospectus supplement, we or another specified person or entity may be permitted, at our or its option, but subject to the conditions specified in that prospectus supplement, to acquire from the related trust particular mortgage assets underlying a series of certificates in exchange for: | ||||||||
● | cash that would be applied to pay down the principal balances of certificates of that series; and/or | |||||||
● | other mortgage loans or commercial mortgage-backed securities that— | |||||||
(1) | conform to the description of mortgage assets in this prospectus, and | |||||||
(2) | satisfy the criteria set forth in the related prospectus supplement. | |||||||
Further, if so specified under circumstances described in the related prospectus supplement, all of the remaining certificateholders of a given series of certificates, acting together, may exchange those certificates for all of the mortgage loans, REO properties and commercial mortgage-backed securities remaining in the mortgage pool underlying those certificates. Investors are advised to consult their tax advisors concerning the federal, state, local or other tax consequences to them of such an exchange. | ||||||||
Characteristics of the Offered Certificates | Each series of certificates will have the following characteristics: | |||||||
● | if the certificates evidence an interest in a trust fund that includes mortgage loans, the certificates will be issued pursuant to a pooling agreement; | |||||||
● | if the certificates evidence an interest in a trust fund that does not include mortgage loans, the certificates will be issued pursuant to a trust agreement; | |||||||
● | each series of certificates will include one or more classes of certificates; | |||||||
● | each series of certificates, including any class or classes not offered by this prospectus, will represent, in the aggregate, the entire beneficial ownership interest in the related trust fund; | |||||||
● | each class of certificates being offered to you, other than certain stripped interest certificates, will have a stated principal amount; and | |||||||
● | each class of certificates being offered to you, other than certain stripped principal certificates, will accrue interest based on a fixed, floating, variable or adjustable interest rate. | ||||||
We will describe the specific characteristics of each class of offered certificates in the related prospectus supplement, including the principal balance or notional amount, pass-through rate, payment characteristics and authorized denominations. In the case of a floating, variable or adjustable interest rate, the related prospectus supplement will specify the method for determining the rate. Among other things, in the related prospectus supplement, we will summarize the flow of funds, payment priorities and allocations among the respective classes of offered certificates of any particular series, the respective classes of non-offered certificates of that series, and fees and expenses, to the extent necessary to understand the payment characteristics of those classes of offered certificates, and we will identify any events in the applicable governing document(s) that would alter the transaction structure or flow of funds. The certificates will not be guaranteed or insured by Morgan Stanley Capital I Inc. or any of its affiliates. If the related prospectus supplement so provides, the certificates may be insured or guaranteed by an entity specified therein. Otherwise, the certificates also will not be guaranteed or insured by any governmental agency or instrumentality or by any other person. | |||||||
A | Interest | Each class of certificates offered to you, other than stripped principal certificates and certain classes of stripped interest certificates, will accrue interest at the rate indicated in the prospectus supplement. Interest will be distributed to you as provided in the related prospectus supplement. | |||||
Interest distributions: | |||||||
● | on stripped interest certificates may be made on the basis of the notional amount for that class, as described in the related prospectus supplement; and | ||||||
● | may be reduced to the extent of certain delinquencies, losses, prepayment interest shortfalls, and other contingencies described in this prospectus and the related prospectus supplement. | ||||||
B | Principal | The certificates of each series initially will have an aggregate principal balance no greater than the outstanding principal balance of the trust fund’s assets as of the close of business on the first day of the month during which the trust fund is formed, after application of scheduled payments due on or before that date, whether or not received. The related prospectus supplement may provide that the principal balance of the trust fund’s assets will be determined as of a different date. The principal balance of a certificate at a given time represents the maximum amount that the holder is then entitled to receive of principal from future cash flow on the assets in the related trust fund. | |||||
Unless the prospectus supplement provides otherwise, distributions of principal: | |||||||
● | will be made on each distribution date to the holders of the class or classes of certificates entitled to principal distributions, until the principal balances of those certificates have been reduced to zero; and | ||||||
● | will be made on a pro rata basis among all of the certificates of a given class or by random selection, as described in the prospectus supplement or otherwise established by the trustee. | ||||||
Stripped interest or interest-only certificates will not have a principal balance and will not receive distributions of principal. | |||||||
Advances | If the trust assets for a series of offered certificates include mortgage loans, then, as and to the extent described in the related prospectus supplement, the related master servicer, the related special servicer, the related trustee, any related provider of credit support and/or any other specified person may be obligated to make, or may have the option of making, advances with respect to those mortgage loans to cover— | ||||||
● | delinquent scheduled payments of principal and/or interest, other than balloon payments, | ||||||
● | property protection expenses, | ||||||
● | other servicing expenses, or | ||||||
● | any other items specified in the related prospectus supplement. | ||||||
Any party making advances will be entitled to reimbursement from subsequent recoveries on the related mortgage loan and as otherwise described in this prospectus or the related prospectus supplement. That party may also be entitled to receive interest on its advances for a specified period. See “Description of the Certificates—Advances.”. | |||||||
The master servicer: | |||||||
● | will be reimbursed for advances from subsequent recoveries from the delinquent mortgage loan or from other sources, as described in this prospectus and the related prospectus supplement; and | ||||||
● | will be entitled to interest on advances, if specified in the related prospectus supplement. | ||||||
If a particular trust fund includes commercial mortgage backed securities, the prospectus supplement will describe any advance obligations applicable to those commercial mortgage backed securities. | |||||||
Termination | The related prospectus supplement may provide for the optional early termination of the series of certificates through repurchase of the trust fund’s assets by a specified party, under specified circumstances. | ||||||
The related prospectus supplement may provide for the early termination of the series of certificates in various ways, including: | |||||||
● | optional early termination where a party identified in the prospectus supplement, which may be the master servicer or the special servicer, could repurchase the trust fund assets pursuant to circumstances specified in the prospectus supplement; and | ||||||
● | termination through the solicitation of bids for the sale of all or a portion of the trust fund assets in the event the principal amount of a specified class or classes declines by a specified percentage amount on or after a specified date. | ||||||
Registration of Certificates | If the related prospectus supplement so provides, one or more classes of the certificates being offered to you will initially be represented by one or more certificates registered in the name of Cede & Co., as the nominee of the Depository Trust Company. If the certificate you purchase is registered in the name of Cede & Co., you will not be entitled to receive a definitive certificate, except under the limited circumstances described in this prospectus. | ||||||
Tax Status of the Certificates | The certificates of each series will constitute either: | ||||||
● | regular interests and residual interests in a trust treated as a real estate mortgage investment conduit—known as a REMIC—under Sections 860A through 860G of the Internal Revenue Code; or | ||||||
● | interests in a trust treated as a grantor trust under applicable provisions of the Internal Revenue Code. | ||||||
A | REMIC | The regular certificates of the REMIC generally will be treated as debt obligations of the applicable REMIC for federal income tax purposes. Some of the regular certificates of the REMIC may be issued with original issue discount for federal income tax purposes. | |||||
A portion or, in certain cases, all of the income from REMIC residual certificates: | |||||||
● | may not be offset by any losses from other activities of the holder of those certificates; | ||||||
● | may be treated as unrelated business taxable income for holders of the residual certificates of the REMIC that are subject to tax on unrelated business taxable income, as defined in Section 511 of the Internal Revenue Code; and | ||||||
● | may be subject to U.S. withholding tax. | ||||||
To the extent described in this prospectus and the related prospectus supplement, the certificates offered to you will be treated as: | |||||||
● | assets described in section 7701(a)(19)(C) of the Internal Revenue Code; and | ||||||
● | “real estate assets” within the meaning of sections 856(c)(4)(A) and 856(c)(5)(B) of the Internal Revenue Code. | ||||||
B | Grantor Trust | If no election is made to treat the trust fund relating to a series of certificates as a REMIC, the trust fund will be classified as a grantor trust and not as an association taxable as a corporation for federal income tax purposes. If the trust fund is a grantor trust, you will generally be treated as an owner of an undivided pro rata interest in the mortgage pool or pool of securities and any other assets held by the trust fund, but if the related prospectus so specifies, you will be treated as an owner of only certain designated mortgages, securities, assets or portions thereof. In certain cases the certificates may represent interests in a portion of a trust fund as to which one or more REMIC elections, as described above, are also made. | |||||
Investors are advised to consult their tax advisors and to review“Federal Income Tax Consequences” in this prospectus and the related prospectus supplement. | |||||||
ERISA Considerations | If you are subject to Title I of the Employee Retirement Income Security Act of 1974, as amended—also known as ERISA, or Section 4975 of the Internal Revenue Code, you should carefully review with your legal advisors whether the purchase or holding of certificates could give rise to a transaction that is prohibited or is not otherwise permissible under either statute. | ||||||
In general, the related prospectus supplement will specify that some of the classes of certificates may not be transferred unless the trustee and Morgan Stanley Capital I Inc. receive a letter of representations or an opinion of counsel to the effect that: | |||||||
● | the transfer will not result in a violation of the prohibited transaction provisions of ERISA or the Internal Revenue Code; and | ||||||
● | the transfer will not subject any of the trustee, Morgan Stanley Capital I Inc. or any servicer to additional obligations. | ||||||
Legal Investment | The related prospectus supplement will specify whether any classes of the offered certificates will constitute “mortgage related securities” for purposes of the Secondary Mortgage Market Enhancement Act of 1984, as amended. If your investment activities are subject to legal investment laws and regulations, regulatory capital requirements, or review by regulatory authorities, then you may be subject to restrictions on investment in the offered certificates. You should consult your own legal advisors for assistance in determining the suitability of and consequences to you of the purchase, ownership, and the sale of the offered certificates. | ||||||
Rating | At the date of issuance, each class of certificates of each series that are offered to you will be rated not lower than investment grade by one or more nationally recognized statistical rating agencies. | ||||||
● | an absolute or partial prohibition against voluntary prepayments during some or all of the loan term, or |
● | a requirement that voluntary prepayments be accompanied by some form of prepayment premium, fee or charge during some or all of the loan term. |
● | the rate of prepayments and other unscheduled collections of principal on the mortgage loans being faster or slower than you anticipated, or |
● | the rate of defaults on the mortgage loans being faster, or the severity of losses on the mortgage loans being greater, than you anticipated. |
● | vary based on the occurrence of specified events, such as the retirement of one or more other classes of certificates of the same series, or |
● | be subject to various contingencies, such as prepayment and default rates with respect to the mortgage loans. |
● | the fair market value and condition of the underlying real property; |
● | the level of interest rates; |
● | the borrower’s equity in the underlying real property; |
● | the borrower’s financial condition; |
● | occupancy levels at or near the time of refinancing; |
● | the operating history of the underlying real property; |
● | changes in zoning and tax laws; |
● | changes in competition in the relevant area; |
● | changes in rental rates in the relevant area; |
● | changes in governmental regulation and fiscal policy; |
● | prevailing general and regional economic conditions; |
● | the state of the fixed income and mortgage markets; and |
● | the availability of credit for multifamily rental or commercial properties. |
● | The ratings do not assess the likelihood that you will receive timely payments on your certificates. |
● | The ratings do not assess the likelihood of prepayments, including those caused by defaults. |
● | The ratings do not assess the likelihood of early optional termination of the certificates. |
● | We cannot assure you that the historical data supporting the actuarial analysis will accurately reflect or predict the rate of delinquency, foreclosure or loss that will be experienced by the mortgage loans in a particular series. |
● | We cannot assure you that the appraised value of any property securing a mortgage loan in a particular series will remain stable throughout the life of your certificate. |
● | We cannot assure you that the real estate market will not experience an overall decline in property values nor can we assure you that the outstanding balance of any mortgage loan in a particular series will always be less than the market value of the property securing the mortgage loan. |
● | the sufficiency of the net operating income of the applicable real property; |
● | the market value of the applicable real property at or prior to maturity; and |
● | the ability of the related borrower to refinance or sell the applicable real property. |
● | the successful operation and value of the related mortgaged property, and |
● | the related borrower’s ability to refinance the mortgage loan or sell the related mortgaged property. |
● | the location, age, functionality, design and construction quality of the subject property; |
● | the lack of any operating history in the case of a newly built or renovated mortgaged property; |
● | perceptions regarding the safety, convenience and attractiveness of the property; |
● | the characteristics of the neighborhood where the property is located; |
● | the degree to which the subject property competes with other properties in the area; |
● | the proximity and attractiveness of competing properties; |
● | the existence and construction of competing properties; |
● | the adequacy of the property’s management and maintenance; |
● | tenant mix and concentration; |
● | national, regional or local economic conditions, including plant closings, industry slowdowns and unemployment rates; |
● | local real estate conditions, including an increase in or oversupply of comparable commercial or residential space; |
● | demographic factors; |
● | the dependence upon a single tenant or a concentration of tenants in a particular business or industry; |
● | customer confidence, tastes and preferences; |
● | retroactive changes in building codes and other applicable laws; |
● | changes in governmental rules, regulations and fiscal policies, including environmental legislation; and |
● | vulnerability to litigation by tenants and patrons. |
● | an increase in interest rates, real estate taxes and other operating expenses; |
● | an increase in the capital expenditures needed to maintain the property or make improvements; |
● | a decline in the financial condition of a major tenant and, in particular, a sole tenant or anchor tenant; |
● | an increase in vacancy rates; |
● | a decline in rental rates as leases are renewed or replaced; |
● | natural disasters and civil disturbances such as earthquakes, hurricanes, floods, eruptions, terrorist attacks or riots; and |
● | environmental contamination. |
● | the length of tenant leases; |
● | the creditworthiness of tenants; |
● | the level of tenant defaults; |
● | the rental rates at which leases are renewed or replaced; |
● | 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 maintain or replace tenants. |
● | to pay for maintenance and other operating expenses associated with the property; |
● | to fund repairs, replacements and capital improvements at the property; and |
● | to service mortgage loans secured by, and any other debt obligations associated with operating, the property. |
● | a general inability to lease space; |
● | an increase in vacancy rates, which may result from tenants deciding not to renew an existing lease or discontinuing operations; |
● | an increase in tenant payment defaults or any other inability to collect rental payments; |
● | a decline in rental rates as leases are entered into, renewed or extended at lower rates; |
● | an increase in the capital expenditures needed to maintain the property or to make improvements; |
● | a decline in the financial condition and/or bankruptcy or insolvency of a significant or sole tenant; and |
● | an increase in leasing costs and/or the costs of performing landlord obligations under existing leases. |
● | the business operated by the tenants; |
● | the creditworthiness of the tenants; and |
● | the number of tenants. |
● | the unpaid rent due under the lease, without acceleration, for the period prior to the filing of the bankruptcy petition or any earlier repossession by the landlord, or surrender by the tenant, of the leased premises, plus |
● | the rent reserved by the lease, without acceleration, for the greater of one year and 15%, not to exceed three years, of the term of the lease following the filing of the bankruptcy petition or any earlier repossession by the landlord, or surrender by the tenant, of the leased premises. |
● | changes in the local, regional or national economy; |
● | changes in interest rates; |
● | the availability of refinancing sources; |
● | changes in governmental regulations, licensing or fiscal policy; |
● | changes in zoning or tax laws; |
● | potential environmental or other legal liabilities; |
● | proximity and attractiveness of, and construction of, competing properties; |
● | convertibility of a property to an alternative use; and |
● | any increases in operating costs or capital expenditures needed to maintain the properties or make improvements. |
● | responding to changes in the local market; |
● | planning and implementing the rental structure, including staggering durations of leases and establishing levels of rent payments; |
● | operating the property and providing building services; |
● | managing operating expenses; and |
● | ensuring that maintenance and capital improvements are carried out in a timely fashion. |
● | maintain or improve occupancy rates, business and cash flow, |
● | reduce operating and repair costs, and |
● | preserve building value. |
● | rental rates; |
● | location; |
● | type of business or services and amenities offered; and |
● | nature and condition of the particular property. |
● | offers lower rents; |
● | has lower operating costs; |
● | offers a more favorable location; or |
● | offers better facilities. |
● | the physical attributes of the property, such as its age, appearance, amenities and construction quality, in relation to competing buildings; |
● | the types of services or amenities offered at the property; |
● | the location of the property; |
● | distance from employment centers and shopping areas; |
● | the characteristics of the surrounding neighborhood, which may change over time; |
● | the rents charged for dwelling units at the property relative to the rents charged for comparable units at competing properties; |
● | the ability of management to provide adequate maintenance and insurance; |
● | the property’s reputation; |
● | the level of mortgage interest rates, which may encourage tenants to purchase rather than lease housing; |
● | the existence or construction of competing or alternative residential properties in the local market, including other apartment buildings and complexes, manufactured housing communities, mobile home parks and single-family housing; |
● | compliance with and continuance of any government housing rental subsidy programs and/or low income housing tax credit or incentive programs from which the property receives benefits; |
● | the ability of management to respond to competition; |
● | the tenant mix and whether the property is primarily occupied by workers from a particular company or type of business, personnel from a local military base or students; |
● | in the case of student housing facilities, the reliance on the financial well-being of the college or university to which it relates, competition from on-campus housing units, and the relatively higher turnover rate compared to other types of multifamily tenants; |
● | adverse local, regional or national economic conditions, which may limit the amount that may be charged for rents and may result in a reduction in timely rent payments or a reduction in occupancy levels; |
● | local factory or other large employer closings; |
● | state and local regulations, which may affect the property owner’s ability to evict tenants or to increase rent to the market rent for an equivalent apartment; |
● | the extent to which the property is subject to land use restrictive covenants or contractual covenants that require that units be rented to low income tenants; |
● | the extent to which the cost of operating the property, including the cost of utilities and the cost of required capital expenditures, may increase; |
● | the extent to which increases in operating costs may be passed through to tenants; and |
● | the financial condition of the owner of the property. |
● | require written leases; |
● | require good cause for eviction; |
● | require disclosure of fees; |
● | prohibit unreasonable rules; |
● | prohibit retaliatory evictions; |
● | prohibit restrictions on a resident’s choice of unit vendors; |
● | limit the bases on which a landlord may increase rent; or |
● | prohibit a landlord from terminating a tenancy solely by reason of the sale of the owner’s building. |
● | fixed percentages, |
● | percentages of increases in the consumer price index, |
● | increases set or approved by a governmental agency, or |
● | increases determined through mediation or binding arbitration. |
● | mortgage loan payments, |
● | real property taxes, |
● | maintenance expenses, and |
● | other capital and ordinary expenses of the property. |
● | maintenance payments from the tenant/shareholders, and |
● | any rental income from units or commercial space that the cooperative corporation might control. |
● | the failure of the corporation to qualify for favorable tax treatment as a “cooperative housing corporation” each year, which may reduce the cash flow available to make debt service payments on a mortgage loan secured by cooperatively owned property; and |
● | the possibility that, upon foreclosure, if the cooperatively owned property becomes a rental property, certain units could be subject to rent control, stabilization and tenants’ rights laws, at below market rents, which may affect rental income levels and the marketability and sale proceeds of the ensuing rental property as a whole. |
● | shopping centers, |
● | factory outlet centers, |
● | malls, |
● | automotive sales and service centers, |
● | consumer oriented businesses, |
● | department stores, |
● | grocery stores, |
● | convenience stores, |
● | specialty shops, |
● | gas stations, |
● | movie theaters, |
● | fitness centers, |
● | bowling alleys, |
● | salons, and |
● | dry cleaners. |
● | the strength, stability, number and quality of the tenants; |
● | tenants’ sales; |
● | tenant mix; |
● | whether the property is in a desirable location; |
● | the physical condition and amenities of the building in relation to competing buildings; |
● | whether a retail property is anchored, shadow anchored or unanchored and, if anchored or shadow anchored, the strength, stability, quality and continuous occupancy of the anchor tenant or the shadow anchor, as the case may be, are particularly important factors; and |
● | the financial condition of the owner of the property. |
● | lower rents, |
● | grant a potential tenant a free rent or reduced rent period, |
● | improve the condition of the property generally, or |
● | make at its own expense, or grant a rent abatement to cover, tenant improvements for a potential tenant. |
● | competition from other retail properties; |
● | perceptions regarding the safety, convenience and attractiveness of the property; |
● | perceptions regarding the safety of the surrounding area; |
● | demographics of the surrounding area; |
● | the strength and stability of the local, regional and national economies; |
● | traffic patterns and access to major thoroughfares; |
● | the visibility of the property; |
● | availability of parking; |
● | the particular mixture of the goods and services offered at the property; |
● | customer tastes, preferences and spending patterns; and |
● | the drawing power of other tenants. |
● | an anchor tenant’s failure to renew its lease; |
● | termination of an anchor tenant’s lease; |
● | the bankruptcy or economic decline of an anchor tenant or a shadow anchor; |
● | the cessation of the business of a self-owned anchor or of an anchor tenant, notwithstanding its continued ownership of the previously occupied space or its continued payment of rent, as the case may be; or |
● | a loss of an anchor tenant’s ability to attract shoppers. |
● | factory outlet centers; |
● | discount shopping centers and clubs; |
● | catalogue retailers; |
● | home shopping networks and programs; |
● | internet web sites and electronic media shopping; and |
● | telemarketing. |
● | the strength, stability, number and quality of the tenants, particularly significant tenants, at the property; |
● | the physical attributes and amenities of the building in relation to competing buildings, including the condition of the HVAC system, parking and the building’s compatibility with current business wiring requirements; |
● | whether the area is a desirable business location, including local labor cost and quality, tax environment, including tax benefits, and quality of life issues, such as schools and cultural amenities; |
● | the location of the property with respect to the central business district or population centers; |
● | demographic trends within the metropolitan area to move away from or towards the central business district; |
● | social trends combined with space management trends, which may change towards options such as telecommuting or hoteling to satisfy space needs; |
● | tax incentives offered to businesses or property owners by cities or suburbs adjacent to or near where the building is located; |
● | local competitive conditions, such as the supply of office space or the existence or construction of new competitive office buildings; |
● | the quality and philosophy of building management; |
● | access to mass transportation; |
● | accessibility from surrounding highways/streets; |
● | changes in zoning laws; and |
● | the financial condition of the owner of the property. |
● | rental rates; |
● | the building’s age, condition and design, including floor sizes and layout; |
● | access to public transportation and availability of parking; and |
● | amenities offered to its tenants, including sophisticated building systems, such as fiber optic cables, satellite communications or other base building technological features. |
● | the cost and quality of labor; |
● | tax incentives; and |
● | quality of life considerations, such as schools and cultural amenities. |
● | full service hotels; |
● | resort hotels with many amenities; |
● | limited service hotels; |
● | hotels and motels associated with national or regional franchise chains; |
● | hotels that are not affiliated with any franchise chain but may have their own brand identity; and |
● | other lodging facilities. |
● | the location of the property and its proximity to major population centers or attractions; |
● | the seasonal nature of business at the property; |
● | the level of room rates relative to those charged by competitors; |
● | quality and perception of the franchise affiliation; |
● | economic conditions, either local, regional or national, which may limit the amount that can be charged for a room and may result in a reduction in occupancy levels; |
● | the existence or construction of competing hospitality properties; |
● | nature and quality of the services and facilities; |
● | financial strength and capabilities of the owner and operator; |
● | the need for continuing expenditures for modernizing, refurbishing and maintaining existing facilities; |
● | increases in operating costs, which may not be offset by increased room rates; |
● | the property’s dependence on business and commercial travelers and tourism; |
● | changes in travel patterns caused by changes in access, energy prices, labor strikes, relocation of highways, the reconstruction of additional highways or other factors; and |
● | changes in travel patterns caused by perceptions of travel safety, which perceptions can be significantly and adversely influenced by terrorist acts and foreign conflict as well as apprehension regarding the possibility of such acts or conflicts. |
● | the continued existence and financial strength of the franchisor; |
● | the public perception of the franchise service mark; and |
● | the duration of the franchise licensing agreement. |
● | location, including proximity to or easy access from major population centers; |
● | appearance; |
● | economic conditions, either local, regional or national, which may limit the amount of disposable income that potential patrons may have for gambling; |
● | the existence or construction of competing casinos; |
● | dependence on tourism; and |
● | local or state governmental regulation. |
● | providing alternate forms of entertainment, such as performers and sporting events, and |
● | offering low-priced or free food and lodging. |
● | hospitals; |
● | medical offices; |
● | skilled nursing facilities; |
● | nursing homes; |
● | congregate care facilities; and |
● | in some cases, assisted living centers and housing for seniors. |
● | statutory and regulatory changes; |
● | retroactive rate adjustments; |
● | administrative rulings; |
● | policy interpretations; |
● | delays by fiscal intermediaries; and |
● | government funding restrictions. |
● | federal and state licensing requirements; |
● | facility inspections; |
● | rate setting; |
● | disruptions in payments; |
● | reimbursement policies; |
● | audits, which may result in recoupment of payments made or withholding of payments due; |
● | laws relating to the adequacy of medical care, distribution of pharmaceuticals, use of equipment, personnel operating policies and maintenance of and additions to facilities and services; |
● | patient care liability claims, including those generated by the recent advent of the use of video surveillance, or “granny cams”, by family members or government prosecutors to monitor care and limited availability and increased costs of insurance; and |
● | shortages in staffing, increases in labor costs and labor disputes. |
● | location of the property, the desirability of which in a particular instance may depend on— |
(1) | availability of labor services, |
(2) | proximity to supply sources and customers, and |
(3) | accessibility to various modes of transportation and shipping, including railways, roadways, airline terminals and ports; |
● | building design of the property, the desirability of which in a particular instance may depend on— |
(1) | ceiling heights, |
(2) | column spacing, |
(3) | number and depth of loading bays, |
(4) | divisibility, |
(5) | floor loading capacities, |
(6) | truck turning radius, |
(7) | overall functionality, and |
(8) | adaptability of the property, because industrial tenants often need space that is acceptable for highly specialized activities; and |
● | the quality and creditworthiness of individual tenants, because industrial properties frequently have higher tenant concentrations. |
● | building design, |
● | location and visibility, |
● | tenant privacy, |
● | efficient access to the property, |
● | proximity to potential users, including apartment complexes or commercial users, |
● | services provided at the property, such as security, |
● | age and appearance of the improvements, and |
● | quality of management. |
● | competition from facilities having businesses similar to a particular restaurant or tavern; |
● | perceptions by prospective customers of safety, convenience, services and attractiveness; |
● | the cost, quality and availability of food and beverage products; |
● | negative publicity, resulting from instances of food contamination, food-borne illness and similar events; |
● | changes in demographics, consumer habits and traffic patterns; |
● | the ability to provide or contract for capable management; and |
● | retroactive changes to building codes, similar ordinances and other legal requirements. |
● | market segment, |
● | product, |
● | price, |
● | value, |
● | quality, |
● | service, |
● | convenience, |
● | location, and |
● | the nature and condition of the restaurant facility. |
● | lower operating costs, |
● | more favorable locations, |
● | more effective marketing, |
● | more efficient operations, or |
● | better facilities. |
● | actions and omissions of any franchisor, including management practices that— |
(1) | adversely affect the nature of the business, or |
(2) | require renovation, refurbishment, expansion or other expenditures; |
● | the degree of support provided or arranged by the franchisor, including its franchisee organizations and third-party providers of products or services; and |
● | the bankruptcy or business discontinuation of the franchisor or any of its franchisee organizations or third-party providers. |
● | location of the manufactured housing property; |
● | the ability of management to provide adequate maintenance and insurance; |
● | the number of comparable competing properties in the local market; |
● | the age, appearance, condition and reputation of the property; |
● | the quality of management; and |
● | the types of facilities and services it provides. |
● | multifamily rental properties, |
● | cooperatively-owned apartment buildings, |
● | condominium complexes, and |
● | single-family residential developments. |
● | fixed percentages, |
● | percentages of increases in the consumer price index, |
● | increases set or approved by a governmental agency, or |
● | increases determined through mediation or binding arbitration. |
● | the location and appearance of the property; |
● | the appeal of the recreational activities offered; |
● | the existence or construction of competing properties, whether or not they offer the same activities; |
● | the need to make capital expenditures to maintain, refurbish, improve and/or expand facilities in order to attract potential patrons; |
● | geographic location and dependence on tourism; |
● | changes in travel patterns caused by changes in energy prices, strikes, location of highways, construction of additional highways and similar factors; |
● | seasonality of the business, which may cause periodic fluctuations in operating revenues and expenses; |
● | sensitivity to weather and climate changes; and |
● | local, regional and national economic conditions. |
● | sporting events; |
● | musical events; |
● | theatrical events; |
● | animal shows; and/or |
● | circuses. |
● | the appeal of the particular event; |
● | the cost of admission; |
● | perceptions by prospective patrons of the safety, convenience, services and attractiveness of the arena or stadium; |
● | perceptions by prospective patrons of the safety of the surrounding area; and |
● | the alternative forms of entertainment available in the particular locale. |
● | the number of rentable parking spaces and rates charged; |
● | the location of the lot or garage and, in particular, its proximity to places where large numbers of people work, shop or live; |
● | the amount of alternative parking spaces in the area; |
● | the availability of mass transit; and |
● | the perceptions of the safety, convenience and services of the lot or garage. |
● | its location, |
● | its size, |
● | the surrounding neighborhood, and |
● | local zoning laws. |
● | the successful operation of the property, and |
● | its ability to generate income sufficient to make payments on the loan. |
● | the amount of income derived or expected to be derived from the related real property collateral for a twelve-month period that is available to pay debt service on the subject mortgage loan, to |
● | the annualized payments of principal and/or interest on the subject mortgage loan and any other senior and/or pari passu loans that are secured by the related real property collateral. |
● | make the loan payments on the related mortgage loan, |
● | cover operating expenses, and |
● | fund capital improvements at any given time. |
● | some health care-related facilities, |
● | hotels and motels, |
● | recreational vehicle parks, and |
● | mini-warehouse and self-storage facilities, |
● | warehouses, |
● | retail stores, |
● | office buildings, and |
● | industrial facilities. |
● | increases in energy costs and labor costs; |
● | increases in interest rates and real estate tax rates; and |
● | changes in governmental rules, regulations and fiscal policies. |
● | the then outstanding principal balance of the mortgage loan and any other senior and/or pari passu loans that are secured by the related real property collateral, to |
● | the estimated value of the related real property based on an appraisal, a cash flow analysis, a recent sales price or another method or benchmark of valuation. |
● | the borrower has a greater incentive to perform under the terms of the related mortgage loan in order to protect that equity, and |
● | the lender has greater protection against loss on liquidation following a borrower default. |
● | the market comparison method, which takes into account the recent resale value of comparable properties at the date of the appraisal; |
● | the cost replacement method, which takes into account the cost of replacing the property at the date of the appraisal; |
● | the income capitalization method, which takes into account the property’s projected net cash flow; or |
● | a selection from the values derived from the foregoing methods. |
● | 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. |
● | the operation of all of the related real properties, and |
● | the ability of those properties to produce sufficient cash flow to make required payments on the related mortgage loans. |
● | any adverse economic developments that occur in the locale, state or region where the properties are located; |
● | changes in the real estate market where the properties are located; |
● | changes in governmental rules and fiscal policies in the governmental jurisdiction where the properties are located; and |
● | acts of nature, including floods, tornadoes and earthquakes, in the areas where properties are located. |
● | operating entities with businesses distinct from the operation of the property with the associated liabilities and risks of operating an ongoing business; and |
● | individuals that have personal liabilities unrelated to the property. |
● | grant a debtor a reasonable time to cure a payment default on a mortgage loan; |
● | reduce monthly payments due under a mortgage loan; |
● | change the rate of interest due on a mortgage loan; or |
● | otherwise alter a mortgage loan’s repayment schedule. |
● | as to the degree of environmental testing conducted at any of the real properties securing the mortgage loans that back your offered certificates; |
● | that the environmental testing conducted by or on behalf of the applicable originators or any other parties in connection with the origination of those mortgage loans or otherwise identified all adverse environmental conditions and risks at the related real properties; |
● | that the results of the environmental testing were accurately evaluated in all cases; |
● | that the related borrowers have implemented or will implement all operations and maintenance plans and other remedial actions recommended by any environmental consultant that may have conducted testing at the related real properties; or |
● | that the recommended action will fully remediate or otherwise address all the identified adverse environmental conditions and risks. |
● | tenants at the property, such as gasoline stations or dry cleaners, or |
● | conditions or operations in the vicinity of the property, such as leaking underground storage tanks at another property nearby. |
● | agents or employees of the lender are deemed to have participated in the management of the borrower, or |
● | the lender actually takes possession of a borrower’s property or control of its day-to-day operations, including through the appointment of a receiver or foreclosure. |
● | to disclose to potential residents or purchasers information in their possession regarding the presence of known lead-based paint or lead-based paint-related hazards in such housing, and |
● | to deliver to potential residents or purchasers a United States Environmental Protection Agency approved information pamphlet describing the potential hazards to pregnant women and young children, including that the ingestion of lead-based paint chips and/or the inhalation of dust particles from lead-based paint by children can cause permanent injury, even at low levels of exposure. |
● | the related borrower’s interest in a commercial condominium unit or multiple units in a residential condominium project, and |
● | the related voting rights in the owners’ association for the subject building, development or project. |
● | the bankrupt party— |
(1) | was insolvent at the time of granting the lien, |
(2) | was rendered insolvent by the granting of the lien, |
(3) | was left with inadequate capital, or |
(4) | was not able to pay its debts as they matured; and |
● | the bankrupt party did not, when it allowed its property to be encumbered by a lien securing the other borrower’s loan, receive fair consideration or reasonably equivalent value for pledging its property for the equal benefit of the other borrower. |
● | Some courts may consider the prepayment premium to be usurious. |
● | Even if the prepayment premium is enforceable, we cannot assure you that foreclosure proceeds will be sufficient to pay the prepayment premium. |
● | Although the collateral substitution provisions related to defeasance are not supposed to be treated as a prepayment and should not affect your certificates, we cannot assure you that a court will not interpret the defeasance provisions as requiring a prepayment premium; nor can we assure you that if it is treated as a prepayment premium, the court will find the defeasance income stream enforceable. |
● | the related real property, or |
● | a majority ownership interest in the related borrower. |
● | the default is deemed to be immaterial, |
● | the exercise of those remedies would be inequitable or unjust, or |
● | the circumstances would render the acceleration unconscionable. |
● | grants any such other mortgage lender cure rights and/or a purchase option with respect to the subject mortgage loan under certain default scenarios or reasonably foreseeable default scenarios; |
● | limits modifications of the payment terms of the subject mortgage loan; and/or |
● | limits or delays enforcement actions with respect to the subject mortgage loan. |
● | grants the mezzanine lender cure rights and/or a purchase option with respect to the subject mortgage loan under certain default scenarios or reasonably foreseeable default scenarios; |
● | limits modifications of payment terms of the subject mortgage loan; and/or |
● | limits or delays enforcement actions with respect to the subject mortgage loan. |
● | war, |
● | riot, strike and civil commotion, |
● | terrorism, |
● | nuclear, biological or chemical materials, |
● | revolution, |
● | governmental actions, |
● | floods and other water-related causes, |
● | earth movement, including earthquakes, landslides and mudflows, |
● | wet or dry rot, |
● | mold, |
● | vermin, and |
● | domestic animals. |
● | breach of contract involving a tenant, a supplier or other party; |
● | negligence resulting in a personal injury, or |
● | responsibility for an environmental problem. |
● | the real properties may be managed by property managers that are affiliated with the related borrowers; |
● | the property managers also may manage additional properties, including properties that may compete with those real properties; or |
● | affiliates of the property managers and/or the borrowers, or the property managers and/or the borrowers themselves, also may own other properties, including properties that may compete with those real properties. |
● | there may not be a secondary market for the certificates; |
● | there will be no obligation on the part of anyone to establish a secondary market; |
● | if a secondary market develops, we cannot assure you that it will continue or will provide you with the liquidity of investment you may have anticipated. Lack of liquidity could result in a substantial decrease in the market value of your certificates; |
● | the market value of your certificates will fluctuate with changes in interest rates; |
● | the secondary market for certificates backed by residential mortgages may be more liquid than the secondary market for certificates backed by multifamily and commercial mortgages so if your liquidity assumptions were based on the secondary market for certificates backed by residential mortgages, your assumptions may not be correct; |
● | furthermore, a particular investor or a few investors may acquire a substantial portion of a given class of offered certificates, thereby limiting trading in that class; |
● | certificateholders have no redemption rights; and |
● | secondary market purchasers are limited to this prospectus, the related prospectus supplement and to the reports delivered to certificateholders for information concerning the certificates. |
● | the availability of alternative investments that offer higher yields or are perceived as being a better credit risk, having a less volatile market value or being more liquid, |
● | legal and other restrictions that prohibit a particular entity from investing in commercial mortgage-backed securities or limit the amount or types of commercial mortgage-backed securities that it may acquire, |
● | investors’ perceptions regarding the commercial and multifamily real estate markets, which may be adversely affected by, among other things, a decline in real estate values or an increase in defaults and foreclosures on mortgage loans secured by income-producing properties, |
● | investors’ perceptions regarding credit, liquidity and the capital markets in general, which may be adversely affected by political, social and economic events completely unrelated to the commercial and multifamily real estate markets, and |
● | the impact on demand generally for commercial mortgage-backed securities as a result of the existence or cancellation of government-sponsored economic programs. |
● | the payment priorities of the respective classes of the certificates of the same series, |
● | the order in which the principal balances of the respective classes of the certificates of the same series with balances will be reduced in connection with losses and default-related shortfalls, and |
● | the characteristics and quality of the mortgage loans in the related trust. |
● | the liquidity of book-entry certificates in any secondary trading market that may develop may be limited because investors may be unwilling to purchase certificates for which they cannot obtain physical certificates; |
● | you will be able to exercise your rights as a certificateholder only indirectly through the Depository Trust Company and its participating organizations; |
● | you will not be recognized by the trustee as a certificateholder; |
● | 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; |
● | you may suffer delays in the receipt of payments on your offered certificates; and |
● | your ability to pledge or otherwise take action with respect to your offered certificates may be limited due to the lack of a physical certificate evidencing your ownership of those certificates. |
● | any net income from that operation and management that does not consist of qualifying rents from real property within the meaning of Section 856(d) of the Internal Revenue Code of 1986, and |
● | any rental income based on the net profits of a tenant or sub-tenant or allocable to a service that is non-customary in the area and for the type of building involved. |
● | generally will not be reduced by losses from other activities, |
● | for a tax-exempt holder, will be treated as unrelated business taxable income, and |
● | for a foreign holder, will not qualify for any exemption from withholding tax. |
● | individuals, |
● | estates, |
● | trusts beneficially owned by any individual or estate, and |
● | pass-through entities having any individual, estate or trust as a shareholder, member or partner. |
● | a foreign person under the Internal Revenue Code of 1986, or |
● | a U.S. person that is classified as a partnership under the Internal Revenue Code of 1986, unless all of its beneficial owners are U.S. persons, or |
● | a foreign permanent establishment or fixed base (within the meaning of an applicable income tax treaty) of a U.S. person. |
● | multifamily mortgage loans, commercial mortgage loans or both; |
● | commercial mortgage pass-through certificates or other commercial mortgage-backed securities evidencing interests in or secured by one or more mortgage loans or other similar certificates or securities; |
● | direct obligations of the United States, agencies of the United States or agencies created by government entities which are not subject to redemption prior to maturity at the option of the issuer and are (a) interest-bearing securities, (b) non-interest-bearing securities, (c) originally interest-bearing securities from which coupons representing the right to payment of interest have been removed, or (d) interest-bearing securities from which the right to payment of principal has been removed; or |
● | a combination of mortgage loans, commercial mortgage backed securities and government securities. |
● | rental or cooperatively-owned buildings with multiple dwelling units; |
● | retail properties related to the sale of consumer goods and other products to the general public, such as shopping centers, malls, factory outlet centers, automotive sales centers, department stores and other retail stores, grocery stores, specialty shops, convenience stores and gas stations; |
● | retail properties related to providing entertainment, recreational and personal services to the general public, such as movie theaters, fitness centers, bowling alleys, salons, dry cleaners and automotive service centers; |
● | office properties; |
● | hospitality properties, such as hotels, motels and other lodging facilities; |
● | casino properties; |
● | health care-related properties, such as hospitals, skilled nursing facilities, nursing homes, congregate care facilities and, in some cases, assisted living centers and senior housing; |
● | industrial properties; |
● | warehouse facilities, mini-warehouse facilities and self-storage facilities; |
● | restaurants, taverns and other establishments involved in the food and beverage industry; |
● | manufactured housing communities, mobile home parks and recreational vehicle parks; |
● | recreational and resort properties, such as golf courses, marinas, ski resorts and amusement parks; |
● | arenas and stadiums; |
● | churches and other religious facilities; |
● | parking lots and garages; |
● | mixed use properties; |
● | other income-producing properties; and |
● | unimproved land. |
● | non-cash items such as depreciation and amortization; |
● | capital expenditures; and |
● | debt service on loans secured by the mortgaged property. |
● | the recent resale value of comparable properties at the date of the appraisal; |
● | the cost of replacing the property; |
● | a projection of value based upon the property’s projected net cash flow; or |
● | a selection from or interpolation of the values derived from the methods listed here. |
● | 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; |
● | income capitalization is inherently based on inexact projections of income and expense and the selection of an appropriate capitalization rate; |
● | more than one of the appraisal methods may be used and each may produce significantly different results; and |
● | if a high Loan-to-Value Ratio accompanies a high Debt Service Coverage Ratio or vice versa, the analysis of default and loss risks is difficult. |
● | the appraised value determined in an appraisal obtained by the originator at origination of that loan and |
● | the sales price for that property. |
● | the aggregate outstanding principal balance and the largest, smallest and average outstanding principal balance of the mortgage loans, unless the related prospectus supplement provides otherwise, the close of business on the Cut-off Date, which is a day of the month of formation of the related trust fund, as designated in the prospectus supplement; |
● | the type of property securing the mortgage loans, e.g., multifamily property or commercial property and the type of property in each category; |
● | the weighted average, by principal balance, of the original and remaining terms to maturity of the mortgage loans; |
● | the earliest and latest origination date and maturity date of the mortgage loans; |
● | the weighted average, by principal balance, of the Loan-to-Value Ratios at origination of the mortgage loans; |
● | the mortgage rates or range of mortgage rates and the weighted average mortgage rate borne by the mortgage loans; |
● | the state or states in which most of the mortgaged properties are located; |
● | information with respect to the prepayment provisions, if any, of the mortgage loans; |
● | the weighted average Retained Interest, if any; |
● | with respect to mortgage loans with adjustable mortgage rates, the Index, the frequency of the adjustment dates, the highest, lowest and weighted average note margin and pass-through margin, and the maximum mortgage rate or monthly payment variation at the time of any adjustment thereof and over the life of the adjustable rate loan and the frequency of monthly payment adjustments; |
● | the Debt Service Coverage Ratio either at origination or as of a more recent date, or both; and |
● | information regarding the payment characteristics of the mortgage loans, including without limitation balloon payment and other amortization provisions. |
● | have original terms to maturity of not more than 40 years; and |
● | provide for payments of principal, interest or both, on due dates that occur monthly, quarterly or semi-annually or at another interval as specified in the related prospectus supplement. |
● | the aggregate approximate initial and outstanding principal amount or Notional Amount, as applicable, and type of the CMBS to be included in the trust fund; |
● | the original and remaining term to stated maturity of the CMBS, if applicable; |
● | whether the CMBS is entitled only to interest payments, only to principal payments or to both; |
● | the pass-through or bond rate of the CMBS or formula for determining the rates, if any; |
● | the applicable payment provisions for the CMBS, including, but not limited to, any priorities, payment schedules and subordination features; |
● | the CMBS issuer, CMBS servicer and CMBS trustee, as applicable; |
● | characteristics of the credit support, if any, such as subordination, reserve funds, insurance policies, letters of credit or guarantees relating to the related underlying mortgage loans, the underlying CMBS or directly to the CMBS; |
● | the terms on which the CMBS or the related underlying mortgage loans or underlying CMBS may, or are required to, be purchased prior to their maturity; |
● | the terms on which mortgage loans or underlying CMBS may be substituted for those originally underlying the CMBS; |
● | the servicing fees payable under the CMBS servicing agreement, pooling agreement, trust agreement, indenture or similar agreement; |
● | the type of information in respect of the underlying mortgage loans described under“—Mortgage Loans—Mortgage Loan Information in Prospectus Supplements” above, and the type of information in respect of the underlying CMBS described in this paragraph; |
● | the characteristics of any cash flow agreements that are included as part of the trust fund evidenced or secured by the CMBS; |
● | whether the CMBS is in certificated form, book-entry form or held through a depository such as The Depository Trust Company or the Participants Trust Company; |
● | the market price of the CMBS and the basis on which the market price was determined; and |
● | if the issuer of the CMBS is required to file reports under the Exchange Act of 1934, as amended, how to locate the reports of the CMBS issuer. |
● | the term or duration of the prefunding period; |
● | the amount of proceeds to be deposited in the prefunding account and the percentage of the mortgage asset pool represented by those proceeds; |
● | triggers or events that would trigger limits on or terminate the prefunding period and the effects of such triggers; |
● | when and how new mortgage assets may be acquired during the prefunding period, and any limitation on the ability to add mortgage assets; |
● | the acquisition or underwriting criteria for additional mortgage assets to be acquired during the prefunding period; |
● | which party has the authority to add mortgage assets or determine if proposed additional mortgage assets meet the acquisition or underwriting criteria for adding mortgage assets; |
● | any requirements to add minimum amounts of mortgage assets and any effects of not meeting those requirements; |
● | if applicable, the procedures and standards for the temporary investment of funds in the prefunding account pending use and a description of the financial products or instruments eligible for the prefunding account; and |
● | the circumstances under which funds in a prefunding account will be distributed to certificateholders or otherwise disposed of. |
● | cash that would be applied to pay down the principal balances of the certificates of that series; and/or |
● | other mortgage loans or commercial mortgage-backed securities that— |
(1) | conform to the description of mortgage assets in this prospectus, and |
(2) | satisfy the criteria set forth in the related prospectus supplement. |
● | the aggregate approximate initial and outstanding principal amounts or Notional Amounts, as applicable, and types of the government securities to be included in the trust fund; |
● | the original and remaining terms to stated maturity of the government securities; |
● | whether the government securities are entitled only to interest payments, only to principal payments or to both; |
● | the interest rates of the government securities or the formula to determine the rates, if any; |
● | the applicable payment provisions for the government securities; and |
● | to what extent, if any, the obligation evidenced by the related series of certificates is backed by the full faith and credit of the United States. |
● | the pass-through rate for each class of certificates or, in the case of a variable or adjustable pass-through rate, the method of determining the pass-through rate; |
● | the effect, if any, of the prepayment of any mortgage loan or CMBS on the pass-through rate of one or more classes of certificates; and |
● | whether the distributions of interest on the certificates of any class will be dependent, in whole or in part, on the performance of any obligor under a Cash Flow Agreement. |
● | will correspond to the rate of principal payments on the assets in the related trust fund; |
● | is likely to be affected by the existence of Lockout Periods and Prepayment Premium provisions of the mortgage loans underlying or comprising the assets; and |
● | is likely to be affected to the extent the servicer of any mortgage loan is able to enforce the Lockout Period and Prepayment Premium provisions. |
● | provide for the accrual of interest thereon based on fixed, floating, variable or adjustable rates; |
● | be senior or subordinate to one or more other classes of certificates in respect of distributions on the certificates; |
● | be entitled to principal distributions, with disproportionately low, nominal or no interest distributions; |
● | be entitled to interest distributions, with disproportionately low, nominal or no principal distributions; |
● | provide for distributions of accrued interest thereon commencing only following the occurrence of events, such as the retirement of one or more other classes of certificates of the series; |
● | provide for payments of interest and/or principal sequentially, based on specified payment schedules, from only a portion of the assets in the trust fund or based on specified calculations, to the extent of available funds, in each case as described in the related prospectus supplement; |
● | provide for distributions based on a combination of two or more components thereof with one or more of the characteristics described in this paragraph including a Stripped Principal Certificate component and a Stripped Interest Certificate component; or |
● | do all or any combination of the above. |
(1) | the total amount of all cash on deposit in the related Certificate Account as of the corresponding Determination Date,exclusive of: |
● | all scheduled payments of principal and interest collected but due on a date subsequent to the related Due Period; |
● | unless the related prospectus supplement provides otherwise, all prepayments, together with related payments of the interest thereon and related prepayment premiums, Liquidation Proceeds, Insurance Proceeds and other unscheduled recoveries received subsequent to the related Due Period; and |
● | all amounts in the Certificate Account that are due or reimbursable to Morgan Stanley Capital I Inc., the trustee, an asset seller, a subservicer, a special servicer, the master servicer or any other entity as specified in the related prospectus supplement or that are payable in respect of certain expenses of the related trust fund; |
(2) | if the related prospectus supplement so provides, interest or investment income on amounts on deposit in the Certificate Account, including any net amounts paid under any Cash Flow Agreements; |
(3) | all advances made by a master servicer or any other entity as specified in the related prospectus supplement with respect to the Distribution Date; |
(4) | if and to the extent the related prospectus supplement so provides, amounts paid by a master servicer or any other entity as specified in the related prospectus supplement with respect to interest shortfalls resulting from prepayments during the related Prepayment Period; and |
(5) | if the related prospectus supplement so provides, to the extent not on deposit in the related Certificate Account as of the corresponding Determination Date, any amounts collected under, from or in respect of any Credit Support with respect to the Distribution Date. |
● | “LIBOR Determination Date” means, for each accrual period, the second business day before the beginning of that accrual period unless another day is specified in the related prospectus supplement. |
● | “Reuters Screen LIBOR01 Page” means the display on the Reuters service, or any successor service, on the page designated as “LIBOR01” or any replacement page or pages on which London interbank rates of major banks for the relevant index currency are displayed. |
● | “Reference Banks” means four major banks in the London interbank market selected by the trustee, the paying agent or another person performing similar functions. |
● | If the rate described above is not published in H.15(519) by 3:00 p.m., New York City time, on that interest determination date, unless the calculation is made earlier and the rate was available from that source at that time, then the commercial paper rate will be the bond equivalent yield of the rate on the relevant interest determination date, for commercial paper having a similar index maturity, as published in H.15 Daily Update or any other recognized electronic source used for displaying that rate under the heading “Commercial Paper—Financial”. The “Bond Equivalent Yield” will be calculated as follows: |
● | If the rate described in the prior paragraph cannot be determined, the Commercial Paper Rate will remain the commercial paper rate then in effect on that interest determination date. |
● | The Commercial Paper Rate will be subject to a lock-in period of six New York City business days. |
● | If the Designated CMT Reuters Page is the Reuters Screen FRBCMT Page, the rate on that interest determination date; or |
● | If the Designated CMT Reuters Page is the Reuters Screen FEDCMT Page, the average for the month ended immediately before the week in which the related interest determination date occurs. |
● | “Designated CMT Reuters Page” means the Reuters page specified in the applicable prospectus supplement that displays treasury constant maturities as reported in H.15 (519). If no Reuters page is so specified, then the applicable page will be the Reuters Screen FEDCMT Page. If the Reuters Screen FEDCMT Page applies but the applicable prospectus supplement does not specify whether the weekly or monthly average applies, the weekly average will apply. |
● | “Reuters Screen FEDCMT page” means the display on the Reuters service, or any successor service, on the page designated as “FEDCMT” or any replacement page or pages on which CMT Rates are displayed. |
● | “Reuters Screen FRBCMT Page” means the display on the Reuters service, or any successor service, on the page designated as “FRBCMT” or any replacement page or pages on which CMT Rates are displayed. |
● | If the rate described above is not displayed on the relevant page by 3:00 p.m., New York City time on that interest determination date, unless the calculation is made earlier and the rate is available from that source at that time on that interest determination date, then the CMT Rate will be the Treasury constant maturity rate having the designated index maturity, as published in H.15(519) or another recognized electronic source for displaying the rate. |
● | If the applicable rate described above is not published in H.15(519) or another recognized electronic source for displaying such rate by 3:00 p.m., New York City time on that interest determination date, unless the calculation is made earlier and the rate is available from one of those sources at that time, then the CMT Rate will be the Treasury constant maturity rate, or other United States Treasury rate, for the index maturity and with reference to the relevant interest determination date, that is published by either the Board of Governors of the Federal Reserve System or the United States Department of the Treasury and that the trustee, the paying agent or another person performing similar functions determines to be comparable to the rate formerly displayed on the Designated CMT Reuters Page shown above and published in H.15(519). |
● | If the rate described in the prior paragraph cannot be determined, then the CMT Rate will be determined to be a yield to maturity based on the average of the secondary market closing offered rates as of approximately 3:30 p.m., New York City time, on the relevant interest determination date reported, according to their written records, by leading primary United States government securities dealers in New York City. The trustee, the paying agent or another person performing similar functions will select five such securities dealers and will eliminate the highest and lowest quotations or, in the event of equality, one of the highest and lowest quotations, for the most recently issued direct nonmalleable fixed rate obligations of the United States Treasury (“Treasury Notes”) with an original maturity of approximately the designated index maturity and a remaining term to maturity of not less than the designated index maturity minus one year in a representative amount. |
● | If three Treasury Note quotations of the kind described in the prior paragraph cannot be obtained, the CMT Rate will be determined to be the yield to maturity based on the average of the secondary market bid rates for Treasury Notes with an original maturity longer than the designated CMT index maturity which have a remaining term to maturity closest to the |
designated CMT index maturity and in a representative amount, as of approximately 3:30 p.m., New York City time, on the relevant interest determination date of leading primary United States government securities dealers in New York City. In selecting these offered rates, the trustee, the paying agent or another person performing similar functions will request quotations from at least five such securities dealers and will disregard the highest quotation (or if there is equality, one of the highest) and the lowest quotation (or if there is equality, one of the lowest). If two Treasury Notes with an original maturitylonger than the designated CMT index maturity have remaining terms to maturity that are equally close to the designated CMT index maturity, quotations will be obtained for the Treasury Note with the shorter remaining term to maturity. |
● | If three or four but not five leading primary United States government securities dealers are quoting as described in the prior paragraph, then the CMT Rate for the relevant interest determination date will be based on the average of the bid rates obtained and neither the highest nor the lowest of those quotations will be eliminated. |
● | If fewer than three of the selected leading primary United States government securities dealers selected are quoting as described above, the CMT Rate will remain the CMT Rate then in effect on that interest determination date. |
● | If the rate described above does not appear on Reuters Screen FEDFUNDS1 Page or is not yet published in H.15(519) by 3:00 p.m., New York City time, on that interest determination date, unless the calculation is made earlier and the rate was available from that source at that time, then the Federal funds rate for the relevant interest determination date will be the rate described above in H.15 Daily Update, or any other recognized electronic source used for the purpose of displaying such rate, opposite the heading “Federal Funds (Effective)”. |
● | If the rate described above does not appear on Reuters Screen FEDFUNDS1 Page or is not yet published in H.15(519), H.15 Daily Update or another recognized electronic source for displaying such rate by 3:00 p.m., New York City time, on that interest determination date, the Federal Funds Rate for that interest determination date will be the arithmetic mean of the rates for the last transaction in overnight U.S. Dollar Federal funds arranged by three leading brokers of Federal Funds transactions in New York City, selected by the trustee, the paying agent or another person performing similar functions, on that interest determination date. |
● | If fewer than three of the selected brokers are quoting as described above, the Federal Funds Rate will remain the Federal Funds Rate then in effect on the relevant interest determination date. |
● | If the rate described above is not published in H.15(519) prior to 3:00 p.m., New York City time, on the relevant interest determination date, unless the calculation is made earlier and the rate was available from that source at that time, then the Prime Rate will be the rate for that interest determination date, as published in H.15 Daily Update or another recognized electronic source for displaying such rate opposite the caption “Bank Prime Loan.” |
● | If the above rate is not published in either H.15(519), H.15 Daily Update or another recognized electronic source for displaying such rate by 3:00 p.m., New York City time, on the relevant interest determination date, then the trustee, the paying agent or another person performing similar functions will determine the Prime Rate to be the average of the rates of interest publicly announced by each bank that appears on the display on the Reuters service, or any successor service, on the page designated “US PRIME 1” or any replacement page or pages on which prime rates or base lending rates of major U.S. banks are displayed (the “Reuters Screen US PRIME 1 Page”), as that bank’s prime rate or base lending rate as in effect on that interest determination date. |
● | If fewer than four rates appear on the Reuters Screen US PRIME 1 Page on the relevant interest determination date, then the Prime Rate will be the average of the prime rates or base lending rates quoted, on the basis of the actual number of days in the |
year divided by a 360-day year, as of the close of business on that interest determination date by three major banks in New York City selected by the trustee, the paying agent or another person performing similar functions. |
● | If the selected banks are not quoting as mentioned above, the Prime Rate will remain the prime rate then in effect on that interest determination date. |
● | the final payment or other liquidation of the last asset subject thereto or the disposition of all property acquired upon foreclosure of any mortgage loan in the trust fund subject thereto and |
● | the purchase of all of the assets of the trust fund by the party entitled to effect the termination, under the circumstances and in the manner set forth in the related prospectus supplement. |
● | DTC notifies Morgan Stanley Capital I Inc. and the certificate registrar in writing that DTC is unwilling or unable to continue as depositary for the certificates and a qualifying successor depositary is not appointed by Morgan Stanley Capital I Inc. within ninety (90) days of such notification; or |
● | the trustee has instituted or has been directed to institute any judicial proceeding in a court to enforce the rights of the certificateholders under the pooling and servicing agreement and under such book-entry certificate and the trustee has been advised by counsel that in connection with such proceeding it is necessary or appropriate for the trustee or its custodian to obtain possession of such book-entry certificate. |
● | the aggregate principal balance of the exchangeable certificates received in the exchange, immediately after the exchange, must equal the aggregate principal balance, immediately prior to the exchange, of the related exchangeable certificates (for purposes of this condition, an interest-only class will have a principal balance of zero); |
● | the aggregate amount of interest payable on any distribution date with respect to the exchangeable certificates received in the exchange must equal the aggregate amount of interest payable on such distribution date with respect to the related exchangeable certificates; and |
● | the class or classes of exchangeable certificates must be exchanged in the proportions, if any, described in the related prospectus supplement. |
● | A class of exchangeable certificates with a floating interest rate and a class of exchangeable certificates with an inverse floating interest rate may be exchangeable, together, for a class of exchangeable certificates with a fixed interest rate. In this case, the classes of exchangeable certificates with interest rates that vary with an index would produce, in the aggregate, an annual interest amount equal to that generated by the exchangeable class with a fixed interest rate. In addition, the aggregate principal balance of the two exchangeable classes with interest rates that vary with an index would equal the principal balance of the exchangeable class with the fixed interest rate. |
● | An interest-only class and a principal-only class of exchangeable certificates may be exchangeable, together, for a class of exchangeable certificates that is entitled to both principal and interest payments. The principal balance of the principal and interest class of exchangeable certificates would be equal to the principal balance of the exchangeable principal-only class, and the interest rate on the exchangeable principal and interest class would be a fixed rate that, when applied to the principal balance of this class, would generate an annual interest amount equal to the annual interest amount of the exchangeable interest-only class in distributions that have identical amounts and identical timing. |
● | Two classes of exchangeable principal and interest classes with different fixed interest rates may be exchangeable, together, for an exchangeable class that is entitled to both principal and interest payments, with a principal balance equal to the aggregate principal balance of the two exchangeable classes, and a fixed interest rate that, when applied to the principal balance of the exchangeable class, would generate an annual interest amount equal to the aggregate amount of annual interest of the two exchangeable classes. |
● | A class of exchangeable certificates that accretes all of its interest for a specified period, with the accreted amount added to the principal balance of the accreting class, and a class of exchangeable certificates that receives principal payments from these accretions may be exchangeable, together, for a single class of related exchangeable certificates that receives payments of interest continuously from the first distribution date on which it receives interest until it is retired. |
● | A class of exchangeable certificates that is a planned principal class or targeted principal class, and a class of exchangeable certificates that only receives principal payments on a distribution date if scheduled payments have been made on the planned principal class or targeted principal class, as applicable, may be exchangeable, together, for a class of related exchangeable certificates that receives principal payments without regard to the schedule from the first distribution date on which it receives principal until it is retired. |
● | A Pooling Agreement will be used where the trust fund includes mortgage loans. The parties to a Pooling Agreement will include Morgan Stanley Capital I Inc., a trustee, a master servicer and any special servicer appointed as of the date of the Pooling Agreement. If a master servicer is not appointed, a servicer, with, generally, the same obligations as described in this prospectus with respect to the master servicer, except to the extent specified in the prospectus supplement, will be appointed. This servicer will service all or a significant number of mortgage loans directly without a subservicer. References in this prospectus to master servicer and its rights and obligations, to the extent set forth in the related prospectus supplement, shall be deemed to also be references to any servicer servicing mortgage loans directly. |
● | A Trust Agreement will be used where the trust fund does not include mortgage loans. The parties to a Trust Agreement will be Morgan Stanley Capital I Inc. and a trustee. A manager or administrator may be appointed pursuant to the Trust Agreement for any trust fund to administer the trust fund. |
● | in respect of each mortgage loan included in the related trust fund, including without limitation, the address of the related mortgaged property, the mortgage rate and, if applicable, the applicable Index, margin, adjustment date and any rate cap information, the original and remaining term to maturity, the original and outstanding principal balance and balloon payment, if any, of the mortgage loan as of the date indicated and payment and prepayment provisions, if applicable, and |
● | in respect of each CMBS included in the related trust fund, including without limitation, the CMBS issuer, CMBS servicer and CMBS trustee, the pass-through or bond rate or formula for determining the rate, the issue date and original and remaining term to maturity, if applicable, the original and outstanding principal amount and payment provisions, if applicable. |
● | the accuracy of the information set forth for the mortgage loan on the schedule of assets appearing as an exhibit to the related Agreement; |
● | the existence of title insurance insuring the lien priority of the mortgage loan; |
● | the authority of the Warrantying Party to sell the mortgage loan; |
● | the payment status of the mortgage loan and the status of payments of taxes, assessments and other charges affecting the related mortgaged property; |
● | the existence of customary provisions in the related mortgage note and mortgage to permit realization against the mortgaged property of the benefit of the security of the mortgage; and |
● | the existence of hazard and extended perils insurance coverage on the mortgaged property. |
● | the Warrantying Party will be obligated to repurchase the mortgage loan from the trustee within a specified period from the date on which the Warrantying Party was notified of the breach, at the Purchase Price; or |
● | if so provided in the prospectus supplement for a series, the Warrantying Party, will have the option, within a specified period after initial issuance of such series of certificates, to cause the mortgage loan to be removed from the trust fund and substitutein its place one or more other mortgage loans, in accordance with the standards described in the related prospectus supplement; or |
● | if so provided in the prospectus supplement for a series, the Warrantying Party, will have the option to reimburse the trust fund or the certificateholders for any losses caused by the breach. |
● | the accuracy of the information set forth therefor on the schedule of assets appearing as an exhibit to the related Agreement and |
● | the authority of the Warrantying Party to sell the assets. |
● | an account or accounts the deposits in which are insured by the Bank Insurance Fund or the Savings Association Insurance Fund of the FDIC, to the limits established by the FDIC, and the uninsured deposits in which are otherwise secured such that the certificateholders have a claim with respect to the funds in the Certificate Account or a perfected first priority security interest against any collateral securing the funds that is superior to the claims of any other depositors or general creditors of the institution with which the Certificate Account is maintained; or |
● | otherwise maintained with a bank or trust company, and in a manner, satisfactory to the rating agency or agencies rating any class of certificates of the subject series. |
(1) | all payments on account of interest on the assets, including any default interest collected, in each case net of any portion thereof retained by a master servicer, a subservicer or a special servicer as its servicing compensation and net of any Retained Interest; |
(2) | all proceeds of the hazard, business interruption and general liability insurance policies to be maintained in respect of each mortgaged property securing a mortgage loan in the trust fund, to the extent the proceeds are not applied to the restoration of the property or released to the borrower in accordance with normal servicing procedures and all Insurance Proceeds and allLiquidation Proceeds, together with the net proceeds on a monthly basis with respect to any mortgaged properties acquired for the benefit of certificateholders by foreclosure or by deed in lieu of foreclosure or otherwise; |
(3) | 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”; |
(4) | any advances made as described under“Description of the Certificates—Advances in Respect of Delinquencies”; |
(5) | any amounts representing prepayment premiums; |
(6) | any amounts paid under any Cash Flow Agreement, as described under“Description of the Trust Funds—Cash Flow Agreements”; |
(7) | all proceeds of any asset or, with respect to a mortgage loan included in the trust fund, property acquired in respect thereof purchased by Morgan Stanley Capital I Inc., any asset seller or any other specified person as described above under“—Assignment of Assets; Repurchases” and“—Representations and Warranties; Repurchases,” all proceeds of any defaulted mortgage loan purchased as described below under“—Realization Upon Defaulted Mortgage Loans,” and all proceeds of any asset purchased as described above under“Description of the Certificates—Termination”; |
(8) | any amounts paid by a master servicer to cover certain interest shortfalls arising out of the prepayment of mortgage loans in the trust fund as described under“Description of the Agreements—Retained Interest; Servicing Compensation and Payment of Expenses”; |
(9) | to the extent that any item does not constitute additional servicing compensation to a master servicer, any payments on account of modification or assumption fees, late payment charges, prepayment premiums or Equity Participations on the mortgage loans or CMBS or both; |
(10) | all payments required to be deposited in the Certificate Account with respect to any deductible clause in any blanket insurance policy described below under“—Hazard Insurance Policies”; |
(11) | any amount required to be deposited by a master servicer or the trustee in connection with losses realized on investments for the benefit of the master servicer or the trustee, as the case may be, of funds held in the Certificate Account; and |
(12) | any other amounts required to be deposited in the Certificate Account as provided in the related Agreement and described in the related prospectus supplement. |
(1) | to make distributions to the certificateholders on each Distribution Date; |
(2) | to reimburse a master servicer for unreimbursed amounts advanced as described above under“Description of the Certificates—Advances in Respect of Delinquencies,” the reimbursement to be made out of amounts received which were identified and applied by the master servicer as late collections of interest, net of related servicing fees and Retained 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; |
(3) | to reimburse a master servicer for unpaid servicing fees earned and certain unreimbursed servicing expenses incurred with respect to mortgage loans and properties acquired in respect thereof, such reimbursement to be made out of amounts that represent Liquidation Proceeds and Insurance Proceeds collected on the particular mortgage loans and properties, and net income collected on the particular properties, with respect to which the fees were earned or the expenses were incurred or out of amounts drawn under any form of Credit Support with respect to such mortgage loans and properties; |
(4) | to reimburse a master servicer for any advances described in clause (2) above and any servicing expenses described in clause (3) above which, in the master servicer’s good faith judgment, will not be recoverable from the amounts described in clauses (2) and (3), respectively, the reimbursement to be made from amounts collected on other assets or, if and to the extent so provided by the related Agreement and described in the related prospectus supplement, just from that portion of amounts collected on other assets that is otherwise distributable on one or more classes of Subordinate Certificates, if any, remain outstanding, and otherwise any outstanding class of certificates, of the related series; |
(5) | if and to the extent described in the related prospectus supplement, to pay a master servicer interest accrued on the advances described in clause (2) above and the servicing expenses described in clause (3) above while these amounts remain outstanding and unreimbursed; |
(6) | to pay for costs and expenses incurred by the trust fund for environmental site assessments with respect to, and for containment, clean-up or remediation of hazardous wastes, substances and materials on, mortgaged properties securing defaulted mortgage loans as described below under“—Realization Upon Defaulted Mortgage Loans”; |
(7) | to reimburse a master servicer, Morgan Stanley Capital I Inc., or any of their respective directors, officers, employees and agents, as the case may be, for certain expenses, costs and liabilities incurred thereby, as and to the extent described below under“—Matters Regarding a Master Servicer, a Special Servicer and the Depositor”; |
(8) | if and to the extent described in the related prospectus supplement, to pay or to transfer to a separate account for purposes of escrowing for the payment of the trustee’s fees; |
(9) | to reimburse the trustee or any of its directors, officers, employees and agents, as the case may be, for certain expenses, costs and liabilities incurred thereby, as and to the extent described below under“—Matters Regarding the Trustee”; |
(10) | unless otherwise provided in the related prospectus supplement, to pay a master servicer, as additional servicing compensation, interest and investment income earned in respect of amounts held in the Certificate Account; |
(11) | to pay the person entitled thereto any amounts deposited in the Certificate Account that were identified and applied by the master servicer as recoveries of Retained Interest; |
(12) | to pay for costs reasonably incurred in connection with the proper operation, management and maintenance of any mortgaged property acquired for the benefit of certificateholders by foreclosure or by deed in lieu of foreclosure or otherwise, these payments to be made out of income received on this type of property; |
(13) | if one or more elections have been made to treat the trust fund or designated portions thereof as a REMIC, to pay any federal, state or local taxes imposed on the trust fund or its assets or transactions, as and to the extent described below under“Federal Income Tax Consequences—REMICs—Prohibited Transactions Tax and Other Taxes”; |
(14) | to pay for the cost of an independent appraiser or other expert in real estate matters retained to determine a fair sale price for a defaulted mortgage loan or a property acquired in respect thereof in connection with the liquidation of the defaulted mortgage loan or property; |
(15) | to pay for the cost of various opinions of counsel obtained pursuant to the related Agreement for the benefit of certificateholders; |
(16) | to pay for the costs of recording the related Agreement if recordation materially and beneficially affects the interests of certificateholders, provided that the payment shall not constitute a waiver with respect to the obligation of the Warrantying Party to remedy any breach of representation or warranty under the Agreement; |
(17) | to pay the person entitled thereto any amounts deposited in the Certificate Account in error, including amounts received on any asset after its removal from the trust fund whether by reason of purchase or substitution as contemplated by“—Assignment of Assets; Repurchase” and “—Representations and Warranties; Repurchases” or otherwise; |
(18) | to make any other withdrawals permitted by the related Agreement and described in the related prospectus supplement; and |
(19) | to clear and terminate the Certificate Account at the termination of the trust fund. |
● | maintaining, or causing the borrower or lessee on each mortgage or lease to maintain, hazard, business interruption and general liability insurance policies and, if applicable, rental interruption policies as described in this prospectus and in any related prospectus supplement, and filing and settling claims thereunder; |
● | maintaining escrow or impoundment accounts of borrowers for payment of taxes, insurance and other items required to be paid by any borrower pursuant to the mortgage loan; |
● | processing assumptions or substitutions in those cases where the master servicer has determined not to enforce any applicable Due-on-Sale clause; attempting to cure delinquencies; |
● | inspecting and managing mortgaged properties under certain circumstances; and |
● | maintaining accounting records relating to the mortgage loans. Generally the master servicer or another service provider, as specified in the related prospectus supplement, 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.” |
● | affect the amount or timing of any scheduled payments of principal or interest on the mortgage loan; or |
● | in its judgment, materially impair the security for the mortgage loan or reduce the likelihood of timely payment of amounts due thereon. |
● | in its judgment, a material default on the mortgage loan has occurred or a payment default is imminent and |
● | in its judgment, that modification, waiver or amendment is reasonably likely to produce a greater recovery with respect to the mortgage loan on a present value basis than would liquidation. |
● | monitor any mortgage loan in the trust fund which is in default, |
● | contact the borrower concerning the default, |
● | evaluate whether the causes of the default can be cured over a reasonable period without significant impairment of the value of the mortgaged property, |
● | initiate corrective action in cooperation with the borrower if cure is likely, |
● | inspect the mortgaged property, and |
● | take any other actions as are consistent with the Servicing Standard. |
● | institute foreclosure proceedings, |
● | exercise any power of sale contained in any mortgage, |
● | obtain a deed in lieu of foreclosure, or |
● | otherwise acquire title to a mortgaged property securing the mortgage loan. |
● | the mortgaged property is in compliance with applicable environmental laws, and there are no circumstances present at the mortgaged property relating to the use, management or disposal of any hazardous substances, hazardous materials, wastes, or petroleum-based materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any federal, state or local law or regulation; or |
● | if the mortgaged property is not so in compliance or such circumstances are so present, then it would be in the best economic interest of the trust fund to acquire title to the mortgaged property and further to take the actions as would be necessary and appropriate to effect the compliance and respond to the circumstances, the cost of which actions will be an expense of the trust fund. |
● | the Internal Revenue Service grants an extension of time to sell the property or |
● | the trustee receives an opinion of independent counsel to the effect that the holding of the property by the trust fund subsequent to that period will not result in the imposition of a tax on the trust fund or cause the trust fund to fail to qualify as a REMIC under the Code at any time that any certificate is outstanding. |
● | solicit bids for any mortgaged property so acquired by the trust fund as will be reasonably likely to realize a fair price for the property; and |
● | accept the first and, if multiple bids are contemporaneously received, the highest cash bid received from any person that constitutes a fair price. |
● | that the restoration will increase the proceeds to certificateholders on liquidation of the mortgage loan after reimbursement of the special servicer for its expenses; and |
● | that the expenses will be recoverable by it from related Insurance Proceeds or Liquidation Proceeds. |
● | the replacement cost of the improvements less physical depreciation and |
● | the proportion of the loss as the amount of insurance carried bears to the specified percentage of the full replacement cost of the improvements. |
(a) | a statement of the party’s responsibility for assessing compliance with the servicing criteria applicable to it; |
(b) | a statement that the party used the criteria in Item 1122(d) of Regulation AB to assess compliance with the applicable servicing criteria; |
(c) | the party’s assessment of compliance with the applicable servicing criteria during and as of the end of the prior calendar month, setting forth any material instance of noncompliance identified by the party; and |
(d) | a statement that a registered public accounting firm has issued an attestation report on the party’s assessment of compliance with the applicable servicing criteria during and as of the end of the prior calendar month. |
● | specifically imposed by the Agreement or otherwise incidental to the performance of obligations and duties thereunder, including, in the case of a master servicer or special servicer, the prosecution of an enforcement action in respect of any specific mortgage loans, except as any loss, liability or expense shall be otherwise reimbursable pursuant to the Agreement; |
● | incurred in connection with any breach of a representation or warranty made in the Agreement; or |
● | incurred by reason of misfeasance, bad faith or negligence in the performance of obligations or duties thereunder, or by reason of reckless disregard of its obligations or duties. |
(1) | any failure by the master servicer to distribute or cause to be distributed to certificateholders, or to remit to the trustee for distribution to certificateholders, any required payment; |
(2) | any failure by the master servicer duly to observe or perform in any material respect any of its other covenants or obligations under the Agreement which continues unremedied for thirty days after written notice of the failure has been given to the master servicer by the trustee or Morgan Stanley Capital I Inc., or to the master servicer, Morgan Stanley Capital I Inc. and the trustee by the holders of certificates evidencing not less than 25% of the Voting Rights; |
(3) | any breach of a representation or warranty made by the master servicer under the Agreement which materially and adversely affects the interests of certificateholders and which continues unremedied for thirty days after written notice of that breach has been given to the master servicer by the trustee or Morgan Stanley Capital I Inc., or to the master servicer, Morgan Stanley Capital I Inc. and the trustee by the holders of certificates evidencing not less than 25% of the Voting Rights; and |
(4) | certain events of insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings and certain actions by or on behalf of the master servicer indicating its insolvency or inability to pay its obligations. |
● | exercise any of the powers vested in it by any Agreement; |
● | make any investigation of matters arising under any Agreement; or |
● | institute, conduct or defend any litigation under any Agreement or related to any Agreement. |
(1) | to cure any ambiguity; |
(2) | to correct, modify or supplement any provision in the Agreement which may be inconsistent with any other provision in the Agreement; |
(3) | to make any other provisions with respect to matters or questions arising under the Agreement which are not inconsistent with the provisions thereof; or |
(4) | to comply with any requirements imposed by the Code; |
(1) | reduce in any manner the amount of or delay the timing of, payments received or advanced on mortgage loans which are required to be distributed on 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 (1), without the consent of the holders of all certificates of that class; or |
(3) | modify the provisions of the Agreement described in this paragraph without the consent of the holders of all certificates covered by the Agreement then outstanding. |
(1) | the nature and amount of coverage under the Credit Support; |
(2) | any conditions to payment thereunder not otherwise described in this prospectus; |
(3) | the conditions, if any, under which the amount of coverage under the Credit Support may be reduced and under which the Credit Support may be terminated or replaced; |
(4) | the material provisions relating to the Credit Support; and |
(5) | information regarding the obligor under any instrument of Credit Support, including: |
● | a brief description of its principal business activities; |
● | its principal place of business, place of incorporation and the jurisdiction under which it is chartered or licensed to do business; |
● | if applicable, the identity of regulatory agencies that exercise primary jurisdiction over the conduct of its business; and |
● | its total assets, and its stockholders’ or policyholders’ surplus, if applicable, as of the date specified in the prospectus supplement. |
● | purport to reflect the laws of any particular state; or |
● | purport to encompass the laws of all states in which the security for the mortgage loans is situated. |
● | a borrower—the borrower and usually the owner of the subject property, and |
● | a mortgagee—the lender. |
● | a trustor—the equivalent of a mortgagor or borrower, |
● | a trustee to whom the mortgaged property is conveyed, and |
● | a beneficiary—the lender—for whose benefit the conveyance is made. |
● | a tenant’s interest in a lease of land or improvements, or both, and |
● | the leasehold estate created by the lease. |
● | the borrower assigns its right, title and interest as landlord under each lease and the income derived from each lease to the lender, and |
● | the borrower retains a revocable license to collect the rents for so long as there is no default under the loan documents. |
● | the Internal Revenue Service grants an REO Extension, or |
● | It obtains an opinion of counsel generally to the effect that the holding of the property beyond the close of the third calendar year after its acquisition will not result in the imposition of a tax on the trust fund or cause any REMIC created pursuant to the Agreement to fail to qualify as a REMIC under the Code. |
(1) | the right of the leasehold lender to receive notices from the ground lessor of any defaults by the borrower; |
(2) | the right to cure those defaults, with adequate cure periods; |
(3) | if a default is not susceptible of cure by the leasehold lender, the right to acquire the leasehold estate through foreclosure or otherwise; |
(4) | the ability of the ground lease to be assigned to and by the leasehold lender or purchaser at a foreclosure sale and for the concomitant release of the ground lessee’s liabilities thereunder; |
(5) | the right of the leasehold lender to enter into a new ground lease with the ground lessor on the same terms and conditions as the old ground lease in the event of a termination thereof; |
(6) | a ground lease or leasehold mortgage that prohibits the ground lessee from treating the ground lease as terminated in the event of the ground lessor’s bankruptcy and rejection of the ground lease by the trustee for the debtor ground lessor; and |
(7) | A leasehold mortgage that provides for the assignment of the debtor ground lessee’s right to reject a lease pursuant to Section 365 of the Bankruptcy Code. |
● | to receive rents, hazard insurance and condemnation proceeds, and |
● | To cause the mortgaged property securing the mortgage loan to be sold upon default of the Borrower or trustor. This would extinguish the junior lender’s or junior beneficiary’s lien. However, the master servicer or special servicer, as applicable, could assert its subordinate interest in the mortgaged property in foreclosure litigation or satisfy the defaulted senior loan. |
● | a diminution in value of property securing any mortgage loan; |
● | limitation on the ability to foreclose against the property; or |
● | in certain circumstances, liability for clean-up costs or other remedial actions, which liability could exceed the value of the principal balance of the related mortgage loan or of the mortgaged property. |
● | the mortgaged property is in compliance with applicable environmental laws, and there are no circumstances present at the mortgaged property relating to the use, management or disposal of any hazardous substances, hazardous materials, wastes, or petroleum-based materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any federal, state or local law or regulation; or |
● | If the mortgaged property is not so in compliance or such circumstances are so present, then it would be in the best economic interest of the trust fund to acquire title to the mortgaged property and further to take actions as would be necessary and appropriate to effect compliance or respond to such circumstances. |
● | the environmental inquiry conducted by the master servicer or special servicer, as the case may be, prior to any foreclosure indicates the presence of a Disqualifying Condition that arose prior to the date of initial issuance of the certificates of aseries and |
● | the master servicer or the special servicer certify that it has acted in compliance with the Servicing Standard and has not, by any action, created, caused or contributed to a Disqualifying Condition, |
● | the borrower may have difficulty servicing and repaying multiple loans; |
● | if the junior loan permits recourse to the borrower—as junior loans often do—and the senior loan does not, a borrower may be more likely to repay sums due on the junior loan than those on the senior loan; |
● | 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; |
● | if the borrower defaults on the senior loan 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; and |
● | the bankruptcy of a junior lender may operate to stay foreclosure or similar proceedings by the senior lender. |
● | for the interest rate, discount points and charges as are permitted in that state, or |
● | that the terms of the loan shall 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. |
● | certificates held by a thrift institution taxed as a “domestic building and loan association” will constitute assets described in Code Section 7701(a)(19)(C); |
● | certificates held by a real estate investment trust will constitute “real estate assets” within the meaning of Code Section 856(c)(5)(B); and |
● | interest on certificates held by a real estate investment trust will be considered “interest on obligations secured by mortgages on real property” within the meaning of Code Section 856(c)(3)(B). |
● | “real estate assets” within the meaning of Code Section 856(c)(5)(B); |
● | “loans secured by an interest in real property” under Code Section 7701(a)(19)(C); and |
● | whether the income on the certificates is interest described in Code Section 856(c)(3)(B). |
A. | Taxation of Owners of REMIC Regular Certificates |
● | adding (1) the present value at the end of the accrual period — determined by using as a discount factor the original yield to maturity of the REMIC Regular Certificates as calculated under the Prepayment Assumption — of all remaining payments to be received on the REMIC Regular Certificates under the Prepayment Assumption and (2) any payments included in the stated redemption price at maturity received during such accrual period, and |
● | subtracting from that total the adjusted issue price of the REMIC Regular Certificates at the beginning of such accrual period. |
(1) | the sum of the issue price plus the aggregate amount of OID that would have been includible in the gross income of an original REMIC Regular Certificateholder, who purchased the REMIC Regular Certificate at its issue price, less |
(2) | any prior payments included in the stated redemption price at maturity, and the denominator of which is the sum of the daily portions for that REMIC Regular Certificate for all days beginning on the date after the purchase date and ending on the maturity date computed under the Prepayment Assumption. |
● | the interest is unconditionally payable at least annually; |
● | the issue price of the debt instrument does not exceed the total noncontingent principal payments; and |
● | interest is based on a “qualified floating rate,” an “objective rate,” a combination of a single fixed rate and one or more “qualified floating rates,” one “qualified inverse floating rate,” or a combination of “qualified floating rates” that do not operate in a manner that significantly accelerates or defers interest payments on the REMIC Regular Certificates. |
(1) | the total remaining market discount and |
(2) | a fraction, the numerator of which is the OID accruing during the period and the denominator of which is the total remaining OID at the beginning of the period. |
(1) | the total remaining market discount and |
(2) | a fraction, the numerator of which is the amount of stated interest paid during the accrual period and the denominator of which is the total amount of stated interest remaining to be paid at the beginning of the period. |
● | the amount that would have been includible in the holder’s income with respect to the REMIC Regular Certificate had income accrued thereon at a rate equal to 110% of the AFR as defined in Code Section 1274(d) determined as of the date of purchase of such REMIC Regular Certificate, over |
● | the amount actually includible in such holder’s income. |
● | is not a “10-percent shareholder” within the meaning of Code Section 871(h)(3)(B) or, or a controlled foreign corporation described in Code Section 881(c)(3)(C) related to, the REMIC (or possibly one or more mortgagors); and |
● | provides the trustee, or the person who would otherwise be required to withhold tax from such distributions under Code Section 1441 or 1442, with an appropriate statement, signed under penalties of perjury, identifying the beneficial owner and stating, among other things, that the beneficial owner of the REMIC Regular Certificate is a Non-U.S. Person. |
● | the broker determines that the seller is an exempt recipient, or |
● | the seller provides, in the required manner, identifying information and, in the case of a non-U.S. Person, certifies that such seller is a Non-U.S. Person, and other conditions are met. |
● | the broker determines that the seller is an exempt recipient, or |
● | the seller certifies its non-U.S. Person status and other conditions are met. |
B. | Taxation of Owners of REMIC Residual Certificates |
● | the income from the mortgage loans or CMBS and the REMIC’s other assets and |
● | the deductions allowed to the REMIC for interest and OID on the REMIC Regular Certificates and, except as described above under “—Taxation of Owners of REMIC Regular Certificates—Non-interest Expenses of the REMIC,” other expenses. |
● | the limitations on deductibility of investment interest expense and expenses for the production of income do not apply; |
● | all bad loans will be deductible as business bad debts; and |
● | the limitation on the deductibility of interest and expenses related to tax exempt income will apply. |
● | would qualify, under existing Treasury regulations, as a grantor trust if it were not a REMIC, treating all interests as ownership interests, even if they would be classified as debt for federal income tax purposes, or |
● | is similar to such a trust and is structured with the principal purpose of avoiding the single class REMIC rules. |
● | may not, except as described below, be offset by any unrelated losses, deductions or loss carryovers of a REMIC Residual Certificateholder; |
● | will be treated as “unrelated business taxable income” within the meaning of Code Section 512 if the REMIC Residual Certificateholder is a pension fund or any other organization that is subject to tax only on its unrelated business taxable income, as discussed under “—Tax Exempt Investors” below; and |
● | is not eligible for any reduction in the rate of withholding tax in the case of a REMIC Residual Certificateholder that is a foreign investor, as discussed under “—Residual Certificate Payments—Non-U.S. Persons” below. |
● | the disposition of a mortgage loan or CMBS, |
● | the receipt of income from a source other than a mortgage loan or CMBS or certain other permitted investments, |
● | the receipt of compensation for services, or |
● | gain from the disposition of an asset purchased with the payments on the mortgage loans or CMBS for temporary investment pending distribution on the certificates. |
● | a breach of the related servicer’s, trustee’s or depositor’s obligations, as the case may be, under the related Agreement for such series, such tax will be borne by such servicer, trustee or depositor, as the case may be, out of its own funds or |
● | Morgan Stanley Capital I Inc.’s obligation to repurchase a mortgage loan, |
(a) | the United States, any State, possession or political subdivision thereof, any foreign government, any international organization or any agency or instrumentality of any of the foregoing (provided that such term does not include aninstrumentality if all its activities are subject to tax and, except for FHLMC, a majority of its board of directors is not selected by any such governmental agency); |
(b) | any organization, other than certain farmers’ cooperatives, generally exempt from federal income taxes unless such organization is subject to the tax on “unrelated business taxable income”; and |
(c) | a rural electric or telephone cooperative. |
● | a regulated investment company, real estate investment trust or common trust fund; |
● | a partnership, trust or estate; and |
● | certain cooperatives. |
● | an affidavit from the proposed transferee to the effect that it is not a disqualified organization and is not acquiring the REMIC Residual Certificate as a nominee or agent for a disqualified organization, and |
● | a covenant by the proposed transferee to the effect that the proposed transferee agrees to be bound by and to abide by the transfer restrictions applicable to the REMIC Residual Certificate. |
● | the present value of the expected future distributions on the REMIC Residual Certificate 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 |
● | 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. |
(1) | the transferor conducted, at the time of the transfer, a reasonable investigation of the financial condition of the transferee and, as a result of the investigation, the transferor determined that the transferee had historically paid its debts as they came due and found no significant evidence that the transferee would not continue to pay its debts as they come due in the future; |
(2) | the transferee represents to the transferor that (i) it understands that, as the holder of the Noneconomic REMIC Residual Certificate, the transferee may incur tax liabilities in excess of cash flows generated by the interest, (ii) that the transferee intends to pay taxes associated with holding the residual interest as they came due and (iii) that the transferee will not cause income with respect to the REMIC Residual Certificate to be attributable to a foreign permanent establishment or fixed base, within the meaning of an applicable income tax treaty, of such transferee or any other person; and |
(3) | the transfer is not a direct or indirect transfer to a foreign permanent establishment or fixed base (within the meaning of an applicable income tax treaty) and either: |
(i) | the present value of the anticipated tax liabilities associated with holding the Noneconomic REMIC Residual Certificate does not exceed the sum of: |
● | the present value of any consideration given to the transferee to acquire the Noneconomic REMIC Residual Certificate, |
● | the present value of the expected future distributions on the Noneconomic REMIC Residual Certificate and |
● | the present value of the anticipated tax savings associated with holding the Noneconomic REMIC Residual Certificate as the REMIC generates losses. For purposes of the computations under this “minimum transfer price” alternative, the transferee is assumed to pay tax at the highest rate of tax specified in section 11(b)(1) of the Internal Revenue Code (currently 35%) or, in certain circumstances, the alternative minimum tax rate. Further, present values generally are computed using a discount rate equal to the short-term Federal rate set forth in Section 1274(d) of the Internal Revenue Code for the month of such transfer and the compounding period used by the transferee; or |
(ii) | (a) at the time of the transfer, and at the close of each of the transferee’s two fiscal years preceding the year of transfer, the transferee’s gross assets for financial reporting purposes exceed $100 million and its net assets for financial reporting purposes exceed $10 million, (b) the transferee is an eligible corporation (as defined in Treasury regulation Section 1.860E-1(c)(6)(i)) that makes a written agreement that any subsequent transfer of the interest will be to another eligible corporation in a transaction which will also satisfy clauses (1) and (2) above and this clause (3)(ii) and (c) the facts and circumstances known to the transferor on or before the date of the transfer must not reasonably indicate that the taxes associated with the residual interest will not be paid. For purposes of clause (3)(ii)(c), if the amount of consideration paid in respect of the residual interest is so low that under any set of reasonable assumptions a reasonable person would conclude that the taxes associated with holding the residual interest will not be paid, then the transferor is deemed to know that the transferee cannot or will not pay the taxes associated with the residual interest. |
A. | Single Class of Grantor Trust Certificates |
● | A grantor trust certificate owned by a “domestic building and loan association” within the meaning of Code Section 7701(a)(19) representing principal and interest payments on mortgage loans or CMBS will be considered to represent “loans . . . Secured by an interest in real property which is . . . residential property” within the meaning of Code Section 7701(a)(19)(C)(v), to the extent that the mortgage loans or CMBS represented by that grantor trust certificate are of a type described in that Code section; |
● | a grantor trust certificate owned by a real estate investment trust representing an interest in mortgage loans or CMBS will be considered to represent “real estate assets” within the meaning of Code Section 856(c)(5)(B), and interest income on the mortgage loans or CMBS will be considered “interest on obligations secured by mortgages on real property” within the meaning of Code Section 856(c)(3)(B), to the extent that the mortgage loans or CMBS represented by that grantor trust certificate are of a type described in that Code section; and |
● | A grantor trust certificate owned by a REMIC will represent “obligation[s]... which [are] principally secured by an interest in real property” within the meaning of Code Section 860G(a)(3). |
● | the total remaining market discount and |
● | A fraction, the numerator of which is the OID accruing during the period and the denominator of which is the total remaining OID at the beginning of the accrual period. |
● | the total remaining market discount and |
● | A fraction, the numerator of which is the amount of stated interest paid during the accrual period and the denominator of which is the total amount of stated interest remaining to be paid at the beginning of the accrual period. |
B. | Multiple Classes of Grantor Trust Certificates |
(1) | Stripped Bonds and Stripped Coupons |
● | the amount of OID with respect to the mortgage loans or CMBS is treated as zero under the OID de minimis rule when the certificate was stripped or |
● | No more than 100 basis points, including any Excess Servicing, are stripped off of the trust fund’s mortgage loans or CMBS. |
(2) | Grantor Trust Certificates Representing Interests in Loans Other Than Adjustable Rate Loans |
● | adding (1) the present value at the end of the accrual period—determined by using as a discount factor the original yield to maturity of the respective component under the Prepayment Assumption—of all remaining payments to be received under the Prepayment Assumption on the respective component and (2) any payments included in the stated redemption price at maturity received during such accrual period, and |
● | subtracting from that total the “adjusted issue price” of the respective component at the beginning of such accrual period. |
(3) | Grantor Trust Certificates Representing Interests in Adjustable Rate Loans |
C. | Sale or Exchange of a Grantor Trust Certificate |
● | the holder entered the contract to sell the grantor trust certificate substantially contemporaneously with acquiring the grantor trust certificate; |
● | the grantor trust certificate is part of a straddle; |
● | the grantor trust certificate is marketed or sold as producing capital gain; or |
● | other transactions to be specified in Treasury regulations that have not yet been issued. |
D. | Non-U.S. Persons |
E. | Information Reporting and Backup Withholding |
● | the broker determines that the seller is an exempt recipient, or |
● | the seller provides, in the required manner, certain identifying information and, in the case of a non-U.S. Person, certifies that the seller is a Non-U.S. Person, and other conditions are met. |
● | the broker determines that the seller is an exempt recipient or |
● | the seller certifies its non-U.S. Person status and other conditions are met. |
● | the acquisition, sale and holding by ERISA Plans of certain certificates representing an undivided interest in certain asset backed pass-through trusts, with respect to which Morgan Stanley & Co. LLC or any of its affiliates is the sole underwriter or the manager or co-manager of the underwriting syndicate; and |
● | the servicing, operation and management of such asset backed pass-through trusts, provided that the general conditions and certain other conditions set forth in the Exemption are satisfied. |
(1) | The acquisition of the certificates by an ERISA Plan is on terms — including the price for such certificates—that are at least as favorable to the investing ERISA Plan as they would be in an arm’s length transaction with an unrelated party; |
(2) | The certificates acquired by the ERISA Plan have received a rating at the time of the acquisition that is in one of the four highest generic rating categories from at least one NRSRO that meets the requirements in the Exemption (an “Exemption Rating Agency”); |
(3) | The trustee is not an affiliate of any member of the Restricted Group other than an underwriter; |
(4) | The sum of all payments made to and retained by the underwriter in connection with the distribution of the certificates represents not more than reasonable compensation for underwriting the certificates; the sum of all payments made to and retained by the Asset Seller pursuant to the sale of the mortgage loans to the trust fund represents not more than the fair market value of the mortgage loans; the sum of all payments made to and retained by any servicer represent not more than reasonable compensation for the servicer’s services under the Agreement and reimbursement of the servicer’s reasonable expenses in connection therewith; and |
(5) | The ERISA Plan investing in the certificates is an “accredited investor” as defined in Rule 501(a)(1) of Regulation D of the Securities and Exchange Commission under the Securities Act of 1933 as amended. |
● | the corpus of the trust fund must consist solely of assets of the type that have been included in other investment pools; |
● | it is a condition to the issuance of any class of offered certificates that, at the time of issuance, at least one Exemption Rating Agency has rated those certificates in one of its generic rating categories which signifies investment grade. Typically, the four highest rating categories, within which there may be sub-categories or gradations indicating relative standing, signify investment grade. |
● | certificates evidencing interests in other investment pools must have been rated in one of the four highest rating categories by at least one Exemption Rating Agency for at least one year prior to the Plan’s acquisition of the Securities; and |
● | certificates evidencing interests in other investment pools must have been purchased by investors other than ERISA Plans for at least one year prior to any ERISA Plan’s acquisition of the Securities. |
● | the person or its affiliate is an obligor with respect to five percent or less of the fair market value of the obligations or receivables contained in the trust fund; |
● | the Plan is not a plan with respect to which any member of the Restricted Group is the “plan sponsor” as defined in Section 3(16)(B) of ERISA; |
● | in the case of an acquisition in connection with the initial issuance of certificates, at least fifty percent of each class of certificates in which ERISA Plans have invested is acquired by persons independent of the Restricted Group and at least fifty percent of the aggregate interest in the trust fund is acquired by persons independent of the Restricted Group; |
● | an ERISA Plan’s investment in certificates of any class does not exceed twenty-five percent of all of the certificates of that class outstanding at the time of the acquisition; and |
● | immediately after the acquisition, no more than twenty-five percent of the assets of any ERISA Plan with respect to which the person has discretionary authority or renders investment advice are invested in certificates representing an interest in one or more trusts containing assets sold or serviced by the same entity. |
● | that the certificates constitute “securities” for purposes of the Exemption and |
● | that the general conditions and other requirements set forth in the Exemption would be satisfied, including whether one or more of the credit rating agencies meets the requirements to be an Exemption Rating Agency. |
● | must be recognized by the SEC as a NRSRO; |
● | must have indicated on its most recently filed SEC Form NRSRO that it rates “issuers of asset-backed securities;” and |
● | must have had, within the twelve (12) months prior to the initial issuance of the securities, at least three (3) “qualified ratings engagements” which are defined as (A) a rating engagement requested by an issuer or underwriter in connection with the initial offering of the securities, (B) which is made public to investors generally, (C) for which the rating agency is compensated, and (D) which involves the offering of securities of the type that would be granted relief under the Exemption. |
(a) | interest-bearing securities; |
(b) | non-interest-bearing securities; |
(c) | originally interest-bearing securities from which coupons representing the right to payment of interest have been removed; or |
(d) | interest-bearing securities from which the right to payment of principal has been removed. |
● | non-cash items such as depreciation and amortization; |
● | capital expenditures; and |
● | debt service on loans secured by the mortgaged property. |
● | any failure by the master servicer to distribute or cause to be distributed to certificateholders, or to remit to the trustee for distribution to certificateholders, any required payment; |
● | any failure by the master servicer duly to observe or perform in any material respect any of its other covenants or obligations under the Pooling Agreement which continues unremedied for thirty days after written notice of such failure has been given to the master servicer by the trustee or Morgan Stanley Capital I Inc., or to the master servicer, Morgan Stanley Capital I Inc. and the trustee by the holders of certificates evidencing not less than 25% of the Voting Rights; |
● | any breach of a representation or warranty made by the master servicer under the Pooling Agreement which materially and adversely affects the interests of certificateholders and which continues unremedied for thirty days after written notice of such breach has been given to the master servicer by the trustee or Morgan Stanley Capital I Inc., or to the master servicer, Morgan Stanley Capital I Inc. and the trustee by the holders of certificates evidencing not less than 25% of the Voting Rights; and |
● | certain events of insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings and certain actions by or on behalf of the master servicer indicating its insolvency or inability to pay its obligations. |
A. | the standard for servicing the servicer must follow as defined by the terms of the related Pooling Agreement and any related hazard, business interruption, rental interruption or general liability insurance policy or instrument of Credit Support included in the related trust fund as described in this prospectus under “Description of Credit Support” and in the prospectus supplement; |
B. | applicable law; and |
C. | the general servicing standard specified in the related prospectus supplement or, if no such standard is so specified, its normal servicing practices. |
(a) | the appraised value determined in an appraisal obtained by the originator at origination of that loan, or |
(b) | the lesser of |
● | the appraised value determined in an appraisal obtained at the time of origination of the Refinance Loan and |
● | the sales price for that property; or |
(c) | the value as determined in accordance with another method specified in the prospectus supplement, including without limitation by applying a capitalization rate to underwritten net cash flow. |
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No dealer, salesman or other person is authorized to give any information or to represent anything not contained in this prospectus supplement. You must not rely on any unauthorized information or representations. This prospectus supplement is an offer to sell only the securities offered by this prospectus supplement, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus supplement is current only as of its date. |
$ 774,748,000
(Approximate)
Morgan Stanley Capital I Trust 2015-MS1 Morgan Stanley Capital I Inc.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES,
prospectus supplement
MORGAN STANLEY
June 25, 2015
| |||||
Prospectus Supplement | ||||||
EXECUTIVE SUMMARY | S-7 | |||||
SUMMARY OFprospectus supplement | S-9 | |||||
RISK FACTORS | S-41 | |||||
CAPITALIZED TERMS USED IN THISprospectus | ||||||
SUPPLEMENT | S-83 | |||||
FORWARD LOOKING STATEMENTS | S-83 | |||||
TRANSACTION PARTIES | S-83 | |||||
DESCRIPTION OF THE OFFERED CERTIFICATES | S-100 | |||||
YIELD, PREPAYMENT AND MATURITY | ||||||
CONSIDERATIONS | S-138 | |||||
DESCRIPTION OF THE MORTGAGE POOL | S-150 | |||||
SERVICING OF THE MORTGAGE LOANS | S-187 | |||||
MATERIAL FEDERAL INCOME TAX CONSEQUENCES | S-219 | |||||
STATE AND LOCAL TAX CONSIDERATIONS | S-224 | |||||
CERTAIN LEGAL ASPECTS OF THE MORTGAGE | ||||||
LOANS | S-225 | |||||
CERTAIN ERISA CONSIDERATIONS | S-225 | |||||
LEGAL INVESTMENT | S-228 | |||||
USE OF PROCEEDS | S-228 | |||||
PLAN OF DISTRIBUTION (CONFLICTS OF INTEREST) | S-228 | |||||
LEGAL MATTERS | S-230 | |||||
RATINGS | S-230 | |||||
INDEX OF SIGNIFICANT TERMS | S-232 | |||||
Prospectus | ||||||
Summary of Prospectus | 1 | |||||
Risk Factors | 9 | |||||
Description of The Trust Funds | 48 | |||||
Use of Proceeds | 55 | |||||
Yield Considerations | 55 | |||||
The Depositor | 58 | |||||
The Sponsor | 58 | |||||
Other Sponsors, Mortgage Loan Sellers and Originators | 58 | |||||
Description of The Certificates | 59 | |||||
Description of The Agreements | 68 | |||||
Description of Credit Support | 80 | |||||
Legal Aspects of the Mortgage Loans and the Leases | 82 | |||||
Federal Income Tax Consequences | 94 | |||||
State and Local Tax Considerations | 113 | |||||
ERISA Considerations | 114 | |||||
Legal Investment | 116 | |||||
Plan of Distribution | 117 | |||||
Legal Matters | 118 | |||||
Financial Information | 118 | |||||
Rating | 118 | |||||
Incorporation of Information by Reference | 118 | |||||
Glossary of Terms | 120 | |||||
Until ninety (90) days after the date of this prospectus supplement, all dealers that buy, sell or trade the certificates offered by this prospectus supplement, whether or not participating in this offering, may be required to deliver a prospectus supplement and the accompanying prospectus. This is in addition to the dealers’ obligation to deliver a prospectus supplement and the accompanying prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. | ||||||