| | FREE WRITING PROSPECTUS |
| | FILED PURSUANT TO RULE 433 |
| | REGISTRATION FILE NO.: 333-257991-07 |
| | |
Free Writing Prospectus
Structural and Collateral Term Sheet
$720,578,197
(Approximate Initial Pool Balance)
$617,805,000
(Approximate Aggregate Certificate Balance of Offered Certificates)
BANK 2023-BNK46
as Issuing Entity
Wells Fargo Commercial Mortgage Securities, Inc.
as Depositor
Wells Fargo Bank, National Association
JPMorgan Chase Bank, National Association
Bank of America, National Association
Morgan Stanley Mortgage Capital Holdings LLC
as Sponsors and Mortgage Loan Sellers
Commercial Mortgage Pass-Through Certificates
Series 2023-BNK46
July 27, 2023
WELLS FARGO SECURITIES | BofA SECURITIES
| MORGAN STANLEY | J.P MORGAN |
Co-Lead Manager and Joint Bookrunner | Co-Lead Manager and Joint Bookrunner | Co-Lead Manager and Joint Bookrunner | Co-Lead Manager and Joint Bookrunner |
Academy Securities, Inc. Co-Manager | Drexel Hamilton Co-Manager | Siebert Williams Shank Co-Manager |
| | | | | |
STATEMENT REGARDING THIS FREE WRITING PROSPECTUS
The depositor has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (“SEC”) (SEC File No. 333-257991) for the offering to which this communication relates. Before you invest, you should read the prospectus in the registration statement and other documents the depositor has filed with the SEC for more complete information about the depositor, the issuing entity and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the depositor, any underwriter, or any dealer participating in the offering will arrange to send you the prospectus after filing if you request it by calling toll free 1-800-745-2063 (8 a.m. – 5 p.m. EST) or by emailing wfs.cmbs@wellsfargo.com.
Nothing in this document constitutes an offer of securities for sale in any jurisdiction where the offer or sale is not permitted. The information contained herein is preliminary as of the date hereof, supersedes any such information previously delivered to you and will be superseded by any such information subsequently delivered and ultimately by the final prospectus relating to the securities. These materials are subject to change, completion, supplement or amendment from time to time.
This free writing prospectus has been prepared by the underwriters for information purposes only and does not constitute, in whole or in part, a prospectus for the purposes of (i) Regulation (EU) 2017/1129 (as amended), (ii) such Regulation as it forms part of UK domestic law, or (iii) Part VI of the UK Financial Services and Markets Act 2000, as amended; and does not constitute an offering document for any other purpose.
STATEMENT REGARDING ASSUMPTIONS AS TO SECURITIES, PRICING ESTIMATES AND OTHER INFORMATION
The attached information contains certain tables and other statistical analyses (the “Computational Materials”) which have been prepared in reliance upon information furnished by the Mortgage Loan Sellers. Numerous assumptions were used in preparing the Computational Materials, which may or may not be reflected herein. As such, no assurance can be given as to the Computational Materials’ accuracy, appropriateness or completeness in any particular context; or as to whether the Computational Materials and/or the assumptions upon which they are based reflect present market conditions or future market performance. The Computational Materials should not be construed as either projections or predictions or as legal, tax, financial or accounting advice. You should consult your own counsel, accountant and other advisors as to the legal, tax, business, financial and related aspects of a purchase of these securities. Any weighted average lives, yields and principal payment periods shown in the Computational Materials are based on prepayment and/or loss assumptions, and changes in such prepayment and/or loss assumptions may dramatically affect such weighted average lives, yields and principal payment periods. In addition, it is possible that prepayments or losses on the underlying assets will occur at rates higher or lower than the rates shown in the attached Computational Materials. The specific characteristics of the securities may differ from those shown in the Computational Materials due to differences between the final underlying assets and the preliminary underlying assets used in preparing the Computational Materials. The principal amount and designation of any security described in the Computational Materials are subject to change prior to issuance. None of Wells Fargo Securities, LLC, J.P. Morgan Securities LLC, BofA Securities, Inc., Morgan Stanley & Co. LLC, Academy Securities, Inc., Drexel Hamilton, LLC, Siebert Williams Shank & Co., LLC or any of their respective affiliates, make any representation or warranty as to the actual rate or timing of payments or losses on any of the underlying assets or the payments or yield on the securities. The information in this presentation is based upon management forecasts and reflects prevailing conditions and management’s views as of this date, all of which are subject to change. In preparing this presentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us by or on behalf of the Mortgage Loan Sellers or which was otherwise reviewed by us.
This free writing prospectus contains certain forward-looking statements. If and when included in this free writing prospectus, the words “expects”, “intends”, “anticipates”, “estimates” and analogous expressions and all statements that are not historical facts, including statements about our beliefs or expectations, are intended to identify forward-looking statements. Any forward-looking statements are made subject to risks and uncertainties which could cause actual results to differ materially from those stated. Those risks and uncertainties include, among other things, declines in general economic and business conditions, increased competition, changes in demographics, changes in political and social conditions, regulatory initiatives and changes in customer preferences, many of which are beyond our control and the control of any other person or entity related to this offering. The forward-looking statements made in this free writing prospectus are made as of the date stated on the cover. We have no obligation to update or revise any forward-looking statement.
Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including but not limited to Wells Fargo Securities, LLC, a member of NYSE, FINRA, NFA and SIPC, Wells Fargo Prime Services, LLC, a member of FINRA, NFA and SIPC, and Wells Fargo Bank, N.A. Wells Fargo Securities, LLC and Wells Fargo Prime Services, LLC are distinct entities from affiliated banks and thrifts.
“BofA Securities” is the marketing name for the global banking and global markets businesses of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., member FDIC. Securities, strategic advisory, and other investment banking activities are performed globally by investment banking affiliates of Bank of America Corporation, including, in the United States, BofA Securities, Inc., which is a registered broker-dealer and member of FINRA and SIPC, and, in other jurisdictions, locally registered entities.
J.P. Morgan is the marketing name for the investment banking businesses of JPMorgan Chase & Co. and its subsidiaries worldwide. Securities, syndicated loan arranging, financial advisory and other investment banking activities are performed by JPMS and its securities affiliates, and lending, derivatives and other commercial banking activities are performed by JPMorgan Chase Bank, National Association and its banking affiliates. JPMS is a member of SIPC and the NYSE.
IMPORTANT NOTICE REGARDING THE OFFERED CERTIFICATES
The information herein is preliminary and may be supplemented or amended prior to the time of sale. In addition, the Offered Certificates referred to in these materials and the asset pool backing them are subject to modification or revision (including the possibility that one or more classes of certificates may be split, combined or eliminated at any time prior to issuance or availability of a final prospectus) and are offered on a “when, as and if issued” basis.
The underwriters described in these materials may from time to time perform investment banking services for, or solicit investment banking business from, any company named in these materials. The underwriters and/or their affiliates or respective employees may from time to time have a long or short position in any security or contract discussed in these materials.
The information contained herein supersedes any previous such information delivered to any prospective investor and will be superseded by information delivered to such prospective investor prior to the time of sale.
IMPORTANT NOTICE RELATING TO AUTOMATICALLY-GENERATED EMAIL DISCLAIMERS
Any legends, disclaimers or other notices that may appear at the bottom of any email communication to which this free writing prospectus is attached relating to (1) these materials not constituting an offer (or a solicitation of an offer), (2) any representation that these materials are accurate or complete and may not be updated or (3) these materials possibly being confidential, are not applicable to these materials and should be disregarded. Such legends, disclaimers or other notices have been automatically generated as a result of these materials having been sent via Bloomberg or another system.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
2
BANK 2023-BNK46 | Class Structure |
I. Class Structure
| | Class | Expected Ratings (Fitch/KBRA/Moody’s)(1) | Approximate Initial Certificate Balance, Notional Amount or VRR Interest Balance(2) | Approx. Initial Credit Support(3) | Pass-Through Rate Description | Weighted Average Life (Years)(4) | Expected Principal Window(4) | Certificate Principal to Value Ratio(5) | Certificate Principal U/W NOI Debt Yield(6) |
| | Offered Certificates | | | | |
| | A-1 | AAAsf/AAA(sf)/Aaa(sf) | $3,674,000 | 30.000% | (7) | 2.76 | 9/23 - 3/28 | 34.9% | 22.6% |
| | A-2-1 | AAAsf/AAA(sf)/Aaa(sf) | (9) | 30.000% | (7) | (9) | (9) | 34.9% | 22.6% |
| | A-SB | AAAsf/AAA(sf)/Aaa(sf) | $6,426,000 | 30.000% | (7) | 7.24 | 7/28 - 12/32 | 34.9% | 22.6% |
| | A-3(8) | AAAsf/AAA(sf)/Aaa(sf) | (8)(9) | 30.000% | (7) | (9) | (9) | 34.9% | 22.6% |
| | A-4(8) | AAAsf/AAA(sf)/Aaa(sf) | (8)(9) | 30.000% | (7) | (9) | (9) | 34.9% | 22.6% |
| | X-A | AAAsf/AAA(sf)/Aaa(sf) | $479,184,000 (10) | N/A | Variable(11) | N/A | N/A | N/A | N/A |
| | X-B | A-sf/AAA(sf)/NR | $138,621,000 (12) | N/A | Variable(13) | N/A | N/A | N/A | N/A |
| | A-S(8) | AAAsf/AAA(sf)/Aa2(sf) | $86,424,000 (8) | 17.375% | (7) | 9.90 | 6/33 - 7/33 | 41.2% | 19.1% |
| | B(8) | AA-sf/AA-(sf)/NR | $30,805,000 (8) | 12.875% | (7) | 9.93 | 7/33 - 7/33 | 43.5% | 18.1% |
| | C(8) | A-sf/A-(sf)/NR | $21,392,000 (8) | 9.750% | (7) | 9.93 | 7/33 - 7/33 | 45.0% | 17.5% |
| | Non-Offered Certificates(18) | | | | | | |
| | A-2-2 | AAAsf/AAA(sf)/Aaa(sf) | (9) | 30.000% | (7) | (9) | (9) | 34.9% | 22.6% |
| | X-D | BBB-sf/BBB(sf)/NR | $20,537,000 (14) | N/A | Variable(15) | N/A | N/A | N/A | N/A |
| | X-F | BB-sf/BB+(sf)/NR | $13,691,000 (16) | N/A | Variable(17) | N/A | N/A | N/A | N/A |
| | X-G | B-sf/B(sf)/NR | $10,268,000 (16) | N/A | Variable(17) | N/A | N/A | N/A | N/A |
| | X-H | NR/NR/NR | $22,248,287 (16) | N/A | Variable(17) | N/A | N/A | N/A | N/A |
| | D | BBBsf/BBB+(sf)/NR | $13,691,000 | 7.750% | (7) | 10.00 | 7/33 – 8/33 | 46.0% | 17.1% |
| | E | BBB-sf/BBB(sf)/NR | $6,846,000 | 6.750% | (7) | 10.01 | 8/33 – 8/33 | 46.5% | 16.9% |
| | F | BB-sf/BB+(sf)/NR | $13,691,000 | 4.750% | (7) | 10.01 | 8/33 – 8/33 | 47.5% | 16.6% |
| | G | B-sf/B(sf)/NR | $10,268,000 | 3.250% | (7) | 10.01 | 8/33 – 8/33 | 48.3% | 16.3% |
| | H | NR/NR/NR | $22,248,287 | 0.000% | (7) | 10.01 | 8/33 – 8/33 | 49.9% | 15.8% |
| | Non-Offered Eligible Vertical Interest(18) | | | | | |
| | Class RR(19) | NR/NR/NR | $27,807,743.20 | N/A | WAC(20) | 8.30 | 9/23 – 8/33 | N/A | N/A |
| | RR Interest | NR/NR/NR | $8,221,166.66 | N/A | WAC(20) | 8.30 | 9/23 – 8/33 | N/A | N/A |
| | | | | | | | | | | |
Notes: |
(1) | The expected ratings presented are those of Fitch Ratings, Inc. (“Fitch”), Kroll Bond Rating Agency, LLC (“KBRA”) and Moody’s Investors Service, Inc. (“Moody’s”), which the depositor hired to rate the Offered Certificates. One or more other nationally recognized statistical rating organizations that were not hired by the depositor may use information they receive pursuant to Rule 17g-5 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise, to rate or provide market reports and/or published commentary related to the Offered Certificates. We cannot assure you as to what ratings a non-hired nationally recognized statistical rating organization would assign or that its reports will not express differing, possibly negative, views of the mortgage loans and/or the Offered Certificates. The ratings of each Class of Offered Certificates address the likelihood of the timely distribution of interest and, except in the case of the Class X-A and X-B Certificates, the ultimate distribution of principal due on those Classes on or before the Rated Final Distribution Date. See “Risk Factors—Other Risks Relating to the Certificates—Nationally Recognized Statistical Rating Organizations May Assign Different Ratings to the Certificates; Ratings of the Certificates Reflect Only the Views of the Applicable Rating Agencies as of the Dates Such Ratings Were Issued; Ratings May Affect ERISA Eligibility; Ratings May Be Downgraded” and “Ratings” in the Preliminary Prospectus, expected to be dated July 27, 2023 (the “Preliminary Prospectus”). Fitch, KBRA and Moody’s have informed us that the “sf” designation in their ratings represents an identifier for structured finance product ratings. |
(2) | The Certificate Balances, Notional Amounts and VRR Interest Balances set forth in the table are approximate. The actual initial Certificate Balances, Notional Amounts and VRR Interest Balances may be larger or smaller depending on the initial pool balance of the mortgage loans definitively included in the pool of mortgage loans, which aggregate cut-off date balance may be as much as 5% larger or smaller than the amount presented in the Preliminary Prospectus. In addition, the Notional Amounts of the Class X-A, X-B, X-D, X-F, X-G and X-H Certificates (collectively referred to herein as “Class X Certificates”) may vary depending upon the final pricing of the Classes of Principal Balance Certificates (as defined below) or trust components whose Certificate Balances comprise such Notional Amounts and, if as a result of such pricing the pass-through rate of any Class of the Class X Certificates would be equal to zero at all times, such Class of Certificates will not be issued on the closing date of this securitization. |
(3) | The Approximate Initial Credit Support with respect to the Class A-1, A-2-1, A-2-2, A-SB, A-3 and A-4 Certificates represents the approximate credit enhancement for the Class A-1, A-2-1, A-2-2, A-SB, A-3 and A-4 Certificates in the aggregate, taking into account the Certificate Balances of the Class A-3 and Class A-4 trust components. The Approximate Initial Credit Support set forth for the Class A-S Certificates represents the approximate credit support for the underlying Class A-S trust component. The Approximate Initial Credit Support set forth for the Class B Certificates represents the approximate credit support for the underlying Class B trust component. The Approximate Initial Credit Support set forth for the Class C Certificates represents the approximate credit support for the underlying Class C trust component. The VRR Interest only provides credit support to the limited extent that losses incurred on the underlying mortgage loans are allocated to it, on the one hand, and to the Offered Certificates and the Non-Offered Certificates, on the other hand, pro rata, in accordance with their respective Percentage Allocation Entitlements. |
(4) | Weighted Average Lives and Expected Principal Windows are calculated based on an assumed prepayment rate of 0% CPR and the “Structuring Assumptions” described under “Yield and Maturity Considerations—Weighted Average Life” in the Preliminary Prospectus. |
(5) | The Certificate Principal to Value Ratio for each Class of Certificates (other than the Class A-1, A-2-1, A-2-2, A-SB, A-3 and A-4 Certificates) is calculated as the product of (a) the weighted average Cut-off Date LTV Ratio for the mortgage loans and (b) a fraction, the numerator of which is the total initial Certificate Balance of such Class of Certificates and all Classes of Principal Balance Certificates (or, with respect to the Class A-3, A-4, A-S, B or C Certificates, the trust component with the same alphanumeric designation) senior to such Class of Certificates and the denominator of which is the total initial Certificate Balance of all of the Principal Balance Certificates (or, with respect to the Class A-3, A-4, A-S, B or C Certificates, the trust component with the same alphanumeric designation). The Certificate Principal to Value Ratio for each of the Class A-1, A-2-1, A-2-2, A-SB, A-3 and A-4 Certificates is calculated in the aggregate for those Classes as if they were a single Class and is calculated |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
3
BANK 2023-BNK46 | Class Structure |
| as the product of (a) the weighted average Cut-off Date LTV Ratio for the mortgage loans and (b) a fraction, the numerator of which is the total initial aggregate Certificate Balances of such Classes of Certificates (or, with respect to the Class A-3 or A-4 Certificates, the trust component with the same alphanumeric designation) and the denominator of which is the total initial Certificate Balance of all of the Principal Balance Certificates (or, with respect to the Class A-3, A-4, A-S, B or C Certificates, the trust component with the same alphanumeric designation). In any event, however, excess mortgaged property value associated with a mortgage loan will not be available to offset losses on any other mortgage loan. |
(6) | The Certificate Principal U/W NOI Debt Yield for each Class of Certificates (other than the Class A-1, A-2-1, A-2-2, A-SB, A-3 and A-4 Certificates) is calculated as the product of (a) the weighted average U/W NOI Debt Yield for the mortgage loans and (b) a fraction, the numerator of which is the total initial Certificate Balance of all of the Classes of Principal Balance Certificates (or, with respect to the Class A-3, A-4, A-S, B or C Certificates, the trust component with the same alphanumeric designation) and the denominator of which is the total initial Certificate Balance for such Class of Certificates and all Classes of Principal Balance Certificates (or, with respect to the Class A-3, A-4, A-S, B or C Certificates, the trust component with the same alphanumeric designation) senior to such Class of Certificates. The Certificate Principal U/W NOI Debt Yield for each of the Class A-1, A-2-1, A-2-2, A-SB, A-3 and A-4 Certificates is calculated in the aggregate for those Classes as if they were a single Class and is calculated as the product of (a) the weighted average U/W NOI Debt Yield for the mortgage loans and (b) a fraction, the numerator of which is the total initial Certificate Balance of all of the Classes of Principal Balance Certificates (or, with respect to the Class A-3, A-4, A-S, B or C Certificates, the trust component with the same alphanumeric designation) and the denominator of which is the total aggregate initial Certificate Balances for the Class A-1, A-2-1, A-2-2, A-SB, A-3 and A-4 Certificates (or, with respect to the Class A-3 or A-4 Certificates, the trust component with the same alphanumeric designation). In any event, however, cash flow from each mortgaged property supports only the related mortgage loan and will not be available to support any other mortgage loan. |
(7) | The pass-through rates for the Class A-1, A-2-1, A-2-2, A-SB, A-3, A-4, A-S, B, C, D, E, F, G and H Certificates for any distribution date will, in each case, be one of the following: (i) a fixed rate per annum, (ii) a variable rate per annum equal to the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, (iii) a variable rate per annum equal to the lesser of (a) a fixed rate and (b) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date or (iv) a variable rate per annum equal to the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date minus a specified percentage. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis. |
(8) | The Class A-3-1, A-3-2, A-3-X1, A-3-X2, A-4-1, A-4-2, A-4-X1, A-4-X2, A-S-1, A-S-2, A-S-X1, A-S-X2, B-1, B-2, B-X1, B-X2, C-1, C-2, C-X1 and C-X2 Certificates are also offered certificates. Such Classes of Certificates, together with the Class A-3, A-4, A-S, B and C Certificates, constitute the “Exchangeable Certificates”. The Class A-1, A-2-1, A-2-2, A-SB, D, E, F, G and H Certificates and the Exchangeable Certificates with a Certificate Balance, are referred to as the “Principal Balance Certificates.” Each Class of Exchangeable Certificates will have the Certificate Balance or Notional Amount and pass-through rate described below under “Exchangeable Certificates.” |
(9) | The exact initial Certificate Balances or Notional Amounts of the Class A-2-1 and Class A-2-2 Certificates and the Class A-3, Class A-3-X1, Class A-3-X2, Class A-4, Class A-4-X1 and Class A-4-X2 trust components (and consequently, the exact initial Certificate Balance or Notional Amount of each class of Class A-3 Exchangeable Certificates and Class A-4 Exchangeable Certificates) are unknown and will be determined based on the final pricing of the Certificates. However, the initial Certificate Balances, weighted average lives and principal windows of the Class A-2-1 and Class A-2-2 Certificates and the Class A-3 and Class A-4 trust components are expected to be within the applicable ranges reflected in the following chart. The aggregate initial Certificate Balance of the Class A-2-1 and Class A-2-2 Certificates is expected to be approximately $198,630,000, subject to a variance of plus or minus 5%. The aggregate initial Certificate Balance of the Class A-3 and Class A-4 trust components is expected to be approximately $270,454,000, subject to a variance of plus or minus 5%. The Class A-3-X1 and Class A-3-X2 trust components will have initial Notional Amounts equal to the initial Certificate Balance of the Class A-3 trust component. The Class A-4-X1 and Class A-4-X2 trust components will have initial Notional Amounts equal to the initial Certificate Balance of the Class A-4 trust component. In the event that the Class A-2-1 Certificates are issued with the maximum Certificate Balance (i.e., with an initial Certificate Balance of $198,630,000), the Class A-2-2 Certificates will not be issued. In the event that the Class A-4 trust component is issued with an initial Certificate Balance of $270,454,000, the Class A-3 trust component (and, correspondingly, the Class A-3 Exchangeable Certificates) will not be issued. For purposes of the disclosure herein regarding the aggregate certificate balance of the offered certificates, it is assumed that the initial certificate balance of the Class A-2-1 certificates will be $198,630,000, and the initial certificate balance of the Class A-2-2 certificates will be $0. |
| Class of Certificates or Trust Components | | Expected Range of Approximate Initial Certificate Balance | | Expected Range of Weighted Average Life (Years) | | Expected Range of Principal Window (Months) | |
| Class A-2-1 Certificates | | $123,630,000 - $198,630,000 | | 4.81 – 4.81 | | 3/28 – 7/28 / 3/28 – 7/28 | |
| Class A-2-2 Certificates | | $0 - $75,000,000 | | NAP – 4.81 | | NAP / 3/28 – 7/28 | |
| Class A-3 trust component | | $0 - $70,000,000 | | NAP – 9.48 | | NAP / 12/32 – 2/33 | |
| Class A-4 trust component | | $200,454,000 - $270,454,000 | | 9.73 – 9.81 | | 12/32 – 6/33 / 2/33 – 6/33 | |
(10) | The Class X-A Certificates are notional amount certificates. The Notional Amount of the Class X-A Certificates will be equal to the aggregate Certificate Balance of the Class A-1, A-2-1, A-2-2 and A-SB Certificates and the Class A-3 and A-4 trust components outstanding from time to time. The Class X-A Certificates will not be entitled to distributions of principal. |
(11) | The pass-through rate for the Class X-A Certificates for any distribution date will be a per annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the weighted average of the pass-through rates on the Class A-1, A-2-1, A-2-2 and A-SB Certificates and the Class A-3, A-3-X1, A-3-X2, A-4, A-4-X1 and A-4-X2 trust components for the related distribution date, weighted on the basis of their respective Certificate Balances or Notional Amounts outstanding immediately prior to that distribution date (but excluding trust components with a Notional Amount in the denominator of such weighted average calculation). For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis. |
(12) | The Class X-B Certificates are notional amount certificates. The Notional Amount of the Class X-B Certificates will be equal to the aggregate Certificate Balance of the Class A-S, B and C trust components outstanding from time to time. The Class X-B Certificates will not be entitled to distributions of principal. |
(13) | The pass-through rate for the Class X-B Certificates for any distribution date will be a per annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the weighted average of the pass-through rates on the Class A-S, A-S-X1, A-S-X2, B, B-X1, B-X2, C, C-X1 and C-X2 trust components for the related distribution date, weighted on the basis of their respective Certificate Balances or Notional Amounts outstanding immediately prior to that distribution date (but excluding trust components with a Notional Amount in the denominator of such weighted average calculation). For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis. |
(14) | The Class X-D Certificates are notional amount certificates. The Notional Amount of the Class X-D Certificates will be equal to the aggregate Certificate Balance of the Class D and E Certificates outstanding from time to time. The Class X-D Certificates will not be entitled to distributions of principal. |
(15) | The pass-through rate for the Class X-D Certificates for any distribution date will be a per annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the weighted average of the pass-through rates on the Class D and E Certificates for the related distribution date, weighted on the basis of their respective Certificate Balances outstanding immediately prior to that distribution date. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis. |
(16) | The Class X-F, X-G and X-H Certificates are notional amount certificates. The Notional Amount of the Class X-F, X-G and X-H Certificates will be equal to the Certificate Balance of the Class F, G and H Certificates, respectively, outstanding from time to time. None of the Class X-F, X-G and X-H Certificates will be entitled to distributions of principal. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
4
BANK 2023-BNK46 | Class Structure |
(17) | The pass-through rate for the Class X-F, X-G and X-H for any distribution date will, in each case, be a per annum rate equal to the excess, if any, of (a) the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date, over (b) the pass-through rate on the Class F, G and H Certificates, respectively, for the related distribution date. For purposes of the calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis. |
(18) | Not offered pursuant to the Preliminary Prospectus or this Term Sheet. Information provided in this Term Sheet regarding the characteristics of these certificates and the VRR Interest is provided only to enhance your understanding of the offered certificates. |
(19) | The Class RR certificates will be certificated but will not be “certificates” for purposes of this Term Sheet. |
(20) | The effective interest rate for each of the Class RR Certificates and the RR Interest will be a variable rate per annum (described in the table as “WAC”) equal to the weighted average of the net mortgage interest rates on the mortgage loans for the related distribution date. For purposes of calculation of the weighted average of the net mortgage interest rates on the mortgage loans for each distribution date, the mortgage interest rates will be adjusted as necessary to a 30/360 basis. |
| |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
5
BANK 2023-BNK46 | Transaction Highlights |
II. Transaction Highlights
Mortgage Loan Sellers:
Mortgage Loan Seller | | Number of Mortgage Loans | | Number of Mortgaged Properties | | Aggregate Cut-off Date Balance | | Approx. % of Initial Pool Balance |
Wells Fargo Bank, National Association | | 17 | | 17 | | $242,686,531 | | 33.7% |
JPMorgan Chase Bank, National Association | | 5 | | 5 | | 141,090,000 | | 19.6 |
Morgan Stanley Mortgage Capital Holdings LLC | | 6 | | 6 | | 131,000,000 | | 18.2 |
Bank of America, National Association/JPMorgan Chase Bank, National Association | | 2 | | 2 | | 109,166,667 | | 15.1 |
Bank of America, National Association/Wells Fargo Bank, National Association | | 1 | | 1 | | 72,000,000 | | 9.99 |
Bank of America, National Association | | 1 | | 1 | | 24,635,000 | | 3.4 |
Total | | 32 | | 32 | | $720,578,197 | | 100.0% |
Loan Pool:
Initial Pool Balance: | $720,578,197 |
Number of Mortgage Loans: | 32 |
Average Cut-off Date Balance per Mortgage Loan: | $22,518,069 |
Number of Mortgaged Properties: | 32 |
Average Cut-off Date Balance per Mortgaged Property(1): | $22,518,069 |
Weighted Average Interest Rate: | 6.7964% |
Ten Largest Mortgage Loans as % of Initial Pool Balance: | 65.6% |
Weighted Average Original Term to Maturity (months)(2): | 103 |
Weighted Average Remaining Term to Maturity (months)(2): | 100 |
Weighted Average Original Amortization Term (months)(3): | 363 |
Weighted Average Remaining Amortization Term (months)(3): | 361 |
Weighted Average Seasoning (months): | 2 |
| (1) | Information regarding mortgage loans secured by multiple properties is based on an allocation according to relative appraised values or the allocated loan amounts or property-specific release prices set forth in the related loan documents or such other allocation as the related mortgage loan seller deemed appropriate. |
| (2) | With respect to any ARD Loan, unless otherwise indicated, references in this Term Sheet to the applicable “maturity date” or “maturity” refer to the applicable anticipated repayment date with respect to such ARD Loan, and such applicable anticipated repayment date is treated as its maturity date for all purposes hereof. |
| (3) | Excludes any mortgage loan that does not amortize. |
Credit Statistics:
Weighted Average U/W Net Cash Flow DSCR(1): | 2.18x |
Weighted Average U/W Net Operating Income Debt Yield(1): | 15.8% |
Weighted Average Cut-off Date Loan-to-Value Ratio(1): | 49.9% |
Weighted Average Balloon Loan-to-Value Ratio(1): | 49.2% |
% of Mortgage Loans with Additional Subordinate Debt(2): | 0.0% |
% of Mortgage Loans with Single Tenants(3): | 24.5% |
| (1) | With respect to any mortgage loan that is part of a whole loan, loan-to-value ratio, debt service coverage ratio and debt yield calculations include the related pari passu companion loan(s) but exclude any related subordinate companion loan(s) (unless otherwise stated). For mortgaged properties securing residential cooperative mortgage loans, the debt service coverage ratio and debt yield for each such mortgaged property are calculated using U/W Net Operating Income or U/W Net Cash Flow, as applicable, for the related residential cooperative property which is the projected net operating income or net cash flow, as applicable, reflected in the most recent appraisal obtained by or otherwise in the possession of the related mortgage loan seller as of the cut-off date, and the loan-to-value ratio is calculated based upon the appraised value of the residential cooperative property determined as if such residential cooperative property is operated as a residential cooperative, inclusive of the amount of the underlying debt encumbering such residential cooperative property. The debt service coverage ratio, debt yield and loan-to-value ratio information do not take into account any subordinate debt (whether or not secured by the related mortgaged property), that currently exists or is allowed under the terms of any mortgage loan. See “Description of the Mortgage Pool—Mortgage Pool Characteristics” in the Preliminary Prospectus and Annex A-1 to the Preliminary Prospectus. |
| (2) | Seven (3.1%) of the mortgage loans, each of which is secured by a residential cooperative property sold to the depositor by Wells Fargo Bank, National Association, currently have in place subordinate secured lines of credit to the related mortgage borrowers that permit future advances (such loans, collectively, the “Subordinate Coop LOCs”). The percentage figure expressed as “% of Mortgage Loans with Additional Subordinate Debt” is determined as a percentage of the initial pool balance and does not take into account any future subordinate debt (whether or not secured by the mortgaged property), if any, that may be permitted under the terms of any mortgage loan or the pooling and servicing agreement. See “Description of the Mortgage Pool—Additional Indebtedness—Other Unsecured Indebtedness” and “Description of the Mortgage Pool—Additional Indebtedness—Other Secured Indebtedness—Additional Debt Financing for Mortgage Loans Secured by Residential Cooperatives Sold to the Depositor by Wells Fargo Bank, National Association” in the Preliminary Prospectus. |
| (3) | Excludes mortgage loans that are secured by multiple single tenant properties. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
6
BANK 2023-BNK46 | Transaction Highlights |
Loan Structural Features:
Amortization: Based on the Initial Pool Balance, 16.2% of the mortgage pool (10 mortgage loans) has scheduled amortization, as follows:
9.6% (3 mortgage loans) provides for an interest-only period followed by an amortization period; and
6.6% (7 mortgage loans) requires amortization during the entire loan term
Interest-Only: Based on the Initial Pool Balance, 83.8% of the mortgage pool (22 mortgage loans) provides for interest-only payments during the entire loan term through maturity or anticipated repayment date. The weighted average Cut-off Date Loan-to-Value Ratio and weighted average U/W Net Cash Flow DSCR for those mortgage loans are 50.6% and 2.08x, respectively.
Hard Lockboxes: Based on the Initial Pool Balance, 77.5% of the mortgage pool (16 mortgage loans) has hard lockboxes in place.
Reserves: The mortgage loans require amounts to be escrowed monthly as follows (excluding any mortgage loans with springing provisions):
Real Estate Taxes: | 46.2% of the pool |
Insurance: | 20.3% of the pool |
Capital Replacements: | 34.3% of the pool |
TI/LC: | 33.3% of the pool(1) |
| (1) | The percentage of Initial Pool Balance for mortgage loans with TI/LC reserves is based on the aggregate principal balance allocable to loans that include office, mixed use, retail and industrial properties. |
Call Protection/Defeasance: Based on the Initial Pool Balance, the mortgage pool has the following call protection and defeasance features:
59.8% of the mortgage pool (16 mortgage loans) features a lockout period, then defeasance only until an open period;
24.2% of the mortgage pool (3 mortgage loans) features a lockout period, then greater of a prepayment premium (1%) or yield maintenance, then defeasance or greater of a prepayment premium (1%) or yield maintenance until an open period;
12.1% of the mortgage pool (4 mortgage loans) features a lockout period, then greater of a prepayment premium (1%) or yield maintenance until an open period;
3.9% of the mortgage pool (9 mortgage loans) features no lockout period, but requires the greater of a prepayment premium (1%) or yield maintenance, then a prepayment premium (1%) until an open period;
Prepayment restrictions for each mortgage loan reflect the entire life of the mortgage loan. Please refer to Annex A-1 to the Preliminary Prospectus and the footnotes related thereto for further information regarding individual loan call protection.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
7
BANK 2023-BNK46 | Issue Characteristics |
III. Issue Characteristics
Securities Offered: | $617,805,000 approximate monthly pay, multi-class, commercial mortgage REMIC pass-through certificates consisting of thirty classes (Classes A-1, A-2-1, A-SB, A-3, A-3-1, A-3-2, A-3-X1, A-3-X2, A-4, A-4-1, A-4-2, A-4-X1, A-4-X2, A-S, A-S-1, A-S-2, A-S-X1, A-S-X2, B, B-1, B-2, B-X1, B-X2, C, C-1, C-2, C-X1, C-X2, X-A and X-B), which are offered pursuant to a registration statement filed with the SEC (such Classes of certificates, the “Offered Certificates”). |
Mortgage Loan Sellers: | Wells Fargo Bank, National Association (“WFB”), JPMorgan Chase Bank, National Association (“JPMCB”), Bank of America, National Association (“BANA”) and Morgan Stanley Mortgage Capital Holdings LLC (“MSMCH”) |
Joint Bookrunners and Co-Lead Managers: | Wells Fargo Securities, LLC, J.P. Morgan Securities LLC, BofA Securities, Inc. and Morgan Stanley & Co. LLC |
Co-Manager: | Academy Securities, Inc., Drexel Hamilton, LLC and Siebert Williams Shank & Co., LLC |
Rating Agencies: | Fitch Ratings, Inc., Kroll Bond Rating Agency, LLC and Moody’s Investors Service, Inc. |
Master Servicers: | Wells Fargo Bank, National Association and National Cooperative Bank, N.A. |
Special Servicers: | LNR Partners, LLC and National Cooperative Bank, N.A. |
Certificate Administrator: | Computershare Trust Company, N.A. |
Trustee: | Wilmington Trust, National Association |
Operating Advisor: | Park Bridge Lender Services LLC |
Asset Representations Reviewer: | Park Bridge Lender Services LLC |
U.S. Credit Risk Retention: | For a discussion of the manner in which the U.S. credit risk retention requirements are being addressed by Morgan Stanley Mortgage Capital Holdings LLC, as the retaining sponsor, see “Credit Risk Retention” in the Preliminary Prospectus. |
EU Securitization Regulation and UK Securitization Regulation: | None of the sponsors, the depositor, the underwriters, or their respective affiliates, or any other person intends to retain a material net economic interest in the securitization constituted by the issue of the Certificates and the VRR Interest, or to take any other action in respect of such securitization, in a manner prescribed or contemplated by (i) Regulation (EU) 2017/2402, or (ii) such Regulation as it forms part of UK domestic law. In particular, no such person undertakes to take any action which may be required by any investor for the purposes of its compliance with any applicable requirement under either such Regulation. Furthermore, the arrangements described under “Credit Risk Retention” in the Preliminary Prospectus have not been structured with the objective of ensuring compliance by any person with any requirements of either such Regulation. See “Risk Factors—Other Risks Relating to the Certificates—EU Securitization Regulation and UK Securitization Regulation” in the Preliminary Prospectus. |
Initial Risk Retention Consultation Parties: | Wells Fargo Bank, National Association, JPMorgan Chase Bank, National Association, Bank of America, National Association and Morgan Stanley Mortgage Capital Holdings LLC |
Initial Majority Controlling Class Certificateholder: | Eightfold Real Estate Capital Fund VI, L.P. |
Cut-off Date: | The Cut-off Date with respect to each mortgage loan is the due date for the monthly debt service payment that is due in August 2023 (or, in the case of any mortgage loan that has its first due date after August 2023, the date that would have been its due date in August 2023 under the terms of that mortgage loan if a monthly debt service payment were scheduled to be due in that month). |
Expected Closing Date: | On or about August 10, 2023. |
Determination Dates: | The 11th day of each month (or if that day is not a business day, the next succeeding business day), commencing in September 2023. |
Distribution Dates: | The fourth business day following the Determination Date in each month, commencing in September 2023. |
Rated Final Distribution Date: | The Distribution Date in August 2056. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
8
BANK 2023-BNK46 | Issue Characteristics |
Interest Accrual Period: | With respect to any Distribution Date, the calendar month immediately preceding the month in which such Distribution Date occurs. |
Day Count: | The Offered Certificates will accrue interest on a 30/360 basis. |
Minimum Denominations: | $10,000 for each Class of Offered Certificates (other than the Class X-A and X-B Certificates) and $1,000,000 for the Class X-A and X-B Certificates. Investments may also be made in any whole dollar denomination in excess of the applicable minimum denomination. |
Clean-up Call: | 1.0% |
Delivery: | DTC, Euroclear and Clearstream Banking |
ERISA/SMMEA Status: | Each Class of Offered Certificates is expected to be eligible for exemptive relief under ERISA. No Class of Offered Certificates will be SMMEA eligible. |
Risk Factors: | THE CERTIFICATES INVOLVE CERTAIN RISKS AND MAY NOT BE SUITABLE FOR ALL INVESTORS. SEE THE “SUMMARY OF RISK FACTORS” AND “RISK FACTORS” SECTIONS OF THE PRELIMINARY PROSPECTUS. |
Bond Analytics Information: | The Certificate Administrator will be authorized to make distribution date statements, CREFC® reports and certain supplemental reports (other than confidential information) available to certain financial modeling and data provision services, including Bloomberg, L.P., Trepp, LLC, Intex Solutions, Inc., Markit Group Limited, Interactive Data Corp., BlackRock Financial Management, Inc., CMBS.com, Inc., Moody’s Analytics, Inc., Morningstar Credit Information & Analytics, LLC, KBRA Analytics, LLC, MBS Data, LLC, RealInsight and Thomson Reuters Corporation. |
Tax Treatment | For U.S. federal income tax purposes, the issuing entity will consist of one or more REMICs arranged in a tiered structure and a trust (the “grantor trust”). The upper-most REMIC will issue REMIC regular interests some of which will be held by the grantor trust (such grantor trust-held REMIC regular interests, the “trust components”). The Offered Certificates (other than the Exchangeable Certificates) will represent REMIC regular interests (other than the trust components). The Exchangeable Certificates will represent beneficial ownership of one or more of the trust components held by the grantor trust. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
9
BANK 2023-BNK46 | Characteristics of the Mortgage Pool |
IV. Characteristics of the Mortgage Pool(1)
A. Ten Largest Mortgage Loans
Mortgage Loan Seller | Mortgage Loan Name | City | State | Number of Mortgage Loans / Mortgaged Properties | Mortgage Loan Cut-off Date Balance ($) | % of Initial Pool Balance(%) | Property Type | Number of SF/Rooms | Cut-off Date Balance Per SF/Room ($) | Cut-off Date LTV Ratio (%) | Balloon LTV Ratio (%) | U/W NCF DSCR (x) | U/W NOI Debt Yield (%) |
BANA/WFB | CX - 250 Water Street | Cambridge | MA | 1 / 1 | $72,000,000 | 9.99% | Mixed Use | 479,004 | $1,110 | 48.8% | 48.8% | 1.66x | 9.3% |
BANA/JPMCB | Fashion Valley Mall | San Diego | CA | 1 / 1 | 70,000,000 | 9.7 | Retail | 1,377,155 | 327 | 31.5 | 31.5 | 3.15 | 18.7 |
JPMCB | Soho Beach House Miami | Miami Beach | FL | 1 / 1 | 60,100,000 | 8.3 | Hospitality | 50 | 2,800,000 | 50.7 | 50.7 | 2.34 | 17.8 |
WFB | Largo Town Center | Largo | MD | 1 / 1 | 45,500,000 | 6.3 | Retail | 277,104 | 164 | 66.2 | 66.2 | 1.48 | 10.7 |
WFB | Seagate Campus | Fremont | CA | 1 / 1 | 43,000,000 | 6.0 | Industrial | 574,775 | 299 | 66.2 | 66.2 | 1.83 | 13.6 |
MSMCH | 1201 Third Avenue | Seattle | WA | 1 / 1 | 42,000,000 | 5.8 | Office | 1,129,710 | 150 | 30.5 | 30.5 | 2.76 | 17.7 |
BANA/JPMCB | One & Two Commerce Square | Philadelphia | PA | 1 / 1 | 39,166,667 | 5.4 | Office | 1,896,143 | 116 | 51.4 | 51.4 | 1.68 | 14.7 |
WFB | Brandon Mall | Brandon | FL | 1 / 1 | 36,000,000 | 5.0 | Retail | 659,882 | 183 | 54.7 | 54.7 | 2.33 | 19.2 |
MSMCH | Cumberland Mall | Atlanta | GA | 1 / 1 | 33,000,000 | 4.6 | Retail | 709,318 | 254 | 48.9 | 48.9 | 1.66 | 13.8 |
JPMCB | 1825 K Street NW | Washington | DC | 1 / 1 | 32,000,000 | 4.4 | Office | 260,419 | 161 | 53.0 | 53.0 | 1.74 | 13.4 |
Top Three Total/Weighted Average | | | 3 / 3 | $202,100,000 | 28.0% | | | | 43.4% | 43.4% | 2.38x | 15.1% |
Top Five Total/Weighted Average | | | 5 / 5 | $290,600,000 | 40.3% | | | | 50.3% | 50.3% | 2.16x | 14.2% |
Top Ten Total/Weighted Average | | | 10 / 10 | $472,766,667 | 65.6% | | | | 49.1% | 49.1% | 2.12x | 14.8% |
Non-Top Ten Total/Weighted Average | | | 22 / 22 | $247,811,531 | 34.4% | | | | 51.5% | 49.4% | 2.29x | 17.6% |
| (1) | With respect to any mortgage loan that is part of a whole loan, Cut-off Date Balance Per SF or Room ($) loan-to-value ratio, debt service coverage ratio and debt yield calculations include the related pari passu companion loan(s) but exclude any related subordinate companion loan(s) (unless otherwise stated). With respect to each mortgage loan, debt service coverage ratio, debt yield and loan-to-value ratio information do not take into account subordinate debt (whether or not secured by the related mortgaged property), if any, that currently exists or is allowed under the terms of such mortgage loan. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
10
BANK 2023-BNK46 | Characteristics of the Mortgage Pool |
B. Summary of the Whole Loans
No. | Property Name | Mortgage Loan Seller in BANK 2023-BNK46 | Trust Cut-off Date Balance | Aggregate Pari-Passu Companion Loan Cut-off Date Balance (1) | Controlling Pooling/Trust & Servicing Agreement | Master Servicer | Special Servicer | Related Pari Passu Companion Loan(s) Securitizations | Related Pari Passu Companion Loan(s) Original Balance |
1 | CX - 250 Water Street | BANA/WFB | $72,000,000 | $531,500,000 | Future Securitization(2) | Wells Fargo Bank, National Association | LNR Partners, LLC | BANK 2023-BNK45, MSWF 2023-1, BMARK 2023-B38, BBCMS 2023-C20 | $459,500,000 |
2 | Fashion Valley Mall | BANA/JPMCB | $70,000,000 | $450,000,000 | Future Securitization(3) | KeyBank National Association | LNR Partners, LLC | BBCMS 2023-C20, BMARK 2023-B39 | $380,000,000 |
3 | Soho Beach House Miami | JPMCB | $60,100,000 | $140,000,000 | BMARK 2023-B39 | Midland Loan Services, a Division of PNC Bank, National Association | K-Star Asset Management LLC | BANK 2023-BNK46 | $79,900,000 |
5 | Seagate Campus | WFB | $43,000,000 | $172,000,000 | BMARK 2023-B39 | Midland Loan Services, a Division of PNC Bank, National Association | K-Star Asset Management LLC | BBCMS 2023-C20 | $129,000,000 |
6 | 1201 Third Avenue | MSMCH | $42,000,000 | $170,000,000 | BANK 2023-BNK46 | Wells Fargo Bank, N.A. | LNR Partners, LLC | BMARK 2023-V2, BMARK 2023-B38, BANK5 2023-5YR1 | $128,000,000 |
7 | One & Two Commerce Square | BANA/JPMCB | $39,166,667 | $220,000,000 | BANK 2023-BNK46 | Wells Fargo Bank, N.A. | LNR Partners, LLC | BBCMS 2023-C20, BANK5 2023-5YR2, Benchmark 2023-B39, Benchmark 2023-V3 | $180,833,333 |
8 | Brandon Mall | WFB | $36,000,000 | $121,000,000 | BANK5 2023-5YR2 | Midland Loan Services, a Division of PNC Bank, National Association | CWCapital Asset Management LLC | BANK 2023-BNK46 | $85,000,000 |
9 | Cumberland Mall | MSMCH | $33,000,000 | $180,000,000 | BMARK 2023-V2 | Midland Loan Services, a Division of PNC Bank, National Association | 3650 REIT Loan Servicing LLC | MSWF 2023-1 | $147,000,000 |
10 | 1825 K Street NW | JPMCB | $32,000,000 | $42,000,000 | BANK 2023-BNK46 | Wells Fargo Bank, N.A. | LNR Partners, LLC | Future Securitization | $10,000,000 |
20 | Barbours Cut Port IOS | WFB | $12,825,000 | $93,500,000 | MSWF 2023-1 | Wells Fargo Bank, N.A. | Argentic Service Company LP | BBCMS 2023-C20 | $80,675,000 |
| (1) | The Aggregate Pari Passu Companion Loan Cut-off Date Balance excludes the related Subordinate Companion Loans. |
| (2) | The CX – 250 Water Street whole loan will be serviced under the pooling and servicing agreement governing the BANK 2023-BNK45 trust until the securitization of the related note A-1 companion loan. From and after the securitization of the related note A-1 companion loan, such whole loan will be serviced under the pooling and servicing agreement governing such securitization and the related master servicer, special servicer, trustee, certificate administrator, custodian, operating advisor and directing certificateholder will be the parties specified in such pooling and servicing agreement. |
| (3) | The Fashion Valley Mall whole loan will be serviced under the pooling and servicing agreement governing the BBCMS 2023-C20 trust until the securitization of the related note A-1-1 companion loan. From and after the securitization of the related note A-1-1 companion loan, such whole loan will be serviced under the pooling and servicing agreement governing such securitization and the related master servicer, special servicer, trustee, certificate administrator, custodian, operating advisor and directing certificateholder will be the parties specified in such pooling and servicing agreement. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
11
BANK 2023-BNK46 | Characteristics of the Mortgage Pool |
C. Previous Securitization History(1)
Loan No. | Mortgage Loan Seller | Mortgage Loan or Mortgaged Property Name | City | State | Property Type | Mortgage Loan or Mortgaged Property Cut-off Date Balance ($) | % of Cut-off Date Pool Balance (%) | Previous Securitization |
3.00 | JPMCB | Soho Beach House Miami | Miami Beach | FL | Hospitality | $60,100,000 | 8.3% | BMARK 2019-B10, GSMS 2019-GC39 |
9.00 | MSMCH | Cumberland Mall | Atlanta | GA | Retail | 33,000,000 | 4.6 | WFCM 2013-LC12, WFRBS 2013-C14 |
11.00 | WFB | Prada Waikiki | Honolulu | HI | Retail | $26,981,699 | 3.7 | WFRBS 2014-C19 |
13.00 | MSMCH | Mariposa Shopping Center | Nogales | AZ | Retail | 25,000,000 | 3.5 | COMM 2015-PC1 |
14.00 | BANA | Hampton Inn Kearny Mesa | San Diego | CA | Hospitality | 24,635,000 | 3.4 | DBJPM 2016-C3 |
15.00 | WFB | Jacksonville Marriott | Jacksonville | FL | Hospitality | 23,500,000 | 3.3 | MSBAM 2013-C11 |
19.00 | WFB | Union Square | New Hope | PA | Mixed Use | 13,250,000 | 1.8 | WFRBS 2013-C14 |
22.00 | WFB | Central Westchester Tenants Corp | Hartsdale | NY | Multifamily | 7,935,115 | 1.1 | WFRBS 2013-C16 |
24.00 | WFB | Tracy Tenants Corp | New York | NY | Multifamily | 4,969,799 | 0.7 | WFRBS 2013-C13 |
28.00 | WFB | Elmhurst House, Inc | Elmhurst | NY | Multifamily | 2,590,331 | 0.4 | WFRBS 2014-C23 |
31.00 | WFB | Spice Lofthouse Corp a/k/a Spice Lofthouse Corporation | New York | NY | Multifamily | 1,391,048 | 0.2 | FNA 2013-M12 |
| Total | | | | | $196,371,293 | 27.3% | |
| (1) | The table above represents the most recent securitization with respect to the mortgaged property securing the related mortgage loan, based on information provided by the related borrower or obtained through searches of a third-party database. While loans secured by the above mortgaged properties may have been securitized multiple times in prior transactions, mortgage loans in this securitization are only listed in the above chart if the mortgage loan paid off a loan in another securitization. The information has not otherwise been confirmed by the mortgage loan sellers. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
12
BANK 2023-BNK46 | Characteristics of the Mortgage Pool |
D. Mortgage Loans with Scheduled Balloon Payments and Related Classes
Class A-2-1 and A-2-2(1) |
Loan No. | Mortgage Loan Seller | Mortgage Loan Name | State | Property Type | Mortgage Loan Cut-off Date Balance ($) | % of Initial Pool Balance (%) | Mortgage Loan Balance at Maturity ($) | % of Class A-2-1 and A-2-2 Certificate Principal Balance (%)(2) | SF | Loan per SF ($) | U/W NCF DSCR (x) | U/W NOI Debt Yield (%) | Cut-off Date LTV Ratio (%) | Balloon LTV Ratio (%) | Rem. IO Period (mos.) | Rem. Term to Maturity (mos.) | |
6 | MSMCH | 1201 Third Avenue | WA | Office | $42,000,000 | 5.8% | $42,000,000 | 21.1% | 1,129,710 | $150 | 2.76x | 17.7% | 30.5% | 30.5% | 55 | 55 | |
7 | BANA/JPMCB | One & Two Commerce Square | PA | Office | 39,166,667 | 5.4 | 39,166,667 | 19.7 | 1,896,143 | $116 | 1.68 | 14.7 | 51.4 | 51.4 | 58 | 58 | |
8 | WFB | Brandon Mall | FL | Retail | 36,000,000 | 5.0 | 36,000,000 | 18.1 | 659,882 | $183 | 2.33 | 19.2 | 54.7 | 54.7 | 58 | 58 | |
9 | MSMCH | Cumberland Mall | GA | Retail | 33,000,000 | 4.6 | 33,000,000 | 16.6 | 709,318 | $254 | 1.66 | 13.8 | 48.9 | 48.9 | 57 | 57 | |
10 | JPMCB | 1825 K Street NW | DC | Office | 32,000,000 | 4.4 | 32,000,000 | 16.1 | 260,419 | $161 | 1.74 | 13.4 | 53.0 | 53.0 | 59 | 59 | |
12 | JPMCB | 22330 Glenn Drive | VA | Office | 26,340,000 | 3.7 | 26,340,000 | 13.3 | 167,440 | $157 | 1.82 | 15.1 | 58.5 | 58.5 | 59 | 59 | |
Total/Weighted Average | | | $208,506,667 | 28.9% | $208,506,667 | 105.0% | | | 2.03x | 15.8% | 48.5% | 48.5% | 58 | 58 | |
| | | | | | | | | | | | | | | | | |
| (1) | The table above presents the mortgage loan whose balloon payments would be applied to pay down the principal balance of the Class A-2-1 and A-2-2 Certificates, assuming a 0% CPR and applying the “Structuring Assumptions” described in the Preliminary Prospectus, including the assumptions that (i) none of the mortgage loans in the pool experience prepayments prior to maturity, defaults or losses; (ii) there are no extensions of maturity dates of any mortgage loans in the pool; and (iii) each mortgage loan in the pool is paid in full on its stated maturity date. Each Class of Certificates evidences undivided ownership interests in the entire pool of mortgage loans. Debt service coverage ratio, debt yield and loan-to-value ratio information do not take into account subordinate debt (whether or not secured by the related mortgaged property), if any, that currently exists or is allowed under the terms of any mortgage loan. See Annex A-1 to the Preliminary Prospectus. |
| (2) | Reflects the percentage equal to the Balloon Balance divided by the aggregate initial Class A-2-1 and A-2-2 Certificate Balance. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
13
BANK 2023-BNK46 | Characteristics of the Mortgage Pool |
| E. | Property Type Distribution(1) |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg005.jpg)
Property Type | Number of Mortgaged Properties | Aggregate Cut-off Date Balance ($) | % of Cut-off Date Balance (%) | Weighted Average Cut-off Date LTV Ratio (%) | Weighted Average Balloon LTV Ratio (%) | Weighted Average U/W NCF DSCR (x) | Weighted Average U/W NOI Debt Yield (%) | Weighted Average U/W NCF Debt Yield (%) | Weighted Average Interest Rate (%) |
Retail | 7 | $257,881,699 | 35.8% | 50.3% | 49.2% | 2.04x | 14.5% | 13.9% | 6.7284% |
Super Regional Mall | 3 | 139,000,000 | 19.3 | 41.6 | 41.6 | 2.58 | 17.7 | 17.0 | 6.7276 |
Anchored | 3 | 91,900,000 | 12.8 | 65.0 | 63.8 | 1.42 | 10.8 | 10.0 | 6.7297 |
Single Tenant | 1 | 26,981,699 | 3.7 | 44.6 | 38.7 | 1.37 | 10.7 | 10.7 | 6.7280 |
Office | 5 | 153,006,667 | 21.2 | 48.3 | 48.3 | 1.98 | 14.9 | 13.9 | 7.1762 |
CBD | 3 | 113,166,667 | 15.7 | 44.1 | 44.1 | 2.10 | 15.4 | 14.1 | 6.9021 |
Suburban | 1 | 26,340,000 | 3.7 | 58.5 | 58.5 | 1.82 | 15.1 | 15.0 | 8.1390 |
Medical | 1 | 13,500,000 | 1.9 | 64.0 | 64.0 | 1.31 | 10.3 | 10.1 | 7.5960 |
Hospitality | 4 | 122,485,000 | 17.0 | 53.5 | 51.8 | 2.00 | 16.6 | 15.1 | 7.2813 |
Full Service | 2 | 83,600,000 | 11.6 | 49.3 | 48.1 | 2.19 | 17.3 | 15.9 | 6.9470 |
Limited Service | 1 | 24,635,000 | 3.4 | 65.0 | 60.4 | 1.43 | 14.5 | 12.9 | 8.2950 |
Select Service | 1 | 14,250,000 | 2.0 | 58.4 | 58.4 | 1.88 | 16.0 | 14.2 | 7.4900 |
Mixed Use | 3 | 93,650,000 | 13.0 | 50.1 | 50.1 | 1.66 | 10.1 | 9.9 | 5.8458 |
Lab/Office | 1 | 72,000,000 | 9.99 | 48.8 | 48.8 | 1.66 | 9.3 | 9.3 | 5.5095 |
Office/Retail | 1 | 13,250,000 | 1.8 | 64.2 | 64.2 | 1.44 | 10.8 | 9.8 | 6.7480 |
Office/Lab/Industrial | 1 | 8,400,000 | 1.2 | 38.9 | 38.9 | 2.02 | 16.1 | 15.0 | 7.3050 |
Industrial | 2 | 55,825,000 | 7.7 | 62.5 | 62.5 | 1.77 | 13.1 | 12.7 | 7.0768 |
R&D/Manufacturing | 1 | 43,000,000 | 6.0 | 66.2 | 66.2 | 1.83 | 13.6 | 13.1 | 7.0400 |
Other | 1 | 12,825,000 | 1.8 | 50.3 | 50.3 | 1.55 | 11.3 | 11.3 | 7.2000 |
Multifamily | 9 | 28,129,831 | 3.9 | 9.4 | 8.5 | 8.10 | 55.5 | 54.7 | 5.8048 |
Cooperative | 9 | 28,129,831 | 3.9 | 9.4 | 8.5 | 8.10 | 55.5 | 54.7 | 5.8048 |
Self Storage | 2 | 9,600,000 | 1.3 | 61.2 | 61.2 | 1.33 | 9.4 | 9.3 | 6.9317 |
Self Storage | 2 | 9,600,000 | 1.3 | 61.2 | 61.2 | 1.33 | 9.4 | 9.3 | 6.9317 |
Total/Weighted Average | 32 | $720,578,197 | 100.0% | 49.9% | 49.2% | 2.18x | 15.8% | 15.0% | 6.7964% |
| (1) | Because this table presents information relating to the mortgaged properties and not the mortgage loans, the information for mortgage loans secured by more than one mortgaged property is based on allocated loan amounts (allocating the principal balance of the mortgage loan to each of those properties according to the relative appraised values of the mortgaged properties or the allocated loan amounts or property-specific release prices set forth in the related mortgage loan documents or such other allocation as the related mortgage loan seller deemed appropriate).For mortgaged properties securing residential cooperative mortgage loans, the debt service coverage ratio and debt yield for each such mortgaged property is calculated using U/W Net Operating Income or U/W Net Cash Flow, as applicable, for the related residential cooperative property which is the projected net operating income or net cash flow, as applicable, reflected in the most recent appraisal obtained by or otherwise in the possession of the related mortgage loan seller as of the cut-off date and the loan-to-value ratio, is calculated based upon the appraised value of the residential cooperative property determined as if such residential cooperative property is operated as a residential cooperative, inclusive of the amount of the underlying debt encumbering such residential cooperative property. With respect to any mortgage loan that is part of a whole loan, the loan-to-value ratio, debt service coverage ratio and debt yield calculations include the related pari passu companion loan(s) but exclude any related subordinate companion loan(s) (unless otherwise stated). With respect to each mortgage loan, debt service coverage ratio, debt yield and loan-to-value ratio information do not take into account any subordinate debt (whether or not secured by the related mortgaged property) that currently exists or is allowed under the terms of such mortgage loan. See Annex A-1 to the Preliminary Prospectus. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
14
BANK 2023-BNK46 | Characteristics of the Mortgage Pool |
| F. | Geographic Distribution(1)(2) |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg006.jpg)
Location | Number of Mortgaged Properties | Aggregate Cut-off Date Balance ($) | % of Cut-off Date Balance (%) | Weighted Average Cut- off Date LTV Ratio (%) | Weighted Average Balloon LTV Ratio (%) | Weighted Average U/W NCF DSCR (x) | Weighted Average U/W NOI Debt Yield (%) | Weighted Average U/W NCF Debt Yield (%) | Weighted Average Interest Rate (%) |
California | 4 | $146,035,000 | 20.3% | 47.8% | 47.0% | 2.41x | 16.3% | 15.7% | 6.6390% |
Southern California | 2 | 94,635,000 | 13.1 | 40.2 | 39.0 | 2.70 | 17.6 | 16.9 | 6.3977 |
Northern California | 2 | 51,400,000 | 7.1 | 61.7 | 61.7 | 1.86 | 14.0 | 13.4 | 7.0833 |
Florida | 3 | 119,600,000 | 16.6 | 50.9 | 50.1 | 2.23 | 17.9 | 16.5 | 7.1496 |
Massachusetts | 1 | 72,000,000 | 9.99 | 48.8 | 48.8 | 1.66 | 9.3 | 9.3 | 5.5095 |
Pennsylvania | 3 | 66,666,667 | 9.3 | 55.4 | 55.4 | 1.68 | 14.2 | 12.7 | 7.5173 |
Maryland | 1 | 45,500,000 | 6.3 | 66.2 | 66.2 | 1.48 | 10.7 | 10.0 | 6.6510 |
Washington | 1 | 42,000,000 | 5.8 | 30.5 | 30.5 | 2.76 | 17.7 | 15.6 | 5.5850 |
Virginia | 2 | 39,840,000 | 5.5 | 60.4 | 60.4 | 1.65 | 13.5 | 13.3 | 7.9550 |
Other(3) | 17 | 188,936,531 | 26.2 | 47.5 | 45.9 | 2.49 | 18.4 | 17.9 | 6.9905 |
Total/Weighted Average | 32 | $720,578,197 | 100.0% | 49.9% | 49.2% | 2.18x | 15.8% | 15.0% | 6.7964% |
| | | | | | | | | |
| (1) | The mortgaged properties are located in 14 states. |
| (2) | Because this table presents information relating to the mortgaged properties and not the mortgage loans, the information for mortgage loans secured by more than one mortgaged property is based on allocated loan amounts (allocating the principal balance of the mortgage loan to each of those properties according to the relative appraised values of the mortgaged properties or the allocated loan amounts or property-specific release prices set forth in the related mortgage loan documents or such other allocation as the related mortgage loan seller deemed appropriate) For mortgaged properties securing residential cooperative mortgage loans, the debt service coverage ratio and debt yield for each such mortgaged property is calculated using U/W Net Operating Income or U/W Net Cash Flow, as applicable, for the related residential cooperative property, which is the projected net operating income or net cash flow, as applicable, reflected in the most recent appraisal obtained by or otherwise in the possession of the related mortgage loan seller as of the cut-off date, and the loan-to-value ratio, is calculated based upon the appraised value of the residential cooperative property determined as if such residential cooperative property is operated as a residential cooperative, inclusive of the amount of the underlying debt encumbering such residential cooperative property. With respect to any mortgage loan that is part of a whole loan, the loan-to-value ratio, debt service coverage ratio and debt yield calculations include the related pari passu companion loan(s) but exclude any related subordinate companion loan(s) (unless otherwise stated). With respect to each mortgage loan, debt service coverage ratio, debt yield and loan-to-value ratio information do not take into account any subordinate debt (whether or not secured by the related mortgaged property) that currently exists or is allowed under the terms of such mortgage loan. See Annex A-1 to the Preliminary Prospectus. |
| (3) | Includes 7 other states. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
15
BANK 2023-BNK46 | Characteristics of the Mortgage Pool |
| G. | Characteristics of the Mortgage Pool(1) |
CUT-OFF DATE BALANCE |
Range of Cut-off Date Balances ($) | Number of Mortgage Loans | Aggregate Cut-off Date Balance ($) | Percent by Aggregate Cut-off Date Pool Balance (%) |
996,428 - 1,000,000 | 1 | $996,428 | 0.1% |
1,000,001 - 5,000,000 | 8 | 23,198,288 | 3.2 |
5,000,001 - 20,000,000 | 7 | 75,760,115 | 10.5 |
20,000,001 - 30,000,000 | 6 | 147,856,699 | 20.5 |
30,000,001 - 50,000,000 | 7 | 270,666,667 | 37.6 |
50,000,001 - 70,000,000 | 2 | 130,100,000 | 18.1 |
72,000,000 | 1 | 72,000,000 | 9.99 |
Total: | 32 | $720,578,197 | 100.0% |
Average: | $22,518,069 | | |
UNDERWRITTEN NOI DEBT SERVICE COVERAGE RATIO |
Range of U/W NOI DSCRs (x) | Number of Mortgage Loans | Aggregate Cut-off Date Balance ($) | Percent by Aggregate Cut-off Date Pool Balance (%) |
1.30 - 1.50 | 5 | $71,481,699 | 9.9% |
1.51 - 2.00 | 11 | 366,716,667 | 50.9 |
2.01 - 4.00 | 8 | 256,747,110 | 35.6 |
4.01 - 9.00 | 5 | 11,336,759 | 1.6 |
9.01 – 9.34 | 2 | 12,904,914 | 1.8 |
16.70 | 1 | 1,391,048 | 0.2 |
Total: | 32 | $720,578,197 | 100.0% |
Weighted Average: | 2.29x | | |
UNDERWRITTEN NOI DEBT YIELD |
Range of U/W NOI Debt Yields (%) | Number of Mortgage Loans | Aggregate Cut-off Date Balance ($) | Percent by Aggregate Cut-off Date Pool Balance (%) |
9.2 - 12.0 | 10 | $240,056,699 | 33.3% |
12.1 - 16.0 | 7 | 212,391,667 | 29.5 |
16.1 - 20.0 | 6 | 240,000,000 | 33.3 |
20.1 - 40.0 | 2 | 5,497,110 | 0.8 |
40.1 - 60.0 | 4 | 8,336,759 | 1.2 |
60.1 – 66.6 | 2 | 12,904,914 | 1.8 |
115.5 | 1 | 1,391,048 | 0.2 |
Total: | 32 | $720,578,197 | 100.0% |
Weighted Average: | 15.8% | | |
| | | | | |
LOAN PURPOSE |
Loan Purpose | Number of Mortgage Loans | Aggregate Cut-off Date Balance ($) | Percent by Aggregate Cut-off Date Pool Balance (%) |
Refinance | 24 | $525,613,197 | 72.9% |
Acquisition | 4 | 145,900,000 | 20.2 |
Recapitalization | 4 | 49,065,000 | 6.8 |
Total: | 32 | $720,578,197 | 100.0% |
MORTGAGE RATE |
Range of Mortgage Rates (%) | Number of Mortgage Loans | Aggregate Cut-off Date Balance ($) | Percent by Aggregate Cut-off Date Pool Balance (%) |
5.5095 - 6.0000 | 10 | $208,636,293 | 29.0% |
6.0001 - 6.5000 | 2 | 3,493,538 | 0.5 |
6.5001 - 7.0000 | 9 | 225,331,699 | 31.3 |
7.0001 - 7.5000 | 4 | 78,475,000 | 10.9 |
7.5001 - 8.0000 | 5 | 153,666,667 | 21.3 |
8.0001 - 8.1390 | 1 | 26,340,000 | 3.7 |
8.2950 | 1 | 24,635,000 | 3.4 |
Total: | 32 | $720,578,197 | 100.0% |
Weighted Average: | 6.7964% | | |
UNDERWRITTEN NCF DEBT SERVICE COVERAGE RATIO |
Range of U/W NCF DSCRs (x) | Number of Mortgage Loans | Aggregate Cut-off Date Balance ($) | Percent by Aggregate Cut-off Date Pool Balance (%) |
1.28 - 1.50 | 9 | $179,866,699 | 25.0% |
1.51 - 2.00 | 9 | 296,081,667 | 41.1 |
2.01 - 4.00 | 6 | 218,997,110 | 30.4 |
4.01 - 9.00 | 5 | 11,336,759 | 1.6 |
9.01 – 9.11 | 2 | 12,904,914 | 1.8 |
16.62 | 1 | 1,391,048 | 0.2 |
Total: | 32 | $720,578,197 | 100.0% |
Weighted Average: | 2.18x | | |
UNDERWRITTEN NCF DEBT YIELD |
Range of U/W NCF Debt Yields (%) | Number of Mortgage Loans | Aggregate Cut-off Date Balance ($) | Percent by Aggregate Cut-off Date Pool Balance (%) |
9.0 - 12.0 | 10 | $240,056,699 | 33.3% |
12.1 - 16.0 | 10 | 286,291,667 | 39.7 |
16.1 - 20.0 | 3 | 166,100,000 | 23.1 |
20.1 - 40.0 | 2 | 5,497,110 | 0.8 |
40.1 - 60.0 | 4 | 8,336,759 | 1.2 |
60.1 – 65.0 | 2 | 12,904,914 | 1.8 |
115.0 | 1 | 1,391,048 | 0.2 |
Total: | 32 | $720,578,197 | 100.0% |
Weighted Average: | 15.0% | | |
| | | |
(1) For mortgaged properties securing residential cooperative mortgage loans, the debt service coverage ratio and debt yield for each such mortgaged property is calculated using U/W Net Operating Income or U/W Net Cash Flow, as applicable, for the related residential cooperative property, which is the projected net operating income or net cash flow, as applicable, reflected in the most recent appraisal obtained by or otherwise in the possession of the related mortgage loan seller as of the cut-off date, and the loan-to-value ratio is calculated based upon the appraised value of the residential cooperative property determined as if such residential cooperative property is operated as a residential cooperative, inclusive of the amount of the underlying debt encumbering such residential cooperative. With respect to any mortgage loan that is part of a whole loan, the loan-to-value ratio, debt service coverage ratio and debt yield calculations include the related pari passu companion loan(s) but exclude any related subordinate companion loan(s) (unless otherwise stated). With respect to each mortgage loan, debt service coverage ratio, debt yield and loan-to-value ratio information do not take into account any subordinate debt (whether or not secured by the related mortgaged property), that currently exists or is allowed under the terms of such mortgage loan. See Annex A-1 to the Preliminary Prospectus. Prepayment provisions for each mortgage loan reflects the entire life of the loan (from origination to maturity).
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
16
BANK 2023-BNK46 | Characteristics of the Mortgage Pool |
| |
ORIGINAL TERM TO MATURITY |
Original Terms to Maturity (months) | Number of Mortgage Loans | Aggregate Cut- off Date Balance | Percent by Aggregate Cut-off Date Pool Balance (%) |
60 | 6 | $208,506,667 | 28.9% |
120 | 26 | 512,071,531 | 71.1 |
Total: | 32 | $720,578,197 | 100.0% |
Weighted Average: | 103 months | | |
REMAINING TERM TO MATURITY |
Range of Remaining Terms to Maturity (months) | Number of Mortgage Loans | Aggregate Cut- off Date Balance | Percent by Aggregate Cut-off Date Pool Balance (%) |
55 - 59 | 6 | $208,506,667 | 28.9% |
112 - 120 | 26 | 512,071,531 | 71.1 |
Total: | 32 | $720,578,197 | 100.0% |
Weighted Average: | 100 months | | |
ORIGINAL AMORTIZATION TERM(1) |
Original Amortization Terms (months) | Number of Mortgage Loans | Aggregate Cut- off Date Balance | Percent by Aggregate Cut-off Date Pool Balance (%) |
Non-Amortizing | 22 | $603,681,667 | 83.8% |
360 | 9 | 114,399,420 | 15.9 |
480 | 1 | 2,497,110 | 0.3 |
Total: | 32 | $720,578,197 | 100.0% |
Weighted Average(3): | 363 months | | |
REMAINING AMORTIZATION TERM(2) |
Range of Remaining Amortization Terms (months) | Number of Mortgage Loans | Aggregate Cut- off Date Balance | Percent by Aggregate Cut-off Date Pool Balance (%) |
Non-Amortizing | 22 | $603,681,667 | 83.8% |
352 - 360 | 9 | 114,399,420 | 15.9 |
477 | 1 | 2,497,110 | 0.3 |
Total: | 32 | $720,578,197 | 100.0% |
Weighted Average(3): | 361 months | | |
LOCKBOXES |
Type of Lockbox | Number of Mortgage Loans | Aggregate Cut- off Date Balance | Percent by Aggregate Cut-off Date Pool Balance (%) |
Hard/ Springing Cash Management | 15 | $533,981,667 | 74.1% |
Soft/ Springing Cash Management | 3 | 84,000,000 | 11.7 |
Springing | 4 | 49,831,699 | 6.9 |
None | 9 | 28,129,831 | 3.9 |
Hard/ In Place Cash Management | 1 | 24,635,000 | 3.4 |
Total: | 32 | $720,578,197 | 100.0% |
PREPAYMENT PROVISION SUMMARY |
Prepayment Provision | Number of Mortgage Loans | Aggregate Cut- off Date Balance | Percent by Aggregate Cut-off Date Pool Balance (%) |
Lockout / Defeasance / Open | 16 | $430,941,699 | 59.8% |
Lockout / GRTR 1% or YM / Defeasance or GRTR 1% or YM / Open | 3 | 174,100,000 | 24.2 |
Lockout / GRTR 1% or YM / Open | 4 | 87,406,667 | 12.1 |
GRTR 1% or YM / 1% / Open | 9 | 28,129,831 | 3.9 |
Total: | 32 | $720,578,197 | 100.0% |
| | | |
| | | | |
CUT-OFF DATE LOAN-TO-VALUE RATIO | |
Range of Cut-off Date LTV Ratios (%) | Number of Mortgage Loans | Aggregate Cut- off Date Balance | Percent by Aggregate Cut-off Date Pool Balance (%) | |
4.1 - 15.0 | 8 | $25,632,721 | 3.6% | |
15.1 - 30.0 | 1 | 2,497,110 | 0.3 | |
30.1 - 40.0 | 3 | 120,400,000 | 16.7 | |
40.1 - 50.0 | 4 | 155,481,699 | 21.6 | |
50.1 - 60.0 | 8 | 226,281,667 | 31.4 | |
60.1 - 66.2 | 8 | 190,285,000 | 26.4 | |
Total: | 32 | $720,578,197 | 100.0% | |
Weighted Average: | 49.9% | | | |
BALLOON LOAN-TO-VALUE RATIO | |
Range of Balloon LTV Ratios (%) | Number of Mortgage Loans | Aggregate Cut- off Date Balance | Percent by Aggregate Cut-off Date Pool Balance (%) | |
3.5 - 15.0 | 9 | $28,129,831 | 3.9% | |
15.1 - 40.0 | 4 | 147,381,699 | 20.5 | |
40.1 - 50.0 | 3 | 128,500,000 | 17.8 | |
50.1 - 60.0 | 9 | 247,681,667 | 34.4 | |
60.1 - 66.2 | 7 | 168,885,000 | 23.4 | |
Total: | 32 | $720,578,197 | 100.0% | |
Weighted Average: | 49.2% | | | |
AMORTIZATION TYPE |
Amortization Type | Number of Mortgage Loans | Aggregate Cut- off Date Balance | Percent by Aggregate Cut-off Date Pool Balance (%) |
Interest Only | 21 | $531,681,667 | 73.8% |
Interest Only - ARD | 1 | 72,000,000 | 9.99 |
Interest Only, Amortizing Balloon | 3 | 69,535,000 | 9.6 |
Amortizing Balloon | 7 | 47,361,531 | 6.6 |
Total: | 32 | $720,578,197 | 100.0% |
ORIGINAL TERM OF INTEREST-ONLY PERIOD FOR PARTIAL IO LOANS |
IO Terms (months) | Number of Mortgage Loans | Aggregate Cut- off Date Balance | Percent by Aggregate Cut-off Date Pool Balance (%) |
24 | 2 | $48,135,000 | 6.7% |
36 | 1 | 21,400,000 | 3.0 |
Total: | 3 | $69,535,000 | 9.6% |
Weighted Average: | 28 months | | |
SEASONING |
Seasoning (months) | Number of Mortgage Loans | Aggregate Cut- off Date Balance | Percent by Aggregate Cut-off Date Pool Balance (%) |
0 | 2 | $70,135,000 | 9.7% |
1 | 10 | 177,471,699 | 24.6 |
2 | 8 | 297,841,667 | 41.3 |
3 | 2 | 35,497,110 | 4.9 |
4 | 2 | 3,586,759 | 0.5 |
5 | 1 | 42,000,000 | 5.8 |
6 | 3 | 78,360,847 | 10.9 |
8 | 4 | 15,685,115 | 2.2 |
Total: | 32 | $720,578,197 | 100.0% |
Weighted Average: | 2 months | | |
(1) The original amortization term shown for any mortgage loan that is interest only for part of its term does not include the number of months in its interest only period and reflects only the number of months as of the commencement of amortization remaining from the end of such interest-only period. (2) The remaining amortization term shown for any mortgage loan that is interest only for part of its term does not include the number of months in its interest only period and reflects only the number of months as of the commencement of amortization remaining from the end of such interest-only period. (3) Excludes the non-amortizing mortgage loans. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
17
BANK 2023-BNK46 | Certain Terms and Conditions |
| V. | Certain Terms and Conditions |
Allocation Between the VRR Interest and the Certificates: | Amounts available for distributions to the holders of the Certificates and the VRR Interest will be allocated between amounts available for distribution to the holders of the VRR Interest, on the one hand, and to the Certificates, on the other hand. The portion of such amount allocable to (a) the VRR Interest will at all times be the product of such amount multiplied by 5% and (b) the Certificates will at all times be the product of such amount multiplied by 95% (each, the respective “Percentage Allocation Entitlement”). The Class RR Certificates and the RR Interest will collectively constitute an “eligible vertical interest” (as such term is defined in the Credit Risk Retention Rules), which is expected to be acquired and retained by certain of the sponsors as described under “Credit Risk Retention” in the Preliminary Prospectus. The Class RR Certificates and the RR Interest collectively comprise the “VRR Interest”. |
| |
Interest Entitlements: | The interest entitlement of each Class of Certificates (other than the Class V and Class R Certificates) or trust component on each Distribution Date generally will be the interest accrued during the related Interest Accrual Period on the related Certificate Balance or Notional Amount at the related pass-through rate, net of any prepayment interest shortfalls allocated to that Class or trust component for such Distribution Date as described below. If prepayment interest shortfalls arise from voluntary prepayments (without the applicable Master Servicer’s consent) on particular non-specially serviced loans during any collection period, the applicable Master Servicer is required to make a compensating interest payment to offset those shortfalls, generally up to an amount equal to the portion of its master servicing fees that accrue at 0.25 basis points per annum. The remaining amount of prepayment interest shortfalls will be allocated between the VRR Interest, on one hand, and the Certificates (other than the Class V and Class R Certificates) on the other hand, in accordance with their respective Percentage Allocation Entitlements. The prepayment interest shortfalls allocated to the Certificates (other than the Class V and Class R Certificates) will be allocated among such Classes of Certificates (other than the Exchangeable Certificates) and trust components that are entitled to interest, on a pro rata basis, based on their respective amounts of accrued interest for the related Distribution Date, to reduce the interest entitlement on each such Class of Certificates. For any distribution date, prepayment interest shortfalls allocated to a trust component will be allocated among the related Classes of Exchangeable Certificates, pro rata, in accordance with their Class Percentage Interests. If a Class or trust component receives less than the entirety of its interest entitlement on any Distribution Date, then the shortfall (excluding any shortfall due to prepayment interest shortfalls), together with interest thereon, will be added to its interest entitlement for the next succeeding Distribution Date. |
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Aggregate Principal Distribution Amount: | The Aggregate Principal Distribution Amount for each Distribution Date generally will be the aggregate amount of principal received or advanced in respect of the mortgage loans, net of any non-recoverable advances and interest thereon and workout-delayed reimbursement amounts that are reimbursed to either Master Servicer, either Special Servicer or the Trustee during the related collection period. Non-recoverable advances and interest thereon are reimbursable from principal collections and advances before reimbursement from other amounts. Workout-delayed reimbursement amounts are reimbursable from principal collections. The Certificates will be entitled to the portion of the Aggregate Principal Distribution Amount equal to their Percentage Allocation Entitlement, which is referred to herein as the “Principal Distribution Amount”. |
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Subordination, Allocation of Losses and Certain Expenses: | The chart below describes the manner in which the payment rights of certain Classes of Certificates will be senior or subordinate, as the case may be, to the payment rights of other Classes of Certificates. The chart also shows the allocation between the VRR Interest and the Certificates and the corresponding entitlement to receive principal and/or interest of certain Classes of Certificates on any distribution date in descending order. It also shows the manner in which losses are allocated between the VRR Interest and the Certificates and the manner in which the Certificate allocations are further allocated to certain Classes of those Certificates in ascending order (beginning with the Non-Offered Certificates, other than the Class X-D, X-F, X-G, X-H, V and R Certificates) to reduce the balance of each such Class to zero; provided that no principal payments or mortgage loan losses will be allocated to the Class X-A, X-B, X-D, X-F, X-G, X-H, V or R Certificates or any class of Exchangeable Certificates with an “X” suffix, although principal payments and losses may reduce the Notional Amounts of the Class X-A, X-B, X-D, X-F, X-G and X-H Certificates and any class of Exchangeable Certificates with an “X” suffix, and, therefore, the amount of interest they accrue. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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BANK 2023-BNK46 | Certain Terms and Conditions |
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(1) The Class A-2-2, X-D, X-F, X-G and X-H Certificates and the VRR Interest are not offered by the Term Sheet or Preliminary Prospectus. (2) The maximum certificate balances of the Class A-3, A-4, A-S, B and C certificates (subject to the constraint on the aggregate initial certificate balance of the Class A-3 and A-4 trust components discussed in footnote (9) to the table under “Class Structure”) will be issued on the closing date, and the certificate balance or notional amount of each other class of Exchangeable Certificates will be equal to zero on the closing date. The relative priorities of the Exchangeable Certificates are described more fully under “Exchangeable Certificates.” (3) The Class X-A, X-B, X-D, X-F, X-G and X-H Certificates are interest-only certificates. (4) Other than the Class A-2-2, X-D, X-F, X-G, X-H, V and R Certificates. |
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Distributions: | On each Distribution Date, funds available for distribution from the mortgage loans, net of specified trust fees, expenses and reimbursements that are allocable to the Certificates will generally be distributed in the following amounts and order of priority (in each case to the extent of remaining available funds): |
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| 1. Class A-1, A-2-1, A-2-2, A-SB, A-3, A-4, X-A, X-B, X-D, X-F, X-G and X-H Certificates: To interest on the Class A-1, A-2-1, A-2-2, A-SB, X-A, X-B, X-D, X-F, X-G and X-H Certificates and the Class A-3, A-3-X1, A-3-X2, A-4, A-4-X1 and A-4-X2 trust components, pro rata, according to their respective interest entitlements. |
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| 2. Class A-1, A-2-1, A-2-2 and A-SB Certificates and the Class A-3 and A-4 trust components: To principal on the Class A-1, A-2-1, A-2-2 and A-SB Certificates and the Class A-3 and A-4 trust components in the following amounts and order of priority(i) first, to principal on the Class A-SB Certificates, in an amount up to the Principal Distribution Amount for such Distribution Date until their Certificate Balance is reduced to the Class A-SB Planned Principal Balance for such Distribution Date; (ii) second, to principal on the Class A-1 Certificates until their Certificate Balance is reduced to zero, up to the remainder of the Principal Distribution Amount for such Distribution Date; (iii) third, to principal on the Class A-2-1 and A-2-2 Certificates, pro rata, based on their respective outstanding Certificate Balances, until their Certificate Balance is reduced to zero, up to the remainder of the Principal Distribution Amount for such Distribution Date; (iv) fourth, to principal on the Class A-3 trust component, until its Certificate Balance is reduced to zero, up to the remainder of the Principal Distribution Amount for such Distribution Date; (v) fifth, to principal on the Class A-4 trust component, until its Certificate Balance is reduced to zero, up to the remainder of the Principal Distribution Amount for such Distribution Date; and (vi) sixth, to principal on the Class A-SB Certificates until their Certificate Balance is reduced to zero, up to the |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
19
BANK 2023-BNK46 | Certain Terms and Conditions |
| remainder of the Principal Distribution Amount for such Distribution Date. However, if the Certificate Balance of each and every Class of Principal Balance Certificates, other than the Class A-1, A-2-1, A-2-2 and A-SB Certificates and the Class A-3 and A-4 trust components, has been reduced to zero as a result of the allocation of Mortgage Loan losses and expenses and any of the Class A-1, A-2-1, A-2-2 and A-SB Certificates and the Class A-3 and A-4 trust components remains outstanding, then the Principal Distribution Amount will be distributed to the Class A-1, A-2-1, A-2-2 and A-SB Certificates and the Class A-3 and A-4 trust components, pro rata, based on their respective outstanding Certificate Balances, until their Certificate Balances have been reduced to zero. |
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| 3. Class A-1, A-2-1, A-2-2 and A-SB Certificates and the Class A-3 and A-4 trust components: To reimburse the holders of the Class A-1, A-2-1, A-2-2 and A-SB Certificates and the Class A-3 and A-4 trust components, pro rata, on the basis of previously allocated unreimbursed losses, for any previously unreimbursed losses (plus interest thereon) on the mortgage loans that were previously allocated in reduction of the Certificate Balances of such Classes or trust components. |
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| 4. Class A-S, A-S-X1 and A-S-X2 trust components: To make distributions on the Class A-S, A-S-X1 and A-S-X2 trust components as follows: (a) first, to interest on the Class A-S, A-S-X1 and A-S-X2 trust components, pro rata, according to their respective interest entitlements; (b) next, to the extent of the portion of the Principal Distribution Amount remaining after distributions in respect of principal to each Class with a higher distribution priority (in this case, the Class A-1, A-2-1, A-2-2 and A-SB Certificates and the Class A-3 and A-4 trust components), to principal on the Class A-S trust component until its Certificate Balance is reduced to zero; and (c) next, to reimburse the holders of the Class A-S trust component for any previously unreimbursed losses (plus interest thereon) on the mortgage loans that were previously allocated to that trust component in reduction of their Certificate Balance. 5. Class B, B-X1 and B-X2 trust components: To make distributions on the Class B, B-X1 and B-X2 trust components as follows: (a) first, to interest on the Class B, B-X1 and B-X2 trust components, pro rata, according to their respective interest entitlements; (b) next, to the extent of the portion of the Principal Distribution Amount remaining after distributions in respect of principal to each Class with a higher distribution priority (in this case, the Class A-1, A-2-1, A-2-2 and A-SB Certificates and the Class A-3, A-4 and A-S trust components), to principal on the Class B trust component until its Certificate Balance is reduced to zero; and (c) next, to reimburse the holders of the Class B trust component for any previously unreimbursed losses (plus interest thereon) on the mortgage loans that were previously allocated to that trust component in reduction of their Certificate Balance. 6. Class C, C-X1 and C-X2 trust components: To make distributions on the Class C, C-X1 and C-X2 trust components as follows: (a) first, to interest on the Class C, C-X1 and C-X2 trust components, pro rata, according to their respective interest entitlements; (b) next, to the extent of the portion of the Principal Distribution Amount remaining after distributions in respect of principal to each Class with a higher distribution priority (in this case, the Class A-1, A-2-1, A-2-2 and A-SB Certificates and the Class A-3, A-4, A-S and B trust components), to principal on the Class C trust component until its Certificate Balance is reduced to zero; and (c) next, to reimburse the holders of the Class C trust component for any previously unreimbursed losses (plus interest thereon) on the mortgage loans that were previously allocated to that trust component in reduction of their Certificate Balance. 7. Class D Certificates: To make distributions on the Class D Certificates as follows: (a) first, to interest on the Class D Certificates in the amount of the interest entitlement for that Class; (b) next, to the extent of the portion of the Principal Distribution Amount remaining after distributions in respect of principal to each Class with a higher distribution priority (in this case, the Class A-1, A-2-1, A-2-2 and A-SB Certificates and the Class A-3, A-4, A-S, B and C trust components), to principal on the Class D Certificates until their Certificate Balance is reduced to zero; and (c) next, to reimburse the holders of the Class D Certificates for any previously unreimbursed losses (plus interest thereon) on the mortgage loans that were previously allocated to that Class in reduction of their Certificate Balance. 8. After the Class A-1, A-2-1, A-2-2, A-SB and D Certificates and the Class A-3, A-4, A-S, B and C trust components are paid all amounts to which they are entitled, the remaining funds available for distribution will be used to pay interest, principal and loss |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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BANK 2023-BNK46 | Certain Terms and Conditions |
| reimbursement amounts on the Class E, F, G and H Certificates sequentially in that order in a manner analogous to the Class D Certificates. |
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| Principal and interest payable on the Class A-3, A-3-X1, A-3-X2, A-4, A-4-X1, A-4-X2, A-S, A-S-X1, A-S-X2, B, B-X1, B-X2, C, C-X1 and C-X2 trust components will be distributed pro rata to the corresponding classes of Exchangeable Certificates representing interests therein in accordance with their Class Percentage Interests therein as described below under “Exchangeable Certificates.” |
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Exchangeable Certificates: | Each class of Exchangeable Certificates may be exchanged for the corresponding classes of Exchangeable Certificates set forth next to such class in the table below, and vice versa. Following any exchange of one or more classes of Exchangeable Certificates (the applicable “Surrendered Classes”) for one or more classes of other Exchangeable Certificates (the applicable “Received Classes”), the Class Percentage Interests (as defined below) of the outstanding certificate balances or Notional Amounts of the Corresponding Trust Components that are represented by the Surrendered Classes (and consequently their related certificate balances or notional amounts) will be decreased, and those of the Received Classes (and consequently their related certificate balances or notional amounts) will be increased. The dollar denomination of each of the Received Classes of certificates must be equal to the dollar denomination of each of the Surrendered Classes of certificates. No fee will be required with respect to any exchange of Exchangeable Certificates. |
Surrendered Classes (or Received Classes) of Certificates | Received Classes (or Surrendered Classes) of Certificates |
Class A-3 | Class A-3-1, Class A-3-X1 |
Class A-3 | Class A-3-2, Class A-3-X2 |
Class A-4 | Class A-4-1, Class A-4-X1 |
Class A-4 | Class A-4-2, Class A-4-X2 |
Class A-S | Class A-S-1, Class A-S-X1 |
Class A-S | Class A-S-2, Class A-S-X2 |
Class B | Class B-1, Class B-X1 |
Class B | Class B-2, Class B-X2 |
Class C | Class C-1, Class C-X1 |
Class C | Class C-2, Class C-X2 |
On the closing date, the issuing entity will issue the following “trust components,” each with the initial certificate balance (or, if such trust component has an “X” suffix, notional amount) and pass-through rate set forth next to it in the table below. Each trust component with an “X” suffix will not be entitled to distributions of principal. |
Trust Component | Initial Certificate Balance or Notional Amount | Pass-Through Rate |
Class A-3 | See footnote (9) to the table under “Class Structure” | Class A-3 Certificate Pass-Through Rate minus 1.00% |
Class A-3-X1 | Equal to Class A-3 Trust Component Certificate Balance | 0.50% |
Class A-3-X2 | Equal to Class A-3 Trust Component Certificate Balance | 0.50% |
Class A-4 | See footnote (9) to the table under “Class Structure” | Class A-4 Certificate Pass-Through Rate minus 1.00% |
Class A-4-X1 | Equal to Class A-4 Trust Component Certificate Balance | 0.50% |
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THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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BANK 2023-BNK46 | Certain Terms and Conditions |
Trust Component | Initial Certificate Balance or Notional Amount | Pass-Through Rate |
Class A-4-X2 | Equal to Class A-4 Trust Component Certificate Balance | 0.50% |
Class A-S | $86,424,000 | Class A-S Certificate Pass-Through Rate minus 1.00% |
Class A-S-X1 | Equal to Class A-S Trust Component Certificate Balance | 0.50% |
Class A-S-X2 | Equal to Class A-S Trust Component Certificate Balance | 0.50% |
Class B | $30,805,000 | Class B Certificate Pass-Through Rate minus 1.00% |
Class B-X1 | Equal to Class B Trust Component Certificate Balance | 0.50% |
Class B-X2 | Equal to Class B Trust Component Certificate Balance | 0.50% |
Class C | $21,392,000 | Class C Certificate Pass-Through Rate minus 1.00% |
Class C-X1 | Equal to Class C Trust Component Certificate Balance | 0.50% |
Class C-X2 | Equal to Class C Trust Component Certificate Balance | 0.50% |
Each class of Exchangeable Certificates represents an undivided beneficial ownership interest in the trust components set forth next to it in the table below (the “Corresponding Trust Components”). Each class of Exchangeable Certificates has a pass-through rate equal to the sum of the pass-through rates of the Corresponding Trust Components and represents a percentage interest (the related “Class Percentage Interest”) in each Corresponding Trust Component, including principal and interest payable thereon, equal to (x) the certificate balance (or, if such class has an “X” suffix, notional amount) of such class of certificates, divided by (y) the certificate balance of the Class A-3 trust component (if such class of Exchangeable Certificates has an “A-3” designation), the Class A-4 trust component (if such class of Exchangeable Certificates has an “A-4” designation), the Class A-S trust component (if such class of Exchangeable Certificates has an “A-S” designation), the Class B trust component (if such class of Exchangeable Certificates has a “B” designation) or the Class C trust component (if such class of Exchangeable Certificates has a “C” designation). |
Group of Exchangeable Certificates | Class of Exchangeable Certificates | Corresponding Trust Components |
“Class A-3 Exchangeable Certificates” | Class A-3 | Class A-3, A-3-X1, A-3-X2 |
Class A-3-1 | Class A-3, A-3-X2 |
Class A-3-2 | Class A-3 |
Class A-3-X1 | Class A-3-X1 |
Class A-3-X2 | Class A-3-X1, A-3-X2 |
“Class A-4 Exchangeable Certificates” | Class A-4 | Class A-4, A-4-X1, A-4-X2 |
Class A-4-1 | Class A-4, A-4-X2 |
Class A-4-2 | Class A-4 |
Class A-4-X1 | Class A-4-X1 |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
22
BANK 2023-BNK46 | Certain Terms and Conditions |
Group of Exchangeable Certificates | Class of Exchangeable Certificates | Corresponding Trust Components |
“Class A-4 Exchangeable Certificates” | Class A-4-X2 | Class A-4-X1, A-4-X2 |
“Class A-S Exchangeable Certificates” | Class A-S | Class A-S, A-S-X1, A-S-X2 |
Class A-S-1 | Class A-S, A-S-X2 |
Class A-S-2 | Class A-S |
| Class A-S-X1 | Class A-S-X1 |
Class A-S-X2 | Class A-S-X1, A-S-X2 |
“Class B Exchangeable Certificates” | Class B | Class B, B-X1, B-X2 |
Class B-1 | Class B, B-X2 |
Class B-2 | Class B |
Class B-X1 | Class B-X1 |
Class B-X2 | Class B-X1, B-X2 |
“Class C Exchangeable Certificates” | Class C | Class C, C-X1, C-X2 |
Class C-1 | Class C, C-X2 |
Class C-2 | Class C |
Class C-X1 | Class C-X1 |
Class C-X2 | Class C-X1, C-X2 |
| The maximum Certificate Balance or Notional Amount of each class of Class A-3 Exchangeable Certificates that could be issued in an exchange is equal to the Certificate Balance of the Class A-3 trust component, the maximum Certificate Balance or Notional Amount of each class of Class A-4 Exchangeable Certificates that could be issued in an exchange is equal to the Certificate Balance of the Class A-4 trust component, the maximum Certificate Balance or Notional Amount of each class of Class A-S Exchangeable Certificates that could be issued in an exchange is equal to the Certificate Balance of the Class A-S trust component, the maximum Certificate Balance or Notional Amount of each class of Class B Exchangeable Certificates that could be issued in an exchange is equal to the Certificate Balance of the Class B trust component and the maximum Certificate Balance or Notional Amount of each class of Class C Exchangeable Certificates that could be issued in an exchange is equal to the Certificate Balance of the Class C trust component. The maximum Certificate Balances of Class A-3, A-4, A-S, B and C certificates (subject to the constraint on the aggregate initial Certificate Balance of the Class A-3 and A-4 trust components discussed in footnote (9) to table under “Class Structure”) will be issued on the closing date, and the Certificate Balance or Notional Amount of each other class of Exchangeable Certificates will be equal to zero on the Closing Date. Each class of Class A-3 Exchangeable Certificates, Class A-4 Exchangeable Certificates, Class A-S Exchangeable Certificates, Class B Exchangeable Certificates and Class C Exchangeable Certificates will have a Certificate Balance or Notional Amount equal to its Class Percentage Interest multiplied by the Certificate Balance of the Class A-3 trust component, Class A-4 trust component, Class A-S trust component, Class B trust component or Class C trust component, respectively. Each class of Class A-3 Exchangeable Certificates, Class A-4 Exchangeable Certificates, Class A-S Exchangeable Certificates, Class B Exchangeable Certificates and Class C Exchangeable Certificates with a Certificate Balance will have the same Approximate Initial Credit Support, Weighted Average Life, Expected Principal Window, Certificate Principal U/W NOI Debt Yield and Certificate Principal to Value Ratio as the Class A-3 Certificates, Class A-4 Certificates, Class A-S Certificates, Class B Certificates or Class C Certificates, respectively, shown above. |
Allocation of Yield Maintenance Charges and Prepayment Premiums: | If any yield maintenance charge or prepayment premium is collected during any particular collection period with respect to any mortgage loan, then on the Distribution Date corresponding to that collection period, the Certificate Administrator will pay that yield maintenance charge or prepayment premium (net of liquidation fees payable therefrom) in the following manner: (x) to the Certificates (other than the Class X-D, X-F, X-G, X-H, F, G, H, V and R certificates), in the following amounts: |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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BANK 2023-BNK46 | Certain Terms and Conditions |
| (1) to each of the Class A-1, A-2-1, A-2-2, A-SB, A-3, A-3-1, A-3-2, A-4, A-4-1, A-4-2, A-S, A-S-1, A-S-2, B, B-1, B-2, C, C-1, C-2, D and E Certificates, the product of (a) the Non-Retained Percentage of the yield maintenance charge or prepayment premium, (b) the related Base Interest Fraction (as defined in the Preliminary Prospectus) for such class and the applicable principal prepayment, and (c) a fraction, the numerator of which is equal to the amount of principal distributed to such class for that Distribution Date, and the denominator of which is the total amount of principal distributed to the Class A-1, A-2-1, A-2-2, A-SB, D, E, F, G and H Certificates and the Class A-3 Exchangeable Certificates, the Class A-4 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that Distribution Date, (2) to the Class A-3-X1 Certificates, the product of (a) the Non-Retained Percentage of such yield maintenance charge or prepayment premium, (b) a fraction, the numerator of which is equal to the amount of principal distributed to the Class A-3-1 Certificates for that Distribution Date, and the denominator of which is the total amount of principal distributed to the Class A-1, A-2-1, A-2-2, A-SB, D, E, F, G and H Certificates and the Class A-3 Exchangeable Certificates, the Class A-4 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that Distribution Date and (c) the difference between (i) the Base Interest Fraction for the Class A-3 Certificates and the applicable principal prepayment and (ii) the Base Interest Fraction for the Class A-3-1 Certificates and the applicable principal prepayment, (3) to the Class A-3-X2 Certificates, the product of (a) the Non-Retained Percentage of such yield maintenance charge or prepayment premium, (b) a fraction, the numerator of which is equal to the amount of principal distributed to the Class A-3-2 Certificates for that Distribution Date, and the denominator of which is the total amount of principal distributed to the Class A-1, A-2-1, A-2-2, A-SB, D, E, F, G and H Certificates and the Class A-3 Exchangeable Certificates, the Class A-4 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that Distribution Date and (c) the difference between (i) the Base Interest Fraction for the Class A-3 Certificates and the applicable principal prepayment and (ii) the Base Interest Fraction for the Class A-3-2 Certificates and the applicable principal prepayment, (4) to the Class A-4-X1 Certificates, the product of (a) the Non-Retained Percentage of such yield maintenance charge or prepayment premium, (b) a fraction, the numerator of which is equal to the amount of principal distributed to the Class A-4-1 Certificates for that Distribution Date, and the denominator of which is the total amount of principal distributed to the Class A-1, A-2-1, A-2-2, A-SB, D, E, F, G and H Certificates and the Class A-3 Exchangeable Certificates, the Class A-4 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that Distribution Date and (c) the difference between (i) the Base Interest Fraction for the Class A-4 Certificates and the applicable principal prepayment and (ii) the Base Interest Fraction for the Class A-4-1 Certificates and the applicable principal prepayment, (5) to the Class A-4-X2 Certificates, the product of (a) the Non-Retained Percentage of such yield maintenance charge or prepayment premium, (b) a fraction, the numerator of which is equal to the amount of principal distributed to the Class A-4-2 Certificates for that Distribution Date, and the denominator of which is the total amount of principal distributed to the Class A-1, A-2-1, A-2-2, A-SB, D, E, F, G and H Certificates and the Class A-3 Exchangeable Certificates, the Class A-4 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that Distribution Date and (c) the difference between (i) the Base Interest Fraction for the Class A-4 Certificates and the applicable principal prepayment and (ii) the Base Interest Fraction for the Class A-4-2 Certificates and the applicable principal prepayment, (6) to the Class A-S-X1 Certificates, the product of (a) the Non-Retained Percentage of such yield maintenance charge or prepayment premium, (b) a fraction, the |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
24
BANK 2023-BNK46 | Certain Terms and Conditions |
| numerator of which is equal to the amount of principal distributed to the Class A-S-1 Certificates for that Distribution Date, and the denominator of which is the total amount of principal distributed to the Class A-1, A-2-1, A-2-2, A-SB, D, E, F, G and H Certificates and the Class A-3 Exchangeable Certificates, the Class A-4 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that Distribution Date and (c) the difference between (i) the Base Interest Fraction for the Class A-S Certificates and the applicable principal prepayment and (ii) the Base Interest Fraction for the Class A-S-1 Certificates and the applicable principal prepayment, (7) to the Class A-S-X2 Certificates, the product of (a) the Non-Retained Percentage of such yield maintenance charge or prepayment premium, (b) a fraction, the numerator of which is equal to the amount of principal distributed to the Class A-S-2 Certificates for that Distribution Date, and the denominator of which is the total amount of principal distributed to the Class A-1, A-2-1, A-2-2, A-SB, D, E, F, G and H Certificates and the Class A-3 Exchangeable Certificates, the Class A-4 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that Distribution Date and (c) the difference between (i) the Base Interest Fraction for the Class A-S Certificates and the applicable principal prepayment and (ii) the Base Interest Fraction for the Class A-S-2 Certificates and the applicable principal prepayment, (8) to the Class B-X1 Certificates, the product of (a) the Non-Retained Percentage of such yield maintenance charge or prepayment premium, (b) a fraction, the numerator of which is equal to the amount of principal distributed to the Class B-1 Certificates for that Distribution Date, and the denominator of which is the total amount of principal distributed to the Class A-1, A-2-1, A-2-2, A-SB, D, E, F, G and H Certificates and the Class A-3 Exchangeable Certificates, the Class A-4 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that Distribution Date and (c) the difference between (i) the Base Interest Fraction for the Class B Certificates and the applicable principal prepayment and (ii) the Base Interest Fraction for the Class B-1 Certificates and the applicable principal prepayment, (9) to the Class B-X2 Certificates, the product of (a) the Non-Retained Percentage of such yield maintenance charge or prepayment premium, (b) a fraction, the numerator of which is equal to the amount of principal distributed to the Class B-2 Certificates for that Distribution Date, and the denominator of which is the total amount of principal distributed to the Class A-1, A-2-1, A-2-2, A-SB, D, E, F, G and H Certificates and the Class A-3 Exchangeable Certificates, the Class A-4 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that Distribution Date and (c) the difference between (i) the Base Interest Fraction for the Class B Certificates and the applicable principal prepayment and (ii) the Base Interest Fraction for the Class B-2 Certificates and the applicable principal prepayment, (10) to the Class C-X1 Certificates, the product of (a) the Non-Retained Percentage of such yield maintenance charge or prepayment premium, (b) a fraction, the numerator of which is equal to the amount of principal distributed to the Class C-1 Certificates for that Distribution Date, and the denominator of which is the total amount of principal distributed to the Class A-1, A-2-1, A-2-2, A-SB, D, E, F, G and H Certificates and the Class A-3 Exchangeable Certificates, the Class A-4 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that Distribution Date and (c) the difference between (i) the Base Interest Fraction for the Class C Certificates and the applicable principal prepayment and (ii) the Base Interest Fraction for the Class C-1 Certificates and the applicable principal prepayment, (11) to the Class C-X2 Certificates, the product of (a) the Non-Retained Percentage of such yield maintenance charge or prepayment premium, (b) a fraction, the numerator of which is equal to the amount of principal distributed to the Class C-2 Certificates for that Distribution Date, and the denominator of which is the total |
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THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
25
BANK 2023-BNK46 | Certain Terms and Conditions |
| amount of principal distributed to the Class A-1, A-2-1, A-2-2, A-SB, D, E, F, G and H Certificates and the Class A-3 Exchangeable Certificates, the Class A-4 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that Distribution Date and (c) the difference between (i) the Base Interest Fraction for the Class C Certificates and the applicable principal prepayment and (ii) the Base Interest Fraction for the Class C-2 Certificates and the applicable principal prepayment, (12) to the Class X-A Certificates, the excess, if any, of (a) the product of (i) the Non-Retained Percentage of such yield maintenance charge or prepayment premium and (ii) a fraction, the numerator of which is equal to the total amount of principal distributed to the Class A-1, A-2-1, A-2-2 and A-SB Certificates and the Class A-3 Exchangeable Certificates and the Class A-4 Exchangeable Certificates for that Distribution Date, and the denominator of which is the total amount of principal distributed to the Class A-1, A-2-1, A-2-2, A-SB, D, E, F, G and H Certificates and the Class A-3 Exchangeable Certificates, the Class A-4 Exchangeable Certificates, the Class A-S Exchangeable Certificates, the Class B Exchangeable Certificates and the Class C Exchangeable Certificates for that Distribution Date, over (b) the total amount of such yield maintenance charge or prepayment premium distributed to the Class A-1, A-2-1, A-2-2 and A-SB Certificates and the Class A-3 Exchangeable Certificates and the Class A-4 Exchangeable Certificates as described above, and (13) to the Class X-B Certificates, any remaining portion of the Non-Retained Percentage of such yield maintenance charge or prepayment premium not distributed as described above, and (y) to the VRR Interest (and, correspondingly, pro rata to the Class RR Certificates and the RR Interest based on their respective percentage interests in the VRR Interest), its Percentage Allocation Entitlement of such yield maintenance charge or prepayment premium. No prepayment premiums or yield maintenance charges will be distributed to the holders of the Class X-D, X-F, X-G, X-H, F, G, H or R Certificates. For a description of when prepayment premiums and yield maintenance charges are generally required on the mortgage loans, see Annex A-1 to the Preliminary Prospectus. See also “Risk Factors—Risks Relating to the Mortgage Loans—Risks Relating to Enforceability of Yield Maintenance Charges, Prepayment Premiums or Defeasance Provisions” and “Risk Factors—Other Risks Relating to the Certificates—Your Yield May Be Affected by Defaults, Prepayments and Other Factors” in the Preliminary Prospectus. Prepayment premiums and yield maintenance charges will be distributed on each Distribution Date only to the extent they are actually received on the mortgage loans as of the related Determination Date. |
Realized Losses: | The Certificate Balances of the Class A-1, A-2-1, A-2-2, A-SB, D, E, F, G and H Certificates and the Class A-3, A-4, A-S, B and C trust components will be reduced without distribution on any Distribution Date as a write-off to the extent of the Non-Retained Percentage of any losses realized on the mortgage loans allocated to such Class on such Distribution Date. Such losses will be applied in the following order, in each case until the related Certificate Balance is reduced to zero: first, to the Class H Certificates; second, to the Class G Certificates; third, to the Class F Certificates; fourth, to the Class E Certificates; fifth, to the Class D Certificates; sixth, to the Class C trust component; seventh, to the Class B trust component; eighth, to the Class A-S trust component; and, finally, pro rata, to the Class A-1, A-2-1, A-2-2, A-SB Certificates and the Class A-3 and A-4 trust components based on their outstanding Certificate Balances. Any portion of such amount applied to the Class A-3, A-4, A-S, B or C trust component will reduce the Certificate Balance or Notional Amount of each Class of Certificates in the related group of Exchangeable Certificates by an amount equal to the product of (x) its Certificate Balance or Notional Amount, divided by the Certificate Balance of such trust component prior to the applicable reduction, and (y) the amount applied to such trust component. The Notional Amount of the Class X-A Certificates will be reduced by the amount of all losses that are allocated to the Class A-1, A-2-1, A-2-2 and A-SB Certificates or the Class A-3 or A-4 trust components as write-offs in reduction of their Certificate Balances. The Notional Amount of the Class X-B Certificates will be reduced by the amount of all losses that are allocated to the Class A-S, B or C trust components as write-offs in reduction of their Certificate Balances. The Notional Amount of the Class X-D Certificates will be reduced by the amount of all losses that are allocated to the Class D or E Certificates as write-offs in reduction of their Certificate Balances. The Notional Amount of the Class X-F Certificates will be reduced by the amount of all losses that are allocated to the Class F Certificates as write-offs in reduction of their Certificate Balance. The Notional |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
26
BANK 2023-BNK46 | Certain Terms and Conditions |
| Amount of the Class X-G Certificates will be reduced by the amount of all losses that are allocated to the Class G Certificates as write-offs in reduction of their Certificate Balance. The Notional Amount of the Class X-H Certificates will be reduced by the amount of all losses that are allocated to the Class H Certificates as write-offs in reduction of their Certificate Balance. |
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P&I Advances: | Each Master Servicer or, if such Master Servicer fails to do so, the Trustee, will be obligated to advance delinquent debt service payments with respect to the mortgage loans it services (other than balloon payments, excess interest and default interest) and assumed debt service payments on mortgage loans with delinquent balloon payments (excluding any related companion loan), except to the extent any such advance is deemed non-recoverable from collections on the related mortgage loan. In addition, if an Appraisal Reduction Amount exists for a given mortgage loan, the interest portion of any P&I advance for such mortgage loan will be reduced, which will have the effect of reducing the amount of interest available for distribution to the Certificates, which with respect to the Certificates (other than the Class V and Class R Certificates) will be applied in reverse alphabetical order of their Class designations (except that interest payments on the Class A-1, A-2-1, A-2-2, A-SB, A-3, A-3-X1, A-3-X2, A-4, A-4-X1, A-4-X2, X-A, X-B, X-D, X-F, X-G and X-H Certificates would be affected on a pari passu basis). |
Servicing Advances: | Each Master Servicer or, if such Master Servicer fails to do so, the Trustee, will be obligated to make servicing advances, including the payment of delinquent property taxes, insurance premiums and ground rent, except to the extent that those advances are deemed non-recoverable from collections on the related mortgage loan. The related Master Servicer or the Trustee, as applicable, will have the primary obligation to make any required servicing advances with respect to any serviced whole loan. With respect to any non-serviced whole loan, the master servicer or trustee, as applicable, under the related lead securitization servicing agreement will have the primary obligation to make any required servicing advances with respect to such non-serviced whole loan. |
Appraisal Reduction Amounts and Collateral Deficiency Amounts: | An “Appraisal Reduction Amount” generally will be created in the amount, if any, by which the principal balance of a required appraisal loan (which is a mortgage loan (other than a non-serviced mortgage loan) with respect to which certain defaults, modifications or insolvency events have occurred as further described in the Preliminary Prospectus) plus other amounts overdue or advanced in connection with such mortgage loan exceeds 90% of the appraised value of the related mortgaged property plus certain escrows and reserves (including letters of credit) held with respect to the mortgage loan. With respect to any serviced whole loan, any Appraisal Reduction Amount will be allocated first to the related subordinate companion loan(s), if any, and then, pro rata, to the related mortgage loan and the related pari passu companion loan(s). With respect to any non-serviced mortgage loan, appraisal reduction amounts are expected to be calculated in a similar manner under the related non-serviced pooling and servicing agreement. A mortgage loan will cease to be a required appraisal loan when the same has ceased to be a specially serviced loan (if applicable), has been brought current for at least three consecutive months and no other circumstances exist that would cause such mortgage loan to be a required appraisal loan. A “Collateral Deficiency Amount” will exist with respect to any mortgage loan that is modified into an AB loan structure and remains a corrected mortgage loan and will generally equal the excess of (i) the stated principal balance of such AB modified loan (taking into account the related junior note(s) and any pari passu notes included therein), over (ii) the sum of (in the case of a whole loan, solely to the extent allocable to the subject mortgage loan) (x) the most recent appraised value of the related mortgaged property plus (y) solely to the extent not reflected or taken into account in such appraised value (or in the calculation of any related Appraisal Reduction Amount) and to the extent on deposit with, or otherwise under the control of, the lender as of the date of such determination, any capital or additional collateral contributed by the related borrower at the time the mortgage loan (and as part of the modification thereto) became an AB modified loan plus (z) any other escrows or reserves (in addition to any amounts set forth in the immediately preceding clause (y) and solely to the extent not reflected or taken into account in the calculation of any related Appraisal Reduction Amount) held by the lender with respect to the mortgage loan as of the date of such determination. A “Cumulative Appraisal Reduction Amount” with respect to any mortgage loan will be the sum of any Appraisal Reduction Amount and any Collateral Deficiency Amount. Appraisal Reduction Amounts will affect the amount of debt service advances in respect of the related mortgage loan. Additionally, Cumulative Appraisal Reduction Amounts will be taken into account in the determination of the identity of the Class whose majority constitutes the “majority controlling class certificateholder” and is entitled to appoint the directing certificateholder. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
27
BANK 2023-BNK46 | Certain Terms and Conditions |
Clean-Up Call and Exchange Termination: | On each Distribution Date occurring after the aggregate unpaid principal balance of the pool of mortgage loans is less than 1.0% of the principal balance of the mortgage loans as of the cut-off date, certain specified persons will have the option to purchase all of the remaining mortgage loans (and the trust’s interest in all property acquired through exercise of remedies in respect of any mortgage loan) at the price specified in the Preliminary Prospectus. Exercise of the option will terminate the trust and retire the then-outstanding Certificates and the VRR Interest If the aggregate Certificate Balances of each of the Class A-1, A-2-1, A-2-2, A-SB, D and E Certificates and the Class A-3, A-4, A-S, B and C trust components have been reduced to zero, the trust may also be terminated in connection with an exchange of all the then-outstanding Certificates (other than the Class V and Class R Certificates) for the mortgage loans and REO properties then remaining in the issuing entity, subject to payment of a price specified in the Preliminary Prospectus, but all of the holders of those outstanding Classes of Certificates (other than the Class V and Class R Certificates) would have to voluntarily participate in the exchange. |
Liquidation Loan Waterfall: | Following the liquidation of any mortgage loan or mortgaged property, the net liquidation proceeds generally will be applied (after reimbursement of advances and certain trust fund expenses), first, as a recovery of accrued interest, other than delinquent interest that was not advanced as a result of Appraisal Reduction Amounts, second, as a recovery of principal until all principal has been recovered, and then as a recovery of delinquent interest that was not advanced as a result of Appraisal Reduction Amounts. Please see “Description of the Certificates—Distributions—Application Priority of Mortgage Loan Collections or Whole Loan Collections” in the Preliminary Prospectus. |
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Control Eligible Certificates: | The Class G and H Certificates. |
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Directing Certificateholder/ Controlling Class: | A directing certificateholder may be appointed by the “majority controlling class certificateholder”, which will be the holder(s) of a majority of the Controlling Class. The “Controlling Class” will be, as of any time of determination, the most subordinate Class of Control Eligible Certificates then-outstanding that has an aggregate Certificate Balance (as notionally reduced by any Cumulative Appraisal Reduction Amounts allocable to such Class) at least equal to 25% of the initial Certificate Balance of that Class; provided, however, that if at any time the Certificate Balances of the Certificates other than the Control Eligible Certificates have been reduced to zero as a result of principal payments on the Mortgage Loans, then the Controlling Class will be the most subordinate Class of Control Eligible Certificates that has a Certificate Balance greater than zero without regard to any Cumulative Appraisal Reduction Amounts. The Controlling Class as of the Closing Date will be the Class [H] Certificates. The Control Eligible Certificates will not include the VRR Interest, and the VRR Interest is not permitted to be a Controlling Class. |
Control and Consultation/ Replacement of Special Servicer by Directing Certificateholder: | The rights of various parties to replace a Special Servicer and approve or consult with respect to major actions of a Special Servicer will vary according to defined periods. A “Control Termination Event” will occur when the Class F Certificates have a Certificate Balance (taking into account the application of any Cumulative Appraisal Reduction Amounts to notionally reduce the Certificate Balance of such Class) of less than 25% of the initial Certificate Balance of that Class; provided, that a Control Termination Event will not be deemed continuing in the event that the Certificate Balances of the Certificates other than the Control Eligible Certificates have been reduced to zero as a result of principal payments on the Mortgage Loans. A “Consultation Termination Event” will occur when there is no Class of Control Eligible Certificates that has a then-outstanding Certificate Balance at least equal to 25% of the initial Certificate Balance of that Class, in each case, without regard to the application of any Cumulative Appraisal Reduction Amounts; provided, however, that a Consultation Termination Event will not be deemed continuing in the event that the Certificate Balances of the Certificates other than the Control Eligible Certificates have been reduced to zero as a result of principal payments on the Mortgage Loans. If no Control Termination Event has occurred and is continuing, except with respect to the Excluded Loans (as defined below) with respect to the directing certificateholder (i) the directing certificateholder will be entitled to grant or withhold approval of asset status reports prepared, and material servicing actions proposed, by a Special Servicer, and (ii) the directing certificateholder will be entitled to terminate and replace a Special Servicer with or without cause, and appoint itself or another person as the successor special servicer. It will be a condition to such appointment that Fitch, KBRA and Moody’s (and any rating agency rating any securities backed by any pari passu companion loan(s) serviced under this transaction) confirm that the appointment would not result in a qualification, downgrade or withdrawal of any of their then-current ratings of Certificates (and any certificates backed by any pari passu companion loan(s) serviced under this transaction). |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
28
BANK 2023-BNK46 | Certain Terms and Conditions |
| If a Control Termination Event has occurred and is continuing but no Consultation Termination Event has occurred and is continuing, each Special Servicer will be required to consult with the directing certificateholder (other than with respect to Excluded Loans as to such party) and the Operating Advisor in connection with asset status reports and material special servicing actions. If a Consultation Termination Event has occurred and is continuing, each Special Servicer must seek to consult with the Operating Advisor in connection with asset status reports and material special servicing actions, and, in general, no directing certificateholder will be recognized or have any right to terminate either Special Servicer or approve, direct or consult with respect to servicing matters. With respect to each serviced whole loan, the rights of the directing certificateholder described above will be subject to the consultation rights of the holders of the related pari passu companion loans. Those consultation rights will generally extend to asset status reports and material special servicing actions involving the related whole loan, will be as set forth in the related intercreditor agreement, and will be in addition to the rights of the directing certificateholder in this transaction described above. With respect to each non-serviced whole loan, the applicable servicing agreement for the related controlling pari passu companion loan(s) generally grants (or will grant) the directing certificateholder under the related securitization (or, in some cases, a controlling companion loan holder) control rights that may include the right to approve or disapprove various material servicing actions involving the related whole loan. The directing certificateholder for this securitization (so long as no Consultation Termination Event has occurred and is occurring) generally will nonetheless have the right to be consulted on a non-binding basis with respect to such actions. For purposes of the servicing of any such whole loan contemplated by this paragraph, the occurrence and continuance of a Control Termination Event or Consultation Termination Event under this securitization will not limit the control or other rights of the directing certificateholder (or equivalent) under the securitization of the related controlling pari passu companion loan(s). The control rights and consent and consultation rights described in the preceding paragraphs are subject to various limitations, conditions and exceptions as described in the Preliminary Prospectus. Notwithstanding any contrary description set forth above, in the event that, with respect to any mortgage loan, the majority controlling class certificateholder or the directing certificateholder is a Borrower Party, the majority controlling class certificateholder and the directing certificateholder will have no right to receive asset status reports or such other information as may be specified in the BANK 2023-BNK46 pooling and servicing agreement, to grant or withhold approval of, or consult with respect to, asset status reports prepared, and material servicing actions proposed, by the applicable Special Servicer, with respect to such mortgage loan, and such mortgage loan will be referred to as an “Excluded Loan” as to such party. In addition, notwithstanding any contrary description set forth above, in the event that, with respect to any mortgage loan, a controlling class certificateholder is a Borrower Party, such controlling class certificateholder will have no right to receive asset status reports or such other information as may be specified in the BANK 2023-BNK46 pooling and servicing agreement with respect to such mortgage loan. “Borrower Party” means a borrower, a mortgagor or a manager of a mortgaged property, an Accelerated Mezzanine Loan Lender, or any Borrower Party Affiliate. “Accelerated Mezzanine Loan Lender” means a mezzanine lender under a mezzanine loan that has been accelerated or as to which foreclosure or enforcement proceedings have been commenced against the equity collateral pledged to secure such mezzanine loan. “Borrower Party Affiliate” means, with respect to a borrower, a mortgagor, a manager of a Mortgaged Property or an Accelerated Mezzanine Loan Lender, (x) any other person controlling or controlled by or under common control with such borrower, mortgagor, manager or Accelerated Mezzanine Loan Lender, as applicable, or (y) any other person owning, directly or indirectly, 25% or more of the beneficial interests in such borrower, mortgagor, manager or Accelerated Mezzanine Loan Lender. With respect to a mortgage loan secured by a residential cooperative property, a person will not be considered a “Borrower Party” solely by reason of such person holding one or more cooperative unit loans that are secured by direct equity interests in the related borrower or owning one or more residential cooperative units comprising the related mortgaged property as a result of any foreclosure, transfer in lieu of foreclosure or other exercise of remedies with respect to any such unit loan(s). |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
29
BANK 2023-BNK46 | Certain Terms and Conditions |
Risk Retention Consultation Parties: | Each of (i) the party selected by Wells Fargo Bank, National Association, (ii) the party selected by Morgan Stanley Bank, N.A., (iii) the party selected by Bank of America, National Association, and (iv) the party selected by JPMorgan Chase Bank, National Association, in each case, as an owner of the VRR Interest. Except with respect to an Excluded Loan as to such party, each risk retention consultation party will be entitled to consult with either Special Servicer, upon request of such risk retention consultation party, with respect to certain material servicing actions proposed by such Special Servicer. |
Replacement of Special Servicer by General Vote of Certificateholders: | If a Control Termination Event has occurred and is continuing, either Special Servicer may be removed and replaced without cause upon the affirmative direction of certificate owners holding not less than 66-2/3% of a certificateholder quorum, following a proposal from certificate owners holding not less than 25% of the appraisal-reduced voting rights of all Principal Balance Certificates. The certificateholders who initiate a vote on a termination and replacement of a Special Servicer without cause must cause Fitch, KBRA and Moody’s to confirm the then-current ratings of the Certificates (or decline to review the matter) and cause the payment of the fees and expenses incurred in the replacement. If no Control Termination Event has occurred and is continuing, either Special Servicer may be replaced by the directing certificateholder, subject to Fitch, KBRA and Moody’s (and any rating agency rating any securities backed by any pari passu companion loan(s) serviced under this transaction) confirming the then-current ratings of the Certificates (and any certificates backed by any pari passu companion loans serviced under this transaction) or declining to review the matter. |
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Excluded Special Servicer: | In the event that, with respect to any mortgage loan, the applicable Special Servicer is a Borrower Party, such Special Servicer will be required to resign as special servicer of such mortgage loan (referred to as an “excluded special servicer loan”). If no Control Termination Event has occurred and is continuing, the directing certificateholder will be entitled to appoint (and may replace with or without cause) a separate special servicer that is not a Borrower Party (referred to as an “excluded special servicer”) with respect to such excluded special servicer loan unless such excluded special servicer loan is also an excluded loan. Otherwise, upon resignation of such Special Servicer with respect to an excluded special servicer loan, the resigning Special Servicer will be required to use reasonable efforts to appoint the excluded special servicer. |
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Appraisal Remedy: | If the Class of Certificates comprising the Controlling Class loses its status as Controlling Class because of the application of an Appraisal Reduction Amount or Collateral Deficiency Amount, the holders of a majority of the voting rights of such Class may require the applicable Special Servicer to order a second appraisal for any mortgage loan in respect of which an Appraisal Reduction Amount or Collateral Deficiency Amount has been applied. The applicable Special Servicer must thereafter determine whether, based on its assessment of such second appraisal, any recalculation of the Appraisal Reduction Amount or Collateral Deficiency Amount is warranted, and if so warranted, the applicable Special Servicer will recalculate such Appraisal Reduction Amount or Collateral Deficiency Amount. Such Class will not be able to exercise any direction, control, consent and/or similar rights of the Controlling Class unless and until reinstated as the Controlling Class through such determination; and pending such determination, the rights of the Controlling Class will be exercised by the Control Eligible Certificates, if any, that would be the Controlling Class taking into account the subject appraisal reduction amount. |
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Sale of Defaulted Assets: | There will be no “fair value” purchase option. Instead, the BANK 2023-BNK46 pooling and servicing agreement will authorize the applicable Special Servicer to sell defaulted mortgage loans serviced by such Special Servicer to the highest bidder in a manner generally similar to sales of REO properties. The sale of a defaulted loan (other than a non-serviced whole loan) for less than par plus accrued interest and certain other fees and expenses owed on the loan will be subject to consent or consultation rights of the directing certificateholder and/or Operating Advisor, as described in the Preliminary Prospectus. Generally speaking, the holder of a pari passu companion loan will have consent and/or consultation rights, as described in the Preliminary Prospectus. If the subject whole loan includes one or more subordinate companion loans, those subordinate companion loans may be included in such sale as well. With respect to each serviced whole loan, if such whole loan becomes a defaulted loan under the BANK 2023-BNK46 pooling and servicing agreement, the applicable Special Servicer will generally be required to sell both the mortgage loan and the related pari passu companion loan(s) as a single whole loan. If the subject whole loan includes one or more subordinate companion loans, those subordinate companion loans may be included in such sale as well. With respect to each non-serviced whole loan, the applicable servicing agreement governing the servicing of such whole loan generally will provide that, if the related pari passu companion loan(s) serviced under such agreement become a defaulted loan under such servicing agreement, then the related special servicer may offer to sell to any person (or may offer to purchase) for |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
30
BANK 2023-BNK46 | Certain Terms and Conditions |
| cash such whole loan during such time as such applicable pari passu companion loan(s) constitutes a defaulted loan under such servicing agreement. Generally speaking, in connection with any such sale, the related special servicer is required to sell both the mortgage loan and the related pari passu companion loan(s) as a whole loan. The directing certificateholder for this securitization generally will have consent and/or consultation rights as the holder of an interest in the related mortgage loan, as described in the Preliminary Prospectus. If the subject whole loan includes one or more subordinate companion loans, those subordinate companion loans may be included in such sale as well. The procedures for the sale of any whole loan that becomes a defaulted whole loan, and any associated consultation rights, are subject to various limitations, conditions and exceptions as described in the Preliminary Prospectus. |
“As-Is” Appraisals: | Appraisals must be conducted on an “as-is” basis, and must be no more than 12 months old, for purposes of determining Appraisal Reduction Amounts and market value in connection with REO sales. Required appraisals may consist of updates of prior appraisals. Internal valuations by a Special Servicer are permitted if the principal balance of a mortgage loan is less than $2,000,000. |
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Operating Advisor: | The Operating Advisor will perform certain review duties if a Control Termination Event has occurred and is continuing, which will generally include a limited annual review of, and the delivery of a report regarding, certain actions of the Special Servicers with respect to the resolution and/or liquidation of specially serviced loans to the Certificate Administrator. The review and report generally will be based on any asset status reports and additional information delivered to the Operating Advisor by the Special Servicers. In addition, if a Control Termination Event has occurred and is continuing, each Special Servicer must seek to consult with the Operating Advisor (in addition to the directing certificateholder if no Consultation Termination Event has occurred and is continuing) in connection with material special servicing actions with respect to specially serviced loans serviced by such Special Servicer. Furthermore, under certain circumstances, but only if a Consultation Termination Event has occurred and is continuing, the Operating Advisor may recommend the replacement of either Special Servicer, in which case the Certificate Administrator will deliver notice of such recommendation to the certificateholders, and certificateholders with specified percentages of the voting rights may direct the replacement of such Special Servicer at their expense. If a Consultation Termination Event has occurred and is continuing, the Operating Advisor may be removed and replaced without cause upon the affirmative direction of certificate owners holding at least 75% of the appraisal-reduced voting rights of all Certificates, following a proposal from certificate owners holding not less than 25% of the appraisal-reduced voting rights of all Certificates. The certificateholders who initiate a vote on a termination and replacement of the Operating Advisor without cause must cause Fitch, KBRA and Moody’s to confirm the then-current ratings of the Certificates (or decline to review the matter) and cause the payment of the fees and expenses incurred in the replacement. The Operating Advisor generally may be discharged from its duties if and when the Class A-1, A-2-1, A-2-2, A-SB, D and E Certificates and the Class A-3, A-4, A-S, B and C trust components are retired. |
Asset Representations Reviewer: | The Asset Representations Reviewer will be required to review certain delinquent mortgage loans after a specified delinquency threshold has been exceeded (an “Asset Review Trigger”) and the required percentage of certificateholders vote to direct a review of such delinquent loans. An Asset Review Trigger will occur when either (1) mortgage loans with an aggregate outstanding principal balance of 25.0% or more of the aggregate outstanding principal balance of all of the mortgage loans (including any REO loans (or a portion of any REO loan in the case of a whole loan)) held by the issuing entity as of the end of the applicable collection period are delinquent loans or (2)(A) prior to and including the second anniversary of the Closing Date, at least 10 mortgage loans are delinquent loans as of the end of the applicable collection period and the outstanding principal balance of such delinquent loans in the aggregate constitutes at least 15.0% of the aggregate outstanding principal balance of all of the mortgage loans (including any REO loans (or a portion of any REO loan in the case of a whole loan)) held by the issuing entity as of the end of the applicable collection period, or (B) after the second anniversary of the Closing Date, at least 15 mortgage loans are delinquent loans as of the end of the applicable collection period and the outstanding principal balance of such delinquent loans in the aggregate constitutes at least 20.0% of the aggregate outstanding principal balance of all of the mortgage loans (including any REO loans (or a portion of any REO loan in the case of a whole loan)) held by the issuing entity as of the end of the applicable collection period. See “Pooling and Servicing Agreement—The Asset Representations Reviewer—Asset Review” in the Preliminary Prospectus. The Asset Representations Reviewer may be terminated and replaced without cause. Upon (i) the written direction of certificateholders evidencing not less than 25% of the voting rights (without regard to the application of any Cumulative Appraisal Reduction Amounts) requesting a vote to terminate and replace the Asset Representations Reviewer with a proposed successor Asset Representations Reviewer that is an eligible asset representations reviewer, and (ii) |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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BANK 2023-BNK46 | Certain Terms and Conditions |
| payment by such holders to the Certificate Administrator of the reasonable fees and expenses to be incurred by the Certificate Administrator in connection with administering such vote, the Certificate Administrator will promptly provide notice to all certificateholders and the Asset Representations Reviewer of such request by posting such notice on its internet website, and by mailing such notice to all certificateholders and the Asset Representations Reviewer. Upon the written direction of certificateholders evidencing at least 75% of a certificateholder quorum (without regard to the application of any Cumulative Appraisal Reduction Amounts), the Trustee will terminate all of the rights and obligations of the Asset Representations Reviewer under the BANK 2023-BNK46 pooling and servicing agreement by written notice to the Asset Representations Reviewer, and the proposed successor Asset Representations Reviewer will be appointed. See “Pooling and Servicing Agreement—The Asset Representations Reviewer” in the Preliminary Prospectus. |
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Dispute Resolution Provisions: | The mortgage loan sellers will be subject to the dispute resolution provisions set forth in the BANK 2023-BNK46 pooling and servicing agreement to the extent those provisions are triggered with respect to any mortgage loan sold to the depositor by a mortgage loan seller and such mortgage loan seller will be obligated under the related mortgage loan purchase agreement to comply with all applicable provisions and to take part in any mediation or arbitration proceedings that may result. Generally, in the event that a Repurchase Request (as defined in the Preliminary Prospectus) is not “Resolved” (as defined below) within 180 days after the related mortgage loan seller receives such Repurchase Request, then the enforcing servicer will be required to send a notice to the “Initial Requesting Certificateholder” (if any) and the Certificate Administrator indicating the enforcing servicer’s intended course of action with respect to the Repurchase Request. If (a) the enforcing servicer’s intended course of action with respect to the Repurchase Request does not involve pursuing further action to exercise rights against the related mortgage loan seller with respect to the Repurchase Request and the Initial Requesting Certificateholder, if any, or any other certificateholder or certificate owner wishes to exercise its right to refer the matter to mediation (including non-binding arbitration) or arbitration, or (b) the enforcing servicer’s intended course of action is to pursue further action to exercise rights against the related mortgage loan seller with respect to the Repurchase Request but the Initial Requesting Certificateholder, if any, or any other certificateholder or certificate owner does not agree with the dispute resolution method selected by the enforcing servicer, then the Initial Requesting Certificateholder, if any, or such other certificateholder or certificate owner may deliver a written notice to the applicable Special Servicer indicating its intent to exercise its right to refer the matter to either mediation or arbitration. “Resolved” means, with respect to a Repurchase Request, (i) that the related Material Defect has been cured, (ii) the related mortgage loan has been repurchased in accordance with the related mortgage loan purchase agreement, (iii) a mortgage loan has been substituted for the related mortgage loan in accordance with the related mortgage loan purchase agreement, (iv) the applicable mortgage loan seller has made a Loss of Value Payment (as defined in the Preliminary Prospectus), (v) a contractually binding agreement is entered into between the enforcing servicer, on behalf of the issuing entity, and the related mortgage loan seller that settles the related mortgage loan seller’s obligations under the related mortgage loan purchase agreement, or (vi) the related mortgage loan is no longer property of the issuing entity as a result of a sale or other disposition in accordance with the BANK 2023-BNK46 pooling and servicing agreement. See “Pooling and Servicing Agreement—Dispute Resolution Provisions” in the Preliminary Prospectus. |
Investor Communications: | The Certificate Administrator is required to include on any Form 10–D any request received from a certificateholder to communicate with other certificateholders related to certificateholders exercising their rights under the terms of the BANK 2023-BNK46 pooling and servicing agreement. Any certificateholder wishing to communicate with other certificateholders regarding the exercise of its rights under the terms of the BANK 2023-BNK46 pooling and servicing agreement will be able to deliver a written request signed by an authorized representative of the requesting investor to the Certificate Administrator. |
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Certain Fee Offsets: | If a workout fee is earned by the applicable Special Servicer following a loan default with respect to any mortgage loan that it services, then certain limitations will apply based on modification fees paid by the borrower. The modification fee generally must not exceed 1% of the principal balance of the loan as modified in any 12-month period. In addition, if the loan re-defaults, any subsequent workout fee on that loan must be reduced by a portion of the modification fees paid by the borrower in the previous 12 months. Likewise, liquidation fees collected in connection with a liquidation or partial liquidation of a mortgage loan must be reduced by a portion of the modification fees paid by the borrower in the previous 12 months. |
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Deal Website: | The Certificate Administrator will be required to maintain a deal website, which will include, among other items: (a) summaries of asset status reports prepared by the Special Servicers, |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
32
BANK 2023-BNK46 | Certain Terms and Conditions |
| (b) inspection reports, (c) appraisals, (d) various “special notices” described in the Preliminary Prospectus, (e) the “Investor Q&A Forum”, (f) a voluntary “Investor Registry” and (g) the “Risk Retention Special Notices” tab. Investors may access the deal website following execution of a certification and confidentiality agreement. |
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Initial Majority Controlling Class Certificateholder: | It is expected that Eightfold Real Estate Capital, L.P. or its affiliate will be the initial majority controlling class certificateholder. |
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Whole Loans: | Each of the mortgaged properties identified above under “IV. Characteristics of the Mortgage Pool—B. Summary of the Whole Loans” secures both a mortgage loan to be included in the trust fund and one or more other mortgage loans that will not be included in the trust fund, each of which will be pari passu or subordinate in right of payment with the mortgage loan included in the trust fund. We refer to each such group of mortgage loans as a “whole loan”. Such “—Summary of the Whole Loans” section includes further information regarding the various notes in each whole loan, the holders of such notes, the lead servicing agreement for each such whole loan, and the applicable master servicer and applicable special servicer under such lead servicing agreement. |
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THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Mixed Use | Loan #1 | Cut-off Date Balance: | | $72,000,000 |
Property Subtype: Lab/Office | CX - 250 Water Street | Cut-off Date LTV: | | 48.8% |
Address: 250 Water Street | | U/W NCF DSCR: | | 1.66x |
Cambridge, MA 02141 | | U/W NOI Debt Yield: | | 9.3% |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg008.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Mixed Use | Loan #1 | Cut-off Date Balance: | | $72,000,000 |
Property Subtype: Lab/Office | CX - 250 Water Street | Cut-off Date LTV: | | 48.8% |
Address: 250 Water Street | | U/W NCF DSCR: | | 1.66x |
Cambridge, MA 02141 | | U/W NOI Debt Yield: | | 9.3% |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg009.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
35
No. 1 – CX - 250 Water Street |
|
Mortgage Loan Information | | Mortgaged Property Information |
Mortgage Loan Seller: | Bank of America, National Association, Wells Fargo Bank, National Association | | Single Asset/Portfolio: | Single Asset |
Credit Assessment (Moody’s/Fitch/KBRA): | Baa2(sf)/BBBsf/BBB(sf) | | Property Type – Subtype: | Mixed Use – Lab/Office |
Original Principal Balance(1): | $72,000,000 | | Location: | Cambridge, MA |
Cut-off Date Balance(1): | $72,000,000 | | Size: | 479,004 SF |
% of Initial Pool Balance: | 9.99% | | Cut-off Date Balance Per SF(1): | $1,109.59 |
Loan Purpose: | Refinance | | Maturity Date Balance Per SF(1): | $1,109.59 |
Borrower Sponsors: | DivcoWest Real Estate Services, LLC, California State Teachers’ Retirement System and Teacher Retirement System of Texas | | Year Built/Renovated: | 2022 / NAP |
Guarantor: | DW Propco EF, LLC | | Title Vesting: | Fee |
Mortgage Rate(2): | 5.5095% | | Property Manager: | DivcoWest Real Estate Services, Inc. (borrower-related) |
Note Date: | January 27, 2023 | | Current Occupancy (As of): | 98.7% (8/1/2023) |
Seasoning: | 6 months | | YE 2022 Occupancy(6): | NAP |
Maturity Date(2): | February 10, 2033 | | YE 2021 Occupancy(6): | NAP |
IO Period(2): | 120 months | | YE 2020 Occupancy(6): | NAP |
Loan Term (Original)(2): | 120 months | | Appraised Value(7): | $1,090,000,000 |
Amortization Term (Original): | NAP | | Appraised Value Per SF(7): | $2,275.56 |
Loan Amortization Type: | Interest Only - ARD | | Appraisal Valuation Date(7): | January 1, 2023 |
Call Protection(3): | L(24),YM1(6),DorYM1(83),O(7) | | |
Lockbox Type: | Hard/Springing Cash Management | | Underwriting and Financial Information |
Additional Debt(1): | Yes | | YE 2022 NOI(6): | NAP |
Additional Debt Type (Balance)(1): | Pari Passu ($459,500,000) | | YE 2021 NOI(6): | NAP |
| | | YE 2020 NOI(6): | NAP |
| | | YE 2019 NOI(6): | NAP |
| | | U/W Revenues: | $62,561,733 |
| | U/W Expenses: | $13,277,931 |
| | | U/W NOI: | $49,283,802 |
Escrows and Reserves(4) | | U/W NCF: | $49,164,051 |
| Initial | Monthly | Cap | | U/W DSCR based on NOI/NCF(1): | 1.66x / 1.66x |
Taxes: | $0 | Springing | NAP | | U/W Debt Yield based on NOI/NCF(1): | 9.3% / 9.3% |
Insurance: | $0 | Springing | NAP | | U/W Debt Yield at Maturity based on NOI/NCF(1): | 9.3% / 9.3% |
TI/LC Reserve: | $0 | Springing | NAP | | Cut-off Date LTV Ratio(1)(7): | 48.8% |
Other Reserves(5): | $17,593,844 | $0 | NAP | | LTV Ratio at Maturity(1)(7): | 48.8% |
| | | | | | | |
Sources and Uses |
Sources | | | | Uses | | |
Original Whole Loan Amount | $531,500,000 | 98.6% | | Loan Payoff | $473,876,626 | 87.9% |
Cash Equity Contribution | 7,497,903 | 1.4 | | Outstanding TI Payment(8) | 44,192,678 | 8.2 |
| | | | Reserves | 17,593,844 | 3.3 |
| | | | Closing Costs | 3,334,755 | 0.6 |
Total Sources | $538,997,903 | 100.0% | | Total Uses | $538,997,903 | 100.0% |
| (1) | The CX - 250 Water Street Mortgage Loan (as defined below) is part of the CX - 250 Water Street Whole Loan (as defined below), which is evidenced by 21 pari passu promissory notes with an aggregate principal balance as of the Cut-off Date of $531,500,000. The Financial Information in the chart above reflects the CX - 250 Water Street Whole Loan. |
| (2) | The CX - 250 Water Street Whole Loan is structured with an anticipated repayment date (the “ARD”) of February 10, 2033 and a final maturity date of February 10, 2038. The initial interest rate for the CX - 250 Water Street Whole Loan is 5.50950% per annum. After the ARD, the interest rate will increase to a per annum rate equal to the greater of (i) 7.50950% and (ii) the sum of the swap rate in effect on the ARD plus 4.28000%. The metrics presented above are calculated based on the ARD. |
| (3) | The CX - 250 Water Street Whole Loan may be voluntarily prepaid in whole beginning on the payment date in March 2025 with the payment of a yield maintenance premium if such prepayment occurs prior to the payment date in August 2032. In addition, the CX – 250 Water Street Whole Loan may be defeased in whole at any time after the earlier to occur of (i) January 27, 2026 or (ii) the date that is two years from the closing date of the securitization that includes the last pari passu note to be securitized. The assumed defeasance lockout period is based on the expected BANK 2023-BNK46 closing date in August 2023. The actual defeasance lockout period may be longer. |
| (4) | For a full description of Escrows and Reserves, please refer to “Escrows and Reserves” below. |
| (5) | The Other Reserves represents a Base Building Work Reserve ($5,932,952), an Outstanding TI/LC Reserve ($7,160,274) and an Outstanding Linkage Fees Reserve ($4,500,617). |
| (6) | Historical financial information is not applicable because the CX - 250 Water Street Property (as defined below) was built in 2022. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Mixed Use | Loan #1 | Cut-off Date Balance: | | $72,000,000 |
Property Subtype: Lab/Office | CX - 250 Water Street | Cut-off Date LTV: | | 48.8% |
Address: 250 Water Street | | U/W NCF DSCR: | | 1.66x |
Cambridge, MA 02141 | | U/W NOI Debt Yield: | | 9.3% |
| (7) | Appraised Value represents the “Prospective Market Value Upon Completion & Stabilization” as of January 1, 2023, which assumes that remaining construction balances are paid, outstanding tenant improvements are paid to the tenant, the tenant has commenced rent payments, and retail space leasing costs are paid, all of which have occurred other than payment of $5,932,952 for base building work, $7,160,274 for tenant improvements and future retail leasing costs. Such amounts for base building work and tenant improvements were fully reserved by the lender at loan origination. The appraisal concluded to an “as-is” appraised value of $960,000,000 as of May 4, 2022. The “as-is” appraised value results in a Cut-off Date LTV Ratio and LTV Ratio at Maturity of 55.4% for the CX - 250 Water Street Whole Loan. The appraisal concluded to an “as dark” appraised value of $920,000,000 as of May 4, 2022. The “as dark” appraised value results in a Cut-off Date LTV Ratio and LTV Ratio at Maturity of 57.8% for the CX - 250 Water Street Whole Loan. |
| (8) | Outstanding tenant improvements were paid directly to E.R. Squibb & Sons LLC by the borrower sponsors at origination. |
The Mortgage Loan. The largest mortgage loan (the “CX - 250 Water Street Mortgage Loan”) is part of a whole loan (the “CX - 250 Water Street Whole Loan”) that is evidenced by 21 pari passu promissory notes in the aggregate original principal amount of $531,500,000 and secured by a first priority fee mortgage encumbering a 479,004 SF mixed-use, life sciences laboratory and office property located in Cambridge, Massachusetts (the “CX - 250 Water Street Property”). The CX - 250 Water Street Whole Loan was co-originated by Bank of America, N.A., Wells Fargo Bank, National Association, Goldman Sachs Bank USA (“GS”) and 3650 Real Estate Investment Trust 2 LLC (“3650”). The CX - 250 Water Street Mortgage Loan, with an aggregate original principal amount of $72,000,000, is evidenced by the non-controlling Note A-5, originated by BANA, and the non-controlling Note A-9-1, originated by WFB. The remaining promissory notes comprising the CX - 250 Water Street Whole Loan are summarized in the below table. The CX - 250 Water Street Whole Loan will be serviced pursuant to the pooling and servicing agreement for the BANK 2023-BNK45 trust until the securitization of the controlling Note A-1, whereupon the CX - 250 Water Street Whole Loan will be serviced pursuant to the pooling and servicing agreement for such future securitization. See “Description of the Mortgage Pool—The Whole Loans—The Non-Serviced Pari Passu Whole Loans” and “Pooling and Servicing Agreement—Servicing of the Non-Serviced Mortgage Loans—Servicing of the CX – 250 Water Street Mortgage Loan” in the prospectus.
The CX - 250 Water Street Whole Loan has a 10-year interest-only term through the ARD of February 10, 2033 and a final maturity date of February 10, 2038. After the ARD, the interest rate will increase to the greater of (i) 7.5095%, and (ii) the sum of the swap rate in effect on the ARD plus 4.2800% (“Adjusted Interest Rate”), however, interest accrued at the excess of the Adjusted Interest Rate over the initial interest rate will be deferred as described below under “Lockbox and Cash Management.” From the origination date through the ARD, the CX - 250 Water Street Whole Loan accrues interest at the rate of 5.5095% per annum.
Whole Loan Note Summary
Notes | Original Balance | Cut-off Date Balance | Note Holder | Controlling Piece |
A-1 | $56,250,000 | $56,250,000 | BANA | Yes |
A-5, A-9-1 | 72,000,000 | 72,000,000 | BANK 2023-BNK46 | No |
A-2, A-6, A-8 | 75,125,000 | 75,125,000 | BBCMS 2023-C20 | No |
A-3, A-7 | 55,000,000 | 55,000,000 | BANA | No |
A-4, A-12 | 55,000,000 | 55,000,000 | BANK 2023-BNK45 | No |
A-10, A-11, A-14 | 65,625,000 | 65,625,000 | MSWF 2023-1 | No |
A-9-2, A-13, A-15, A-16 | 46,200,000 | 46,200,000 | WFB | No |
A-17, A-18 | 53,150,000 | 53,150,000 | Benchmark 2023-B38 | No |
A-19, A-20 | 53,150,000 | 53,150,000 | 3650 | No |
Total | $531,500,000 | $531,500,000 | | |
The Borrower and the Borrower Sponsors. The borrowing entity for the CX - 250 Water Street Whole Loan is DW Propco EF, LLC, a Delaware limited liability company and single purpose entity with two independent directors. There is no non-recourse carveout guarantor or environmental indemnitor for the CX - 250 Water Street Whole Loan separate from the borrower. The borrower sponsors are a joint venture between DivcoWest Real Estate Services, LLC (“Divco”), California State Teachers’ Retirement System (“CalSTRS”) and Teacher Retirement System of Texas (“TRS”).
Founded in 1993, Divco is a multidisciplinary investment firm headquartered in San Francisco, California, with over 190 employees across seven investment offices. Divco is a developer, owner and operator of real estate throughout the United States, with expertise in Boston, having invested in and managed over 22 commercial properties in the area, including offices in the Seaport, Financial District, and East Cambridge submarkets. Most notably, Divco owned and operated One Kendall Square, a life sciences office campus in the Kendall Square submarket. As of September 30, 2022, Divco had over $17.7 billion in assets under management. Since inception, Divco has acquired approximately 59.7 million square feet.
CalSTRS is reported to be the nation’s second largest public pension fund, with assets totaling approximately $309.3 billion as of May 31, 2023. CalSTRS’ investment portfolio is diversified into nine asset categories, including nearly 16.2% (approximately $50.2 billion as of May 31, 2023) allocated to real estate investments in institutional Class A commercial assets across the United States. Divco and CalSTRS have a 20-year history working together, with over $1.5 billion co-invested into various Divco-sponsored investment vehicles.
Established in 1937, TRS provides retirement and related benefits for those employed by the public schools, colleges and universities supported by the State of Texas. As of August 31, 2022, the agency was serving approximately 1.9 million participants and had assets under management of nearly $184 billion. TRS is the largest public retirement system in Texas in both membership and assets.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
37
Property Type: Mixed Use | Loan #1 | Cut-off Date Balance: | | $72,000,000 |
Property Subtype: Lab/Office | CX - 250 Water Street | Cut-off Date LTV: | | 48.8% |
Address: 250 Water Street | | U/W NCF DSCR: | | 1.66x |
Cambridge, MA 02141 | | U/W NOI Debt Yield: | | 9.3% |
The Property. The CX - 250 Water Street Property consists of a Class A, LEED Gold (targeted), mixed-use, life sciences laboratory and office building located in Cambridge, Massachusetts that was recently developed by the borrower sponsors. The CX - 250 Water Street Property is a part of Cambridge Crossing, a 43-acre, mixed-use, master-planned area located in East Cambridge, which is being developed by Divco, who owns all but four parcels. Cambridge Crossing broke ground in May 2017 and upon completion is expected to include over 16 buildings, 2.1 million square feet of science and technology space, 2.4 million square feet of residential space, 100,000 square feet of dining and retail space and 11 acres of green and open space. Over 2.5 million square feet of space has already started construction or been completed and major tenants include Philips, Sanofi and Bristol Myers Squibb. Cambridge Crossing is at the intersection of Cambridge, Somerville and Boston, and is accessible to all parts of the greater Boston area via two MBTA stations (Green and Orange lines), nearby commuter and Amtrak trains, an on-site shuttle, and dedicated bike lanes throughout. Cambridge Crossing is approximately 3.5 miles from Boston Logan International Airport.
The CX – 250 Water Street Property was designed by Jacobs and Ennead and construction was completed in 2022. The CX - 250 Water Street Property is a nine-story building with post-COVID design features and includes laboratory space (approximately 60.0% NRA), office space (approximately 40.0% NRA), ground floor retail (6,424 square feet), two penthouse mechanical levels, three below-grade parking levels with 355 parking spaces (0.74 spaces per 1,000 SF), bike storage, a fitness center and an indoor solarium. The CX - 250 Water Street Property has 15’ - 20’ ceiling heights and five passenger elevators. Adjacent to the building is open green space with a playing field and a plaza to host food trucks. The CX - 250 Water Street Property is 98.7% leased to E.R. Squibb & Sons LLC (wholly owned by Bristol Myers Squibb (“BMY”)).
Major Tenant.
E.R. Squibb & Sons LLC (472,580 square feet, 98.7% of NRA, 100.0% of underwritten base rent): E.R. Squibb & Sons LLC is a wholly owned subsidiary of BMY (rated A+/A2 by S&P/Moody’s), which is the guarantor under the E.R. Squibb & Sons LLC leases. Founded in 1887, BMY is a global biopharmaceutical company headquartered in New York, New York. BMY focuses on making critical advances in oncology, hematology, immunology, and cardiovascular disease among other fields. BMY has had several high-profile drugs successfully receive approval, with notable recent releases and current pipeline drugs including Abecma (approved: multiple myeloma), Zeposia (approved: multiple sclerosis) and Breyanzi (approved: lymphoma). BMY (NYSE: BMY) is publicly traded and had revenues of $46.2 billion in 2022. As of May 2023, BMY had a market capitalization of approximately $135 billion.
The CX - 250 Water Street Property is expected to serve as BMY’s research and early development center, where it is expected to consolidate approximately 550 employees from multiple locations in the Boston area. BMY is entitled to receive an approximate $106.3 million ($225 PSF) tenant improvement allowance, of which approximately $7.2 million remained outstanding as of the origination date and was fully reserved by the lender. In addition to such tenant improvement allowance, BMY reportedly is investing an additional $169.0 million ($358 PSF) toward the buildout of its space. The tenant is currently completing its work and is anticipated to take occupancy in the third quarter of 2023.
E.R. Squibb & Sons LLC leases all of the laboratory and office space at the CX – 250 Water Street Property through October 31, 2037, with two, 10-year renewal options and no termination option. E.R. Squibb & Sons LLC’s original lease was for 415,900 SF (floors 1-8) before expanding to lease the remaining 56,680 square feet on floor 9. The rent commencement dates of the BMY leases at the CX - 250 Water Street Property were July 1, 2022 (for floor 9) and November 1, 2022 (for all other floors). The blended starting base rent for the E.R. Squibb & Sons LLC leases is $90.48 PSF (NNN). Base rent for floors 1-8 is $88.50 PSF and base rent for floor 9 is $105.00 PSF, with both leases including approximately 2.5% and 2.75% annual rent steps, respectively. E.R. Squibb & Sons LLC did not receive any free rent as part of its lease. The blended in-place rent at the CX - 250 Water Street Property is approximately 27.1% below the appraisal’s concluded market rent of $115.00 PSF (NNN).
E.R. Squibb & Sons LLC has a contraction option for its floor 9 space, which, if exercised, would be effective October 31, 2032, upon 18-30 months’ notice and payment of a contraction fee equal to an estimated $8.3 million. E.R. Squibb & Sons LLC has subleased a portion of the floor 9 space (45,500 square feet, 9.6% of E.R. Squibb & Sons LLC’s leased NRA or 9.5% of the total building NRA) to Eterna Therapeutics Inc. (NASDAQ: ERNA) at a sublease rent of $120 PSF with 3.0% annual increases, which sublease is coterminous with the effective date of E.R. Squibb & Sons LLC’s contraction option. Eterna Therapeutics Inc. received a tenant improvement allowance of $190 PSF from E.R. Squibb & Sons LLC to build out its space. Eterna Therapeutics Inc. has a termination option in year 7 of the sublease term and has one 5-year extension option.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
38
Property Type: Mixed Use | Loan #1 | Cut-off Date Balance: | | $72,000,000 |
Property Subtype: Lab/Office | CX - 250 Water Street | Cut-off Date LTV: | | 48.8% |
Address: 250 Water Street | | U/W NCF DSCR: | | 1.66x |
Cambridge, MA 02141 | | U/W NOI Debt Yield: | | 9.3% |
The following table presents certain information relating to the tenancy at the CX - 250 Water Street Property:
Major Tenant(1)
Tenant Name | Suite | Credit Rating (Fitch/ Moody’s/ S&P)(2) | Tenant NRSF | % of NRSF | Annual U/W Base Rent PSF | Annual U/W Base Rent | % of Total Annual U/W Base Rent | Lease Expiration Date | Extension Options | Term. Option (Y/N) |
Major Tenant | | | | | | | | | |
E.R. Squibb & Sons LLC | 100 – 800 | NR/A2/A+ | 415,900 | 86.8% | $88.50 | $36,807,150 | 86.1% | 10/31/2037 | 2 x 10 yr | N |
E.R. Squibb & Sons LLC(3) | 900 | NR/A2/A+ | 56,680 | 11.8% | $105.00 | $5,951,400 | 13.9% | 10/31/2037 | 2 x 10 yr | Y |
Occupied Collateral Total | | 472,580 | 98.7% | $90.48 | $42,758,550 | 100.0% | | | |
| | | | | | | | | |
Vacant Space (Retail) | | 6,424 | 1.3% | | | | | | |
| | | | | | | | | |
Collateral Total | | 479,004 | 100.0% | | | | | | |
| | | | | | | | | | |
| (1) | Based on underwritten rent roll dated August 1, 2023. |
| (2) | The credit ratings are those of the direct parent company, BMY, which is the guarantor under the leases. |
| (3) | E.R. Squibb & Sons LLC has a contraction option for its floor 9 space on the last day of the 10th lease year (October 31, 2032) with 18-30 months’ notice and a contraction payment equal to an estimated $8.3 million. E.R. Squibb & Sons LLC has subleased a portion of the floor 9 space (45,500 square feet) to Eterna Therapeutics Inc. through October 31, 2032. Eterna Therapeutics Inc. has a termination option in year 7 of the sublease term and has one 5-year extension option. |
The following table presents certain information relating to the lease rollover schedule at the CX - 250 Water Street Property:
Lease Expiration Schedule(1)(2)
Year Ending December 31, | No. of Leases Expiring | Expiring NRSF | % of Total NRSF | Cumulative Expiring NRSF | Cumulative % of Total NRSF | Annual U/W Base Rent | % of Total Annual U/W Base Rent | Annual U/W Base Rent PSF |
MTM | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2023 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2024 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2025 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2026 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2027 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2028 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2029 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2030 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2031 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2032 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2033 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2034 & Beyond | 2 | 472,580 | 98.7% | 472,580 | 98.7% | $42,758,550 | 100.0% | $90.48 |
Vacant | 0 | 6,424 | 1.3% | 479,004 | 100.0% | $0 | 0.0% | $0.00 |
Total/Weighted Average(3) | 2 | 479,004 | 100.0% | | | $42,758,550 | 100.0% | $90.48 |
| (1) | Based on the underwritten rent roll dated August 1, 2023. |
| (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 Expiration Schedule. |
| (3) | Total/Weighted Average Annual U/W Base Rent PSF excludes vacant space. |
The following table presents historical occupancy percentages at the CX - 250 Water Street Property:
Historical Occupancy(1)
12/31/2020 | 12/31/2021 | 12/31/2022 | 8/1/2023(2) |
NAP | NAP | NAP | 98.7% |
(1) | Historical occupancies are not applicable because the CX – 250 Water Street Property was built in 2022. |
(2) | Based on the underwritten rent roll. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Mixed Use | Loan #1 | Cut-off Date Balance: | | $72,000,000 |
Property Subtype: Lab/Office | CX - 250 Water Street | Cut-off Date LTV: | | 48.8% |
Address: 250 Water Street | | U/W NCF DSCR: | | 1.66x |
Cambridge, MA 02141 | | U/W NOI Debt Yield: | | 9.3% |
Underwritten Net Cash Flow. The following table presents certain information relating to the underwritten net cash flow at the CX - 250 Water Street Property:
Cash Flow Analysis(1)
| | U/W | | %(2) | | U/W $ per SF |
Base Rent(3) | | $43,079,750 | | 68.2% | | $89.94 |
Straight Lined Rent(4) | | 5,689,409 | | 9.0 | | 11.88 |
Gross Potential Rent | | $48,769,159 | | 77.2% | | $101.81 |
Parking Income | | 1,596,600 | | 2.5 | | 3.33 |
Total Reimbursements | | 12,827,911 | | 20.3 | | 26.78 |
Net Rental Income | | $63,193,670 | | 100.0% | | $131.93 |
Less Vacancy & Credit Loss | | 631,937 | | 1.3 | | 1.32 |
Effective Gross Income | | $62,561,733 | | 99.0% | | $130.61 |
| | | | | | |
Real Estate Taxes | | $6,619,604 | | 10.6% | | $13.82 |
Insurance | | 355,155 | | 0.6 | | 0.74 |
Management Fee | | 1,564,043 | | 2.5 | | 3.27 |
Other Operating Expenses | | 4,739,129 | | 7.6 | | 9.89 |
Total Operating Expenses | | $13,277,931 | | 21.2% | | $27.72 |
| | | | | | |
Net Operating Income | | $49,283,802 | | 78.8% | | $102.89 |
Replacement Reserves | | 119,751 | | 0.2 | | 0.25 |
TI/LC | | 0 | | 0.0 | | 0.00 |
Net Cash Flow | | $49,164,051 | | 78.6% | | $102.64 |
| | | | | | |
NOI DSCR(5) | | 1.66x | | | | |
NCF DSCR(5) | | 1.66x | | | | |
NOI Debt Yield(5) | | 9.3% | | | | |
NCF Debt Yield(5) | | 9.3% | | | | |
| (1) | Historical financial information is not available because the CX - 250 Water Street Property was built in 2022. |
| (2) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (3) | Based on the in-place rent roll dated August 1, 2023 for contractual leases. |
| (4) | Straight-line average rent credit was taken for the E.R. Squibb & Sons LLC leases (BMY is the investment grade rated parent company) through the loan term. |
| (5) | Debt service coverage ratios and debt yields are based on the CX - 250 Water Street Whole Loan. |
Appraisal. The appraised value of $1,090,000,000 represents the “Prospective Market Value Upon Completion & Stabilization”, as of January 1, 2023, which assumes that remaining construction balances are paid, outstanding tenant improvements are paid to the tenant, the tenant has commenced rent payments, and retail space leasing costs are paid, all of which have occurred other than payment of $5,932,952 for base building work, $7,160,274 for tenant improvements and future retail leasing costs. Such amounts for base building work and tenant improvements were fully reserved by the lender at loan origination. The appraisal concluded to an “as-is” appraised value of $960,000,000 as of May 4, 2022. The appraisal concluded to an “as dark” appraised value of $920,000,000 as of May 4, 2022.
Environmental Matters. The Phase I environmental assessment (“ESA”) dated May 24, 2022 identified a controlled recognized environmental condition at the CX - 250 Water Street Property resulting from former industrial and rail yard use (primarily lead and petroleum impacts to soil) and the presence of urban fill, which is common in the area surrounding Boston. Remedial actions are anticipated to be completed in connection with the completion of construction at the CX - 250 Water Street Property, and when completed, are expected to result in regulatory closure for the CX - 250 Water Street Property, according to the ESA. See “Description of the Mortgage Pool—Mortgage Pool Characteristics—Environmental Considerations” in the prospectus.
Market Overview and Competition. The CX - 250 Water Street Property is located in Cambridge, Massachusetts, within the Boston core-based statistical area, directly north of the City of Boston and separated from Boston’s central business district (“CBD”) by the Charles River. Cambridge is bordered by Somerville to the north and Watertown to the west. Cambridge is acclaimed for its mix of venture capital, National Institutes of Health (“NIH”) funding and state investments. In recent years, Cambridge has become a life sciences and biotechnology hub not only for the Northeast, but for the entire United States. 18 of the top 20 life sciences companies are in East Cambridge. Cambridge is home to over 5,000 private business establishments, including Watson Health, Amgen, Facebook and Apple, among others.
The Cambridge market is best known for its innovation and high concentration of research and development operations. Cambridge has one of the highest densities of college educated people in the world, with three major NIH hospitals and 42 colleges, universities
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
40
Property Type: Mixed Use | Loan #1 | Cut-off Date Balance: | | $72,000,000 |
Property Subtype: Lab/Office | CX - 250 Water Street | Cut-off Date LTV: | | 48.8% |
Address: 250 Water Street | | U/W NCF DSCR: | | 1.66x |
Cambridge, MA 02141 | | U/W NOI Debt Yield: | | 9.3% |
and community colleges in the Boston/Cambridge area, including Harvard University and Massachusetts Institute of Technology. There are over 11,000 undergraduate students and over 11,000 graduate students living in Cambridge.
The following table presents the submarket statistics for the laboratory space in the Cambridge market:
Submarket | Inventory (SF) | Overall Vacancy Rate | YTD Overall Absorptions (SF) | Under Construction (SF) | Direct Avg. Rent | Direct Avg. Rent (Class A) |
East Cambridge | 8,159,000 | 3.5% | 0 | 2,169,000 | $102.78 | $110.00 |
Mid Cambridge | 2,951,620 | 1.0% | (29,562) | 0 | $115.00 | $115.00 |
West Cambridge | 1,406,102 | 0.0% | 1,589 | 326,616 | $96.18 | $100.00 |
Total/Wtd. Avg. | 12,516,722 | 2.5% | (27,973) | 2,495,616 | $104.92 | $110.06 |
Source: Appraisal.
The following table summarizes the comparable office leases in the surrounding market:
Property | Year Built | Tenant Name | Lease Start Date | Term (yrs.) | Lease Type | Tenant Size (SF) | Base Rent PSF | Rent Steps/yr | TI PSF |
CX - 250 Water Street(1)(2) Cambridge, MA | 2022 | E.R. Squibb & Sons LLC | Jul/Nov-22 | 15.0 | NNN | 472,580 | $90.48 | 2.53% | $225.00 |
325 Binney Cambridge, MA | 2024 | Moderna Therapeutics | Jan-24 | 15.0 | NNN | 462,000 | $117.00 | 3.00% | $225.00 |
Lab Building Somerville, MA | 2021 | Generate Biomedicines, Inc. | Apr-22 | 10.1 | NNN | 71,330 | $82.30 | 2.75% | $250.00 |
One Rogers/Charles Park Cambridge, MA | 1984 | Flagship Entities | Nov-23 | 10.0 | NNN | 388,000 | $115.00 | 3.00% | $200.00 |
The Richards Building Cambridge, MA | 1989 | Vericel Corporation | Mar-22 | 10.0 | NNN | 57,159 | $102.00 | 3.00% | $75.00 |
University Park Cambridge, MA | 2000 | Brigham and Women’s | Feb-21 | 5.0 | NNN | 112,410 | $100.00 | 3.00% | $0.00 |
Average(3) | | | | 10.0 | | 218,180 | $103.26 | | $150.00 |
Source: Appraisal.
| (1) | Information is based on the underwritten rent roll dated August 1, 2023. |
| (2) | The information is based on the weighted average of the E.R. Squibb & Sons LLC leases and includes both office and lab spaces. The lease to E.R. Squibb & Sons LLC for floors 1-8 started on November 1, 2022 for 415,900 square feet at a base rent PSF of $88.50 with 2.5% annual increases. The lease to E.R. Squibb & Sons LLC for floor 9 started on July 1, 2022 for 56,680 square feet at a base rent PSF of $105.00 with 2.75% annual increases. |
| (3) | Average excludes the CX - 250 Water Street Property. |
Escrows. At origination, the borrower was required to deposit into escrow (i) $7,160,274 for a reserve with respect to outstanding tenant improvement allowances and leasing commissions, (ii) $5,932,952 for a base building reserve with respect to construction of the CX - 250 Water Street Property, and (iii) $4,500,617 for a reserve with respect to outstanding linkage fees. The borrower is required to pay the Somerville Affordable Housing Trust Fund linkage fees in the amount of $2,250,309 on August 18, 2023 and August 18, 2024, pursuant to the Project Mitigation Agreement, between the City of Somerville and the borrower.
Tax Escrows – During a Trigger Period (as defined below), the borrower is required to deposit into a real estate tax reserve, on a monthly basis, 1/12th of the estimated annual real estate taxes.
Insurance Escrows – During a Trigger Period, or if the borrower fails to maintain a blanket insurance policy, the borrower is required to deposit into an insurance reserve, on a monthly basis, 1/12th of estimated annual insurance premiums.
TI/LC Reserves – During a Lease Sweep Period (as defined below), all excess cash will be swept into the TI/LC reserve.
A “Trigger Period” will occur:
| (i) | commencing upon the ARD (with no cure or end date); |
| (ii) | commencing upon the occurrence of an event of default under the CX - 250 Water Street Whole Loan until waived or cured; |
| (iii) | on any date from and after June 30, 2023, commencing when the debt service coverage ratio is less than 1.45x based on the CX - 250 Water Street Whole Loan for two consecutive calendar quarters, and ending upon the earlier to occur of (x) the debt service coverage ratio based on the CX - 250 Water Street Whole Loan being equal to or greater than 1.45x for two consecutive calendar quarters and (y) funds on deposit in the cash collateral account (without regard to prior disbursements from such account) equaling or exceeding $23,950,200; or |
| (iv) | during a Lease Sweep Period. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
41
Property Type: Mixed Use | Loan #1 | Cut-off Date Balance: | | $72,000,000 |
Property Subtype: Lab/Office | CX - 250 Water Street | Cut-off Date LTV: | | 48.8% |
Address: 250 Water Street | | U/W NCF DSCR: | | 1.66x |
Cambridge, MA 02141 | | U/W NOI Debt Yield: | | 9.3% |
A “Lease Sweep Period” will commence (prior to the ARD) upon:
(i) the earliest to occur of:
(a) the date that is 12 months prior to the earliest stated expiration of the Lease Sweep Lease (as defined below);
(b) the last date under such Lease Sweep Lease that the tenant has the right to give notice of its exercise of a renewal option; or
(c) with respect to any Lease Sweep Lease that is a Short Term Qualifying Lease (as defined below), the date that is 12 months prior to the ARD or the date that the lender reasonably determines that a Lease Sweep Period should commence in order for the aggregate amount of projected deposits into the rollover account for the period commencing on such date through the ARD to equal the Lease Sweep Deposit Amount (as defined below);
(ii) the date of the early termination, early cancellation or early surrender of a Lease Sweep Lease (or any material portion thereof) prior to its then current expiration date or the receipt by the borrower or manager of written notice from the tenant under a Lease Sweep Lease of its intent to effect an early termination, early cancellation or early surrender of such Lease Sweep Lease prior to its then current expiration date;
(iii) solely with respect to any Lease Sweep Lease under which neither the applicable tenant, nor any lease guarantor is an investment grade entity, if such tenant has ceased operating its business (i.e., “goes dark”) in a majority of its leased space at the property and the same has not been subleased in accordance with the terms of the loan documents, pursuant to a sublease on the same or substantially similar or better terms as the applicable Lease Sweep Lease;
(iv) a monetary or material non-monetary default under a Lease Sweep Lease by the tenant; or
(v) the occurrence of an insolvency proceeding with respect to the tenant under a Lease Sweep Lease, its parent company or any lease guarantor.
A Lease Sweep Period will end upon:
| (A) | if triggered in the case of clause (i), (ii), (iii) and (iv) above, the entirety of the Lease Sweep Lease space is leased pursuant to one or more qualified leases and in the lender’s reasonable judgment, sufficient funds have been accumulated in the rollover account; |
| (B) | if triggered in the case of clause (i) above, the date on which the tenant under the Lease Sweep Lease irrevocably exercises its renewal or extension option or otherwise extends its Lease Sweep Lease in accordance with the terms of the loan documents with respect to all of its Lease Sweep Lease space, and, in the lender’s reasonable judgment, sufficient funds have been accumulated in the rollover account; |
| (C) | if triggered in the case of clause (ii) above, if the tenant under the applicable Lease Sweep Lease rescinds in writing the exercise of its notice exercising its early termination, cancellation or surrender right or option; |
| (D) | if triggered in the case of clause (iii) above, the circumstances giving rise to a Lease Sweep Period under clause (iii) no longer exist; |
| (E) | if triggered in the case of clause (iv) above, the date on which the subject default has been cured; |
| (F) | if triggered in the case of clause (v) above, either (1) the applicable insolvency proceeding has terminated and the applicable Lease Sweep Lease has been affirmed, assumed or assigned in a manner reasonably satisfactory to the lender or (2) the applicable Lease Sweep Lease has been assumed or assumed and assigned to a third party in a manner reasonably satisfactory to the lender; |
| (G) | if triggered in the case of clauses (i), (ii), (iii), (iv) and/or (v) above, the CX - 250 Water Street Property has achieved a debt yield of not less than 7.5% and, in the lender’s reasonable judgment, sufficient funds have been accumulated in the rollover account; or |
| (H) | if triggered in the case of clauses (i), (ii), (iii), (iv) and/or (v) above, the date on which funds in the rollover account collected with respect to the Lease Sweep Lease space in question is equal to the Lease Sweep Deposit Amount applicable to such Lease Sweep Lease space. |
A “Lease Sweep Lease” means (i) the E.R. Squibb & Sons, LLC leases at the CX - 250 Water Street Property and (ii) any replacement lease that, either individually or when taken together with any other lease with the same tenant or its affiliates, covers the majority of the Lease Sweep Lease space.
A “Lease Sweep Tenant” means any tenant under a Lease Sweep Lease.
A “Lease Sweep Deposit Amount” means an amount equal to the total rentable square feet of the applicable Lease Sweep Lease space that is the subject of a Lease Sweep Period multiplied by $50.00.
A “Short Term Qualifying Lease” means any “qualified lease” that has an initial term which does not extend at least two years beyond the ARD.
Lockbox and Cash Management. The CX - 250 Water Street Whole Loan is structured with a hard lockbox and springing cash management. All rents are required to be deposited directly into a lender-controlled lockbox account. During a Trigger Period, funds on deposit in the lockbox account are required to be swept on a daily basis into a lender-controlled cash management account. Prior to the ARD (except during the continuance of an event of default under the CX – 250 Water Street Whole Loan), all excess cash is required to be transferred to a lender-controlled account as additional collateral for the CX - 250 Water Street Whole Loan, subject to certain permitted uses by the borrower described in the loan documents, and except as described with respect to a Lease Sweep Period. If the CX - 250 Water Street Whole Loan is not paid by the ARD, from and after the ARD, the CX - 250 Water Street Whole Loan will accrue interest at the Adjusted Interest Rate; however, interest accrued at the excess of the Adjusted Interest Rate over the initial interest rate will be deferred.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
42
Property Type: Mixed Use | Loan #1 | Cut-off Date Balance: | | $72,000,000 |
Property Subtype: Lab/Office | CX - 250 Water Street | Cut-off Date LTV: | | 48.8% |
Address: 250 Water Street | | U/W NCF DSCR: | | 1.66x |
Cambridge, MA 02141 | | U/W NOI Debt Yield: | | 9.3% |
On and after the ARD (except during the continuance of an event of default under the CX – 250 Water Street Whole Loan), all amounts on deposit in the cash management account after payment of debt service, required reserves and budgeted operating expenses will be required to be applied to the prepayment of the outstanding principal balance of the CX - 250 Water Street Whole Loan until the outstanding principal balance has been reduced to zero and then to any excess interest until the excess interest has been reduced to zero.
Property Management. The CX - 250 Water Street Property is managed by DivcoWest Real Estate Services, Inc., an affiliate of the borrower.
Partial Release. Not permitted.
Real Estate Substitution. Not permitted.
Subordinate and Mezzanine Indebtedness. None.
Letter of Credit. None.
Right of First Offer / Right of First Refusal. None.
Ground Lease. None.
Terrorism Insurance. The borrower is required to obtain and maintain property insurance and business interruption insurance for 24 months plus a 365-day extended period of indemnity. Such insurance is required to cover perils of terrorism and acts of terrorism. If the Terrorism Risk Insurance Program Reauthorization Act of 2015 is not in effect, the borrower will only be required to pay for terrorism insurance a maximum of two times the annual insurance premiums payable for the CX - 250 Water Street Property at the time with respect to the property and business income or rental income insurance interruption policies (excluding the terrorism and earthquake components of such premiums). See “Risk Factors—Risks Relating to the Mortgage Loans—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the prospectus.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
43
Property Type: Retail | Loan #2 | Cut-off Date Balance: | | $70,000,000 |
Property Subtype: Super Regional Mall | Fashion Valley Mall | Cut-off Date LTV: | | 31.5% |
Address: 7007 Friars Road | | U/W NCF DSCR: | | 3.15x |
San Diego, CA 92108 | | U/W NOI Debt Yield: | | 18.7% |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg010.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
44
Property Type: Retail | Loan #2 | Cut-off Date Balance: | | $70,000,000 |
Property Subtype: Super Regional Mall | Fashion Valley Mall | Cut-off Date LTV: | | 31.5% |
Address: 7007 Friars Road | | U/W NCF DSCR: | | 3.15x |
San Diego, CA 92108 | | U/W NOI Debt Yield: | | 18.7% |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg011.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
45
Property Type: Retail | Loan #2 | Cut-off Date Balance: | | $70,000,000 |
Property Subtype: Super Regional Mall | Fashion Valley Mall | Cut-off Date LTV: | | 31.5% |
Address: 7007 Friars Road | | U/W NCF DSCR: | | 3.15x |
San Diego, CA 92108 | | U/W NOI Debt Yield: | | 18.7% |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg012.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
46
Property Type: Retail | Loan #2 | Cut-off Date Balance: | | $70,000,000 |
Property Subtype: Super Regional Mall | Fashion Valley Mall | Cut-off Date LTV: | | 31.5% |
Address: 7007 Friars Road | | U/W NCF DSCR: | | 3.15x |
San Diego, CA 92108 | | U/W NOI Debt Yield: | | 18.7% |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg013.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
47
No. 2 – Fashion Valley Mall |
|
Mortgage Loan Information | | Mortgaged Property Information |
Mortgage Loan Seller: | Bank of America, National Association, JPMorgan Chase Bank, National Association | | Single Asset/Portfolio: | Single Asset |
Credit Assessment (Moody’s/Fitch/KBRA): | Aaa(sf)/AAAsf/AAA(sf) | | Property Type – Subtype: | Retail – Super Regional Mall |
Original Principal Balance(1): | $70,000,000 | | Location: | San Diego, CA |
Cut-off Date Balance(1): | $70,000,000 | | Size: | 1,377,155 SF |
% of Initial Pool Balance: | 9.7% | | Cut-off Date Balance Per SF(1): | $326.76 |
Loan Purpose: | Refinance | | Maturity Date Balance Per SF(1): | $326.76 |
Borrower Sponsor: | Simon Property Group, L.P. | | Year Built/Renovated(5): | 1969 / 2023 |
Guarantors: | Simon Property Group, L.P. and PPF Retail, LLC | | Title Vesting: | Fee |
Mortgage Rate: | 5.7300% | | Property Manager: | Simon Management Associates, LLC (borrower-related) |
Note Date: | May 25, 2023 | | Current Occupancy (As of)(6): | 94.0% (5/15/2023) |
Seasoning: | 2 months | | YE 2022 Occupancy(6): | 96.7% |
Maturity Date: | June 1, 2033 | | YE 2021 Occupancy(6): | 98.0% |
IO Period: | 120 months | | YE 2020 Occupancy(6): | 96.1% |
Loan Term (Original): | 120 months | | As-Is Appraised Value(7): | $1,430,000,000 |
Amortization Term (Original): | NAP | | As-Is Appraised Value Per SF(7): | $1,308.37 |
Loan Amortization Type: | Interest Only | | As-Is Appraisal Valuation Date: | April 5, 2023 |
Call Protection(2): | L(26),D(88),O(6) | | |
Lockbox Type: | Hard/Springing Cash Management | | Underwriting and Financial Information |
Additional Debt(1)(3): | Yes | | YE 2022 NOI: | $80,846,012 |
Additional Debt Type (Balance)(1)(3): | Pari Passu ($380,000,000) | | YE 2021 NOI: | $79,065,945 |
| | | YE 2020 NOI: | $72,772,653 |
| | | YE 2019 NOI: | $82,934,141 |
| | | U/W Revenues: | $103,974,716 |
Escrows and Reserves(4) | | U/W Expenses: | $19,972,427 |
| Initial | Monthly | Cap | | U/W NOI: | $84,002,289 |
Taxes: | $0 | Springing | NAP | | U/W NCF: | $82,302,958 |
Insurance: | $0 | Springing | NAP | | U/W DSCR based on NOI/NCF(1): | 3.21x / 3.15x |
Replacement Reserves: | $0 | Springing | NAP | | U/W Debt Yield based on NOI/NCF(1): | 18.7% / 18.3% |
TI/LC Reserve: | $0 | Springing | NAP | | U/W Debt Yield at Maturity based on NOI/NCF(1): | 18.7% / 18.3% |
Gap Rent Reserve: | $4,458,079 | $0 | NAP | | Cut-off Date LTV Ratio(1)(7): | 31.5% |
Outstanding TI/LC: | $24,345,615 | $0 | NAP | | LTV Ratio at Maturity(1)(7): | 31.5% |
| | | | | | | |
Sources and Uses |
Sources | | | | Uses | | |
Original Whole Loan Amount | $450,000,000 | 100.0% | | Loan Payoff | $417,362,939 | 92.7% |
| | | | Reserves | 28,803,694 | 6.4 |
| | | | Return of Equity | 2,571,188 | 0.6 |
| | | | Closing Costs | 1,262,178 | 0.3 |
Total Sources | $450,000,000 | 100.0% | | Total Uses | $450,000,000 | 100.0% |
| (1) | The Fashion Valley Mall Mortgage Loan (as defined below) is part of the Fashion Valley Mall Whole Loan (as defined below), which is evidenced by 21 pari passu promissory notes with an aggregate principal balance as of the Cut-off Date of $450,000,000. The Cut-off Date Balance Per SF, Maturity Date Balance Per SF, U/W DSCR based on NOI/NCF, U/W Debt Yield based on NOI/NCF, U/W Debt Yield at Maturity based on NOI/NCF, Cut-off Date LTV Ratio and LTV Ratio at Maturity presented above are based on the Fashion Valley Mall Whole Loan. |
| (2) | Defeasance of the Fashion Valley Mall Whole Loan is permitted after the date that is the earlier of (i) two years from the closing date of the securitization that includes the last note to be securitized (the “REMIC Prohibition Period”) and (ii) May 25, 2026 (the “Permitted Release Date”). The assumed lockout period is based on the expected BANK 2023-BNK46 closing date in August 2023. The actual lockout period may be longer. If the Permitted Release Date has occurred but the REMIC Prohibition Period has not occurred, the borrower may prepay the Fashion Valley Mall Whole Loan in whole (but not in part) provided that such prepayment includes an amount equal to the yield maintenance premium. |
| (3) | The borrower utilized an approximately $2.5 million C-PACE loan to complete energy efficient upgrades at the Fashion Valley Mall Property (as defined below). The C-PACE loan has a ten-year term with final payment occurring in September 2025. The annual debt service is $312,351 and the remaining balance as of March 2023 was $866,043. The debt service is included as an assessment on the Fashion Valley Mall Property’s real estate tax bills and is a recoverable expense. |
| (4) | See “Escrows” below for further discussion of reserve requirements. |
| (5) | The Fashion Valley Mall Property is undergoing a renovation that is planned to be completed by the end of 2023. |
| (6) | Historical occupancies include all tenants in place, Retail Development Program (“RDP”) tenants and excludes all Release Parcels (as defined below). As of May 15, 2023, the Fashion Valley Mall Property was 96.0% occupied inclusive of RDP tenants. RDP tenants have been excluded from the underwriting as RDP lease terms are for less than a year and can be terminated by the landlord at any time with 30 days’ notice. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
48
Property Type: Retail | Loan #2 | Cut-off Date Balance: | | $70,000,000 |
Property Subtype: Super Regional Mall | Fashion Valley Mall | Cut-off Date LTV: | | 31.5% |
Address: 7007 Friars Road | | U/W NCF DSCR: | | 3.15x |
San Diego, CA 92108 | | U/W NOI Debt Yield: | | 18.7% |
| (7) | The Appraised Value represents the hypothetical as-is value, which excludes the value attributed to Release Parcels. Based on the actual as-is value of $1,450,000,000 the Cut-off Date LTV Ratio and LTV Ratio at Maturity are 31.0% and 31.0%, respectively. See “Partial Release” below. |
The Mortgage Loan. The second largest mortgage loan (the “Fashion Valley Mall Mortgage Loan”) is part of a whole loan (the “Fashion Valley Mall Whole Loan”) evidenced by 21 pari passu promissory notes in the aggregate original principal amount of $450,000,000. The Fashion Valley Mall Whole Loan was co-originated on May 25, 2023 by Bank of America, National Association (“BANA”), JPMorgan Chase Bank, National Association (“JPMCB”), Barclays Capital Real Estate Inc. (“Barclays”) and Bank of Montreal (“BMO”). The Fashion Valley Mall Mortgage Loan is evidenced by the non-controlling notes A-1-2, A-2-1-2 and A-2-4, with an aggregate outstanding principal balance as of the Cut-off Date of $70,000,000. The remaining promissory notes comprising the Fashion Valley Mall Whole Loan are summarized in the below table. The Fashion Valley Mall Whole Loan will be serviced pursuant to the pooling and servicing agreement for the BBCMS 2023-C20 trust until the controlling Note A-1-1 is securitized, whereupon the Fashion Valley Mall Whole Loan will be serviced pursuant to the pooling and servicing agreement for such future securitization. See “Description of the Mortgage Pool—The Whole Loans—The Non-Serviced Pari Passu Whole Loans” and “Pooling and Servicing Agreement—Servicing of the Non-Serviced Mortgage Loans Servicing of the Fashion Valley Mall Mortgage Loan” in the prospectus.
Whole Loan Note Summary
Notes | Original Balance | Cut-off Date Balance | Note Holder | Controlling Piece |
A-1-1 | $60,000,000 | $60,000,000 | BANA | Yes |
A-1-2 | 55,000,000 | 55,000,000 | BANK 2023-BNK46 | No |
A-1-3 | 25,000,000 | 25,000,000 | BBCMS 2023-C20 | No |
A-1-4 | 10,000,000 | 10,000,000 | BANA | No |
A-2-1-1 | 30,000,000 | 30,000,000 | Benchmark 2023-B39 | No |
A-2-1-2 | 5,000,000 | 5,000,000 | BANK 2023-BNK46 | No |
A-2-2 | 30,000,000 | 30,000,000 | Benchmark 2023-B39 | No |
A-2-3 | 25,000,000 | 25,000,000 | Benchmark 2023-B39 | No |
A-2-4 | 10,000,000 | 10,000,000 | BANK 2023-BNK46 | No |
A-3-1 | 22,500,000 | 22,500,000 | BMO | No |
A-3-2 | 20,000,000 | 20,000,000 | BMO | No |
A-3-3 | 17,500,000 | 17,500,000 | BBCMS 2023-C20 | No |
A-3-4 | 15,000,000 | 15,000,000 | BMO | No |
A-3-5 | 12,500,000 | 12,500,000 | BMO | No |
A-3-6 | 12,500,000 | 12,500,000 | BMO | No |
A-4-1 | 35,000,000 | 35,000,000 | Barclays | No |
A-4-2 | 25,000,000 | 25,000,000 | BBCMS 2023-C20 | No |
A-4-3 | 15,000,000 | 15,000,000 | BBCMS 2023-C20 | No |
A-4-4 | 10,000,000 | 10,000,000 | Barclays | No |
A-4-5 | 10,000,000 | 10,000,000 | Barclays | No |
A-4-6 | 5,000,000 | 5,000,000 | Barclays | No |
Total | $450,000,000 | $450,000,000 | | |
The Borrower and the Borrower Sponsor. The borrowing entity for the Fashion Valley Mall Whole Loan is Fashion Valley Mall, LLC, a Delaware limited liability company and single purpose entity with two independent directors. The borrower sponsor is Simon Property Group, L.P. (“Simon”) and the non-recourse carveout guarantors are Simon and PPF Retail, LLC (“PPF”). Simon and PPF’s liability as the non-recourse carveout guarantor (or if any affiliate of Simon Property Group, L.P. is the non-recourse carveout guarantor) is limited to 20% ($90,000,000) of the original principal amount of the Fashion Valley Mall Whole Loan, plus all reasonable out-of-pocket costs and expenses incurred in the enforcement of the guaranty or preservation of the lender’s rights under the guaranty. There is no separate environmental indemnity for the Fashion Valley Mall Whole Loan; however, environmental losses are a recourse carveout which is guaranteed by Simon and PPF (subject to the aforementioned 20% cap).
Simon is the operating partnership of Simon Property Group Inc. (NYSE: SPG / S&P: A-), which is in the ownership of shopping, dining, entertainment and mixed-use destinations and an S&P 100 company. As of December 31, 2022, Simon owned or had an interest in 230 properties comprising over 184 million square feet in North America, Asia and Europe. Simon also owns an 80% interest in The Taubman Realty Group, or TRG, which owns 24 regional, super-regional and outlet malls in the U.S. and Asia. Additionally, as of December 31, 2022, Simon had a 22.4% ownership interest in Klépierre, a publicly traded, Paris-based real estate company, which owns shopping centers in 14 European countries. As of July 2023, Simon had an equity market capitalization of over $45 billion.
PPF is a real estate core fund managed by Morgan Stanley Real Estate Advisors. The fund is located in New York, New York and invests across the United States and targets investments in the retail, multi-family, office and industrial sectors. As of March 31, 2022, Prime Property Fund managed 526 investments, with a total value of more than $44.4 billion in gross real estate assets.
The Property. The Fashion Valley Mall Property is a Class A, open-air, super-regional mall that was constructed in 1969 on an 81.44-acre plot of land in the Mission Valley section of San Diego, California. The Fashion Valley Mall Property consists of 1,377,155 square feet of net rentable area and provides parking via 7,512 surface parking and parking garage spaces (approximately 5.5 spaces per
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
49
Property Type: Retail | Loan #2 | Cut-off Date Balance: | | $70,000,000 |
Property Subtype: Super Regional Mall | Fashion Valley Mall | Cut-off Date LTV: | | 31.5% |
Address: 7007 Friars Road | | U/W NCF DSCR: | | 3.15x |
San Diego, CA 92108 | | U/W NOI Debt Yield: | | 18.7% |
1,000 square feet). The Fashion Valley Mall Property is home to six anchor department stores, including Neiman Marcus (excluded from underwriting), Bloomingdale’s, Nordstrom, Macy’s and JCPenney (excluded from underwriting), and an 18-screen AMC Theatres.
The parcels relating to the Neiman Marcus and JCPenney stores, including their related parking structures and spaces, are permitted to be freely released by the borrower, therefore all square footage and any rent for those tenants has been excluded in the lender’s underwriting and no value has been given to either parcel in the appraised value. The information relating to the Fashion Valley Mall Property herein does not include either the Neiman Marcus or JCPenney parcels (each, a “Release Parcel”), unless otherwise expressly stated herein. See “Partial Release” below.
As of May 15, 2023, the Fashion Valley Mall Property was 94.0% leased by over 150 tenants and 96.0% leased including three additional RDP tenants. 859,488 square feet (62.4% of net rentable area) is occupied by the 14 anchor tenants, three of which are subject to ground leases under which the tenants own their improvements. As of the trailing 12-month period ending March 2023, the Fashion Valley Mall Property generated over $1.05 billion in total sales, and in-line sales of $1,424 per square foot (excluding Apple and Tesla). The Fashion Valley Mall Property is the only full-price location in the San Diego market for many retailers and restaurants, including Armani Exchange, Bloomingdale’s, Burberry, Cartier, Coach, Dior, Gucci, Hugo Boss, Neiman Marcus, Omega, Prada, Rolex, Saint Laurent, Salvatore Ferragamo and Tory Burch.
The Fashion Valley Mall Property is currently undergoing an estimated $84.9 million cosmetic renovation that will include removal of outdated architectural elements, installation of additional landscaping and an experiential water feature, replacement and relocation of escalators and elevators, renovations to restrooms, additions of outdoor cabana rooms, and the building of a landscaped park at the food court. The borrower sponsor has spent approximately $34 million to date, and the renovation is expected to be fully complete by year-end 2023.
Major Tenants.
Nordstrom (220,486 square feet, 16.0% of NRA, 0.0% of underwritten base rent): Nordstrom (Moody’s/S&P/Fitch: Ba1/BB+/BBB-) was founded in 1901 as a retail shoe business in Seattle, Washington. Nordstrom offers an extensive selection of brand-name and private label merchandise for women, men, young adults and children and is focused on apparel, shoes, beauty, accessories and home goods. The Nordstrom lease at the Fashion Valley Mall Property has an original commencement date of August 28, 1981 and ground lease expiration date of December 31, 2080. Nordstrom does not pay base rent but is responsible for Common Area and Maintenance (“CAM”) charges. Nordstrom’s reported sales at the Fashion Valley Mall Property were $147,000,000 for year-end 2022.
Bloomingdale’s (201,502 square feet, 14.6% of NRA, 0.05% of underwritten base rent): Founded in 1872 and headquartered in New York, New York, Bloomingdale’s (Moody’s/S&P/Fitch: Ba2/BB+/BBB-) is a department store chain with over 2,500 employees and 60 stores in the United States. Bloomingdale’s offers a variety of shopping services including stylists, beauty, gift shopping, tailoring and wedding registry. The Bloomingdale’s store at the Fashion Valley Mall Property is an original tenant at the Fashion Valley Mall Property from 1969. Bloomingdale’s has a ground lease expiration date of January 31, 2035 with three 15-year renewal options. Bloomingdale’s reported sales at the Fashion Valley Mall Property were $40,400,000 for year-end 2022.
Macy’s (196,120 square feet, 14.2% of NRA, 0.05% of underwritten base rent): Founded in 1858 and headquartered in New York, New York, Macy’s (Moody’s/S&P/Fitch: Ba2/BB+/BBB-) is a department store chain that operates approximately 725 stores in the United States and Washington, D.C., as well as Guam and Puerto Rico. Macy’s has three banners that include Macy’s, bluemercury, and Bloomingdale’s (and accompanying e-commerce sites), that sell men’s, women’s, and children’s apparel and accessories, cosmetics, and home furnishings, among other merchandise. The Macy’s store at the Fashion Valley Mall Property is an original tenant at the Fashion Valley Mall Property since 1969. Macy’s has a ground lease expiration date of January 31, 2026 with two, 21-year renewal options remaining so long as there is no event of default. Macy’s reported sales at the Fashion Valley Mall Property were $51,000,000 for year-end 2022.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
50
Property Type: Retail | Loan #2 | Cut-off Date Balance: | | $70,000,000 |
Property Subtype: Super Regional Mall | Fashion Valley Mall | Cut-off Date LTV: | | 31.5% |
Address: 7007 Friars Road | | U/W NCF DSCR: | | 3.15x |
San Diego, CA 92108 | | U/W NOI Debt Yield: | | 18.7% |
The following table presents certain information relating to the tenant sales at the Fashion Valley Mall Property:
Tenant Sales(1)
| 2017 | 2018 | 2019 | 2020(2) | 2021 | 2022 | TTM March 2023 |
Gross Mall Sales | $608,514,305 | $682,415,790 | $1,085,890,001 | $717,229,387 | $983,426,151 | $1,050,104,045 | $1,055,000,320 |
Gross Mall Sales (Ex-Apple / Tesla)(3) | $490,756,985 | $501,039,180 | $812,226,260 | $629,072,676 | $890,646,999 | $979,138,467 | $978,542,475 |
Sales PSF (Inline < 10,000 SF) | $1,235 | $1,410 | $1,675 | $1,095 | $1,503 | $1,534 | $1,599 |
Sales PSF (Inline < 10,000 SF, Ex-Apple / Tesla)(3) | $966 | $989 | $998 | $895 | $1,297 | $1,378 | $1,424 |
Occupancy Cost (Inline < 10,000 SF)(4) | 13.1% | 11.9% | 10.3% | 15.8% | 11.7% | 11.5% | 11.1% |
Occupancy Cost (Inline < 10,000 SF, Ex-Apple / Tesla)(3)(4) | 16.8% | 17.0% | 17.3% | 19.4% | 13.6% | 12.8% | 12.5% |
| (1) | All sales information presented herein with respect to the Fashion Valley Mall Property is based upon information provided by the borrower sponsor. In certain instances, sales figures represent estimates because the tenants are not required to report, or otherwise may not have reported sales information on a timely basis. Further, because sales are self-reported, such information is not independently verified by the borrower sponsor. The sales information in this table includes the Release Parcels. Sales for anchor tenants were only provided between 2019-2022 and TTM March 2023 anchor sales are for year-end 2022. |
| (2) | The Fashion Valley Mall Property was closed due to the COVID-19 pandemic from March 29, 2020 through May 23, 2020. |
| (3) | The Apple lease commenced on February 1, 2023. The Tesla lease expired on January 31, 2022. |
| (4) | Occupancy Cost is calculated by the sum of rent, percentage rent, CAM and taxes divided by annual sales. |
The following table presents certain information relating to the major tenant sales at the Fashion Valley Mall Property:
Major Tenant Sales(1)
Tenant Name | 2017 | 2018 | 2019 | 2020(2) | 2021 | 2022 | TTM March 2023 | TTM March 2023 Sales PSF/Screen |
Nordstrom | N/A | N/A | $140,200,000 | $98,100,000 | $135,600,000 | $147,000,000 | $147,000,000 | $667 |
Bloomingdale’s | N/A | N/A | $39,200,000 | $23,500,000 | $39,200,000 | $40,400,000 | $40,400,000 | $200 |
Macy’s | N/A | N/A | $57,000,000 | $31,400,000 | $51,300,000 | $51,000,000 | $51,000,000 | $260 |
Forever 21 | $11,925,965 | $11,976,850 | $10,716,695 | $5,952,591 | $10,081,242 | $8,133,078 | $7,558,543 | $141 |
AMC Theatres | $10,517,462 | $12,823,064 | $11,531,806 | $4,257,851 | $4,274,855 | $8,769,754 | $8,674,735 | $481,930(3) |
The Container Store | $10,450,544 | $9,597,623 | $9,861,732 | $7,571,965 | $11,483,773 | $11,346,954 | $10,946,269 | $448 |
Zara | $14,422,358 | $14,978,373 | $17,324,258 | $12,031,385 | $19,974,922 | $27,250,373 | $27,873,804 | $1,283 |
Pottery Barn | $7,453,111 | $6,644,660 | $6,762,824 | $5,612,810 | $7,815,960 | $9,311,118 | $9,321,064 | $468 |
H&M | $8,601,793 | $7,292,426 | $7,681,442 | $5,924,805 | $7,965,235 | $8,670,202 | $8,576,263 | $608 |
Victoria’s Secret | $10,524,915 | $10,079,554 | $9,918,003 | $6,919,209 | $9,686,990 | $10,372,731 | $9,921,287 | $790 |
| (1) | All sales information presented herein with respect to the Fashion Valley Mall Property is based upon information provided by the borrower sponsor. In certain instances, sales figures represent estimates because the tenants are not required to report, or otherwise may not have reported sales information on a timely basis. Further, because sales are self-reported, such information is not independently verified by the borrower sponsor. TTM March 2023 anchor sales are for year-end 2022. |
| (2) | The Fashion Valley Mall Property was closed due to the COVID-19 pandemic from March 29, 2020 through May 23, 2020. |
| (3) | Based on AMC Theatres’ 18 screens. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
51
Property Type: Retail | Loan #2 | Cut-off Date Balance: | | $70,000,000 |
Property Subtype: Super Regional Mall | Fashion Valley Mall | Cut-off Date LTV: | | 31.5% |
Address: 7007 Friars Road | | U/W NCF DSCR: | | 3.15x |
San Diego, CA 92108 | | U/W NOI Debt Yield: | | 18.7% |
The following table presents certain information relating to the major tenants at the Fashion Valley Mall Property:
Major Tenants(1)
Tenant Name | Credit Rating (Moody’s/ S&P/Fitch)(2) | Tenant NRSF | % of NRSF | Annual U/W Base Rent PSF(1) | Annual U/W Base Rent(1) | % of Total Annual U/W Base Rent(1) | Sales PSF/ Year(3) | U/W Occ. Cost | Lease Expiration Date | Renewal | Term. Option (Y/N) |
Anchor Tenants | | | | | | | | | | |
Nordstrom(4) | Ba1/BB+/BBB- | 220,486 | 16.0% | $0.00 | $0 | 0.0% | $667 | 0.1% | 12/31/2080 | None | N |
Bloomingdale’s(4) | Ba2/BB+/BBB- | 201,502 | 14.6% | $0.17 | $33,450 | 0.05% | $200 | 0.4% | 1/31/2035 | 3 x 15 yr | N |
Macy’s(4) | Ba2/BB+/BBB- | 196,120 | 14.2% | $0.17 | $33,866 | 0.05% | $260 | 0.3% | 1/31/2026 | 2 x 21 yr | N |
Anchor Tenants Subtotal / Wtd. Avg. | | 618,108 | 44.9% | $0.11 | $67,316 | 0.1% | | | | | |
Junior Anchor Tenants | | | | | | | | | | | |
Forever 21 | NR/NR/NR | 53,787 | 3.9% | $34.32 | $1,845,796 | 2.5% | $141 | 25.3% | 1/31/2026 | None | N |
AMC Theatres | Caa2/CCC+/NR | 51,610 | 3.7% | $30.25 | $1,561,203 | 2.1% | $481,930(5) | 23.6% | 12/31/2024 | 3 x 5 yr | N |
The Container Store | NR/B/NR | 24,432 | 1.8% | $40.00 | $977,280 | 1.3% | $448 | 12.3% | 5/31/2030 | 1 x 5 yr | N |
Zara(6) | NR/NR/NR | 21,726 | 1.6% | $104.38 | $2,267,760 | 3.1% | $1,283 | 12.5% | 9/30/2022 | None | N |
Pottery Barn | NR/NR/NR | 19,920 | 1.4% | $55.81 | $1,111,639 | 1.5% | $468 | 22.7% | 1/31/2024 | None | N |
H&M(6) | NR/BBB/NR | 14,106 | 1.0% | $67.13 | $946,934 | 1.3% | $608 | 21.6% | 1/31/2023 | None | N |
Victoria’s Secret | B1/BB-/NR | 12,559 | 0.9% | $159.88 | $2,007,925 | 2.8% | $790 | 27.4% | 1/31/2025 | None | N |
Jr. Anchor Tenants Subtotal / Wtd. Avg. | 198,140 | 14.4% | $54.10 | $10,718,536 | 14.7% | | | | | |
| | | | | | | | | | |
Remaining Occupied | 478,320 | 34.7% | $129.72 | $62,046,033 | 85.2% | | | | | |
Occupied Collateral Total/ Wtd. Avg. | 1,294,568 | 94.0% | $56.26 | $72,831,885 | 100.0% | | | | | |
| | | | | | | | | | |
Vacant Space | 82,587 | 6.0% | | | | | | | | |
| | | | | | | | | | |
Collateral Total | 1,377,155 | 100.0% | | | | | | | | |
| | | | | | | | | | | |
| (1) | Based on the underwritten rent roll dated May 15, 2023, inclusive of rent steps through May 2024 and overage and percent in lieu rent as of the 12 months ended March 2023 sales for certain tenants. |
| (2) | In certain instances, ratings provided are those of the parent company of the entity shown, whether or not the parent company guarantees the lease. |
| (3) | All sales information presented herein with respect to the Fashion Valley Mall Property is based upon information provided by the borrower sponsor as of the 12 months ended March 2023. In certain instances, sales figures represent estimates because the tenants are not required to report, or otherwise may not have reported sales information on a timely basis. Further, because sales are self-reported, such information is not independently verified by the borrower sponsor. Sales for anchor tenants are as of year-end 2022. |
| (4) | The Nordstrom, Bloomingdale’s and Macy’s tenants are subject to ground leases. Nordstrom does not pay base rent but is responsible for CAM charges. |
| (5) | Based on AMC Theatres’ 18 screens. |
| (6) | Leases for both Zara and H&M are subject to renewal. Both tenants are month to month and continue to pay rent. We cannot assure you whether or when either lease will be renewed. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
52
Property Type: Retail | Loan #2 | Cut-off Date Balance: | | $70,000,000 |
Property Subtype: Super Regional Mall | Fashion Valley Mall | Cut-off Date LTV: | | 31.5% |
Address: 7007 Friars Road | | U/W NCF DSCR: | | 3.15x |
San Diego, CA 92108 | | U/W NOI Debt Yield: | | 18.7% |
The following table presents certain information relating to the lease rollover schedule at the Fashion Valley Mall Property:
Lease Expiration Schedule(1)(2)
Year Ending December 31 | No. of Leases Expiring | Expiring NRSF | % of Total NRSF | Cumulative Expiring NRSF | Cumulative % of Total NRSF | Annual U/W Base Rent | % of Total Annual U/W Base Rent | Annual U/W Base Rent PSF |
2023 & MTM | 16 | 65,119 | 4.7% | 65,119 | 4.7% | $7,383,543 | 10.1% | $113.39 |
2024 | 21 | 138,793 | 10.1% | 203,912 | 14.8% | $9,777,149 | 13.4% | $70.44 |
2025 | 10 | 40,591 | 2.9% | 244,503 | 17.8% | $5,789,837 | 7.9% | $142.64 |
2026 | 8 | 268,169 | 19.5% | 512,672 | 37.2% | $4,432,342 | 6.1% | $16.53 |
2027 | 13 | 52,290 | 3.8% | 564,962 | 41.0% | $6,395,710 | 8.8% | $122.31 |
2028 | 16 | 56,510 | 4.1% | 621,472 | 45.1% | $7,440,994 | 10.2% | $131.68 |
2029 | 16 | 36,387 | 2.6% | 657,859 | 47.8% | $4,722,754 | 6.5% | $129.79 |
2030 | 17 | 89,563 | 6.5% | 747,422 | 54.3% | $9,430,718 | 12.9% | $105.30 |
2031 | 8 | 19,726 | 1.4% | 767,148 | 55.7% | $2,091,762 | 2.9% | $106.04 |
2032 | 8 | 24,906 | 1.8% | 792,054 | 57.5% | $2,871,986 | 3.9% | $115.31 |
2033 | 18 | 62,768 | 4.6% | 854,822 | 62.1% | $10,362,452 | 14.2% | $165.09 |
2034 & Beyond | 7 | 439,746 | 31.9% | 1,294,568 | 94.0% | $2,132,637 | 2.9% | $4.85 |
Vacant(3) | 0 | 82,587 | 6.0% | 1,377,155 | 100.0% | $0 | 0.0% | $0.00 |
Total/Wtd. Avg. | 158 | 1,377,155 | 100.0% | | | $72,831,885 | 100.0% | $56.26 |
| (1) | Based on the underwritten rent roll dated May 15, 2023 inclusive of rent steps through May 2024 and overage and percent in lieu rent as of the 12 months ended March 2023 sales for certain tenants. |
| (2) | Certain tenants may have lease termination options that are exercisable prior to the stated expiration date of the subject lease or leases that are not considered in the Lease Expiration Schedule. |
| (3) | Total/Weighted Average Annual U/W Base Rent PSF excludes vacant space. |
The following table presents historical occupancy percentages at the Fashion Valley Mall Property:
Historical Occupancy(1)
12/31/2020(2) | 12/31/2021(2) | 12/31/2022(2) | 5/15/2023(3) |
96.1% | 98.0% | 96.7% | 94.0% |
(1) | Occupancy does not include the Release Parcels. |
(2) | Historical occupancies are as of December 31 for each respective year and are inclusive of RDP tenants. |
(3) | Current occupancy is as of May 15, 2023 and includes all tenants in place and tenants with signed leases as of the reporting period. The Fashion Valley Mall Property was 96.0% occupied inclusive of RDP tenants. RDP tenants have been excluded from the underwriting as RDP lease terms are for less than a year and can be terminated by the landlord at any time with 30 days’ notice. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Retail | Loan #2 | Cut-off Date Balance: | | $70,000,000 |
Property Subtype: Super Regional Mall | Fashion Valley Mall | Cut-off Date LTV: | | 31.5% |
Address: 7007 Friars Road | | U/W NCF DSCR: | | 3.15x |
San Diego, CA 92108 | | U/W NOI Debt Yield: | | 18.7% |
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and underwritten net cash flow at the Fashion Valley Mall Property:
Cash Flow Analysis
| | 2019 | | | 2020(1) | | | 2021 | | | 2022 | | | U/W(2) | | | %(3) | | | U/W $ per SF |
Base Rent | | $65,244,678 | | | $62,076,239 | | | $55,990,692 | | | $56,783,656 | | | $62,582,702(4) | | | 54.3 | % | | $45.44 |
Contractual Rent Steps(5) | | 0 | | | 0 | | | 0 | | | 0 | | | 1,475,982 | | | 1.3 | | | 1.07 |
Overage Rent(6) | | 2,964,021 | | | 2,858,448 | | | 7,036,298 | | | 8,776,710 | | | 6,515,626 | | | 5.7 | | | 4.73 |
Vacant Income | | 0 | | | 0 | | | 0 | | | 0 | | | 9,925,306 | | | 8.6 | | | 7.21 |
Percentage Rent in Lieu | | 18,238 | | | 1,817,988 | | | 3,439,192 | | | 2,870,199 | | | 2,257,576 | | | 2.0 | | | 1.64 |
Gross Potential Rent | | $68,226,937 | | | $66,752,675 | | | $66,466,182 | | | $68,430,565 | | | $82,757,191 | | | 71.8 | % | | $60.09 |
Other Income(7) | | 2,478,795 | | | 1,414,802 | | | 1,823,959 | | | 2,325,352 | | | 1,990,156 | | | 1.7 | | | 1.45 |
Total Reimbursements | | 28,751,732 | | | 28,054,338 | | | 26,714,510 | | | 26,406,200 | | | 29,319,699 | | | 25.4 | | | 21.29 |
Temp Tenant Income | | 2,674,141 | | | 1,598,280 | | | 2,629,279 | | | 3,201,937 | | | 1,227,157 | | | 1.1 | | | 0.89 |
Net Rental Income | | $102,131,605 | | | $97,820,095 | | | $97,633,930 | | | $100,364,054 | | | $115,294,203 | | | 100.0 | % | | $83.72 |
Less Vacancy & Credit Loss | | 427,991 | | | 8,190,545 | | | 614,970 | | | 219,541 | | | 11,319,487 | | | 13.7 | | | 8.22 |
Effective Gross Income | | $101,703,614 | | | $89,629,550 | | | $97,018,960 | | | $100,144,513 | | | $103,974,716 | | | 90.2 | % | | $75.50 |
| | | | | | | | | | | | | | | | | | | | |
Real Estate Taxes(8) | | 6,240,843 | | | 6,504,302 | | | 6,409,444 | | | 6,573,617 | | | 6,835,547 | | | 6.6 | | | 4.96 |
Insurance | | 1,221,624 | | | 1,463,511 | | | 1,667,073 | | | 1,857,588 | | | 2,051,070 | | | 2.0 | | | 1.49 |
Management Fee | | 3,071,417 | | | 2,712,396 | | | 2,920,689 | | | 3,189,710 | | | 3,188,185 | | | 3.1 | | | 2.32 |
Other Operating Expenses | | 8,235,589 | | | 6,176,688 | | | 6,955,809 | | | 7,677,586 | | | 7,897,625 | | | 7.6 | | | 5.73 |
Total Operating Expenses | | $18,769,473 | | | $16,856,897 | | | $17,953,015 | | | $19,298,501 | | | $19,972,427 | | | 19.2 | % | | $14.50 |
| | | | | | | | | | | | | | | | | | | | |
Net Operating Income | | $82,934,141 | | | $72,772,653 | | | $79,065,945 | | | $80,846,012 | | | $84,002,289 | | | 80.8 | % | | $61.00 |
Replacement Reserves | | 0 | | | 0 | | | 0 | | | 0 | | | 195,237 | | | 0.2 | | | 0.14 |
TI/LC | | 0 | | | 0 | | | 0 | | | 0 | | | 1,504,094 | | | 1.4 | | | 1.09 |
Net Cash Flow | | $82,934,141 | | | $72,772,653 | | | $79,065,945 | | | $80,846,012 | | | $82,302,958 | | | 79.2 | % | | $59.76 |
| | | | | | | | | | | | | | | | | | | | |
NOI DSCR(9) | | 3.17x | | | 2.78x | | | 3.02x | | | 3.09x | | | 3.21x | | | | | | |
NCF DSCR(9) | | 3.17x | | | 2.78x | | | 3.02x | | | 3.09x | | | 3.15x | | | | | | |
NOI Debt Yield(9) | | 18.4% | | | 16.2% | | | 17.6% | | | 18.0% | | | 18.7% | | | | | | |
NCF Debt Yield(9) | | 18.4% | | | 16.2% | | | 17.6% | | | 18.0% | | | 18.3% | | | | | | |
(1) | The Fashion Valley Mall Property was closed due to the COVID-19 pandemic from March 29, 2020 through May 23, 2020. |
(2) | Underwritten financials exclude all income and expenses related to the Release Parcels. |
(3) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
(4) | Based on the underwritten rent roll dated May 15, 2023, with adjustments made for executed leases, pending renewals and tenants that have given notice to vacate. |
(5) | Contractual Rent Steps were taken through May 2024. |
(6) | U/W Overage Rent and Underwritten Percentage Rent in Lieu are based on the terms of applicable leases using TTM March 2023 sales figures. |
(7) | Other Income is based on the borrower sponsor’s projections. Includes Media Participation, Simon Ad panels, and miscellaneous income. Underwritten parking income excludes $400,000 of projected gross parking income from the Neiman Marcus garage and $80,000 of projected parking income expenses are excluded from underwritten expenses too. |
(8) | U/W Real Estate Taxes include debt service for the C-PACE loan to complete energy efficient upgrades at the Fashion Valley Mall Property, which is a recoverable expense. The C-PACE loan has a ten-year term with final payment occurring in September 2025. The annual debt service is $312,351 and the remaining balance as of March 2023 was $866,043. |
(9) | Debt service coverage ratios and debt yields are based on the Fashion Valley Mall Whole Loan. |
Appraisal. The appraisal concluded to a “hypothetical as-is value”, which excludes the value attributed to Release Parcels, as of April 5, 2023 of $1,430,000,000. The “as-is value” including the Release Parcels is $1,450,000,000.
Environmental Matters. The Phase I environmental assessment dated April 10, 2023 identified a recognized environmental condition (the “REC”) at the Fashion Valley Mall Property in connection with a building used for automotive repair located at 6977 Friars Road, which is part of the Release Parcels. The REC was identified based on the duration of hazardous waste generation pertaining to automotive repair, limitations during the property inspection in which observation of the tenant space was not allowed, observations during 2020 reconnaissance, the potential of an unregistered gasoline underground storage tank and violations reported under compliance inspections from the San Diego County Department of Environmental Health (which have been cured). The lender obtained a remedial cost estimate ranging from $157,603-$1,579,956 to assess and remediate the auto service center for potential impacts. See “Description of the Mortgage Pool—Mortgage Pool Characteristics—Environmental Considerations” in the prospectus.
Market Overview and Competition. The Fashion Valley Mall Property is located in San Diego, California, within the San Diego metropolitan statistical area (the “San Diego MSA”) and the West San Diego Beach submarket. The San Diego MSA is the second largest metropolitan area in California, behind Los Angeles, with a population of over three million people. The Fashion Valley Mall
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Retail | Loan #2 | Cut-off Date Balance: | | $70,000,000 |
Property Subtype: Super Regional Mall | Fashion Valley Mall | Cut-off Date LTV: | | 31.5% |
Address: 7007 Friars Road | | U/W NCF DSCR: | | 3.15x |
San Diego, CA 92108 | | U/W NOI Debt Yield: | | 18.7% |
Property is located in a high-traffic corridor near Interstate 8 and Highway 163. It is the only true luxury center in San Diego County and draws affluent shoppers from a 20-mile radius, as well as tourists and international shoppers from Mexico.
According to the appraisal, the vacancy rate as of year-end 2022 was 6.2% for the San Diego retail market, and 3.4% for the West San Diego Beach submarket. The average asking rental rate for the same period was $32.39 per square foot for the San Diego retail market and $37.88 per square foot for the West San Diego Beach submarket. According to the appraisal, the estimated 2022 population within a five-, seven- and ten-mile radius was 526,945, 807,687 and 1,219,300, respectively. Additionally, for the same period, the average household income within the same radii was $107,685, $111,999 and $109,418, respectively.
The following table presents comparable retail centers with respect to the Fashion Valley Mall Property:
Comparable Retail Center Summary
Property Name | Year Built / Renovated or Expanded | Total NRA (SF) | Total Occ. | Distance to Subject | Sales PSF | Major Tenants |
Fashion Valley Mall | 1969 / 2023 | 1,377,155(1) | 94.0%(1) | NAP | $1,424(2) | Macy’s Bloomingdale’s Nordstrom Forever 21 |
Westfield UTC | 1977 / 1997 | 1,189,411 | 96.0% | 6.0 miles | $1,237 | Macy’s Nordstrom Tesla |
Westfield Mission Valley | 1960 / 2004 | 1,216,321 | 90.0% | 1.0 mile | $600 | Bloomingdale’s Outlet Macy’s Backstage Nordstrom Rack Target |
Grossmont Center | 1961 / NAP | 939,000 | 88.0% | 9.0 miles | $473 | CVS Macy’s Target Walmart |
Plaza Bonita | 1981 / 2007 | 1,029,029 | 85.0% | 11.6 miles | $593 | JCPenney Macy’s Nordstrom Rack |
Chula Vista Center | 1962 / 2012 | 862,620 | 64.0% | 12.3 miles | $496 | Burlington JCPenney Macy’s |
Source: Third Party Report, unless stated otherwise.
| (1) | Information obtained from the underwritten rent roll dated May 15, 2023. |
| (2) | Represents sales per square foot as of TTM March 31, 2023 for in-line tenants (excluding Apple and Tesla). All sales information presented herein with respect to the Fashion Valley Mall Property is based upon information provided by the borrower sponsor. In certain instances, sales figures represent estimates because the tenants are not required to report, or otherwise may not have reported sales information on a timely basis. Further, because sales are self-reported, such information is not independently verified by the borrower sponsor. |
Escrows. At origination, the borrower was required to deposit into escrow (i) $24,345,615 for outstanding tenant improvement allowances and leasing commissions and (ii) $4,458,079 for outstanding gap rent.
Tax Escrows – On a monthly basis after the occurrence of a Control Event (as defined below) or during the continuance of a Lockbox Event Period (as defined below) or at any time taxes are not paid by the borrower prior to the assessment of any penalty, the borrower is required to escrow 1/12th of the annual estimated tax payments payable during the next ensuing 12 months.
Insurance Escrows – After the occurrence of a Control Event or during the continuance of a Lockbox Event Period, except if the Fashion Valley Mall Property is insured under an acceptable blanket policy, the borrower is required to escrow 1/12th of the annual estimated insurance payments on a monthly basis.
Replacement Reserves – After the occurrence of a Control Event or during the continuance of a Lockbox Event Period, the borrower is required to escrow approximately $16,270 on a monthly basis for replacements and repairs to be made at the Fashion Valley Mall Property.
Rollover Reserves – After the occurrence of a Control Event or during the continuance of a Lockbox Event Period, the borrower is required to escrow approximately $125,341 on a monthly basis for ongoing leasing reserves.
A “Lockbox Event Period” means the period commencing upon the occurrence of (i) an event of default, (ii) bankruptcy action of the borrower or property manager (if the property manager is an affiliate of the borrower) and the property manager is not replaced within 60 days with a qualified manager, or (iii) the debt yield based on the trailing four calendar quarters is less than 12.0% for two consecutive calendar quarters. A Lockbox Event Period will end (a) with respect to clause (i) above, if the cure of the event of default has been accepted by the lender, (b) with respect to clause (ii) above, if the property manager is replaced with 60 days or the bankruptcy action with respect to the property manager is dismissed within 90 days without adverse consequences to the Fashion Valley Mall Property, or (c) with respect to clause (iii) above, the debt yield based on the trailing four calendar quarters is greater than or equal to 12.0% for two consecutive calendar quarters; provided, however, that (A) no event of default or other Lockbox Event
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
55
Property Type: Retail | Loan #2 | Cut-off Date Balance: | | $70,000,000 |
Property Subtype: Super Regional Mall | Fashion Valley Mall | Cut-off Date LTV: | | 31.5% |
Address: 7007 Friars Road | | U/W NCF DSCR: | | 3.15x |
San Diego, CA 92108 | | U/W NOI Debt Yield: | | 18.7% |
Period is continuing, (B) the borrower has paid all of the lender’s reasonable expenses incurred in connection with the cure of such Lockbox Event Period, including reasonable attorney’s fees and expenses, (C) the borrower may not cure a Lockbox Event Period more than a total of five times in the aggregate during the term of the Fashion Valley Mall Whole Loan, and (D) in no event may the borrower cure a Lockbox Event Period caused by a bankruptcy action of the borrower.
A “Control Event” means if one or more of (i) Simon Property Group, Inc. and (ii) Simon Property Group, L.P. does not own at least 50% of the direct or indirect interests in the borrower or does not control the borrower.
Lockbox and Cash Management. The Fashion Valley Mall Whole Loan is structured with a hard lockbox and springing cash management. The borrower and property manager are required to direct the tenants to pay rent directly into the lockbox account, and to deposit any rents otherwise received in such account within two business days after receipt. During the continuance of a Lockbox Event Period, all funds in the lockbox account are required to be swept on a weekly basis and to a lender-controlled cash management account. Funds in the cash management account are required to be applied to debt service and the reserves and escrows described above, with any excess funds (i) to be deposited into an excess cash flow reserve account held by the lender as cash collateral for the Fashion Valley Mall Whole Loan, or if (ii) no Lockbox Event Period is continuing, disbursed to the borrower.
Property Management. The Fashion Valley Mall Property is managed by Simon Management Associates, LLC, an affiliate of the borrower.
Partial Release. The borrower may obtain a release of one or more Release Parcel for no consideration, subject to the satisfaction of certain conditions including, but not limited to, (i) no event of default has occurred and is continuing, (ii) a Control Event has not occurred, (iii) the borrower delivers to the lender evidence reasonably satisfactory to a prudent lender that the Release Parcel has been (or will be upon recordation of the applicable transfer documentation which will occur contemporaneously with the release of the Release Parcel) legally subdivided from the remainder of the Fashion Valley Mall Property and constitutes one or more separate tax lots, (iv) the Fashion Valley Mall Property will comply with all zoning laws and be serviced by adequate parking and access, (v) the borrower certifies to the lender that the remaining property with all easements appurtenant and other permitted encumbrances thereto will not, strictly as a result of such transfer and release of the Release Parcel, be in violation of certain reciprocal easement agreements or any then applicable law, statute, rule or regulation, (vi) if the Release Parcel is conveyed to or owned by an affiliate of the borrower, the borrower will be required to satisfy certain affiliate Release Parcel conditions with respect to relocation and re-tenanting, and (vii) satisfaction of any REMIC release conditions.
Real Estate Substitution. Not permitted.
Subordinate and Mezzanine Indebtedness. None.
Letter of Credit. None.
Right of First Offer / Right of First Refusal. None.
Ground Lease. None.
Terrorism Insurance. The borrower is required to obtain and maintain property insurance and business interruption insurance for 24 months plus a 365-day extended period of indemnity. Such insurance is required to cover perils of terrorism and acts of terrorism. If the Terrorism Risk Insurance Program Reauthorization Act of 2015 is not in effect, the borrower will only be required to pay for terrorism insurance a maximum of two times the annual insurance premiums payable for the Fashion Valley Mall Property at the time with respect to the property and business income or rental income insurance interruption policies (excluding the terrorism and earthquake components of such premiums). See “Risk Factors—Risks Relating to the Mortgage Loans—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the prospectus.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Hospitality | Loan #3 | Cut-off Date Balance: | | $60,100,000 |
Property Subtype: Full Service | Soho Beach House Miami | Cut-off Date LTV: | | 50.7% |
Address: 4385 Collins Avenue | | U/W NCF DSCR: | | 2.34x |
Miami Beach, FL 33140 | | U/W NOI Debt Yield: | | 17.8% |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg014.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
57
Property Type: Hospitality | Loan #3 | Cut-off Date Balance: | | $60,100,000 |
Property Subtype: Full Service | Soho Beach House Miami | Cut-off Date LTV: | | 50.7% |
Address: 4385 Collins Avenue | | U/W NCF DSCR: | | 2.34x |
Miami Beach, FL 33140 | | U/W NOI Debt Yield: | | 17.8% |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg015.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
58
Property Type: Hospitality | Loan #3 | Cut-off Date Balance: | | $60,100,000 |
Property Subtype: Full Service | Soho Beach House Miami | Cut-off Date LTV: | | 50.7% |
Address: 4385 Collins Avenue | | U/W NCF DSCR: | | 2.34x |
Miami Beach, FL 33140 | | U/W NOI Debt Yield: | | 17.8% |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg016.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
59
No. 3 – Soho Beach House Miami |
|
Mortgage Loan Information | | Mortgaged Property Information |
Mortgage Loan Seller: | JPMorgan Chase Bank, National | | Single Asset/Portfolio: | Single Asset |
| Association | | Property Type – Subtype: | Hospitality – Full Service |
Credit Assessment (Moody’s/Fitch/KBRA): | NR/NR/NR | | Location: | Miami Beach, FL |
Original Principal Balance(1): | $60,100,000 | | Size: | 50 Rooms |
Cut-off Date Balance(1): | $60,100,000 | | Cut-off Date Balance Per Room(1): | $2,800,000 |
% of Initial Pool Balance: | 8.3% | | Maturity Date Balance Per Room(1): | $2,800,000 |
Loan Purpose: | Refinance | | Year Built/Renovated: | 1940/2010 |
Borrower Sponsor: | Soho House & Co Inc. | | Title Vesting: | Fee |
Guarantor: | US AcquireCo, Inc. | | Property Manager: | Self-Managed |
Mortgage Rate: | 6.9900% | | Current Occupancy (As of): | 77.4% (3/31/2023) |
Note Date: | May 11, 2023 | | YE 2022 Occupancy: | 78.6% (12/31/2022) |
Seasoning: | 2 months | | YE 2021 Occupancy: | 81.1% (12/31/2021) |
Maturity Date: | June 1, 2033 | | YE 2020 Occupancy: | 59.0% (12/31/2020) |
IO Period: | 120 months | | YE 2019 Occupancy: | 89.4% (12/31/2019) |
Loan Term (Original): | 120 months | | As-Is Appraised Value: | $276,000,000 |
Amortization Term (Original): | NAP | | As-Is Appraised Value Per Room: | $5,520,000 |
Loan Amortization Type: | Interest Only | | As-Is Appraisal Valuation Date: | March 23, 2023 |
Call Protection(2): | L(24),YM1(2),DorYM1(87),O(7) | | |
Lockbox Type: | Hard/Springing Cash Management | | Underwriting and Financial Information |
Additional Debt(1): | Yes | | TTM NOI (3/31/2023): | $26,973,815 |
Additional Debt Type (Balance)(1): | Pari Passu ($79,900,000) | | YE 2022 NOI: | $25,824,147 |
| | | YE 2021 NOI: | $20,130,829 |
| | | YE 2020 NOI: | $12,198,737 |
| | | U/W Revenues: | $65,813,641 |
| | | U/W Expenses: | $40,907,280 |
Escrows and Reserves(3) | | U/W NOI: | $24,906,361 |
| Initial | Monthly | Cap | | U/W NCF: | $23,178,956 |
Taxes | $336,184 | $48,026 | NAP | | U/W DSCR based on NOI/NCF(1): | 2.51x / 2.34x |
Insurance | $0 | Springing | NAP | | U/W Debt Yield based on NOI/NCF(1): | 17.8% / 16.6% |
FF&E Reserve | $164,894 | 4% of Revenues | NAP | | U/W Debt Yield at Maturity based on NOI/NCF(1): | 17.8% / 16.6% |
Other Reserves | $40,859,366(4) | Springing(5) | NAP | | Cut-off Date LTV Ratio(1): | 50.7% |
| | | | | LTV Ratio at Maturity(1): | 50.7% |
| | | | | | |
| | | | | | | |
Sources and Uses |
Sources | | | | | Uses | | | |
Whole Loan Amount(1): | $140,000,000 | | 86.0% | | Loan Payoff | $118,685,973 | | 72.9% |
Borrower Sponsor Equity: | 22,868,433 | | 14.0 | | Upfront Reserves | 41,360,444 | | 25.4 |
| | | | | Closing Costs | 2,822,016 | | 1.7 |
Total Sources: | $162,868,433 | | 100.0% | | Total Uses | $162,868,433 | | 100.0% |
| (1) | The Soho Beach House Miami Mortgage Loan (as defined below) is part of the Soho Beach House Miami Whole Loan (as defined below), which is evidenced by nine pari passu notes with an aggregate outstanding principal balance of $140,000,000. Cut-off Date Balance Per SF, Maturity Date Balance Per SF, U/W DSCR based on NOI/NCF, U/W Debt Yield based on NOI/NCF, U/W Debt Yield at Maturity based on NOI/NCF, Cut-off Date LTV Ratio and LTV Ratio at Maturity presented above are based on the outstanding balance of the Soho Beach House Miami Whole Loan. |
| (2) | Voluntary prepayment of Soho Beach House Miami Whole Loan in whole (but not in part) is permitted on or after the payment date in December 2032, without payment of any prepayment premium. Provided that no event of default under the Soho Beach House Miami Whole Loan documents is continuing, the borrower has the option to (a) defease the Soho Beach House Miami Whole Loan in whole (but not in part) after the earlier of (x) the date that is two years from the closing date of the securitization that includes the last note of the Soho Beach House Miami Whole Loan to be securitized and (y) July 1, 2026 (the “Permitted Defeasance Date”) or (b) on or after July 1, 2025, prepay the Soho Beach House Miami Whole Loan in whole (but not in part) with the payment of a yield maintenance premium, unless such prepayment occurs on or after December 1, 2032, in which case the borrower is not required to pay a yield maintenance premium. |
| (3) | See “Escrows” below for further discussion of reserve information. |
| (4) | Other Upfront Escrows includes a $40,439,366 Named Storm Coverage Reserve to be used to provide named storm insurance coverage and a $420,000 Seasonality Reserve, as described in “Escrows” herein. |
| (5) | Other Monthly Escrows includes a Seasonality Reserve, as described in “Escrows” herein. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Hospitality | Loan #3 | Cut-off Date Balance: | | $60,100,000 |
Property Subtype: Full Service | Soho Beach House Miami | Cut-off Date LTV: | | 50.7% |
Address: 4385 Collins Avenue | | U/W NCF DSCR: | | 2.34x |
Miami Beach, FL 33140 | | U/W NOI Debt Yield: | | 17.8% |
The Mortgage Loan. The third largest mortgage loan (the “Soho Beach House Miami Mortgage Loan”) is secured by a first mortgage encumbering the borrower’s fee interest in a hospitality property comprised of 50 luxury hotel guest rooms, five food and beverage outlets, event space, a 570-seat private beach club and two outdoor pools, located in Miami Beach, Florida (the “Soho Beach House Miami Property”). The Soho Beach House Miami Mortgage Loan is evidenced by the non-controlling notes A-1, A-3-2 and A-4 with an aggregate original principal balance and outstanding principal balance as of the Cut-off Date of $60,100,000. The Soho Beach House Miami Mortgage Loan is part of a whole loan which is comprised of nine notes, with an aggregate original principal balance and outstanding principal balance as of the Cut-off Date of $140,000,000 (the “Soho Beach House Miami Whole Loan”) and was co-originated by JPMorgan Chase Bank, National Association (“JPMCB”) and Citi Real Estate Funding Inc. (“CREFI”).
The relationship between the holders of the Soho Beach House Miami Whole Loan is governed by a co-lender agreement as described under “Description of the Mortgage Pool—The Whole Loans—The Non-Serviced Pari Passu Whole Loans” in the prospectus.
The Soho Beach House Whole Loan will be serviced pursuant to the pooling and servicing agreement for the Benchmark 2023-B39 trust. See “Description of the Mortgage Pool—The Whole Loans—The Non-Serviced Pari Passu Whole Loans” and “Pooling and Servicing Agreement—Servicing of the Non-Serviced Mortgage Loans—Servicing of the Soho Beach House Miami Mortgage Loan and the Seagate Campus Mortgage Loan” in the prospectus.
Whole Loan Note Summary
Note | Original Balance | Cut-off Date Balance | Note Holder | Controlling Note |
A-1 | $35,000,000 | $35,000,000 | BANK 2023-BNK46 | No |
A-2 | $24,500,000 | $24,500,000 | Benchmark 2023-B39 | Yes |
A-3-1 | $8,900,000 | $8,900,000 | Benchmark 2023-B39 | No |
A-3-2 | $11,100,000 | $11,100,000 | BANK 2023-BNK46 | No |
A-4 | $14,000,000 | $14,000,000 | BANK 2023-BNK46 | No |
A-5-1 | $16,600,000 | $16,600,000 | Benchmark 2023-B39 | No |
A-5-2 | $4,900,000 | $4,900,000 | CREFI(1) | No |
A-6 | $15,000,000 | $15,000,000 | CREFI(1) | No |
A-7 | $10,000,000 | $10,000,000 | CREFI(1) | No |
Total | $140,000,000 | $140,000,000 | | |
| (1) | Expected to be contributed to one or more future securitization trusts. |
The Borrower and Borrower Sponsor. The borrower, Beach House Owner, LLC, is a single-purpose Delaware limited liability company structured to be a bankruptcy-remote entity with at least two independent directors. The borrower sponsor under the Soho Beach House Miami Whole Loan is Soho House & Co Inc. (NYSE: SHCO) (“Soho House”) and the non-recourse carveout guarantor is US AcquireCo, Inc., a wholly owned subsidiary of Soho House. Soho House is majority-owned and controlled by the private equity group The Yucaipa Companies. As of 2022, Soho House has a current membership base of over 210,000 members world-wide across 38 houses (1,122 keys). Soho House also operates 14 restaurants, 9 Soho Works, The Ned London, The Ned New York, Scorpios Beach Club and Soho Home. As of the first quarter 2023, Soho House reported a total revenue of approximately $255.2 million, representing an approximately 33.0% increase over the first quarter 2022.
The Property. The Soho Beach House Miami Property is a hospitality property comprised of 50 luxury hotel guest rooms, five food and beverage outlets, event space, a 570-seat private beach club and two outdoor pools, located in Miami Beach, Florida. The Soho Beach House Miami Property consists of two buildings: (i) a seven-story main building, which was built in 1940 as an Art Deco hotel and fully renovated in 2010, and (ii) a 16-story tower, developed in 2010 with 14 full-floor guest suites. The 50 individually-designed guest suites are fitted with antique pieces, colorful textiles and a mirrored Art Deco-style drinks bar. Additionally, the Soho Beach House Miami Property offers five food and beverage outlets: Cecconi’s (the main restaurant located in the courtyard on the ground floor), Club Bar (design inspired by 1940s Cuba), Ocho (located on the rooftop of the 8th floor featuring a plunge pool and views of the ocean and Miami skyline), Beach Bar (an outdoor bar located at the end of the pool) and Pool & Beach Club (offering lounge beds and waiter service that serves food and drinks to the pool area). In addition to operating as a hotel, the Soho Beach House Miami Property caters to an exclusive membership base, generating significant revenues through annual membership fees as described below. Cecconi’s is open to the public, whereas the remaining food and beverage outlets are restricted to members and guests of the Soho Beach House Miami Property.
As of March 31, 2023, the Soho Beach House Miami Property had 7,208 members each paying an annual membership fee for access to the Soho Beach House Miami Property’s various amenities. Additionally, as of March 31, 2023, there were 3,928 people on the Soho Beach House Miami Property’s membership waitlist (representing 54.5% of March 31, 2023 total members). Members of the Soho Beach House Miami Property have exclusive access to the 570-seat private beach club that spans the width of the Soho Beach House Miami Property. Additional amenities offered to members include access to all five food and beverage outlets, two outdoor pools with waiter service, multiple meeting space areas, a full-service spa, a fully equipped fitness center, a library, a screening room and a private dining room.
Since acquisition of the Soho Beach House Miami Property in 2008, the borrower sponsor has invested approximately $88.0 million in capital expenditures, including approximately $23.4 million invested between 2018 and 2022. Recent capital expenditures include a refreshed Cecconi’s restaurant, upgraded furniture, upgraded case goods and soft goods to both the public spaces and guest rooms, HVAC replacements and a full door replacement. Furthermore, the borrower sponsor anticipates spending an additional approximately
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Hospitality | Loan #3 | Cut-off Date Balance: | | $60,100,000 |
Property Subtype: Full Service | Soho Beach House Miami | Cut-off Date LTV: | | 50.7% |
Address: 4385 Collins Avenue | | U/W NCF DSCR: | | 2.34x |
Miami Beach, FL 33140 | | U/W NOI Debt Yield: | | 17.8% |
$3.2 million (approximately $64,000 per room) by year end 2024 for routine repairs (approximately $550,000) along with kitchen refreshes and hotel shower upgrades (approximately $2.6 million). We cannot assure you whether such repairs and upgrades will be completed as expected or at all.
Total revenue at the Soho Beach House Miami Property consists of five main components: food and beverage revenue (46.4% of UW revenue), membership fees (24.8% of UW revenue), room revenue (19.2% of UW revenue), other sales (6.9% of UW revenue) and Cowshed spa sales (2.6% of UW revenue). Membership fees have been steady at the Soho Beach House Miami Property, as highlighted by its 7,208 active members along with its membership waitlist which has grown from 1,254 in 2019 to 3,928 as of March 31, 2023, representing an approximately 213.2% increase. Given the consistent membership revenue stream, the Soho Beach House Miami Property has the flexibility to adjust transient room pricing with market rates while maintaining revenue streams from food and beverage and membership fees (collectively accounting for 71.3% of UW revenue).
As of March 31, 2023, the Soho Beach House Miami Property had a 77.4% average occupancy rate, $896.30 ADR and $693.40 RevPAR. According to the appraisal, the estimated 2022 demand segmentation for the Soho Beach House Miami Property consisted of 80% leisure, 15% meeting and group and 5.0% commercial.
The following table presents certain information relating to the performance of the Soho Beach House Miami Property:
Historical Occupancy, ADR, RevPAR
| Competitive Set(1)(2) | Soho Beach House Miami Property(3) | Penetration Factor |
Year | Occupancy | ADR | RevPAR | Occupancy | ADR | RevPAR | Occupancy | ADR | RevPAR |
2021 | 62.5% | $732.24 | $457.73 | 81.1% | $731.82 | $593.50 | 129.7% | 99.9% | 129.7% |
2022 | 68.2% | $825.66 | $563.00 | 78.6% | $868.31 | $682.39 | 115.3% | 105.2% | 121.2% |
3/31/2023 TTM(4) | 67.2% | $810.04 | $544.05 | 77.4% | $896.30 | $693.40 | 115.2% | 110.6% | 127.5% |
| (1) | Data obtained from a third-party hotel trend report, utilizing a competitive set in line with the appraisal. |
| (2) | The competitive set consists of the following hotels: The Setai, W South Beach, Eden Roc Miami Beach, The Miami Beach EDITION, Faena Hotel Miami Beach and Nobu Hotel Miami Beach. |
| (3) | Data obtained from the operating statements provided by the borrower sponsor. |
| (4) | TTM represents the trailing 12-month period ending March 31, 2023. |
Membership Fees. All Soho House membership contracts are 12-month contracts with renewals available at the discretion of the membership committee and are billed annually or quarterly. Soho House currently offers four different types of membership contracts: (a) access to every Soho House globally (“Every House”) ($4,815 annual fee), (b) local Soho House access only (“Local House”) ($2,622 annual fee), (c) Every House access for members under the age of 27 ($2,408 annual fee) and (d) Local House access for members under the age of 27 ($1,311 annual fee). The Every House membership contract provides access to all Soho House clubs around the world with the exception of Little Beach House Malibu, which requires an additional Malibu Plus membership. The Local House membership contract allows access only to the Soho House club where the membership application was submitted. There is no corporate allocation of membership revenue to other Soho Houses. All (100%) of the fees from members who applied to and joined Soho House via the Soho Beach House Miami Property, flow through the Soho Beach House Miami Property’s operating statements, regardless of whether the membership is Every House or Local House. As of March 31, 2023, the Soho Beach House Miami Property had 7,208 members, of which 37.8% were Local House members and 62.2% were Every House members.
The following table presents certain information relating to the membership at the Soho Beach House Miami Property:
Soho Beach House Miami Membership(1)
Year | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | Q1 2023 |
Total Members | 2,293 | 2,506 | 2,919 | 3,297 | 3,943 | 4,600 | 6,236 | 5,246 | 5,745 | 7,011 | 7,208 |
% Change | NAP | 9.3% | 16.5% | 12.9% | 19.6% | 16.7% | 35.6% | (15.9%) | 9.5% | 22.0% | 2.8% |
| | | | | | | | | | | |
Total Membership Waitlist | NAV | NAV | NAV | NAV | NAV | NAV | 1,254 | 2,182 | 2,620 | 3,642 | 3,928 |
% Change | NAV | NAV | NAV | NAV | NAV | NAV | NAP | 74.0% | 20.1% | 39.0% | 7.9% |
| (1) | Based on information provided by the borrower sponsor. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Hospitality | Loan #3 | Cut-off Date Balance: | | $60,100,000 |
Property Subtype: Full Service | Soho Beach House Miami | Cut-off Date LTV: | | 50.7% |
Address: 4385 Collins Avenue | | U/W NCF DSCR: | | 2.34x |
Miami Beach, FL 33140 | | U/W NOI Debt Yield: | | 17.8% |
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the Underwritten Net Cash Flow at the Soho Beach House Miami Property:
Cash Flow Analysis(1)
| | 2019 | | 2020 | | 2021 | | 2022 | | 3/31/2023 TTM | | UW | | % of UW Total Revenue | | UW Per Room |
Room Revenue | | $7,859,791 | | | $5,110,615 | | | $10,801,620 | | | $12,419,461 | | | $12,619,929 | | | $12,619,929 | | | 19.2 | % | | $252,399 | |
F&B Revenue | | 22,645,675 | | | 11,555,133 | | | 22,150,546 | | | 29,209,905 | | | 30,565,191 | | | 30,565,191 | | | 46.4 | | | 611,304 | |
Membership Fees | | 12,660,869 | | | 12,311,234 | | | 12,045,186 | | | 15,379,084 | | | 16,345,343 | | | 16,345,343 | | | 24.8 | | | 326,907 | |
Other Sales(2) | | 2,580,441 | | | 1,466,019 | | | 2,295,424 | | | 4,509,686 | | | 4,553,271 | | | 4,553,271 | | | 6.9 | | | 91,065 | |
Cowshed Spa Sales | | 1,536,267 | | | 728,106 | | | 1,516,991 | | | 1,708,420 | | | 1,729,907 | | | 1,729,907 | | | 2.6 | | | 34,598 | |
Total Revenue | | $47,283,044 | | | $31,171,108 | | | $48,809,766 | | | $63,226,557 | | | $65,813,641 | | | $65,813,641 | | | 100.0 | % | | $1,316,273 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Rooms Expense | | 3,439,209 | | | 1,845,751 | | | 3,552,941 | | | 4,180,698 | | | 4,020,961 | | | 4,020,961 | | | 6.1 | | | 80,419 | |
F&B Expense | | 13,720,988 | | | 7,953,356 | | | 12,465,915 | | | 16,048,084 | | | 16,899,196 | | | 16,899,196 | | | 25.7 | | | 337,984 | |
Other Expense | | 1,486,425 | | | 1,101,658 | | | 1,713,265 | | | 2,831,346 | | | 3,017,843 | | | 3,017,843 | | | 4.6 | | | 60,357 | |
Cowshed Spa Expense | | 776,838 | | | 536,016 | | | 883,241 | | | 666,108 | | | 717,625 | | | 717,625 | | | 1.1 | | | 14,353 | |
Departmental Expenses | | $19,423,461 | | | $11,436,782 | | | $18,615,361 | | | $23,726,236 | | | $24,655,625 | | | $24,655,625 | | | 37.5 | % | | $493,113 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Departmental Profit | | $27,859,583 | | | $19,734,326 | | | $30,194,405 | | | $39,500,321 | | | $41,158,015 | | | $41,158,015 | | | 62.5 | % | | $823,160 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Undistributed Expenses | | $10,282,624 | | | $6,100,035 | | | $8,496,753 | | | $12,120,091 | | | $12,522,721 | | | $12,522,721 | | | 19.0 | % | | $250,454 | |
Gross Operating Profit | | $17,576,959 | | | $13,634,291 | | | $21,697,652 | | | $27,380,230 | | | $28,635,294 | | | $28,635,294 | | | 43.5 | % | | $572,706 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Management Fee(3) | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 1,974,409 | | | 3.0 | | | 39,488 | |
Property Tax(4) | | 462,533 | | | 497,182 | | | 564,252 | | | 585,401 | | | 647,624 | | | 576,315 | | | 0.9 | | | 11,526 | |
Property Insurance(5) | | 882,076 | | | 938,372 | | | 1,002,572 | | | 970,682 | | | 1,013,855 | | | 1,178,209 | | | 1.8 | | | 23,564 | |
Total Other Expenses | | $1,344,608 | | | $1,435,554 | | | $1,566,824 | | | $1,556,083 | | | $1,661,480 | | | $3,728,934 | | | 5.7 | % | | $74,579 | |
Net Operating Income | | $16,232,350 | | | $12,198,737 | | | $20,130,829 | | | $25,824,147 | | | $26,973,815 | | | $24,906,361 | | | 37.8 | % | | $498,127 | |
FF&E | | 1,220,219 | | | 666,630 | | | 1,318,087 | | | 1,665,175 | | | 1,727,405 | | | 1,727,405 | | | 2.6 | | | 34,548 | |
Net Cash Flow | | $15,012,131 | | | $11,532,107 | | | $18,812,742 | | | $24,158,972 | | | $25,246,410 | | | $23,178,956 | | | 35.2 | % | | $463,579 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
NOI DSCR(6) | | 1.64x | | | 1.23x | | | 2.03x | | | 2.60x | | | 2.72x | | | 2.51x | | | | | | | |
NCF DSCR(6) | | 1.51x | | | 1.16x | | | 1.90x | | | 2.43x | | | 2.54x | | | 2.34x | | | | | | | |
NOI Debt Yield(6) | | 11.6% | | | 8.7% | | | 14.4% | | | 18.4% | | | 19.3% | | | 17.8% | | | | | | | |
NCF Debt Yield(6) | | 10.7% | | | 8.2% | | | 13.4% | | | 17.3% | | | 18.0% | | | 16.6% | | | | | | | |
| (1) | Certain items such as interest expense, interest income, depreciation, amortization, debt service payments and any other non-recurring items were excluded from the historical presentation and are not included in the underwritten cash flow. |
| (2) | Other Sales is comprised of event space rentals, other income, valet parking and other accommodation sales. |
| (3) | The Soho Beach House Miami Property is self-managed and therefore no historical management fee has been applied. UW management fee is set at 3.0% of total revenue. |
| (4) | Property Taxes were adjusted historically from the borrower sponsor’s financial statements to reflect the actual real estate tax bills in each given year. Adjustments include excluding the sales tax paid on the operating lease (which in the event of a foreclosure would no longer be applicable) from the historical financials. |
| (5) | UW Property Insurance reflects borrower’s purchase, subsequent to the origination date, of a newly obtained Qualified Named Storm Policy (according to the loan sponsor and subject to lender review). See “Escrows” herein. |
| (6) | Debt Yield and DSCR are calculated based on the aggregate outstanding principal balance for the Soho Beach House Miami Whole Loan of $140,000,000. |
Appraisal. The appraisal concluded to an “as is” appraised value for the Soho Beach House Miami Property of $276,000,000 as of March 23, 2023.
Environmental Matters. According to the Phase I environmental site assessments dated March 24, 2023, there was no evidence of any recognized environmental conditions at the Soho Beach House Miami Property.
Market Overview and Competition. The Soho Beach House Miami Property is located in Miami Beach, Florida, within greater Miami-Dade County. According to the appraisal, Miami-Dade County had a year-end 2022 population of approximately 2.7 million. Between 2011 and 2019, Miami-Dade County recorded a record number of overnight visitors each year, peaking at approximately 16.3 million in 2019. While the number of overnight visitors fell in 2020 due to the COVID-19 pandemic, it quickly recovered in 2021 with approximately 15.9 million overnight visitors. With its combination of beaches, nightlife, restaurants, shopping, golf, tennis and national
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Hospitality | Loan #3 | Cut-off Date Balance: | | $60,100,000 |
Property Subtype: Full Service | Soho Beach House Miami | Cut-off Date LTV: | | 50.7% |
Address: 4385 Collins Avenue | | U/W NCF DSCR: | | 2.34x |
Miami Beach, FL 33140 | | U/W NOI Debt Yield: | | 17.8% |
parks, Miami is one of the nation’s premier tourist destinations and is the center of the worldwide cruise industry. Miami is also a favored location for business meetings, sales events, trade shows and high-profile diplomatic events. According to the appraisal, Miami has consistently ranked as one of the top five lodging markets in the country.
The Soho Beach House Miami Property is located approximately 11.6 miles east of the Miami International Airport. In 2022, the Miami International Airport served a record-breaking 50.6 million passengers and added 15 new international routes to areas such as the Caribbean, South America, Europe and Canada. There are over 80 airlines serving Miami International Airport to approximately 150 destinations around the globe, and the airport is also the top United States airport for international freight. Miami International Airport is the leading economic engine for Miami-Dade County and the state of Florida, generating business revenue of approximately $33.7 billion annually and welcoming 70% of all international visitors to Florida.
According to the appraisal, the Soho Beach House Miami Property is located within the Miami-Fort Lauderdale-West Palm Beach metropolitan statistical area (the “Miami MSA”). The Miami MSA is home to approximately 5.6 million people, making it the fourth largest metropolitan statistical area in the United States behind New York, Los Angeles and Chicago. The Miami MSA is home to the headquarters or regional offices of national companies such as Carnival Cruise Lines, Royal Caribbean International, Bank of America, Burger King Corporation, CitiBank and American Airlines.
The appraisal noted there are no proposed hotels anticipated to enter the immediate area in the near future that are considered to be directly competitive with the Soho Beach House Miami Property.
The following table presents certain information relating to the primary hotel competition for the Soho Beach House Miami Property:
Competitive Set(1)
Property | Year Built / Renovated | Number of Rooms | Occupancy | ADR | RevPAR |
Soho Beach House Miami(2) | 1940 / 2010 | 50 | 77.4% | $896.30 | $693.40 |
The Setai Miami Beach | 2004 / 2013 | 137 | 60% - 65% | $1,230 - $1,270 | $730 - $770 |
W South Beach | 2009 / 2020 | 352 | 75% - 80% | $1,080 - $1,120 | $815 - $855 |
Eden Roc Miami Beach | 1955 / 2018 | 415 | 65% - 70% | $380 - $420 | $240 - $280 |
The Miami Beach EDITION | 1957 / 2014 | 294 | 75% - 80% | $965 - $1,005 | $750 - $790 |
Faena Hotel Miami Beach | 2015 / NAP | 179 | 60% - 65% | $1,330 - $1,370 | $790 - $830 |
Nobu Hotel Miami Beach | 2018 / NAP | 206 | 70% - 75% | $480 - $520 | $340 - $380 |
| (1) | Source: Appraisal unless otherwise noted. Occupancy, ADR and RevPAR are based on estimated 2022 values. |
| (2) | Soho Beach House Miami Property metrics are as of March 31, 2023 per the operating statements provided by the borrower sponsor. |
Escrows. At loan origination, the borrower deposited (i) $336,184 into a tax reserve, (ii) $164,894 into a FF&E reserve, (iii) $40,439,366 into a named storm coverage reserve (the “Named Storm Coverage Amount”), which amount (less any premiums paid to the borrower in accordance with the Soho Beach House Miami Whole Loan documents) is required to be released to the borrower in the event that the borrower provides evidence to the lender of a fully bound Qualified Named Storm Policy (as defined below) with respect to the Soho Beach House Miami Property, and (iv) $420,000 into a seasonality reserve.
Real Estate Taxes – The borrower is required to deposit monthly 1/12 of an amount which the lenders estimate would be sufficient to pay taxes for the next ensuing 12 months (currently estimated to be $48,026).
Insurance – The borrower is required to deposit monthly 1/12 of the insurance premiums that the lenders estimate will be payable for the renewal of coverage, unless the borrower maintains a blanket insurance policy in accordance with the Soho Beach House Miami Whole Loan documents; provided, however, that in the event any such blanket insurance policy covers more than one location within a one-thousand-foot radius of the Soho Beach House Miami Property (the “Radius”), the limits of such blanket insurance policy must be sufficient to maintain the coverage required under the Soho Beach House Miami Whole Loan documents for the Soho Beach House Miami Property and any and all other locations combined within the Radius that are covered by such blanket policy insurance policy calculated on a total insured value basis.
FF&E Reserve – The borrower is required to deposit monthly into the replacement reserve account, an amount equal to the greater of (i) 1/12 of 4% of the total revenue generated (excluding membership fees) during the 12-month period ending on the last day of the most recent calendar quarter and (y) the then-current amount (if any) required by the management agreement or the license agreement for replacements or FF&E work (estimated to be approximately $164,894).
Seasonality Reserve – Prior to January 1, 2024 and January 1 of each calendar year thereafter during the term of the Soho Beach House Miami Whole Loan, the lenders are required to reassess the amount necessary to be held in the seasonality reserve and to
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Hospitality | Loan #3 | Cut-off Date Balance: | | $60,100,000 |
Property Subtype: Full Service | Soho Beach House Miami | Cut-off Date LTV: | | 50.7% |
Address: 4385 Collins Avenue | | U/W NCF DSCR: | | 2.34x |
Miami Beach, FL 33140 | | U/W NOI Debt Yield: | | 17.8% |
require the borrower to deposit an amount equal to 110% of the positive difference between (i) the actual aggregate gross income from operations anticipated to be received by the borrower during the months of May, June, July, August, September and October as set forth in the approved annual budget for the calendar year immediately preceding the date of calculation and (ii) the amount necessary to ensure that the Soho Beach House Miami Property has a debt service coverage ratio of at least equal to 1.25x for the immediately preceding twelve month period.
Named Storm Coverage Reserve – The borrower is required under the Soho Beach House Miami Whole Loan documents to obtain on or prior to April 1, 2024, a policy for losses caused by any type of named storm for the borrower and the Soho Beach House Miami Property, which policy must (i) comply with the insurance provisions of the Soho Beach House Miami Whole Loan documents, (ii) insure the Soho Beach House Miami Property in an amount, that when added to the balance of the Named Storm Coverage Amount is equal to $90,439,366 (the “Total Insured Value”), (iii) provide for a premium of not more than $1,500,000 (the “Named Storm Coverage Premium Cap”) and (iv) provide for an allocation to the Soho Beach House Miami Property of not more than $180,000 (any such policy, a “Qualified Named Storm Policy”). The lender is required, upon receipt of an invoice for the same, to disburse to the borrower the amount of the premium payable, in an amount not to exceed the Named Storm Coverage Premium Cap, on any Qualified Named Storm Policy. In the event that the borrower elects to purchase a policy for named storm coverage in an amount less than the Named Storm Coverage Amount on or before April 1, 2024, the Named Storm Coverage Amount will be reduced by the positive difference between (x) the Total Insured Value and (y) the amount of the coverage purchased, and the remainder will continue to constitute the Named Storm Coverage Amount for the remainder of the term of the Soho Beach House Miami Whole Loan. In the event that the borrower does not purchase a Qualified Named Storm Policy or to the extent the Named Storm Coverage Amount is reduced in accordance with the preceding sentence, the Named Storm Coverage Amount will not be released to the borrower and will remain collateral for the Soho Beach House Miami Whole Loan. As of the Cut-off Date, the borrower has purchased, and delivered evidence of, a fully bound Qualified Named Storm Policy, and has otherwise obtained all necessary approvals with respect to the release of the Named Storm Coverage Amount in accordance with the requirements set forth in the Soho Beach House Miami Whole Loan documents as described herein and in accordance with any lender approval processes as governed by the terms of the pooling and servicing agreement for the Benchmark 2023-B39 trust. The Named Storm Coverage Amount is expected to be released, subject only to any required administrative processing.
Lockbox and Cash Management. The Soho Beach House Miami Whole Loan is structured with a hard lockbox and springing cash management. On each business day, all funds in the lockbox accounts will be swept to an account designated by the borrower, unless a Cash Sweep Event (as defined below) is continuing, in which case such funds are required to be swept on each business day into a cash management account controlled by the lenders, at which point, following payment of taxes and insurance, debt service, bank fees, operating expenses and required reserves, all funds are required to be deposited into the excess cash flow reserve, to be held by the lenders as additional security for the Soho Beach House Miami Whole Loan and disbursed in accordance with the terms of the Soho Beach House Miami Whole Loan documents.
A “Cash Sweep Event” means the occurrence of (a) an event of default under the Soho Beach House Miami Whole Loan documents; (b) any bankruptcy action or insolvency of the borrower, the Operating Tenant or a property manager and (c) the debt service coverage ratio for the Soho Beach House Miami Whole Loan based on the trailing 12-month period immediately preceding the date of such determination being less than 1.30x.
A Cash Sweep Event may be cured upon the occurrence of the following: (i) with respect to clause (a) above, the acceptance by the lenders of a cure of such event of default in accordance with the Soho Beach House Miami Whole Loan documents (which cure the lender is not obligated to accept and may reject or accept in its sole and absolute discretion); (ii) with respect to clause (b) above solely with respect to the property manager, if borrower replaces the property manager with a “Qualified Manager” (as defined in the Soho Beach House Miami Whole Loan documents) under a replacement management agreement within 60 days of such bankruptcy event and (iii) with respect to clause (c) above, the achievement of a debt service coverage ratio for the Soho Beach House Miami Whole Loan of 1.35x or greater for one quarter based upon the trailing 12-month period immediately preceding the date of determination; provided, however, that any such Cash Sweep Event cure is subject to the following conditions: (A) no event of default has occurred and is continuing under the Soho Beach House Miami Whole Loan documents, (B) the borrower has paid all of the lender’s reasonable expenses incurred in connection with such Cash Sweep Event cure, including reasonable attorney’s fees and expenses, and (C) in no event may the borrower cure a Cash Sweep Event caused by a bankruptcy action of the borrower or the Operating Tenant.
The Operating Lease. The Soho Beach House Miami Property is managed pursuant to a triple-net operating lease with Soho House Beach House, LLC, an affiliate of the borrower, as operating tenant (the “Operating Tenant”), that expires in May 2036, subject to two, five-year renewal options exercisable by the Operating Tenant. The lenders received an equity pledge by the Operating Tenant’s sole member of all the membership interests in the Operating Tenant, and upon the occurrence and existence of an event of default, the lenders have the right to foreclose on that pledge and control the Operating Tenant. Pursuant to the operating lease, the Operating Tenant is required to pay the borrower $6,791,909 annually in equal monthly installments (the underwritten NCF for the Soho Beach House Miami Property is based on the underlying revenues and not on the operating lease payment) into a restricted account in the borrower’s name and controlled by the lenders. The Operating Tenant is required to deposit all revenue generated by the Soho Beach House Miami Property into the lender-controlled restricted account. In connection with the operating lease, Soho House & Co. Limited and US AcquireCo, Inc. (affiliates of the Operating Tenant) delivered guaranties to the borrower for the payment of all sums due by Operating Tenant and performance of all obligations of the Operating Tenant under the operating lease. The operating lease guaranties are part of the collateral for the Soho Beach House Miami Whole Loan. The Operating Tenant and the guarantors entered into a subordination agreement with the lenders pursuant to which (i) the operating lease is subordinated to the Soho Beach House Miami Whole Loan and (ii) the operating lease guarantors acknowledged that the lenders may exercise all of the borrower’s rights and remedies under the operating lease guaranties after an event of default under the Soho Beach House Miami Whole Loan documents, transfer the Soho Beach House Miami Property or foreclose on the Operating Tenant’s equity pledge.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Hospitality | Loan #3 | Cut-off Date Balance: | | $60,100,000 |
Property Subtype: Full Service | Soho Beach House Miami | Cut-off Date LTV: | | 50.7% |
Address: 4385 Collins Avenue | | U/W NCF DSCR: | | 2.34x |
Miami Beach, FL 33140 | | U/W NOI Debt Yield: | | 17.8% |
The Soho Beach House Miami Property is not currently subject to a franchise agreement, and it is a restricted transfer for the borrower, the Operating Tenant, the guarantor, the Operating Tenant’s sole member, any affiliated manager or their respective affiliates to subject the Soho Beach House Miami Property to a franchise agreement without the lenders’ consent. The Operating Tenant has licensed from certain of its affiliates the right to use certain registered marks related to the Cowshed brand and the Soho House Beach House brand (excluding the Soho House Miami and Cecconi’s marks, which the lender has no right to use) under the respective license agreements (collectively, the “License Agreements”). At origination of the Soho Beach House Miami Whole Loan, the Operating Tenant pledged its interest in the License Agreements to the borrower under a security agreement and such rights have been sublicensed to the lenders. The borrower, the Operating Tenant and Soho House (collectively, the “Parties”) have delivered a certain transition services agreement which obligates the Parties, the guarantor, the licensors and their respective affiliates (collectively, the “TSA Parties”) to continue the uninterrupted operation of the Soho House Beach House Miami Property for a period of two years following the date that the lender obtains title to the Soho Beach House Miami Property following an event of default under the Soho Beach House Miami Whole Loan documents. In connection with such transition services, the lenders are required to pay a management fee of 3% of gross revenue from the Soho Beach House Miami Property and reimburse the TSA Parties for certain costs and operating expenses set forth in the annual budget, subject to a 5% variance. Additionally, under the transition services agreement, during any transition period, the TSA Parties and their respective affiliates and successors and assigns are prohibited from opening any “Soho House” within Miami Beach, Florida (such restricted area, the “Restricted Area”); provided, however, that the foregoing does not restrict the TSA Parties or their respective affiliates and successors and assigns from (i) acquiring, opening, owning or operating any property in the Restricted Area that was acquired or under binding contract by any of the TSA Parties prior to the commencement of such transition period, (ii) acquiring, opening, owning or operating any “Soho Works” solely related to office use during any transition period, or (iii) except for any Soho House, acquiring, owning or operating any property within the Restricted Area. Pursuant to a security agreement, at loan origination, the Operating Tenant pledged its interest in the license agreements to the borrower under a security agreement and such rights have been sublicensed (in accordance with the terms of each license agreement) to the lenders, which sublicenses allow the lenders to, among other things, use the marks during a transition period. See “Description of the Mortgage Pool—Tenant Issues—Affiliated Leases” and “Description of the Mortgage Pool—Mortgage Loan Characteristics—Property Types—Hospitality Properties” for additional information.
Property Management. The Soho Beach House Miami Property is self-managed by the Operating Tenant.
Mezzanine Loan and Preferred Equity. None.
Release of Property. Not permitted.
Letter of Credit. None.
Right of First Offer/Right of First Refusal. None.
Real Estate Substitution. Not permitted.
Subordinate and Mezzanine Indebtedness. None.
Ground Lease. None.
Terrorism Insurance. The borrower is required to maintain terrorism insurance in an amount equal to the full replacement cost of the Soho Beach House Miami Property, as well as 24 months of rental loss and/or business interruption coverage, together with a 12-month extended period of indemnity following casualty. See “Risk Factors—Risks Relating to the Mortgage Loans—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the prospectus.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Retail Property Subtype: Anchored | Loan #4 | Cut-off Date Balance: Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: | | $45,500,000 66.2% 1.48x 10.7% |
Address: 806-990, 1006-1050 Largo Center Drive Largo, MD 20774 | Largo Town Center | |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg017.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
67
Property Type: Retail Property Subtype: Anchored | Loan #4 | Cut-off Date Balance: Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: | | $45,500,000 66.2% 1.48x 10.7% |
Address: 806-990, 1006-1050 Largo Center Drive Largo, MD 20774 | Largo Town Center | |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg018.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
68
Property Type: Retail Property Subtype: Anchored | Loan #4 | Cut-off Date Balance: Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: | | $45,500,000 66.2% 1.48x 10.7% |
Address: 806-990, 1006-1050 Largo Center Drive Largo, MD 20774 | Largo Town Center | |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg019.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
69
No. 4 – Largo Town Center |
|
Mortgage Loan Information | | Mortgaged Property Information |
Mortgage Loan Seller: | Wells Fargo Bank, National Association | | Single Asset/Portfolio: | Single Asset |
Credit Assessment (Fitch/KBRA/Moody’s): | NR/NR/NR | | Property Type – Subtype: | Retail – Anchored |
Original Principal Balance: | $45,500,000 | | Location: | Largo, MD |
Cut-off Date Balance: | $45,500,000 | | Size: | 277,104 SF |
% of Initial Pool Balance: | 6.3% | | Cut-off Date Balance Per SF: | $164.20 |
Loan Purpose: | Acquisition | | Maturity Date Balance Per SF: | $164.20 |
Borrower Sponsors: | Manpreet Singh, Savneet Singh, Vishal Khosla and Gurpreet Singh | | Year Built/Renovated: | 1991-1995/NAP |
Guarantors: | Manpreet Singh and Savneet Singh | | Title Vesting: | Fee |
Mortgage Rate: | 6.6510% | | Property Manager: | Finmarc Management, Inc. |
Note Date: | July 26, 2023 | | Current Occupancy (As of): | 96.9% (3/31/2023) |
Seasoning: | 0 months | | YE 2022 Occupancy(4): | 92.5% |
Maturity Date: | August 11, 2033 | | YE 2021 Occupancy(4): | 86.0% |
IO Period: | 120 months | | YE 2020 Occupancy(4): | 86.0% |
Loan Term (Original): | 120 months | | As-Is Appraised Value: | $68,700,000 |
Amortization Term (Original): | NAP | | As-Is Appraised Value Per SF: | $247.92 |
Loan Amortization Type: | Interest Only | | As-Is Appraisal Valuation Date: | April 5, 2023 |
Call Protection(1): | L(24),D(92),O(4) | | | |
Lockbox Type: | Soft / Springing Cash Management | | Underwriting and Financial Information |
Additional Debt: | None | | TTM NOI (2/28/2023)(5): | $4,259,680 |
Additional Debt Type (Balance): | NAP | | YE 2022 NOI(5): | $4,092,826 |
| | YE 2021 NOI(6): | $4,094,706 |
Escrows and Reserves(2) | | YE 2020 NOI(6): | $3,325,359 |
| Initial | Monthly | Cap | | U/W Revenues: | $6,531,421 |
Taxes | $145,810 | $72,906 | NAP | | U/W Expenses: | $1,649,033 |
Insurance | $10,948 | $10,948 | NAP | | U/W NOI: | $4,882,388 |
Replacement Reserve | $0 | $4,618 | NAP | | U/W NCF: | $4,550,544 |
TI/LC Reserve | $1,000,000 | $23,092 | NAP | | U/W DSCR based on NOI/NCF: | 1.59x / 1.48x |
Deferred Maintenance | $30,625 | $0 | NAP | | U/W Debt Yield based on NOI/NCF: | 10.7% / 10.0% |
Gap Rent | $416,209 | $0 | NAP | | U/W Debt Yield at Maturity based on NOI/NCF: | 10.7% / 10.0% |
Rent Concession | $277,610 | $0 | NAP | | Cut-off Date LTV Ratio: | 66.2% |
Existing TI/LCs | $871,632 | $0 | NAP | | LTV Ratio at Maturity: | 66.2% |
Holdback Reserve(3) | $250,000 | $0 | NAP | | | |
| | | | | | | |
Sources and Uses |
Sources | | | | | Uses | | | |
Original Mortgage Loan amount | $45,500,000 | | 60.6% | | Purchase Price(7) | $70,000,000 | | 93.3% |
Sponsor Equity | 29,311,072 | | 39.0 | | Upfront Reserves | 2,752,834 | | 3.7 |
Seller Credit(7) | 250,000 | | 0.3 | | Closing Costs | 2,308,238 | | 3.1 |
| | | | | | | | |
Total Sources | $75,061,072 | | 100.0% | | Total Uses | $75,061,072 | | 100.0% |
| (1) | The mortgage loan documents provide for conditional yield maintenance in the event that a pay-down of the loan is required in connection with an Urban Air Permit Default Date (as defined below). See “Escrows” section. |
| (2) | See “Escrows” section. |
| (3) | In addition, the seller provided an upfront reserve in the amount of $2,850,000, which is held with a third party and not with the lender and is not collateral for the mortgage loan. See “Escrows - Urban Air Tenant Escrow”. |
| (4) | Represents average occupancy over the trailing 12 month period. |
| (5) | The increase from YE 2022 NOI to U/W NOI was primarily due to one new lease commencing in May 2023 totalling 12.7% of net rentable area and 10.7% of underwritten base rent. |
| (6) | The increase from YE 2020 NOI to YE 2021 NOI was primarily due to four new leases commencing between May 2020 and November 2021 totalling approximately 16.9% of net rentable area and 14.7% underwritten base rent. |
| (7) | Represents the gross purchase price. At loan origination the seller provided a $250,000 credit to the borrower, which is being held with lender in the Holdback Reserve until certain conditions are met (see “Escrows” section below). |
The Mortgage Loan. The mortgage loan (the “Largo Town Center Mortgage Loan”) is evidenced by a promissory note in the original principal amount of $45,500,000 and secured by a first priority fee interest in a 277,104 square foot anchored retail property located in Largo, Maryland (the “Largo Town Center Property”).
The Borrower and Borrower Sponsor. The borrower is Largo Triangle, LLC, a Delaware limited liability company and single purpose entity with one independent director. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
70
Property Type: Retail Property Subtype: Anchored | Loan #4 | Cut-off Date Balance: Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: | | $45,500,000 66.2% 1.48x 10.7% |
Address: 806-990, 1006-1050 Largo Center Drive Largo, MD 20774 | Largo Town Center | |
origination of the Largo Town Center Mortgage Loan. The borrower sponsors are Manpreet Singh, Savneet Singh, Vishal Khosla and Gurpreet Singh. The non-recourse carveout guarantors are Manpreet Singh and Savneet Singh.
Manpreet Singh is the founder and Chief Investment Officer of Singh Capital Partners (“SCP”), a family office based in Washington, D.C. with investments in venture capital, real estate, and growth equity. Gurpreet Singh is the founder and CEO of TalkLocal, a local search platform that connects consumers with local service businesses via a proprietary technology platform.
The Property. The Largo Town Center Property is an anchored retail center located in Largo, Maryland consisting of seven buildings totaling 277,104 square feet. Built in phases between 1991 and 1995, the Largo Town Center Property is situated on a 28.8-acre site and is anchored by Urban Air Trampoline & Adventure Park, Burlington, Shoppers Food Warehouse, Marshall’s and Dollar Tree. Six tenants, accounting for 18.4% of underwritten base rent and 24.0% of the allocated loan amount, are leased fee tenants that own their improvements (Capital One, Bojangles, McDonald’s, Sunoco, Taco Bell, and Truist Bank, collectively the “Leased Fee Tenants”). The Largo Town Center Property contains 1,239 surface parking spaces, resulting in a parking ratio of 4.5 spaces per 1,000 SF of rentable area. As of March 31, 2023, the Largo Town Center Property was 96.9% leased to 35 tenants and has averaged 87.9% occupancy since 2019. Additionally, 18 tenants (comprising 50.6% of the net rentable area) have each been in occupancy at the center for at least 15 years.
Major Tenants.
Urban Air Trampoline & Adventure Park (35,252 SF; 12.7% of NRA; 10.7% of underwritten base rent). Urban Air Trampoline & Adventure Park (“Urban Air”) is an indoor adventure park with numerous attractions including trampolines, mini golf, bumper cars, trapeze, go-karts, climbing walls, bowling, playgrounds, and cafes. Urban Air has over 350 parks open or under development across the United States and Canada. Urban Air’s lease commenced in May 2023, which is when the tenant took possession of their space. Urban Air’s lease expiration is expected to be no later than in December 2033, which is 10 years from the Rent Commencement Date (as defined below - see “Major Tenants” table). The tenant has two, five-year renewal options remaining and may terminate its lease if it does not receive the necessary building permits by February 14, 2024.
Shoppers Food Warehouse (F/M/S: NR/Ba3/B (parent company); 49,840 SF; 18.0% of NRA; 10.1% of underwritten base rent). Founded in 1949, Shoppers Food Warehouse (“Shoppers”) is a full service grocery store focused on providing everyday low warehouse pricing. Shoppers, which serves the Washington D.C., Maryland and Northern Virginia markets, was acquired by United Natural Foods, Inc. (NYSE: UNFI) in 1999. Shoppers has been a tenant since 1990 and has a lease expiring in September 2026 with two, five-year renewal options remaining and no termination options.
Burlington (F/M/S: NR/NR/BB+; 35,511 SF; 12.8% of NRA; 8.5% of underwritten base rent). Founded in 1972 and headquartered in Burlington, New Jersey, Burlington (NYSE: BURL) is an off-price retailer that operated 933 stores across 46 states and Puerto Rico as of March 2023. Burlington’s product offering includes women’s ready-to-wear apparel, menswear, youth apparel, baby, beauty, footwear, accessories, home, toys, gifts, and coats. Burlington has been a tenant since 2020 and has a lease expiring in February 2031 with three, five-year renewal option remaining and no termination options.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
71
Property Type: Retail Property Subtype: Anchored | Loan #4 | Cut-off Date Balance: Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: | | $45,500,000 66.2% 1.48x 10.7% |
Address: 806-990, 1006-1050 Largo Center Drive Largo, MD 20774 | Largo Town Center | |
The following table presents certain information relating to the tenancy at the Largo Town Center Property:
Major Tenants(1)
Tenant Name | Credit Rating (Fitch/ Moody’s/ S&P)(2) | Tenant NRSF | % of NRSF | Annual U/W Base Rent PSF(3) | Annual U/W Base Rent(3) | % of Total Annual U/W Base Rent | Lease Expiration Date | Ext. Options | Term. Option (Y/N) |
Major Tenants | | | | | | | | |
Urban Air | NR/NR/NR | 35,252 | 12.7% | $15.75 | $555,219 | 10.7% | 12/31/2033(4) | 2, 5-year | Y(5) |
Shoppers | NR/Ba3/B | 49,840 | 18.0% | $10.50 | $523,320 | 10.1% | 9/30/2026 | 2, 5-year | N |
Burlington | NR/NR/BB+ | 35,511 | 12.8% | $12.49 | $443,637 | 8.5% | 2/28/2031 | 3, 5-year | N |
Marshall’s | NR/A2/A | 26,975 | 9.7% | $11.75 | $316,956 | 6.1% | 12/31/2026 | 2, 5-year | N |
Sunoco | BB+/Ba2/BB | 912(6) | 0.3% | $267.92 | $244,344 | 4.7% | 9/30/2042 | 2, 5-year | N |
| 148,490 | 53.6% | $12.46(7) | $2,083,476 | 40.1% | | | |
| | | | | | | | |
Non-Major Tenants | 120,080 | 43.3% | $23.02(7) | $3,108,151 | 59.9% | | | |
| | | | | | | | |
Occupied Collateral Total | 268,570 | 96.9% | $16.83(7) | $5,191,627 | 100.0% | | | |
| | | | | | | | |
Vacant Space | 8,534 | 3.1% | | | | | | |
| | | | | | | | |
Collateral Total | 277,104 | 100.0% | | | | | | |
| | | | | | | | | |
| (1) | Information obtained from the underwritten rent roll dated March 31, 2023. |
| (2) | Certain ratings are those of the parent company, whether or not the parent company guarantees the lease. |
| (3) | Annual U/W Base Rent PSF and Annual U/W Base Rent include contractual rent steps totalling $81,250 through July 2024 and straight-line rent averaging totalling $7,970 related to Capital One (1.1% of NRA; 3.0% of underwritten base rent). |
| (4) | The expiration of the base term for the Urban Air lease is 10 years from the Rent Commencement Date. The “Rent Commencement Date” is the earlier of (i) the day after tenant finishes fixturing or (ii) the date tenant opens for business. Tenant’s fixturing period is 210 days after the later of (i) the May 26, 2023 lease commencement date, or (ii) either the date that lease-required permits are issued for tenant’s work or tenant waives its right to terminate the lease due to such permits’ not having been timely issued. |
| (5) | Urban Air may terminate its lease if the necessary building permits are not received by February 14, 2024. |
| (6) | Sunoco is the ground lessee of its pad site, and constructed its improvements at its own expense. |
| (7) | Annual U/W Base Rent PSF excludes Leased Fee Tenants. |
The following table presents a summary of sales and occupancy costs for certain tenants at the Largo Town Center Property.
Tenant Sales(1)(2)
| 2020 Sales (PSF) | 2021 Sales (PSF) | 2022 Sales (PSF) | Occupancy Cost(3) |
Shoppers | $515 | $534 | $533 | 2.9% |
Burlington | $85 | $210 | $197 | 7.7% |
Marshall’s | $209 | $328 | $316 | 5.2% |
Sunoco(4) | $9,444 | $11,427 | $15,823 | 2.1% |
| (1) | Information obtained from the borrower. |
| (2) | Tenants shown on the Major Tenants table above and not included on the Tenant Sales table are not required to report sales. |
| (3) | Occupancy cost based on underwritten base rent and any applicable reimbursements, divided by most recent reported sales. |
| (4) | Sunoco is the ground lessee of its pad site, and constructed its improvements at its own expense. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
72
Property Type: Retail Property Subtype: Anchored | Loan #4 | Cut-off Date Balance: Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: | | $45,500,000 66.2% 1.48x 10.7% |
Address: 806-990, 1006-1050 Largo Center Drive Largo, MD 20774 | Largo Town Center | |
The following table presents certain information relating to the lease rollover schedule at the Largo Town Center Property:
Lease Expiration Schedule(1)(2)
Year Ending December 31, | No. of Leases Expiring | Expiring NRSF | % of Total NRSF | Cumulative Expiring NRSF | Cumulative % of Total NRSF | Annual U/W Base Rent | % of Total Annual U/W Base Rent | Annual U/W Base Rent PSF(3) |
MTM | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2023 | 1 | 2,800 | 1.0% | 2,800 | 1.0% | $88,872 | 1.7% | $31.74 |
2024 | 3 | 15,848 | 5.7% | 18,648 | 6.7% | $419,056 | 8.1% | $26.44 |
2025 | 6 | 21,679 | 7.8% | 40,327 | 14.6% | $576,908 | 11.1% | $22.36 |
2026 | 8 | 96,156 | 34.7% | 136,483 | 49.3% | $1,323,731 | 25.5% | $13.77 |
2027 | 6 | 15,012 | 5.4% | 151,495 | 54.7% | $521,869 | 10.1% | $31.70 |
2028 | 2 | 16,836 | 6.1% | 168,331 | 60.7% | $246,751 | 4.8% | $14.66 |
2029 | 2 | 13,705 | 4.9% | 182,036 | 65.7% | $256,896 | 4.9% | $18.74 |
2030 | 0 | 0 | 0.0% | 182,036 | 65.7% | $0 | 0.0% | $0.00 |
2031 | 1 | 35,511 | 12.8% | 217,547 | 78.5% | $443,637 | 8.5% | $12.49 |
2032 | 3 | 9,392 | 3.4% | 226,939 | 81.9% | $373,568 | 7.2% | $26.44 |
2033 | 2 | 40,719 | 14.7% | 267,658 | 96.6% | $695,994 | 13.4% | $17.09 |
2034 & Beyond | 1 | 912 | 0.3% | 268,570 | 96.9% | $244,344 | 4.7% | $0.00 |
Vacant | 0 | 8,534 | 3.1% | 277,104 | 100.0% | $0 | 0.0% | $0.00 |
Total/Weighted Average | 35 | 277,104 | 100.0% | | | $5,191,627 | 100.0% | $16.83(4) |
| (1) | Information obtained from the underwritten rent roll. |
| (2) | Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the related lease and are not considered in the rollover schedule. |
| (3) | Annual U/W Base Rent PSF excludes the Leased Fee Tenants. Total/Weighted Average Annual U/W Base Rent PSF including the leased fee tenants is $19.33 PSF. |
| (4) | Total/Weighted Average Annual U/W Base Rent PSF excludes vacant space. |
The following table presents historical occupancy percentages at the Largo Town Center Property:
Historical Occupancy
12/31/2020(1)(2) | 12/31/2021(1)(2) | 12/31/2022(1)(2) | 3/31/2023(3) |
86.0% | 86.0% | 92.5% | 96.9% |
| (1) | Information obtained from the borrower. |
| (2) | Represents average occupancy over the trailing 12 month period. |
| (3) | Information obtained from the underwritten rent roll. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
73
Property Type: Retail Property Subtype: Anchored | Loan #4 | Cut-off Date Balance: Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: | | $45,500,000 66.2% 1.48x 10.7% |
Address: 806-990, 1006-1050 Largo Center Drive Largo, MD 20774 | Largo Town Center | |
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and underwritten net cash flow at the Largo Town Center Property:
Cash Flow Analysis
| 2020 | 2021 | 2022 | TTM 2/28/2023 | U/W | %(1) | U/W $ per SF |
Base Rent | $3,658,043 | $4,492,631 | $4,368,004 | $4,511,872 | $5,191,627(2) | 75.7% | $18.74 |
Grossed Up Vacant Space | 0 | 0 | 0 | 0 | 226,151 | 3.3 | 0.82 |
Gross Potential Rent | $3,658,043 | $4,492,631 | $4,368,004 | $4,511,872 | $5,417,778 | 79.0% | $19.55 |
Other Income | 34,107 | 47,894 | 38,598 | 60,620 | 60,620 | 0.9 | 0.22 |
Total Recoveries | 974,573 | 943,766 | 1,242,550 | 1,239,864 | 1,378,090 | 20.1 | 4.97 |
Net Rental Income | $4,666,723 | $5,484,291 | $5,649,152 | $5,812,356 | $6,856,488 | 100.0% | $24.74 |
(Free Rent) | (31,762) | (26,855) | (26,391) | (26,391) | 0 | 0.0 | 0.00 |
(Vacancy & Credit Loss) | 0 | 0 | 0 | 0 | (325,067)(3) | (6.0) | (1.17) |
Effective Gross Income | $4,634,961 | $5,457,436 | $5,622,761 | $5,785,965 | $6,531,421 | 95.3% | $23.57 |
| | | | | | | |
Real Estate Taxes | 712,056 | 732,686 | 753,317 | 753,317 | 803,086 | 12.3 | 2.90 |
Insurance | 59,971 | 60,428 | 79,055 | 75,040 | 125,120 | 1.9 | 0.45 |
Management Fee | 157,742 | 155,861 | 156,512 | 173,044 | 195,943 | 3.0 | 0.71 |
Other Operating Expenses | 379,833 | 413,755 | 541,051 | 524,884 | 524,884 | 8.0 | 1.89 |
Total Operating Expenses | $1,309,602 | $1,362,730 | $1,529,935 | $1,526,285 | $1,649,033 | 25.2% | $5.95 |
| | | | | | | |
Net Operating Income | $3,325,359(4) | $4,094,706(4) | $4,092,826 | $4,259,680 | $4,882,388 | 74.8% | $17.62 |
Replacement Reserves | 0 | 0 | 0 | 0 | 55,421 | 0.8 | 0.20 |
TI/LC | 0 | 0 | 0 | 0 | 276,424 | 4.2 | 1.00 |
Net Cash Flow | $3,325,359 | $4,094,706 | $4,092,826 | $4,259,680 | $4,550,544 | 69.7% | $16.42 |
| | | | | | | |
NOI DSCR | 1.08x | 1.33x | 1.33x | 1.39x | 1.59x | | |
NCF DSCR | 1.08x | 1.33x | 1.33x | 1.39x | 1.48x | | |
NOI Debt Yield | 7.3% | 9.0% | 9.0% | 9.4% | 10.7% | | |
NCF Debt Yield | 7.3% | 9.0% | 9.0% | 9.4% | 10.0% | | |
| (1) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (2) | The U/W Base Rent includes contractual rent steps totalling $81,250 through July 2024 and straight-line rent averaging totalling $7,970 related to Capital One (1.1% of NRA; 3.0% of underwritten base rent). |
| (3) | The underwritten economic vacancy is 6.0%. The Largo Town Center Property was 96.9% leased as of March 31, 2023. |
| (4) | The increase from YE 2020 NOI to YE 2021 NOI was primarily due to four new leases commencing between May 2020 and November 2021 totalling approximately 16.9% of net rentable area and 14.7% underwritten base rent. |
Appraisal. The appraiser concluded to an “as-is” Appraised Value for the Largo Town Center Property of $68,700,000 as of April 5, 2023.
Environmental Matters. A Phase I environmental site assessment (“ESA”) dated April 21, 2023 identified two recognized environmental conditions related to (i) four underground storage tanks owned by a gasoline station operating at the property and (ii) the presence of elevated volatile organic compounds in the soil-gas related to on-site drycleaning at the property. In lieu of a Phase II ESA, the lender obtained a $5,000,000 lender environmental insurance policy from Sirius Specialty Insurance Corporation with a 13 year term (three years past the loan term), with the policy being pre-paid at loan origination. See “Description of the Mortgage Pool—Environmental Considerations” in the prospectus.
Market Overview and Competition. The Largo Town Center Property is located in Largo, Maryland, approximately 14.7 miles east of Washington, D.C and 18.6 miles east of the Ronald Reagan Washington National Airport. Primary access to the area is provided by the Capital Beltway (Interstate 95/495), a 64 mile interstate that surrounds Washington D.C. and its inner suburbs. The property has visibility from Route 202, which provides direct access to the property from the Capital Beltway. The surrounding area contains a mix of commercial and residential properties clustered around the Largo Metrorail Station, which is located 0.8 miles from the property. Major employers in the area include University System of Maryland, Joint Base Andrews Naval Air Facility Washington, U.S. Internal Revenue Service, MGM National Harbor, and Gaylord National Resort and Convention Center.
According to the appraisal, the estimated 2022 population within a one-, three- and five-mile radius was approximately 13,464, 91,804, and 247,067, respectively, and the average household income within the same radii was $108,044, $122,786, and $117,479, respectively.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
74
Property Type: Retail Property Subtype: Anchored | Loan #4 | Cut-off Date Balance: Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: | | $45,500,000 66.2% 1.48x 10.7% |
Address: 806-990, 1006-1050 Largo Center Drive Largo, MD 20774 | Largo Town Center | |
According to a third-party market research report, the Largo Town Center Property is located within the Landover/Largo/Capital Heights retail submarket of the greater Washington, D.C. retail market. As of July 12, 2023, the submarket reported total inventory of approximately 3.5 million square feet with a 4.9% vacancy rate and average asking rent of $25.73 per square foot. Additionally, according to a third-party market research provider, there is nothing under construction in the retail submarket. The appraiser concluded to market rents for the Largo Town Center Property, ranging from $15.00 per square foot for anchor and grocery anchor space, to $34.00 per square foot for inline space. For outparcel ground lease pads, the appraiser concluded to market rents ranging from $135,000 for outparcel to $225,000 for bank outparcel (see table below).
The following table presents certain information relating to the appraiser’s market rent conclusions for the Largo Town Center Property:
Market Rent Summary(1)
| Inline | Large Inline | Anchor | Grocery Anchor | Outparcel | Bank Outparcel |
Market Rent (PSF) | $34.00 | $26.50 | $15.00 | $15.00 | $135,000.00 | $225,000.00 |
Lease Term (Years) | 5 | 5 | 10 | 10 | 15 | 15 |
Lease Type (Reimbursements) | NNN | NNN | NNN | NNN | NNN | NNN |
Rent Increase Projection | 3.0%/year | 3.0%/year | 10.0%/5 years | 10.0%/5 years | 10.0%/5 years | 10.0%/5 years |
Tenant Improvements (New / Renewal) | $10.00 / $0.00 | $10.00 / $0.00 | $25.00 / $0.00 | $25.00 / $0.00 | $10.00 / $0.00 | $10.00 / $0.00 |
Leasing Commissions (New / Renewal) | 6.0% / 3.0% | 6.0% / 3.0% | 6.0% / 3.0% | 6.0% / 3.0% | 6.0% / 3.0% | 6.0% / 3.0% |
Free Rent Months (New / Renewal) | 0 / 0 | 0 / 0 | 0 / 0 | 0 / 0 | 0 / 0 | 0 / 0 |
| (1) | Information obtained from the appraisal. |
The table below presents certain information relating to comparable sales pertaining to the Largo Town Center Property, as identified by the appraiser:
Comparable Sales(1)
Property Name | Location | Year Built/Renovated | Rentable Area (SF) | Occupancy | Sale Date | Sale Price | Sale Price (PSF) |
Largo Town Center | 806-990, 1006-1050 Largo Center Drive Largo, MD | 1991-1995/NAP | 277,104(2) | 96.9%(2) | 7/2023 | $70,000,000 | $253 |
Waldorf Marketplace | 2990-3088 Waldorf Market Waldorf, MD | 2004/NAP | 359,484 | 78.0% | 3/2023 | $55,400,000 | $154 |
Montgomery Village Center | 19134 Montgomery Village Gaithersburg, MD | 1969/2022 | 131,000 | 100.0% | 12/2022 | $40,250,000 | $307 |
Promenade at Manassas | 7486 Stream Walk Lane Manassas, VA | 1992/NAP | 280,760 | 99.0% | 10/2022 | $46,100,000 | $164 |
Brandywine Crossing Phase I & II | 15916-15920 Crain Highway SE Brandywine, MD | 2008/NAP | 231,036 | 93.0% | 3/2022 | $64,000,000 | $277 |
Lexington Village | 46400 Lexington Village Lexington Park, MD | 2011/NAP | 162,678 | 100.0% | 3/2022 | $24,950,000 | $153 |
Woodmore Towne Centre | NE. Corner of Landover Road Landover, MD | 2010/NAP | 712,000 | 97.0% | 12/2021 | $193,400,000 | $272 |
Manokeek Village Center | 7025 Berry Road Accokeek, MD | 2003/NAP | 74,470 | 97.0% | 3/2021 | $17,350,000 | $233 |
Confidential | Confidential | 1960/1998 | 378,205 | 91.0% | 4/2023 | $73,000,000 | $193 |
| (1) | Information obtained from the appraisal. |
| (2) | Information obtained from the underwritten rent roll. |
Escrows.
Real Estate Taxes – The mortgage loan documents require an upfront deposit of $145,810 for real estate taxes and ongoing monthly deposits equal to 1/12 of the taxes that lender estimates will be payable during the next 12 months, initially $72,906.
Insurance – The mortgage loan documents require an upfront deposit of $10,948 for insurance premiums and ongoing monthly deposits equal to 1/12 of the insurance premiums that lender estimates will be payable during the next 12 months, initially $10,948. Notwithstanding the above, the borrower’s obligation to make monthly insurance reserve payments will be waived if (i) no event of
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
75
Property Type: Retail Property Subtype: Anchored | Loan #4 | Cut-off Date Balance: Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: | | $45,500,000 66.2% 1.48x 10.7% |
Address: 806-990, 1006-1050 Largo Center Drive Largo, MD 20774 | Largo Town Center | |
default is continuing, (ii) the insurance policies maintained by the borrower are part of a blanket or umbrella policy approved by the lender in its reasonable discretion, (iii) the borrower provides lender with evidence of such renewal of policies and (iv) the borrower provides the lender paid receipts for the payment of the insurance premiums no later than 10 business days prior to policy expiration. For the avoidance of doubt, as of the time of loan origination, the policies maintained by the borrower covering the Largo Town Center Property are not part of a blanket or umbrella policy and the monthly reserve is active.
Replacement Reserve – The mortgage loan documents require ongoing monthly replacement reserve deposits of $4,618 ($0.20 per square foot per year).
Leasing Reserve – The mortgage loan documents require an upfront deposit of $1,000,000 and ongoing monthly reserves of $23,092 ($1.00 per square foot per year) for tenant improvements and leasing commissions.
Deferred Maintenance – The mortgage loan documents require an upfront deposit of $30,625, which equates to 125% of immediate repairs at the property.
Gap Rent – The mortgage loan documents require an upfront deposit of $416,209 for seven months of gap rent related to Urban Air. Upon an Urban Air Permit Default Date (as defined below), all remaining Gap Rent reserve funds will be held as Existing TI/LC reserve funds. Provided no event of default has occurred and is continuing, commencing on the next succeeding monthly payment date after the date the permits are issued in accordance with the Urban Air lease, the lender will disburse funds to the borrower in an amount equal to $59,458 on each monthly payment date through and until the Urban Air rent commencement date.
Rent Concession – The mortgage loan documents require an upfront deposit of $277,610 for six months of outstanding rent concessions related to Urban Air. Upon an Urban Air Permit Default Date, all remaining Rent Concession reserve funds will be held as Existing TI/LC reserve funds. So long as no event of default has occurred and is continuing, commencing on the next succeeding monthly payment date after the Urban Air rent commencement date lender will disburse funds to the borrower in an amount equal to $46,268 on each monthly payment date thereafter.
Holdback Reserve – The mortgage loan documents require an upfront deposit of $250,000 to be held as additional collateral for the loan. Provided no event of default is continuing, the funds will be released to the borrower upon the delivery of the Urban Air estoppel certificate, which affirms, among other things, (i) the Urban Air lease is in full force and effect, (ii) Urban Air is occupying all of the space, is open for business and is paying full, unabated rent, (iii) all landlord obligations, including TI/LCs, rent concessions and rent abatements, due under the lease have been performed, completed and paid for, (iv) that any improvements described in the Urban Air lease have been constructed in accordance with the lease and been accepted by Urban Air, (v) that Urban Air is not entitled to any concession or rebate of rent or other charges due under the lease, and (vi) that there are no borrower or tenant defaults under the lease. Upon the occurrence of the Urban Air Permit Default Date, the funds will be held as existing TI/LC reserve funds.
Existing TI/LC – The mortgage loan documents require an upfront deposit of $871,632 for outstanding tenant improvements and leasing commissions related to Urban Air. Provided no event of default has occurred and is continuing, upon the delivery of the Urban Air estoppel certificate, any and all remaining Existing TI/LC reserve funds will be disbursed to the borrower.
Upon the Urban Air Permit Default Date, any remaining Gap Rent reserve funds, Rent Concession reserve funds and Holdback reserve funds will also be held as Existing TI/LC reserve funds. Thereafter, upon the earlier of (i) the monthly payment date succeeding the 12 months after Urban Air terminates its lease or (ii) on the monthly payment date occurring in March 2025, unless an Urban Air Cure Event (as defined below) has occurred, any and all Existing TI/LC reserve funds in excess of $1,000,000 will be applied to partially prepay the outstanding principal balance of the mortgage loan, inclusive of all yield maintenance premiums and interest shortfall due in connection therewith. If an Urban Air Cure Event has occurred, on the next succeeding monthly payment date, all Existing TI/LC reserve funds in excess of an amount equal to any and all rent concessions, rent abatements, tenant improvement allowances and leasing commissions in connection with the applicable replacement lease will be disbursed to Borrower.
“Urban Air Permit Default Date” will commence upon the earlier of (i) the termination of the Urban Air lease on or after February 14, 2024 and (ii) July 26, 2024 if the Urban Air permits are not issued.
An “Urban Air Cure Event” may occur on or before the earlier of (i) February 14, 2025 or (ii) 12 months after the date Urban Air terminates the lease, lender’s receipt of evidence that borrower has executed a new lease with a replacement tenant acceptable to lender for all of the space once leased to Urban Air, provided (a) the rental rate under the replacement lease is at least 80% of then current market rents, (b) the term is at least 10 years, (c) any and all tenant improvement allowances, rent concessions, rent abatements, and leasing commissions in connection with such replacement lease must be consistent with then current market rents, and (d) such tenant has no right to terminate the lease (except in the event of the destruction or condemnation of substantially all of the property), all as evidenced by a tenant estoppel certificate executed by such replacement tenant and in form and substance acceptable to lender.
Urban Air Tenant Escrow – At loan closing, the seller provided an upfront reserve in the amount of $2,850,000, which is held with a third party and not with the lender. From and after August 5, 2023 and until such time as either all permits required by the Urban Air lease have been issued or Urban Air has waived its termination right, the escrow agent is authorized to make monthly disbursements to the borrower in an amount equal to $59,458. The remaining funds will be released by the third party to the seller upon the earlier of (i) prior to February 14, 2024, Urban Air’s receipt of all necessary permits, (ii) between February 14, 2024 and July 26, 2024, Urban Air’s receipt of all necessary permits and Urban Air’s waiver of their termination rights, (iii) Urban Air’s receipt of solely the building permit and signing of a memorandum waiving their termination right, or (iv) the seller’s written statement that the Urban Air lease
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
76
Property Type: Retail Property Subtype: Anchored | Loan #4 | Cut-off Date Balance: Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: | | $45,500,000 66.2% 1.48x 10.7% |
Address: 806-990, 1006-1050 Largo Center Drive Largo, MD 20774 | Largo Town Center | |
has been terminated for any reason not related to the Urban Air permit termination right. The borrower and the guarantor will have full recourse liability in an amount equal to $4,665,451 in the event that (i) the Urban Air Permit Default Date occurs, (ii) the Urban Air Tenant Escrow amounts available under the post-closing escrow agreement are released to the seller under the post-closing escrow agreement, and (iii) Urban Air terminates their lease for failure of the permits being issued. Upon the Urban Air Permit Default Date, the remaining funds will be disbursed to the borrower by the third party pursuant to the terms under the post-closing escrow agreement, which the borrower is then required to deposit with lender within two business days of receipt to be held as Existing TI/LC reserve funds. Until the borrower deposits such amounts with the lender, the Urban Air Tenant Escrow is not collateral for the Largo Town Center Mortgage Loan and is not available to the lender under the event of default under the mortgage loan documents.
Lockbox and Cash Management. The Largo Town Center Mortgage Loan is structured with a soft lockbox and springing cash management. The borrower and property manager are required to deposit all rents into an established deposit account within one business day of receipt. Upon the occurrence of a Cash Trap Event Period (defined below), all amounts available in the deposit account will be transferred to a cash management account controlled by the lender on each business day and applied in accordance with the cash flow waterfall in the cash management agreement. During the continuance of a Cash Trap Event Period, all excess cash flow will be held by the lender as additional collateral.
A “Cash Trap Event Period” will commence upon the earliest of the following:
| (i) | the occurrence of an event of default; or |
| (ii) | the net cash flow debt service coverage ratio (“NCF DSCR”) falling below 1.20x. The NCF DSCR will be based on the actual debt service payment prior to the prepayment lockout date and, from and after the prepayment lockout date, the NCF DSCR will be based on debt service payments assuming a hypothetical 30-year amortization schedule. |
A Cash Trap Event Period will end upon the occurrence of the following:
| ● | with regard to clause (i), the cure of such event of default; |
| ● | with regard to clause (ii), the NCF DSCR being greater than or equal to 1.25x for two consecutive calendar quarters. The NCF DSCR will be based on the actual debt service payment prior to the prepayment lockout date and, from and after the prepayment lockout date, the NCF DSCR will be based on debt service payments assuming a hypothetical 30-year amortization schedule. |
Property Management. The Largo Town Center Property is managed by Finmarc Management, Inc.
Partial Release. From and after the prepayment lockout date, the borrower may obtain the release of any or all of the Leased Fee Tenants, provided the following conditions, among others, are satisfied: (i) no event of default is continuing; and (ii) defeasance of the greatest of (a) 90% of the net proceeds of the sale, (b) 115% of the allocated loan amount, (c) an amount that would result in the debt yield following the release being no less than the debt yield immediately prior to the release, (d) an amount that would result in the loan to value ratio being not more than the loan to value ratio immediately prior to release, and (e) such greater amount as may be required to maintain REMIC requirements.
Real Estate Substitution. Not permitted.
Subordinate and Mezzanine Indebtedness. None.
Right of First Offer / Right of First Refusal. None.
Ground Lease. None.
Terrorism Insurance. The loan documents require that the “all risk” insurance policy required to be maintained by the borrower provides coverage for terrorism in an amount equal to the full replacement cost of the Largo Town Center Property, as well as business interruption insurance covering no less than the 18-month period following the occurrence of a casualty event, together with a 6-month extended period of indemnity.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
77
Property Type: Industrial | | Loan #5 | Cut-off Date Balance: | | $43,000,000 |
Property Subtype: R&D/Manufacturing | Seagate Campus | Cut-off Date LTV: | | 66.2% |
Address: 47488 Kato Road | | U/W NCF DSCR: | | 1.83x |
Fremont, CA 94538 | | U/W NOI Debt Yield: | | 13.6% |
| | | | | | |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
78
Property Type: Industrial | | Loan #5 | Cut-off Date Balance: | | $43,000,000 |
Property Subtype: R&D/Manufacturing | Seagate Campus | Cut-off Date LTV: | | 66.2% |
Address: 47488 Kato Road | | U/W NCF DSCR: | | 1.83x |
Fremont, CA 94538 | | U/W NOI Debt Yield: | | 13.6% |
| | | | | | |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
79
No. 5 – Seagate Campus |
|
Mortgage Loan Information | | Mortgaged Property Information |
Mortgage Loan Seller: | Wells Fargo Bank, National Association | | Single Asset/Portfolio: | Single Asset |
Credit Assessment (Moody’s/Fitch/KBRA): | Baa3(sf)/NR/NR | | Property Type – Subtype: | Industrial – R&D/Manufacturing |
Original Principal Balance(1): | $43,000,000 | | Location: | Fremont, CA |
Cut-off Date Balance(1): | $43,000,000 | | Size: | 574,775 SF |
% of Initial Pool Balance: | 6.0% | | Cut-off Date Balance Per SF(1): | $299.25 |
Loan Purpose: | Acquisition | | Maturity Date Balance Per SF(1): | $299.25 |
Borrower Sponsor: | Kato Road Cypress Holdings, LLC | | Year Built/Renovated: | 2010/2016 |
Guarantor: | Kato Road Cypress Holdings, LLC | | Title Vesting: | Fee |
Mortgage Rate: | 7.0400% | | Property Manager: | Self-Managed |
Note Date: | May 24, 2023 | | Current Occupancy (As of): | 100.0% (8/1/2023) |
Seasoning: | 2 months | | YE 2022 Occupancy(5): | NAV |
Maturity Date: | June 6, 2033 | | YE 2021 Occupancy(5): | NAV |
IO Period: | 120 months | | YE 2020 Occupancy(5): | NAV |
Loan Term (Original): | 120 months | | YE 2019 Occupancy(5): | NAV |
Amortization Term (Original): | NAP | | As-Is Appraised Value: | $260,000,000 |
Loan Amortization Type: | Interest Only | | As-Is Appraised Value Per SF: | $452.35 |
Call Protection(2): | L(26),D(87),O(7) | | As-Is Appraisal Valuation Date: | April 13, 2023 |
Lockbox Type: | Hard / Springing Cash Management | | Underwriting and Financial Information |
Additional Debt: | Yes | | TTM NOI(5): | NAV |
Additional Debt Type (Balance): | Pari Passu ($129,000,000) | | YE 2022 NOI(5): | NAV |
| | | YE 2021 NOI(5): | NAV |
| | | YE 2020 NOI(5): | NAV |
| | | U/W Revenues: | $28,021,697 |
| | | U/W Expenses: | $4,631,757 |
Escrows and Reserves(3) | | U/W NOI: | $23,389,940 |
| Initial | Monthly | Cap | | U/W NCF: | $22,468,077 |
Taxes | $0 | Springing | NAP | | U/W DSCR based on NOI/NCF(1): | 1.91x / 1.83x |
Insurance | $0 | Springing | NAP | | U/W Debt Yield based on NOI/NCF(1): | 13.6% / 13.1% |
Replacement Reserve | $0 | Springing | NAP | | U/W Debt Yield at Maturity based on NOI/NCF(1): | 13.6% / 13.1% |
Other(4) | $0 | Springing | NAP | | Cut-off Date LTV Ratio(1): | 66.2% |
| | | | | LTV Ratio at Maturity(1): | 66.2% |
| | | | | | |
| | | | | | | |
Sources and Uses |
Sources | | | | | Uses | | | |
Original Mortgage Loan amount | $172,000,000 | | 65.4% | | Purchase Price | $260,000,000 | | 98.9% |
Borrower Sponsor Equity | 90,443,933 | | 34.4 | | Closing Costs | 2,963,085 | | 1.1 |
Other Sources(6) | 519,152 | | 0.2 | | | | | |
| | | | | | | | |
Total Sources | $262,963,085 | | 100.0% | | Total Uses | $262,963,085 | | 100.0% |
| (1) | Calculated based on the aggregate outstanding principal balance as of the Cut-off Date of the Seagate Campus Whole Loan (as defined below). |
| (2) | Defeasance of the Seagate Campus Whole Loan in whole (but not in part) is permitted at any time after the earlier of (i) May 24, 2026 and (ii) the second anniversary of the closing date of the securitization that includes the last note of the Seagate Campus Whole Loan to be securitized. |
| (3) | See “Escrows and Reserves” below. |
| (4) | Other reserve includes a springing free rent reserve. See “Escrows and Reserves” below. |
| (5) | Historical Occupancy and NOI are unavailable due to the acquisition of the Seagate Campus Property (as defined below) at origination of the Seagate Campus Whole Loan in a sale-leaseback transaction |
| (6) | Other Sources consist of prorated rent of approximately $519,152 from May 24, 2023 through May 31, 2023. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
80
Property Type: Industrial | | Loan #5 | Cut-off Date Balance: | | $43,000,000 |
Property Subtype: R&D/Manufacturing | Seagate Campus | Cut-off Date LTV: | | 66.2% |
Address: 47488 Kato Road | | U/W NCF DSCR: | | 1.83x |
Fremont, CA 94538 | | U/W NOI Debt Yield: | | 13.6% |
| | | | | | |
The Mortgage Loan. The fifth largest mortgage loan (the “Seagate Campus Mortgage Loan”) is part of a whole loan (the “Seagate Campus Whole Loan”) secured by the borrower’s fee interest in a 574,775 SF research and development / advanced manufacturing industrial property located in Fremont, California (the “Seagate Campus Property”). The Seagate Campus Whole Loan was co-originated by Citi Real Estate Funding Inc. (“CREFI”), UBS AG, and Wells Fargo Bank, National Association (“WFB”)and is comprised of seven pari passu notes with an aggregate outstanding principal balance as of the Cut-off Date of $172,000,000. The Seagate Campus Mortgage Loan is evidenced by non-controlling note A-6, with an outstanding principal balance as of the Cut-off Date of $43,000,000. The Notes A-1, A-2, A-3, A-4, and A-5-1 have been previously securitized and the Seagate Campus Whole Loan is being serviced pursuant to the trust and servicing agreement for the Benchmark 2023-B39 securitization trust. See “Description of the Mortgage Pool—The Whole Loans—The Non-Serviced Pari Passu Whole Loans” and “Pooling and Servicing Agreement” in the prospectus.
Whole Loan Note Summary
Notes | Original Balance | Cut-off Date Balance | Note Holder | Controlling Piece |
A-1 | $50,000,000 | $50,000,000 | Benchmark 2023-B39 | Yes |
A-2 | 20,000,000 | 20,000,000 | Benchmark 2023-B39 | No |
A-3 | 16,000,000 | 16,000,000 | Benchmark 2023-B39 | No |
A-4 | 20,000,000 | 20,000,000 | BBCMS 2023-C20 | No |
A-5-1 | 12,000,000 | 12,000,000 | BBCMS 2023-C20 | No |
A-5-2 | 11,000,000 | 11,000,000 | UBS AG | No |
A-6 | 43,000,000 | 43,000,000 | BANK 2023-BNK46 | No |
Total | $172,000,000 | $172,000,000 | | |
The Borrowers and Borrower Sponsor. The borrower is MC Kato Realty LLC, a Delaware limited liability company and single-purpose entity with one independent director in its organizational structure. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the Seagate Campus Whole Loan.
The borrower sponsor and non-recourse carveout guarantor is Kato Road Cypress Holdings, LLC. Kato Road Cypress Holdings, LLC is an affiliate of Sixth Street, a global investment firm with over $65 billion in assets under management and committed capital.
The Property. The Seagate Campus Property is a two-story, Class A, LEED-Gold Certified, research and development / advanced manufacturing facility totaling 574,775 SF and is situated on approximately 30.0-acres in Fremont, California. The Seagate Campus Property was built in 2010 and is 100.0% leased to Seagate Technology LLC (“Seagate”). The Seagate Campus Property features 103,000 SF of class 10 to 1,000 clean rooms, a 260,000-gallon ultrapure water system, 21 kV of power, 6,000 tons of HVAC capacity, 25,000 SF of warehouse space, rooftop solar panels, a full-service cafeteria and an on-site fitness center. The warehouse space at the Seagate Campus Property features 24’ foot ceiling heights, 13 dock-high doors, one drive-in loading door, and six grade-level loading doors. The Seagate Campus Property has 705 parking stalls on site, resulting in a parking ratio of approximately 1.23 spaces per 1,000 SF. Seagate invested approximately $200,000,000 into the Seagate Campus Property in 2016 to construct the R&D labs and manufacturing clean rooms for their hard disk drive manufacturing operations. Seagate purchased the Seagate Campus Property in a sale-leaseback transaction for $260,000,000 in May 2023.
Major Tenants.
Single Tenant: Seagate (BB+/NR/BB: F/M/S&P; 574,775 SF; 100.0% of net rentable area; 100.0% of UW Base Rent; 5/31/2028 lease expiration). Founded in 1979, Seagate is a provider of data storage technology and infrastructure solutions. Seagate’s principal product is hard disk drives. Seagate also produces a range of data storage products including solid state drives, solid state hybrid drives, storage subsystems, and an edge-to-cloud mass data platform that includes data transfer shuttles and a storage-as-a-service cloud. Seagate has over 40,000 employees and uses the Seagate Campus Property as its operational headquarters.
Seagate’s lease at the Seagate Campus Property commenced in May 2023 and has a lease expiration in May 2028 with no termination options. Seagate is contractually obligated to renew its lease upon expiration of the initial five-year lease term and has two renewal options: (i) five years, with starting rent equal to the contractual fifth year rent plus 3.0%, with 3.0% annual increases thereafter, and, to the extent that Seagate elects such five-year extension option, Seagate will have a subsequent renewal option for ten years, or (ii) ten years, with rent to reset to the greater of (a) the contractual fifth year rent plus 3.0%, with 3.0% annual increases thereafter or (b) 90.0% of the then-fair market value rent, with 3.0% annual increases thereafter. If Seagate exercises the 10-year renewal option, the tenant is entitled to a $40,000,000 rent credit applied against monthly payments commencing with the first payment due under the extended term, until the credit is exhausted. The loan documents include a springing free rent reserve. See “Escrows and Reserves” below for further detail.
In the event of a sale of the Seagate Campus Property, the borrower is required to pay Seagate 20% of the equity proceeds exceeding $260 million ($250 million after the release of the unimproved parcel described below) provided Seagate is not in default, occupying 100% of its space, not sublet any space and not given notice to vacate. This right does not apply to any foreclosure, deed-in-lieu or similar proceeding.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
81
Property Type: Industrial | | Loan #5 | Cut-off Date Balance: | | $43,000,000 |
Property Subtype: R&D/Manufacturing | Seagate Campus | Cut-off Date LTV: | | 66.2% |
Address: 47488 Kato Road | | U/W NCF DSCR: | | 1.83x |
Fremont, CA 94538 | | U/W NOI Debt Yield: | | 13.6% |
| | | | | | |
The following table presents certain information relating to the tenancy at the Seagate Campus Property:
Sole Tenant(1)
Tenant Name | Credit Rating (Fitch/ Moody’s/ S&P)(2) | Tenant NRSF | % of NRSF | Annual U/W Base Rent PSF(3) | Annual U/W Base Rent(3) | % of Total Annual U/W Base Rent(3) | Lease Expiration Date(4) | Ext. Options(4) | Term. Option (Y/N) |
Sole Tenant | | | | | | | | |
Seagate | BB+/NR/BB | 574,775 | 100.0% | $43.26 | $24,864,767 | 100.0% | 5/31/2028 | Various(4) | N |
| 574,775 | 100.0% | $43.26 | $24,864,767 | 100.0% | | | |
| | | | | | | | |
Occupied Collateral Total | 574,775 | 100.0% | $43.26 | $24,864,767 | 100.0% | | | |
| | | | | | | | |
Vacant Space | 0 | 0.0% | | | | | | |
| | | | | | | | |
Collateral Total | 574,775 | 100.0% | | | | | | |
| | | | | | | | | |
| (1) | Based on the underwritten rent roll as of August 1, 2023. |
| (2) | Credit Ratings are those of the parent company whether or not the parent guarantees the lease. |
| (3) | U/W Base Rent, % of Total U/W Base Rent and U/W Base Rent PSF include contractual rent steps totaling approximately $724,217 that are underwritten through June 1, 2024. |
| (4) | Seagate is contractually obligated to renew its lease upon expiration of the initial five-year lease term and has two renewal options: (i) five years, with starting rent equal to the contractual fifth year rent plus 3.0%, with 3.0% annual increases thereafter, and, to the extent that Seagate elects such five-year extension option, Seagate will have a subsequent renewal option for ten years, or (ii) ten years, with rent to reset to the greater of (a) the contractual fifth year rent plus 3.0%, with 3.0% annual increases thereafter or (b) 90.0% of the then-fair market value rent, with 3.0% annual increases thereafter. |
The following table presents certain information relating to the lease rollover schedule at the Seagate Campus Property:
Lease Expiration Schedule(1)(2)
Year Ending December 31 | No. of Leases Expiring | Expiring NRSF | % of Total NRSF | Cumulative Expiring NRSF | Cumulative % of Total NRSF | Annual U/W Base Rent(3) | % of Total Annual U/W Base Rent(3) | Annual U/W Base Rent PSF(3) |
MTM | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2022 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2023 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2024 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2025 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2026 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2027 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2028(4) | 1 | 574,775 | 100.0% | 574,775 | 100.0% | $24,864,767 | 100.0% | $43.26 |
2029 | 0 | 0 | 0.0% | 574,775 | 100.0% | $0 | 0.0% | $0.00 |
2030 | 0 | 0 | 0.0% | 574,775 | 100.0% | $0 | 0.0% | $0.00 |
2031 | 0 | 0 | 0.0% | 574,775 | 100.0% | $0 | 0.0% | $0.00 |
2032 | 0 | 0 | 0.0% | 574,775 | 100.0% | $0 | 0.0% | $0.00 |
2033 | 0 | 0 | 0.0% | 574,775 | 100.0% | $0 | 0.0% | $0.00 |
2034 & Beyond | 0 | 0 | 0.0% | 574,775 | 100.0% | $0 | 0.0% | $0.00 |
Vacant | 0 | 0 | 0.0% | 574,775 | 100.0% | $0 | 0.0% | $0.00 |
Total/Weighted Average | 1 | 574,775 | 100.0% | | | $24,864,767 | 100.0% | $43.26 |
| (1) | Certain tenants may have termination or contraction options that may become exercisable prior to the originally stated expiration date of the tenant leases that are not considered in this rollover schedule. |
| (2) | Based on the underwritten rent roll as of August 1, 2023. |
| (3) | U/W Base Rent, % of Total U/W Base Rent and U/W Base Rent PSF include contractual rent steps totaling approximately $724,217 that are underwritten through June 1, 2024. |
| (4) | Seagate is contractually obligated to renew its lease upon expiration of the initial five-year lease term and has two renewal options: (i) five years, with starting rent equal to the contractual fifth year rent plus 3.0%, with 3.0% annual increases thereafter, and, to the extent that Seagate elects such five-year extension option, Seagate will have a subsequent renewal option for ten years, or (ii) ten years, with rent to reset to the greater of (a) the contractual fifth year rent plus 3.0%, with 3.0% annual increases thereafter or (b) 90.0% of the then-fair market value rent, with 3.0% annual increases thereafter. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
82
Property Type: Industrial | | Loan #5 | Cut-off Date Balance: | | $43,000,000 |
Property Subtype: R&D/Manufacturing | Seagate Campus | Cut-off Date LTV: | | 66.2% |
Address: 47488 Kato Road | | U/W NCF DSCR: | | 1.83x |
Fremont, CA 94538 | | U/W NOI Debt Yield: | | 13.6% |
| | | | | | |
The following table presents historical occupancy percentages at the Seagate Campus Property:
Historical Occupancy(1)
12/31/2019 | 12/31/2020 | 12/31/2021 | 12/31/2022 | 8/1/2023 |
NAV | NAV | NAV | NAV | 100.0% |
| | | | |
(1) | Historical occupancy is unavailable due to the acquisition of the Seagate Campus Property at origination of the Seagate Campus Whole Loan in a sale-leaseback transaction. |
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and underwritten net cash flow at the Seagate Campus Property:
Cash Flow Analysis(1)(2)
| U/W | | %(3) | | U/W $ per SF | |
Base Rent | $24,140,550 | | 81.8% | | $42.00 | |
Contractual Rent Steps(4) | 724,217 | | 2.5 | | 1.26 | |
Gross Potential Rent | $24,864,767 | | 84.3% | | $43.26 | |
Reimbursements | 4,631,757 | | 15.7 | | 8.06 | |
Net Rental Income | $29,496,523 | | 100.0% | | $51.32 | |
(Vacancy & Credit Loss) | (1,474,826) | | (5.9) | | (2.57) | |
Effective Gross Income | $28,021,697 | | 95.0% | | $48.75 | |
| | | | | | |
Real Estate Taxes | 3,021,106 | | 10.8 | | 5.26 | |
Insurance | 300,000 | | 1.1 | | 0.52 | |
Management Fee | 840,651 | | 3.0 | | 1.46 | |
Other Operating Expenses(5) | 470,000 | | 1.7 | | 0.82 | |
Total Operating Expenses | $4,631,757 | | 16.5% | | $8.06 | |
| | | | | | |
Net Operating Income | $23,389,940 | | 83.5% | | $40.69 | |
Replacement Reserves | 57,478 | | 0.2 | | 0.10 | |
TI/LC | 864,386 | | 3.1 | | 1.50 | |
Net Cash Flow | $22,468,077 | | 80.2% | | $39.09 | |
| | | | | | |
NOI DSCR(6) | 1.91x | | | | | |
NCF DSCR(6) | 1.83x | | | | | |
NOI Debt Yield(6) | 13.6% | | | | | |
NCF Debt Yield(6) | 13.1% | | | | | |
| (1) | Based on the underwritten rent roll as of August 1, 2023. |
| (2) | Historical financial information is unavailable due to the acquisition of the Seagate Campus Property at origination of the Seagate Campus Whole Loan in a sale-leaseback transaction. |
| (3) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (4) | Contractual Rent Steps totaling approximately $724,217 are underwritten through June 1, 2024. |
| (5) | Other Operating Expenses are primarily attributable to CAM expenses and general and administrative expenses. |
| (6) | NOI and NCF DSCRs and NOI and NCF Debt Yields are based on the Seagate Campus Whole Loan. |
Appraisal. The appraiser concluded to an “as-is” Appraised Value for the Seagate Campus Property of $260,000,000 as of April 13, 2023. The appraiser also concluded to a “go dark” appraised value of $212,000,000 as of April 13, 2023.
Environmental Matters. According to the Phase I environmental site assessment dated March 9, 2023, there was no evidence of any recognized environmental conditions at the Seagate Campus Property.
Market Overview and Competition. The Seagate Campus Property is located in Fremont, California within the Silicon Valley Regional R&D market. Primary access to the Seagate Campus Property is provided by Interstate 880, which is a north-south interstate highway in the San Francisco Bay area of Northern California. Fremont is the fourth largest city in the Bay Area with a population of 230,504
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
83
Property Type: Industrial | | Loan #5 | Cut-off Date Balance: | | $43,000,000 |
Property Subtype: R&D/Manufacturing | Seagate Campus | Cut-off Date LTV: | | 66.2% |
Address: 47488 Kato Road | | U/W NCF DSCR: | | 1.83x |
Fremont, CA 94538 | | U/W NOI Debt Yield: | | 13.6% |
| | | | | | |
as of 2020. Fremont is influenced by its proximity to Silicon Valley and the tech industry presence in the local area. Top employers in Fremont include Tesla Motors Inc, LAM Research, and Synnex Corporation, among others.
According to the appraisal, the Seagate Campus Property is located in the Fremont R&D submarket of the Silicon Valley Regional R&D market. As of December 31, 2022, the submarket had an inventory of approximately 18.18 million SF and a vacancy rate of 6.5%. The appraiser concluded a market rent of $3.50 PSF per month for the Seagate Campus Property.
According to the appraisal, the 2022 population and average household income within a one-, three- and five-mile radius of the Seagate Campus Property was 8,386, 56,129, and 189,822 and $219,043, $219,975 and $203,059, respectively.
The following table presents certain information relating to the appraiser’s market rent conclusions for the Seagate Campus Property:
Market Rent Summary(1)
| R&D/Manufacturing |
Market Rent (PSF/month) | $3.50 |
Lease Term (Years) | 10 |
Lease Type | NNN |
Rent Increase Projection | 3.0%/Year |
Free Rent (New/Renewal) | 6 mths / 0 mths |
(1) | Information obtained from the appraisal. |
The table below presents certain information relating to comparable sales pertaining to the Seagate Campus Property identified by the appraiser:
Comparable Sales(1)
Property Name | Location | Year Built/Renovated | Rentable Area (SF) | Sale Date | Sale Price | Sale Price (PSF) |
Montague Crossings 2520 and 2560 Junction Avenue and 541 E. Trimble Road | San Jose, CA | 1985/2020 | 209,425 | Nov-2022 | $94,700,000 | $452 |
5300-5350 Hellyer Avenue 5300-5350 Hellyer Avenue | San Jose, CA | 2000/NAP | 160,000 | Nov-2021 | $64,250,000 | $402 |
6401-6607 Kaiser Drive 6401-6607 Kaiser Drive | Fremont, CA | 1986/2014 | 309,387 | Jul-2021 | $140,000,000 | $453 |
Mount Eden Research Park 25821-25901 Industrial Boulevard | Hayward, CA | 1999/NAP | 369,986 | Jun-2021 | $155,000,000 | $419 |
3300 Olcott Street 3300 Olcott Street | Santa Clara, CA | 1979/NAP | 105,664 | May-2021 | $45,000,000 | $426 |
Rio Tech Park 30-134 Rio Robles | San Jose, CA | 1984/2015 | 377,776 | Apr-2021 | $169,200,000 | $448 |
| (1) | Information obtained from the appraisal. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
84
Property Type: Industrial | | Loan #5 | Cut-off Date Balance: | | $43,000,000 |
Property Subtype: R&D/Manufacturing | Seagate Campus | Cut-off Date LTV: | | 66.2% |
Address: 47488 Kato Road | | U/W NCF DSCR: | | 1.83x |
Fremont, CA 94538 | | U/W NOI Debt Yield: | | 13.6% |
| | | | | | |
The following table presents certain information relating to the appraiser’s market rent conclusions for the Seagate Campus Property:
Comparable Office Leases(1)
Property Name/Location | Year Built/ Renovated | Total GLA (SF) | % Office | Tenant | Tenant Size (SF) | Lease Start Date | Lease Term | Base Rent PSF/Month | Lease Type |
Seagate Campus (Subject) 47488 Kato Road Fremont, CA | 2010/2016 | 574,775(2) | | | | | | | |
Park Point 135 and 155 N. McCarthy Boulevard Milpitas, CA | 2001/2019 | 471,877 | 70% | Becton, Dickinson and Company | 239,529 | May-2022 | 15.0 Yrs. | $2.95 | NNN |
Mission Technology Park 2421 Mission College Boulevard Santa Clara, CA | 1983/2021 | 102,058 | 80% | Nvidia Corporation | 102,058 | Jul-2022 | 10.5 Yrs. | $3.70 | NNN |
3151 Zanker Road San Jose, CA | 1990/2020 | 201,500 | 30% | NIO | 201,500 | Jul-2022 | 10.0 Yrs. | $2.65 | NNN |
3300 Olcott Street Santa Clara, CA | 1979/1981 | 105,664 | 80% | Gigamon Inc. | 105,664 | Sep-2022 | 8.0 Yrs. | $3.35 | NNN |
Central Technology Park 3410 Central Expressway Santa Clara, CA | 1981/2016 | 104,179 | 70% | Intuitive Surgical, Inc. | 104,179 | Jan-2023 | 3.3 Yrs. | $2.95 | NNN |
150-160 Baytech Drive San Jose, CA | 1997/NAP | 158,221 | 40% | Procept Biorobotics Corporation | 158,221 | Jan-2023 | 10.0 Yrs. | $2.25 | NNN |
(1) | Information obtained from the appraisal. |
(2) | Information obtained from the underwritten rent roll. |
Escrows.
Tax Reserve – On each monthly payment date, the borrower is required to deposit into a real estate tax reserve account 1/12th of the taxes that the lender estimates will be payable by the borrower over the next ensuing 12-month period; provided, however, so long as the Reserve Waiver Conditions (as defined below) are satisfied, the monthly tax deposits will be suspended.
Insurance Reserve – On each monthly payment date, the borrower is required to deposit into an insurance reserve account 1/12th of an amount which would be sufficient to pay the insurance premiums due by the borrower for the renewal of the coverage afforded by the insurance policies; provided, however, so long as the Reserve Waiver Conditions are satisfied, the monthly insurance deposits will be suspended.
Replacement Reserve – The borrower is not required to make monthly deposits into a replacement reserve. However, from time to time, the lender may reassess its estimate of the amount necessary for replacements. If the lender determines in its reasonable discretion that additional replacements are required at the Seagate Campus Property, the borrower is required to increase its monthly deposits upon 30 days’ written notice.
Free Rent Reserve – To the extent that Seagate exercises its ten-year extension option in accordance with the Seagate Campus Whole Loan documents and the Seagate lease, then commencing March 6, 2027 and ending June 6, 2028, the borrower will be required to deposit into a free rent account approximately $1,159,492 on each monthly payment date.
“Reserve Waiver Conditions” means each of the following conditions: (i) the Specified Tenant (as defined below) continues to make its payments and perform the obligations required under the applicable Specified Tenant lease, in each case, relating to the obligations and liabilities for which the applicable reserve account was established and delivers evidence of the same by no later than the dates required in the Seagate Campus Whole Loan documents, (ii) the Single Tenant Condition (as defined below) is satisfied and (iii) no Trigger Period (as defined below) has occurred and is continuing.
“Single Tenant Condition” means (i) a Single Tenant Lease (as defined below) is in full force and effect, (ii) no Specified Tenant Trigger Period (as defined below) is ongoing with respect to such lease, and (iii) no event of default has occurred and is then continuing.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
85
Property Type: Industrial | | Loan #5 | Cut-off Date Balance: | | $43,000,000 |
Property Subtype: R&D/Manufacturing | Seagate Campus | Cut-off Date LTV: | | 66.2% |
Address: 47488 Kato Road | | U/W NCF DSCR: | | 1.83x |
Fremont, CA 94538 | | U/W NOI Debt Yield: | | 13.6% |
| | | | | | |
“Single Tenant Lease” means the Seagate lease (or a single replacement lease with an un-affiliated third party which is entered into in accordance with the terms of the Seagate Campus Whole Loan documents) whereby the entirety of the Seagate Campus Property is demised pursuant to such lease and the applicable lease is a “triple net” lease.
A “Specified Tenant” means (i) Seagate, (ii) any other lessee(s) of the Specified Tenant space (or any portion thereof) and (iii) any guarantor(s) of the applicable related Specified Tenant lease(s).
Lockbox and Cash Management. The Seagate Campus Whole Loan is structured with a hard lockbox and springing cash management. The borrower was required to deliver a notice to Seagate directing it to remit all payments due under its lease directly to the lender-controlled lockbox account. The borrower is required to immediately deposit, or cause the property manager to immediately deposit, all revenue derived from the Seagate Campus Property into the lockbox account. All funds deposited into the lockbox are required to be released to the borrower on each business day unless a Trigger Period exists. Upon the occurrence and during the continuance of a Trigger Period, all funds in the lockbox account are required to be swept on each business day to a lender-controlled cash management account to be applied and disbursed in accordance with the Seagate Campus Whole Loan documents, and all excess cash flow funds remaining in the cash management account after the application of such funds will be applied in accordance with the Seagate Campus Whole Loan documents.
A “Trigger Period” will commence upon the earlier of the following:
| (i) | the occurrence of an event of default; |
| (ii) | the net cash flow debt service coverage ratio falling below 1.10x (“DSCR Trigger”), tested quarterly. Provided, however, no DSCR Trigger will be deemed to exist to the extent that the Single Tenant Condition is satisfied; or |
| (iii) | the occurrence of a Specified Tenant Trigger Period (as defined below). |
A Trigger Period will end upon the occurrence of the following:
| ● | with regard to clause (i), the cure of such event of default; |
| ● | with regard to clause (ii), the net cash flow debt service coverage ratio being equal to or greater than 1.10x for one calendar quarter; or |
| ● | with regard to clause (iii), the Specified Tenant Trigger Period ceases to exist based on conditions described below. |
A “Specified Tenant Trigger Period” means the earliest to occur of the following:
| (i) | a Specified Tenant being in monetary or material non-monetary default under the applicable Specified Tenant lease beyond all applicable notice and cure periods (including, without limitation, for the avoidance of doubt, Seagate’s failure to post the letter of credit (as defined in and when required under the Seagate lease)); |
| (ii) | a Specified Tenant failing to be in actual, legal possession of its space (or applicable portion thereof); |
| (iii) | other than in connection with a Permitted Dark Event (as defined below), a Specified Tenant failing to be open for business during customary hours and “going dark” in greater than 50% of the Specified Tenant space (or applicable portion thereof), as evidenced by a quarterly certification provided by the borrower; |
| (iv) | a Specified Tenant giving notice that it is terminating its lease for all or any portion of the Specified Tenant space; |
| (v) | any termination or cancellation of any Specified Tenant lease (including, without limitation, rejection in any bankruptcy or similar insolvency proceeding) and/or any Specified Tenant lease failing to otherwise be in full force and effect; |
| (vi) | any bankruptcy or similar insolvency of a Specified Tenant; or |
| (vii) | if, as of December 6, 2031 (the “Specified Tenant Extension Test Date”), the Specified Tenant has failed to extend or renew the Specified Tenant lease in accordance with the Seagate Campus Whole Loan documents, then a Specified Tenant Trigger Period will commence on the Specified Tenant Extension Test Date. |
Provided, however, that no Specified Tenant Trigger Period will be deemed to exist pursuant to clauses (i) – (vi) above during any period that the Collateral Cure Conditions (as defined below) are satisfied).
A Specified Tenant Trigger Period will end upon the occurrence of the following:
| ● | the lender’s receipt of evidence reasonably acceptable to the lender of (a) the satisfaction of the applicable Specified Tenant Cure Conditions (as defined below), or (b) the borrower re-tenanting the entire Specified Tenant space (or applicable portion thereof) pursuant to one or more leases in accordance with the terms and conditions of the Seagate Campus Whole Loan documents and, except to the extent the replacement lease is a Single Tenant Lease, the lender having determined that the debt service coverage ratio equals or exceeds 1.25x, and sufficient funds to cover all anticipated leasing costs in connection with the applicable Specified Tenant space have been accumulated in the excess cash flow account. |
“Specified Tenant Cure Conditions” means each of the following, as applicable:
| (i) | with respect to a Specified Tenant Trigger Period described in clause (i) the applicable Specified Tenant has cured all monetary and material non-monetary defaults; |
| (ii) | with respect to a Specified Tenant Trigger Period described in clause (ii) and (iii) the applicable Specified Tenant is in actual, physical possession of the Specified Tenant space (or applicable portion thereof) and, unless a Permitted Dark Event is ongoing with respect to the applicable Specified Tenant, open for business during customary hours and not “dark” in 50% of more of the Specified Tenant space (or applicable portion thereof); |
| (iii) | with respect to a Specified Tenant Trigger Period described in clause (iv) the applicable Specified Tenant has revoked or rescinded all termination or cancellation notices with respect to the applicable Specified Tenant lease and has re-affirmed the |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
86
Property Type: Industrial | | Loan #5 | Cut-off Date Balance: | | $43,000,000 |
Property Subtype: R&D/Manufacturing | Seagate Campus | Cut-off Date LTV: | | 66.2% |
Address: 47488 Kato Road | | U/W NCF DSCR: | | 1.83x |
Fremont, CA 94538 | | U/W NOI Debt Yield: | | 13.6% |
| | | | | | |
| | Specified Tenant lease as being in full force and effect; |
| (iv) | with respect to a Specified Tenant Trigger Period described in clause (vii) the applicable Specified Tenant has renewed or extended the applicable Specified Tenant lease in accordance with the terms of the Seagate Campus Whole Loan documents and the Specified Tenant lease for the Specified Tenant renewal term; |
| (v) | with respect to any applicable bankruptcy or insolvency proceedings involving the applicable Specified Tenant and/or the applicable Specified Tenant lease, (1) the Specified Tenant has affirmed the Specified Tenant lease pursuant to final, non-appealable order of a court of competent jurisdiction or (2) the Specified Tenant lease has been assumed by the Specified Tenant under the Specified Tenant lease and assigned to a third party in compliance with the assignment and assumption requirements of the Specified Tenant lease, without modification of such Specified Tenant lease or any guaranty thereof, in a manner reasonably satisfactory to the lender pursuant to a final, non-appealable order of the bankruptcy court; or |
| (vi) | with respect to a Specific Tenant Trigger Period described in clause (iv) the applicable Specified Tenant is paying full, unabated rent under the applicable Specified Tenant lease (unless a free rent period or similar rent concession is ongoing and all such free rent or the amount of the similar concession is reserved with the lender). |
A “Permitted Dark Event” will be deemed to occur with respect to a tenant that has discontinued operations or “gone dark” in all or any portion of the premises demised pursuant to its lease to the extent one or more of the following conditions is satisfied:
| (i) | such discontinuation is in order to comply with governmental restrictions which restrict the use or occupancy of the Seagate Campus Property as a result of, or otherwise in connection with, the COVID-19 pandemic or any other pandemic or epidemic and the applicable tenant resumes operations in its demised premises within 90 days after such governmental restrictions are lifted; |
| (ii) | such discontinuation: (x) is related to ongoing standard and customary upgrades or renovations by the applicable tenant to its premises pursuant to its lease, (y) such tenant is pursuing the applicable upgrades or renovation in a good faith diligent manner, and (z) the applicable closure is not anticipated to and does not actually last for a period in excess of 90 days; |
| (iii) | such discontinuation is in connection with an ongoing restoration of the Seagate Campus Property by the borrower in accordance with the Seagate Campus Whole Loan documents, and the applicable tenant resumes operations in its demised premises within 90 days after the applicable restoration is complete; or |
| (iv) | day-to-day fluctuation (as opposed to systematic discontinuance) in use of the premises pursuant to the applicable lease as a result of the existence of “work from home”, “flex work” or similar policies of the tenant with respect to its employees such that a portion of said employees are not physically present at the Seagate Campus Property during all or a portion of regular working hours on any given day and whereby the following conditions remain satisfied: (x) such tenant’s business continues to be generally administered in a manner that requires physical space similar to the premises, (y) a majority of such tenant’s premises remains available and functional for the use contemplated by such tenant’s lease and (z) onsite staff remain in place during normal business hours at the applicable premises to implement and provide standard and customary administrative services with respect to the applicable space (i.e. mailroom, reception, administrative assistance, etc.). |
A “Collateral Cure Conditions” will be deemed to exist if the borrower deposits cash into an account with the lender or delivers to the lender a letter of credit which serves as additional collateral for the Seagate Campus Whole Loan, in an amount equal to the Collateral Deposit Projection Amount (as defined below) if and to the extent a Trigger Period were to remain ongoing and as long as the borrower elects to satisfy the Collateral Cure Conditions in order to avoid a Trigger Period on each one year anniversary of the date that the borrower made such deposit (or delivered such letter of credit), the borrower is required to deposit additional cash collateral in the amount of the Collateral Deposit Projection Amount (as determined by the lender for the 12-month period following such anniversary date) or increase the amount of the letter of credit by an amount equal to the Collateral Deposit Projection Amount for the 12-month period following said anniversary date (as applicable). The collateral referenced in this definition is required to be returned to the borrower, provided that no other Trigger Period is then ongoing, at such time as the Trigger Period that the Collateral Cure Conditions relate to would have been cured had the borrower not satisfied the Collateral Cure Conditions.
A “Collateral Deposit Projection Amount” shall mean as of the date of any determination, the sum of (x) all annualized rents as set forth on the then current rent roll plus (y) any other operating income for the Seagate Campus Property for the 12-month period following the date of determination, less any amounts due and payable pursuant to the cash management provisions of the Seagate Campus Whole Loan documents.
Property Management. The Seagate Campus Property is self-managed.
Outparcel Partial Release. The Seagate Campus Whole Loan documents permit the borrower to obtain a free release of the unimproved parcel at the Seagate Campus Property (the “Unimproved Parcel”) at any time after the earlier to occur of (x) 60 days following the closing date of the last note of the Seagate Campus Whole Loan to be securitized and (y) May 24, 2024, provided that no event of default has occurred and is continuing, and upon satisfaction of certain conditions set forth in the Seagate Campus Whole Loan documents, including, without limitation, the following: (i) the borrower provides the lender with reasonable evidence that (A) the remaining property encumbered by the lien of the Seagate Campus Whole Loan documents complies in all material respects with all legal requirements (including, without limitation, all zoning (including any parking requirements) and building codes) and release of the Unimproved Parcel will not cause any leases to be violated in any material respects, (B) the remaining property will constitute a separate and legal lot for tax, subdivision, assessment and zoning purposes, (C) the release of the Unimproved Parcel will not materially adversely affect ingress or egress to or from the remaining property or access to utilities for the remaining property, (D) no improvements (other than surface improvements such as paving, curb cuts, lighting, gating, fencing, utility installations, sheds or trailers) will be constructed on the Unimproved Parcel between the origination of the Seagate Campus Whole Loan and the date the Unimproved Parcel is released, (E) the documents with respect to release of the Unimproved Parcel will not impose any new obligations upon, or otherwise further burden, the remaining property in any material way except in accordance with a new easement or
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
87
Property Type: Industrial | | Loan #5 | Cut-off Date Balance: | | $43,000,000 |
Property Subtype: R&D/Manufacturing | Seagate Campus | Cut-off Date LTV: | | 66.2% |
Address: 47488 Kato Road | | U/W NCF DSCR: | | 1.83x |
Fremont, CA 94538 | | U/W NOI Debt Yield: | | 13.6% |
| | | | | | |
amendment to any applicable property document or other cross-easement agreement acceptable to the lender in its reasonable discretion, (F) the borrower has obtained or caused to be obtained all necessary approvals, consents or permits with respect to the release of the Unimproved Parcel, (G) the documents executed in connection with the conveyance of the Unimproved Parcel must be reasonably acceptable to the lender, and (H) the release of the Unimproved Parcel will not (1) give rise to any right of any tenant at the Seagate Campus Property to terminate its lease or abate or reduce the rent payable thereunder or (2) otherwise have a material adverse effect, (ii) the borrower has delivered a REMIC opinion.
Real Estate Substitution. Not permitted.
Subordinate and Mezzanine Indebtedness. None.
Ground Lease. None.
Right of First Offer. In the event Seagate exercises its five-year renewal option (but not if it exercises its initial ten-year renewal option), Seagate will have a right of first offer to acquire the property during the initial five years of the five-year renewal option (but not during the subsequent second 10-year renewal option, if exercised).
Terrorism Insurance. The loan documents require that the “all risk” insurance policy required to be maintained by the borrowers provides coverage for terrorism in an amount equal to the full replacement cost of the Seagate Campus Property, as well as business interruption insurance covering no less than the 18-month period following the occurrence of a casualty event, together with a 6-month extended period of indemnity. See “Risk Factors—Risks Relating to the Mortgage Loans—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the preliminary prospectus.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
88
Property Type: Office | | Loan #6 | Cut-off Date Balance: | | $42,000,000 |
Property Subtype: CBD | 1201 Third Avenue | Cut-off Date LTV: | | 30.5% |
Address: 1201 Third Avenue | | U/W NCF DSCR: | | 2.76x |
Seattle, WA 98101 | | U/W NOI Debt Yield: | | 17.7% |
| | | | | | |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
89
Property Type: Office | | Loan #6 | Cut-off Date Balance: | | $42,000,000 |
Property Subtype: CBD | 1201 Third Avenue | Cut-off Date LTV: | | 30.5% |
Address: 1201 Third Avenue | | U/W NCF DSCR: | | 2.76x |
Seattle, WA 98101 | | U/W NOI Debt Yield: | | 17.7% |
| | | | | | |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
90
Property Type: Office | | Loan #6 | Cut-off Date Balance: | | $42,000,000 |
Property Subtype: CBD | 1201 Third Avenue | Cut-off Date LTV: | | 30.5% |
Address: 1201 Third Avenue | | U/W NCF DSCR: | | 2.76x |
Seattle, WA 98101 | | U/W NOI Debt Yield: | | 17.7% |
| | | | | | |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
91
Property Type: Office | | Loan #6 | Cut-off Date Balance: | | $42,000,000 |
Property Subtype: CBD | 1201 Third Avenue | Cut-off Date LTV: | | 30.5% |
Address: 1201 Third Avenue | | U/W NCF DSCR: | | 2.76x |
Seattle, WA 98101 | | U/W NOI Debt Yield: | | 17.7% |
| | | | | | |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg025.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
92
No. 6 – 1201 Third Avenue |
|
Mortgage Loan Information | | Mortgaged Property Information |
Mortgage Loan Seller: | Morgan Stanley Mortgage Capital Holdings LLC | | Single Asset/Portfolio: | Single Asset |
Credit Assessment | Aa1(sf)/BBB+sf/A-(sf) | | Property Type – Subtype: | Office – CBD |
(Moody’s/Fitch/KBRA): | | | Location: | Seattle, WA |
Original Principal Balance(1): | $42,000,000 | | Size: | 1,129,710 SF |
Cut-off Date Balance(1): | $42,000,000 | | Cut-off Date Balance Per SF(1): | $150.48 |
% of Initial Pool Balance: | 5.8% | | Maturity Date Balance Per SF(1): | $150.48 |
Loan Purpose: | Refinance | | Year Built/Renovated: | 1988/NAP |
Borrower Sponsors: | MetLife, Inc. and New York Common | | Title Vesting: | Fee |
| Retirement Fund | | Property Manager: | Wright Runstad Associates |
Guarantor(2): | NAP | | | Limited Partnership |
Mortgage Rate: | 5.5850% | | Current Occupancy (As of): | 81.1% (1/1/2023) |
Note Date: | February 10, 2023 | | 8/31/2022 Occupancy | 80.7% |
Seasoning: | 5 months | | YE 2021 Occupancy: | 87.4% |
Maturity Date: | March 9, 2028 | | YE 2020 Occupancy: | 94.4% |
IO Period: | 60 months | | YE 2019 Occupancy: | 95.7% |
Loan Term (Original): | 60 months | | Appraised Value: | $556,500,000 |
Amortization Term (Original): | NAP | | Appraised Value Per SF: | $492.60 |
Loan Amortization Type: | Interest Only | | Appraisal Valuation Date: | December 1, 2022 |
Call Protection: | L(24),YM1(5),DorYM1(24),O(7) | | | |
Lockbox Type: | Hard/Springing Cash Management | | | |
Additional Debt: | Yes | | Underwriting and Financial Information |
Additional Debt Type | | | YE 2022 NOI: | $31,394,453 |
(Balance)(1)(3): | Pari Passu ($128,000,000) | | YE 2021 NOI: | $33,049,379 |
| | | YE 2020 NOI: | $36,494,642 |
| | YE 2019 NOI: | $32,067,288 |
| | | U/W Revenues: | $51,349,507 |
Escrows and Reserves(4) | | U/W Expenses: | $21,283,998 |
| Initial | Monthly | Cap | | U/W NOI: | $30,065,509 |
Taxes | $0 | Springing | NAP | | U/W NCF: | $26,556,863 |
Insurance | $0 | Springing | NAP | | U/W DSCR based on NOI/NCF(1): | 3.12x / 2.76x |
Rollover Reserve | $17,567,429 | $0 | NAP | | U/W Debt Yield based on NOI/NCF(1): | 17.7% / 15.6% |
Free Rent Reserve | $3,755,350 | $0 | NAP | | U/W Debt Yield at Maturity based on | 17.7% / 15.6% |
| | | | | NOI/NCF(1): | |
| | | | | Cut-off Date LTV Ratio(1): | 30.5% |
| | | | | LTV Ratio at Maturity(1): | 30.5% |
| | | | | | | | |
Sources and Uses |
Sources | | | | | Uses | | | |
Original Whole loan amount | $170,000,000 | | 65.4% | | Loan payoff | $236,517,648 | | 91.0% |
Borrower Equity | 89,973,080 | | 34.6 | | Closing Costs | 2,132,653 | | 0.8 |
| | | | | Reserves: | 21,322,779 | | 8.2 |
Total Sources | $259,973,080 | | 100.0% | | Total Uses | $259,973,080 | | 100.0% |
| (1) | The 1201 Third Avenue Mortgage Loan (as defined below) is part of the 1201 Third Avenue Whole Loan (as defined below), which is comprised of seven pari passu senior promissory notes with an aggregate original principal balance of $170,000,000 (collectively, the “1201 Third Avenue Whole Loan”). The Cut-off Date Balance Per SF, Maturity Date Balance Per SF, U/W DSCR based on NOI/NCF, U/W Debt Yield based on NOI/NCF, U/W Debt Yield at Maturity based on NOI/NCF, Cut-off Date LTV Ratio and LTV Ratio at Maturity numbers presented above are based on the aggregate Cut-off Date principal balance of the 1201 Third Avenue Whole Loan. |
| (2) | There is no non-recourse carveout guarantor or separate environmental indemnitor with respect to the 1201 Third Avenue Whole Loan. |
| (3) | See “The Mortgage Loan” for a discussion of additional indebtedness. |
| (4) | See “Escrows” below for further discussion of reserve requirements. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
93
Property Type: Office | | Loan #6 | Cut-off Date Balance: | | $42,000,000 |
Property Subtype: CBD | 1201 Third Avenue | Cut-off Date LTV: | | 30.5% |
Address: 1201 Third Avenue | | U/W NCF DSCR: | | 2.76x |
Seattle, WA 98101 | | U/W NOI Debt Yield: | | 17.7% |
| | | | | | |
The Mortgage Loan. The sixth largest mortgage loan (the “1201 Third Avenue Mortgage Loan”) is part of a whole loan (the “1201 Third Avenue Whole Loan”) with an aggregate original principal balance of $170,000,000. The 1201 Third Avenue Whole Loan is secured by a first priority fee mortgage encumbering a 1,129,710 square foot Class A office property in Seattle, Washington (the “1201 Third Avenue Property”). The 1201 Third Avenue Whole Loan is comprised of seven pari passu senior promissory notes in the aggregate original principal balance of $170,000,000. The 1201 Third Avenue Whole Loan was originated by Morgan Stanley Bank, N.A. (“MSBNA”) and JP Morgan Chase Bank, N.A. (“JPMCB”). The controlling note A-2 with an original principal balance of $42,000,000, represents the 1201 Third Avenue Mortgage Loan and will be included in the BANK 2023-BNK46 securitization trust. The remaining 1201 Third Avenue pari passu notes have either been contributed to other securitization transactions as described in the table below or are currently held by MSBNA and are expected to be contributed to one or more future securitization transactions. The 1201 Third Avenue Whole Loan will be serviced under the BANK 2023-BNK46 pooling and servicing agreement. See “Description of the Mortgage Pool—The Whole Loans—The Serviced Pari Passu Whole Loans” and “Pooling and Servicing Agreement” in the preliminary prospectus.
Whole Loan Note Summary
Notes | Original Balance | Cut-off Date Balance | Note Holder | Controlling Piece |
A-1-1 | $30,000,000 | $30,000,000 | BANK5 2023-5YR1 | No |
A-1-2 | $20,000,000 | $20,000,000 | MSBNA | No |
A-1-3 | $10,000,000 | $10,000,000 | BANK5 2023-5YR2 | No |
A-2 | $42,000,000 | $42,000,000 | BANK 2023-BNK46 | Yes |
A-3 | $40,000,000 | $40,000,000 | Benchmark 2023-B38 | No |
A-4-1 | $20,000,000 | $20,000,000 | Benchmark 2023-B38 | No |
A-4-2 | $8,000,000 | $8,000,000 | Benchmark 2023-V2 | No |
Total | $170,000,000 | $170,000,000 | | |
The Borrower and Borrower Sponsors. The borrower is 1201 Tab Owner, LLC, a single-purpose Delaware limited liability company with two independent directors in its organizational structure. The borrower is indirectly owned and controlled 50% by MetLife, Inc. (“MetLife”) and 50% by New York Common Retirement Fund (together, the “Borrower Sponsor”), with MetLife acting as managing partner. MetLife’s real estate platform invests in real estate products including commercial mortgages and equities. MetLife has over 200 senior real estate professionals across seven regional offices. New York Common Retirement Fund is one of the largest public pension plans in the United States, with over one million New York State and local retirement system members, retirees and beneficiaries. There is no non-recourse carveout guarantor or separate environmental indemnitor with respect to the 1201 Third Avenue Whole Loan.
The Property. The 1201 Third Avenue Property is a Class A, 55-story office property totaling 1,129,710 square feet located in Seattle, Washington. It is the third-tallest building in the city, the eighth-tallest on the West Coast of the United States, and the 97th-tallest in the United States. Construction began in 1986 and finished in 1988. The 1201 Third Avenue Property was designed by Kohn Pedersen Fox Associates and The McKinley Architects. The building was the world headquarters of the financial company Washington Mutual from the building’s opening until 2006, when the company moved across the street to the WaMu Center. MetLife Real Estate Investments and Clarion Partners bought the building in 2012 for $548.8 million. The 1201 Third Avenue Property features an on-site amenity package, including a fitness center, yoga room, locker room with showers, bike storage, electric vehicle charging, multiple outdoor seating areas, conference rooms and on-site management. Since 2013, approximately $26.5 million was spent on common area improvements and repair and maintenance at the 1201 Third Avenue Property including main lobby renovations, restroom renovations, atrium renovations, a new tenant bike commuting center, lighting, elevator and escalator upgrades and more. In addition, the 1201 Third Avenue Property is undergoing a $12.0 million renovation targeted towards upgrading the common areas. The building has received two LEED Certifications - Gold and Platinum in 2011 and 2010, as well as earning the Energy Star in 2007, 2010 and 2011. The 1201 Third Avenue Property is 81.1% occupied by 48 tenants as of January 1, 2023.
Major Tenants.
Perkins Coie (296,843 square feet, 26.3% of net rentable area, 32.9% of underwritten rent). With more than 1,200 lawyers in offices across the United States and Asia, Perkins Coie is an international law firm that provides corporate, commercial litigation, intellectual property and regulatory legal advice to a broad range of clients ranging from industry leaders to public and not-for-profit organizations. Perkins Coie has been a tenant at the 1201 Third Avenue Property since 1985, has a lease expiration date of December 31, 2026, and has five 5-year renewal options remaining. Perkins Coie may terminate its lease at any time within the last 2 years of its term with 15 months’ notice.
WeWork (114,679 square feet, 10.2% of net rentable area, 12.9% of underwritten rent). Founded in 2010, WeWork provides companies and individual people alike shared access to flexible workspaces across the globe through its membership-based business model. WeWork’s consolidated real estate portfolio in the third quarter of 2022 consisted of 647 locations, which supported approximately 756,000 workstations and 536,000 physical memberships. The location at 1201 Third Avenue is one of eight in Seattle. The tenant remained current on rent with no concessions or delayed payments throughout the COVID-19 pandemic. WeWork has been a tenant
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
94
Property Type: Office | | Loan #6 | Cut-off Date Balance: | | $42,000,000 |
Property Subtype: CBD | 1201 Third Avenue | Cut-off Date LTV: | | 30.5% |
Address: 1201 Third Avenue | | U/W NCF DSCR: | | 2.76x |
Seattle, WA 98101 | | U/W NOI Debt Yield: | | 17.7% |
| | | | | | |
at the 1201 Third Avenue Property since 2019, has a lease expiration date of June 30, 2034, and has two 5-year renewal options remaining. The tenant on the lease is 1201 3rd Avenue Tenant LLC, a subsidiary of WeWork.
Accolade, Inc. (45,083 square feet, 4.0% of net rentable area, 5.6% of underwritten rent). Accolade, Inc. (“Accolade”) provides care delivery, navigation and advocacy services. Since its foundation in 2009, this has been done by using a personalized healthcare approach that provides technology-enabled solutions that help people better understand, navigate, and utilize the healthcare system and their workplace benefits. Accolade has six offices across the United States and one office in Prague, Czech Republic. Accolade has been a tenant at the 1201 Third Avenue Property since 2019, has a lease expiration date of March 31, 2030, and has one 7-year renewal option remaining. Accolade may terminate its lease as of October 31, 2027, with notice by July 31, 2026.
The following table presents certain information relating to the tenancy at the 1201 Third Avenue Property:
Major Tenants(1)
Tenant Name | Credit Rating (Moody’s/ Fitch/ S&P)(2) | Tenant NRSF | % of NRSF | Annual U/W Gross Rent PSF | Annual U/W Gross Rent | % of Total Annual U/W Gross Rent | Lease Expiration Date | Extension Options | Termination Option (Y/N) |
Major Tenants | | | | | | | | |
Perkins Coie(3) | NR/NR/NR | 296,843 | 26.3% | $49.88 | $14,807,035 | 32.9% | 12/31/2026 | 5x5 yr | Y |
WeWork(4) | NR/CC/NR | 114,679 | 10.2% | $50.50 | $5,791,290 | 12.9% | 6/30/2034 | 2x5 yr | N |
Kimley-Horn(5) | NR/NR/NR | 46,058 | 4.1% | $49.00 | $2,256,842 | 5.0% | 12/31/2034 | None | Y |
Accolade, Inc.(6) | NR/NR/NR | 45,083 | 4.0% | $56.29 | $2,537,722 | 5.6% | 3/31/2030 | 1x7 yr | Y |
Boston Consulting Group(7) | NR/NR/NR | 42,644 | 3.8% | $55.69 | $2,374,894 | 5.3% | Various | 2x5 yr | N |
Total Major Tenants | | 545,307 | 48.3% | $50.92 | $27,767,783 | 61.7% | | | |
| | | | | | | | | |
Non-Major Tenants | | 371,235 | 32.9% | $46.42 | $17,233,409 | 38.3% | | | |
Occupied Collateral Total | 916,542 | 81.1% | $49.10 | $45,001,191 | 100.0% | | | |
| | | | | | | | |
Vacant Space | 213,168 | 18.9% | | | | | | |
| | | | | | | | |
Collateral Total | 1,129,710 | 100.0% | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| (1) | Information is based on the underwritten rent roll. |
| (2) | Certain ratings are those of the parent entity, whether or not the parent entity guarantees the lease. |
| (3) | Perkins Coie may terminate its lease at any time within the last 2 years of its term with 15 months’ notice. |
| (4) | The tenant on the lease is 1201 3rd Avenue Tenant LLC, a subsidiary of WeWork. |
| (5) | Kimley-Horn’s lease is expected to commence on January 1, 2024 and $1,396,142 of free rent has been escrowed at closing. Kimley-Horn has the right to terminate its lease as of December 31, 2031, with notice by December 31, 2030, and the payment of a termination fee. |
| (6) | Accolade may terminate its lease as of October 31, 2027, with notice by July 31, 2026. |
| (7) | Boston Consulting Group leases 25,239 square feet expiring on December 31, 2026 and 17,405 square feet expiring on January 31, 2027. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
95
Property Type: Office | | Loan #6 | Cut-off Date Balance: | | $42,000,000 |
Property Subtype: CBD | 1201 Third Avenue | Cut-off Date LTV: | | 30.5% |
Address: 1201 Third Avenue | | U/W NCF DSCR: | | 2.76x |
Seattle, WA 98101 | | U/W NOI Debt Yield: | | 17.7% |
| | | | | | |
The following table presents certain information relating to the lease rollover schedule at the 1201 Third Avenue Property:
Lease Expiration Schedule(1)(2)
Year Ending December 31 | No. of Leases Expiring | Expiring NRSF | % of Total NRSF | Cumulative Expiring NRSF | Cumulative % of Total NRSF | Annual U/W Gross Rent | % of Total Annual U/W Gross Rent | Annual U/W Gross Rent PSF(3) |
MTM | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2023 | 6 | 27,360 | 2.4% | 27,360 | 2.4% | $1,427,210 | 3.2% | $52.16 |
2024 | 4 | 64,319 | 5.7% | 91,679 | 8.1% | $2,828,492 | 6.3% | $43.98 |
2025 | 7 | 36,594 | 3.2% | 128,273 | 11.4% | $1,784,818 | 4.0% | $48.77 |
2026 | 7 | 349,409 | 30.9% | 477,682 | 42.3% | $17,644,879 | 39.2% | $50.50 |
2027 | 3 | 30,332 | 2.7% | 508,014 | 45.0% | $1,502,573 | 3.3% | $49.54 |
2028 | 6 | 44,695 | 4.0% | 552,709 | 48.9% | $2,321,506 | 5.2% | $51.94 |
2029 | 2 | 25,734 | 2.3% | 578443 | 51.2% | $1,312,416 | 2.9% | $51.00 |
2030 | 4 | 89,714 | 7.9% | 668,157 | 59.1% | $4,824,897 | 10.7% | $53.78 |
2031 | 0 | 0 | 0.0% | 668157 | 59.1% | $0 | 0.0% | $0.00 |
2032 | 0 | 0 | 0.0% | 668,157 | 59.1% | $0 | 0.0% | $0.00 |
2033 | 1 | 3,394 | 0.3% | 671,551 | 59.4% | $192,270 | 0.4% | $56.65 |
2034 & Beyond | 10 | 244,991 | 21.7% | 916,542 | 81.1% | $11,162,132 | 24.8% | $45.56 |
Vacant | 0 | 213,168 | 18.9% | 1,129,710 | 100.0% | $0 | 0.0% | $0.00 |
Total/Wtd. Avg. | 50 | 1,129,710 | 100.0% | | | $45,001,191 | 100.0% | $49.10 |
| (1) | Information obtained from the underwritten rent roll. |
| (2) | Certain tenants may have lease termination options that are exercisable prior to the stated expiration date of the subject lease or leases that are not considered in the Lease Expiration Schedule. |
| (3) | Wtd. Avg. Annual U/W Gross Rent PSF excludes vacant space. |
The following table presents historical occupancy percentages at the 1201 Third Avenue Property:
Historical Occupancy
12/31/2019(1) | 12/31/2020(1) | 12/31/2021(1) | 8/31/2022(1) | 1/1/2023(2) |
95.7% | 94.4% | 87.4% | 80.7% | 81.1% |
(1) | Provided by the borrower sponsor. |
(2) | Based on the underwritten rent roll. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
96
Property Type: Office | | Loan #6 | Cut-off Date Balance: | | $42,000,000 |
Property Subtype: CBD | 1201 Third Avenue | Cut-off Date LTV: | | 30.5% |
Address: 1201 Third Avenue | | U/W NCF DSCR: | | 2.76x |
Seattle, WA 98101 | | U/W NOI Debt Yield: | | 17.7% |
| | | | | | |
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and underwritten net cash flow at the 1201 Third Avenue Property:
Cash Flow Analysis
| | 2019 | | 2020 | | 2021 | | 2022 | | U/W | | %(1) | | U/W $ per SF | |
Base Rent(2) | | $42,360,410 | | $48,375,162 | | $46,567,269 | | $44,698,404 | | $43,817,168 | | 85.3% | | $38.79 | |
Rent Steps | | 0 | | 0 | | 0 | | 0 | | 1,184,024 | | 2.3 | | 1.05 | |
Free Rent | | 0 | | 0 | | 0 | | (253,395) | | 0 | | 0.0 | | 0.00 | |
Straight Line Rent(3) | | 0 | | 0 | | 0 | | 0 | | 92,088 | | 0.2 | | 0.08 | |
Gross Potential Rent | | $42,360,410 | | $48,375,162 | | $46,567,269 | | $44,445,009 | | $45,093,280 | | 87.8% | | $39.92 | |
Other Income(4) | | 4,616,529 | | 3,462,362 | | 1,895,109 | | 2,865,093 | | 2,472,899 | | 4.8 | | 2.19 | |
Expense Reimbursements | | 2,501,140 | | 3,336,098 | | 4,404,048 | | 4,486,110 | | 3,783,328 | | 7.4 | | 3.35 | |
Net Rental Income | | $49,478,079 | | $55,173,622 | | $52,866,426 | | $51,796,212 | | $51,349,507 | | 100.0% | | $45.45 | |
(Vacancy & Credit Loss) | | 0 | | 0 | | 0 | | 0 | | 0 | | 0.0 | | 0.00 | |
Effective Gross Income | | $49,478,079 | | $55,173,622 | | $52,866,426 | | $51,796,212 | | $51,349,507 | | 100.0% | | $45.45 | |
| | | | | | | | | | | | | | | |
Real Estate Taxes | | 5,645,797 | | 6,456,028 | | 6,777,567 | | 6,252,373 | | 6,484,839 | | 12.6 | | 5.74 | |
Insurance | | 969,083 | | 1,398,611 | | 1,502,386 | | 1,442,334 | | 1,310,976 | | 2.6 | | 1.16 | |
Management Fee | | 779,031 | | 870,596 | | 889,437 | | 862,320 | | 1,000,000 | | 1.9 | | 0.89 | |
Other Operating Expenses | | 10,016,880 | | 9,953,745 | | 10,647,657 | | 11,844,731 | | 12,488,183 | | 24.3 | | 11.05 | |
Total Operating Expenses | | $17,410,791 | | $18,678,980 | | $19,817,047 | | $20,401,758 | | $21,283,998 | | 41.4% | | $18.84 | |
| | | | | | | | | | | | | | | |
Net Operating Income | | $32,067,288 | | $36,494,642 | | $33,049,379 | | $31,394,453 | | $30,065,509 | | 58.6% | | $26.61 | |
Replacement Reserves | | 0 | | 0 | | 0 | | 0 | | 225,942 | | 0.4 | | 0.20 | |
TI/LC | | 0 | | 0 | | 0 | | 0 | | 3,282,704 | | 6.4 | | 2.91 | |
Net Cash Flow | | $32,067,288 | | $36,494,642 | | $33,049,379 | | $31,394,453 | | $26,556,863 | | 51.7% | | $23.51 | |
| | | | | | | | | | | | | | | |
NOI DSCR(5) | | 3.33x | | 3.79x | | 3.43x | | 3.26x | | 3.12x | | | | | |
NCF DSCR(5) | | 3.33x | | 3.79x | | 3.43x | | 3.26x | | 2.76x | | | | | |
NOI Debt Yield(5) | | 18.9% | | 21.5% | | 19.4% | | 18.5% | | 17.7% | | | | | |
NCF Debt Yield(5) | | 18.9% | | 21.5% | | 19.4% | | 18.5% | | 15.6% | | | | | |
| (1) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (2) | Underwritten Base Rent is based on the rent roll as of January 1, 2023. |
| (3) | Includes rent steps for JP Morgan, JP Morgan Chase Bank, Raymond James & Associates Inc, MUFG Union Bank, BNY Mellon Wealth MGMT, Mitsui & Co and Taiwan Cooperative Bank LTD. |
| (4) | Other Income mostly consists of garage and parking revenue. |
| (5) | Debt service coverage ratios and debt yields are based on the 1201 Third Avenue Whole Loan. |
Appraisal. According to the appraisal, the 1201 Third Avenue Property had an “As Is” appraised value of $556,500,000 as of December 1, 2022.
Environmental Matters. According to the Phase I environmental site assessment dated December 8, 2022, there was no evidence of any recognized environmental conditions at the 1201 Third Avenue Property.
Market Overview and Competition. The 1201 Third Avenue Property is located in Seattle, Washington, within the Seattle central business district (“CBD”) submarket of the Seattle Metro office market. The 1201 Third Avenue Property is located in the Financial District of Seattle’s CBD. Situated on Elliott Bay, on the eastern shoreline of Puget Sound, the Seattle CBD is the commercial and financial center of western Washington. The Seattle CBD’s largest area by property size is the Financial District. This district, which is generally bordered by Interstate 5, Yesler Way, Western Avenue and Pike Street, is the heart of Seattle’s CBD and is the location of Seattle’s City Hall and Municipal Building; King County’s Administration Building and Superior Court; the Henry M. Jackson Federal Office Building; and the Nakamura Federal Courthouse, home of the 9th U.S. Circuit Court of Appeals. The local area is served by King County Metro bus transit, Link Light Rail, Sounder Commuter Rail, and two streetcar lines (South Lake Union and First Hill). Fortune 500 companies headquartered in the Puget Sound region include Amazon.com, Costco, Microsoft, Starbucks, PACCAR, Nordstrom, Expedia, Weyerhaeuser, Expeditors International, and Alaska Air Group. Other large companies with major operations include Boeing, T-Mobile, Facebook, Google, and Nintendo. According to the appraisal, as of the third quarter of 2022, the vacancy rate in the Seattle Metro office market was approximately 10.5%, with average asking rents of $34.21 per square foot and inventory of approximately 226.4 million square feet. According to the appraisal, as of the third quarter of 2022, the vacancy rate in the Seattle CBD submarket was approximately 19.0%, with average asking rents of $39.88 per square foot and inventory of approximately 37.6 million square feet. According to the appraisal, the 2022 population within a one-, three- and five-mile radius was 75,990, 242,223 and 491,031, respectively. The 2022 average household income within the same one-, three- and five-mile radius was $147,672, $167,216 and $168,482, respectively.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
97
Property Type: Office | | Loan #6 | Cut-off Date Balance: | | $42,000,000 |
Property Subtype: CBD | 1201 Third Avenue | Cut-off Date LTV: | | 30.5% |
Address: 1201 Third Avenue | | U/W NCF DSCR: | | 2.76x |
Seattle, WA 98101 | | U/W NOI Debt Yield: | | 17.7% |
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The following table presents certain information relating to the appraisal’s market rent conclusion for the 1201 Third Avenue Property:
Market Rent Summary(1)
| Market Rent (PSF) | Lease Term (Months) | Lease Type (Reimbursements) | Rent Increase Projection |
LO 1-14 Space: | $50.00 | 60 | FSG | $1/SF/Yr |
MO 15-29 Space: | $53.00 | 60 | FSG | $1/SF/Yr |
HO 30-49 Space: | $55.00 | 60 | FSG | $1/SF/Yr |
Retail Space: | $37.00 | 60 | NNN | 3.0% Annual |
HO 50+ Space: | $65.00 | 60 | FSG | $1/SF/Yr |
(1) | Information obtained from the appraisal. |
The table below presents leasing data at comparable office properties with respect to the 1201 Third Avenue Property:
Comparable Leases(1)
Property Name | Location | Year Built/Renovated | Rentable Area (SF) | Tenant Name | Tenant Size (SF) | Lease Date | Rent PSF |
1201 Third Avenue(2) | Seattle, WA | 1988/NAP | 1,129,710 | Perkins Coie | 296,843 | Jan. 2012 | $49.88 |
Two Union Square | Seattle, WA | 1989/NAP | 1,164,046 | Indena USA Copperpoint Insurance | 812 7,568 | May 2022 Feb. 2022 | $51.00 $59.50 |
One Convention Place | Seattle, WA | 2000/NAP | 311,052 | Brewe Layman | 1,697 | June 2022 | $53.00 |
Columbia Center | Seattle, WA | 1985/NAP | 1,526,621 | Chicago Title Company Edge Delta Inc | 24,081 11,427 | June 2022 May 2022 | $50.00 $54.00 |
901 5th Avenue | Seattle, WA | 1973/2017 | 541,190 | Cambridge Mobile | 2,824 | May 2022 | $59.00 |
U.S. Bank Centre | Seattle, WA | 1989/2023 | 943,575 | Heritage Bank | 10,540 | April 2022 | $48.00 |
400 University at Rainier | Seattle, WA | 2021/NAP | 121,618 | Industrious | 34,559 | June 2022 | $50.00 |
Russell Investments | Seattle, WA | 2006/NAP | 900,000 | Zillow | 114,543 | Oct. 2021 | $52.00 |
| (1) | Information obtained from the appraisal. |
| (2) | Information obtained from the underwritten rent roll other than location and year built/renovated. |
Escrows.
Tax Reserve - During the continuance of a Cash Management Sweep Period (as defined below), the borrower is required to make ongoing monthly deposits into a reserve for real estate taxes in an amount equal to 1/12th of the real estate taxes that the lender estimates will be payable during the next twelve months for the 1201 Third Avenue Property.
Insurance Reserve - During the continuance of a Cash Management Sweep Period, the borrower is required to make ongoing monthly deposits into a reserve for insurance premiums in an amount equal to 1/12th of the insurance premiums that the lender estimates will be payable for the renewal of coverage upon the expiration of the insurance policies. Notwithstanding the foregoing, the borrower is not required to reserve for insurance premiums, provided that no event of default is continuing under the 1201 Third Avenue Whole Loan, and the borrower provides the lender with satisfactory evidence that the insurance coverage for the 1201 Third Avenue Property is included in blanket policies approved by the lender, and the insurance premiums have been prepaid for not less than one year in advance (or for the period of coverage for which insurance certificates were delivered at origination, if less than one year).
Outstanding TI/LC Reserve – At origination the borrower deposited $17,567,429 into a reserve for tenant improvements, tenant allowances and leasing commissions outstanding as of the origination date.
Free Rent Reserve – At origination the borrower deposited $3,755,350 into a reserve for free rent for various tenants.
Perkins Coie TI/LC Reserve – During a Perkins Coie Event (as defined below), (i) funds are required to be deposited into a reserve for tenant improvements and leasing commissions in connection with vacated Perkins Coie space as described below under “Lockbox and Cash Management” and (ii) the borrower must also deposit into such reserve any compensation it receives from Perkins Coie relating to the termination of the Perkins Coie lease.
Perkins Coie Prepaid Rent Reserve – If Perkins Coie elects to exercise its rights under its lease to prepay rent, the borrower is required to deposit such prepaid rent into a reserve and, in each month for which rent has been prepaid, apply the related prepaid rent for such month, either (i) if a Cash Management Sweep Period exists, to be deposited into the cash management account, or (ii) otherwise, to be returned to the borrower.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
98
Property Type: Office | | Loan #6 | Cut-off Date Balance: | | $42,000,000 |
Property Subtype: CBD | 1201 Third Avenue | Cut-off Date LTV: | | 30.5% |
Address: 1201 Third Avenue | | U/W NCF DSCR: | | 2.76x |
Seattle, WA 98101 | | U/W NOI Debt Yield: | | 17.7% |
| | | | | | |
Lockbox and Cash Management. The 1201 Third Avenue Whole Loan is structured with a hard lockbox and springing cash management. All rents are required to be deposited into a lender-controlled lockbox account. The 1201 Third Avenue Whole Loan requires that the borrower delivers tenant direction letters directing tenants to pay all rents into the lockbox account, and if the borrower or any of its affiliates receives rents from the 1201 Third Avenue Property despite such direction, to deposit such rents into the lockbox account within three business days of receipt. If no Cash Management Sweep Period exists, all funds in the lockbox account are required to be swept on each business day into the borrower’s operating account. Upon the occurrence of a Cash Management Sweep Period, the borrower is required to establish a lender-controlled cash management account, and during the continuance of a Cash Management Sweep Period, all funds in the lockbox account are required to be swept on each business day to the cash management account to be applied, provided no event of default exists under the 1201 Third Avenue Whole Loan, (i) to make the monthly deposits into the tax and insurance reserve funds (if any), as described above under “Escrows,” (ii) to pay debt service on the 1201 Third Avenue Whole Loan, (iii) to pay monthly operating expenses in the amount set forth in the annual budget (which is required to be reasonably approved by the lender during the continuance of a Cash Management Sweep Period) and lender-approved extraordinary expenses, and (iv) to deposit any funds remaining in the cash management account after the application described above, (x) if a Perkins Coie Cash Management Sweep Period exists, into the Perkins Coie TI/LC Reserve until the amount so deposited into such reserve (together with any termination compensation from Perkins Coie deposited into such account) reaches $90 per rentable square foot of the vacated portion of the Perkins Coie space (the “Perkins Coie TI Cap”), and (y) otherwise, into an excess cash flow reserve to be held as additional collateral for the 1201 Third Avenue Whole Loan (provided that, so long as no event of default is continuing, the lender is required to disburse funds in such reserve to pay the items in clause (iii) above). To the extent that no Cash Management Sweep Period is continuing, all funds in the excess cash flow reserve are required to be applied to any shortfalls in the Perkins Coie TI/LC Reserve and the Outstanding TI/LC Reserve, and then to be disbursed to the borrower.
A “Cash Management Sweep Period” will commence upon the earliest of the following: (i) the occurrence and continuance of an event of default, (ii) as of the origination date, or the last day of any calendar quarter following the origination date, the debt yield on the 1201 Third Avenue Whole Loan is less than 10.00%, (iii) as of the origination date, or the last day of any calendar quarter following the origination date, the debt service coverage ratio on the 1201 Third Avenue Whole Loan is less than 1.25x and (iv) the occurrence of a Perkins Coie Event (as defined below). For purposes of determining whether a Cash Management Sweep Period has occurred under clauses (ii) and (iii) above, Perkins Coie rent will be excluded from net operating income used to calculate the debt yield or debt service coverage ratio, as applicable, if a Perkins Coie Event exists.
A Cash Management Sweep Period will end upon the occurrence of the following: (w) with regard to clause (i) above, the cure of such event of default; (x) with regard to clause (ii) above, when the debt yield on the 1201 Third Avenue Whole Loan is at least 10.00% for one calendar quarter; (y) with regard to clause (iii) above, when the debt service coverage ratio of the 1201 Third Avenue Whole Loan is at least 1.25x for at least one quarter; and (z) with regard to clause (iv) above, when a Perkins Coie Cash Management Sweep Cure (as defined below) occurs. For purposes of determining whether a Cash Management Sweep Period has ended under clauses (x) and (y) above, Perkins Coie rent will be included in net operating income used to calculate the debt yield or debt service coverage ratio, as applicable, if Perkins Coie has renewed its lease.
“Perkins Coie Event” means the earlier to occur of (a) Perkins Coie giving written notice of its intention to terminate its lease; and (b) September 30, 2025; provided, however, a Perkins Coie Event will not be deemed to have occurred if on or before the earlier of clauses (a) and (b): (i) Perkins Coie has renewed or extended its lease for at least 75% of the leased space for a term of not less than five years immediately following the Perkins Coie lease expiration date of December 31, 2026, or (ii) (A) Perkins Coie has renewed or extended its lease for at least 60% of the demised premises for a term of not less than five years immediately following such lease expiration date and (B) the debt yield of the 1201 Third Avenue Whole Loan after giving effect to such extension or renewal is at least 13.0%.
“Perkins Coie Cash Management Sweep Cure” means with respect to a Perkins Coie Event either (A) no less than an amount equal to the Perkins Coie TI Cap has been reserved in the Perkins Coie TI/LC Reserve or (B) the debt yield (including, to the extent applicable, after giving effect to an extension or renewal of the Perkins Coie lease and the rent payable thereunder), is at least 13%; provided, however, for the purposes of this clause (B) the lender must test debt yield upon receipt of satisfactory evidence of Perkins Coie’s extension or renewal of its lease.
The borrower has the right to avoid or terminate a Cash Management Sweep Period caused by a decline in debt yield or debt service coverage ratio by delivering to the lender either (i) cash or (ii) a letter of credit, in each case, in an amount that, if applied to the reduction of the principal amount of the 1201 Third Avenue Whole Loan, would cause the debt yield of the 1201 Third Avenue Whole Loan to be equal to or greater than 10.00% or cause the debt service coverage ratio of the 1201 Third Avenue Whole Loan to be equal to or greater than 1.25x, as applicable. Such cash or letter of credit is required to be bifurcated into (i) after a Perkins Coie Event an amount equal to the rent payable under the Perkins Coie lease, not to exceed the Perkins Coie TI Cap, and (ii) the remaining portion of such cash or letter of credit after deducting the amount in clause (i). The amount in clause (ii) is required to be released to the borrower if the debt yield of the 1201 Third Avenue Whole Loan is equal to or greater than 10.00% or the debt service coverage ratio of the 1201 Third Avenue Whole Loan is equal to or greater than 1.25x, as applicable, for one calendar quarter (without giving effect to any cash or letter of credit). The amount in clause (i) is required to be deposited in the Perkins Coie TI/LC Reserve and released only in accordance with the provisions applicable to such reserve.
Property Management. The 1201 Third Avenue Property is managed by Wright Runstad Associates Limited Partnership, a third party property manager.
Partial Release. Not permitted.
Real Estate Substitution. Not permitted.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
99
Property Type: Office | | Loan #6 | Cut-off Date Balance: | | $42,000,000 |
Property Subtype: CBD | 1201 Third Avenue | Cut-off Date LTV: | | 30.5% |
Address: 1201 Third Avenue | | U/W NCF DSCR: | | 2.76x |
Seattle, WA 98101 | | U/W NOI Debt Yield: | | 17.7% |
| | | | | | |
Subordinate and Mezzanine Indebtedness. None.
Right of First Offer/Right of First Refusal. None.
Ground Lease. None.
Letter of Credit. None. However, the borrower has the right to provide a letter of credit to avoid or terminate a Cash Management Sweep Period caused by a decline in debt yield or debt service coverage ratio as described above under “Lockbox and Cash Management.”
Terrorism Insurance. The borrower is required to maintain terrorism insurance in an amount equal to the full replacement cost of the 1201 Third Avenue Property, as well as 24 months of rental loss and/or business interruption coverage. Notwithstanding the foregoing, for so long as the Terrorism Risk Insurance Act of 2002, as extended and modified by the Terrorism Risk Insurance Program Reauthorization Act of 2015 (“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), the lender is required to accept terrorism insurance which insures against “covered acts” as defined by TRIPRA (or such other program) but only in the event that TRIPRA (or such other program) continues to cover both domestic and foreign acts of terrorism. Notwithstanding the foregoing, if TRIPRA is no longer in effect, the borrower will not be required to pay terrorism insurance premiums in excess of an amount equal to 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 1201 Third Avenue Whole Loan documents (without giving effect to the cost of terrorism components of such property and business interruption/rental loss insurance) at the time that such terrorism coverage is excluded from the applicable policy. See “Risk Factors—Risks Relating to the Mortgage Loans—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the prospectus.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
100
Property Type: Office | Loan #7 | Cut-off Date Balance: | | $39,166,667 |
Property Subtype: CBD | One & Two Commerce Square | Cut-off Date LTV: | | 51.4% |
Address: 2001 and 2005 Market Street | | U/W NCF DSCR: | | 1.68x |
Philadelphia, PA 19103 | | U/W NOI Debt Yield: | | 14.7% |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg026.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
101
Property Type: Office | Loan #7 | Cut-off Date Balance: | | $39,166,667 |
Property Subtype: CBD | One & Two Commerce Square | Cut-off Date LTV: | | 51.4% |
Address: 2001 and 2005 Market Street | | U/W NCF DSCR: | | 1.68x |
Philadelphia, PA 19103 | | U/W NOI Debt Yield: | | 14.7% |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg027.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
102
Property Type: Office | Loan #7 | Cut-off Date Balance: | | $39,166,667 |
Property Subtype: CBD | One & Two Commerce Square | Cut-off Date LTV: | | 51.4% |
Address: 2001 and 2005 Market Street | | U/W NCF DSCR: | | 1.68x |
Philadelphia, PA 19103 | | U/W NOI Debt Yield: | | 14.7% |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg028.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
103
Property Type: Office | Loan #7 | Cut-off Date Balance: | | $39,166,667 |
Property Subtype: CBD | One & Two Commerce Square | Cut-off Date LTV: | | 51.4% |
Address: 2001 and 2005 Market Street | | U/W NCF DSCR: | | 1.68x |
Philadelphia, PA 19103 | | U/W NOI Debt Yield: | | 14.7% |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg029.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
104
No. 7 – One & Two Commerce Square |
|
Mortgage Loan Information | | Mortgaged Property Information |
Mortgage Loan Seller: | Bank of America, National Association, JPMorgan Chase Bank, National Association | | Single Asset/Portfolio: | Single Asset |
Credit Assessment (Moody’s/Fitch/KBRA): | NR/NR/NR | | Property Type – Subtype: | Office - CBD |
Original Principal Balance(1): | $39,166,667 | | Location: | Philadelphia, PA |
Cut-off Date Balance(1): | $39,166,667 | | Size: | 1,896,143 SF |
% of Initial Pool Balance: | 5.4% | | Cut-off Date Balance Per SF(1): | $116.03 |
Loan Purpose: | Refinance | | Maturity Date Balance Per SF(1): | $116.03 |
Borrower Sponsor: | Brandywine Operating Partnership, L.P. | | Year Built/Renovated: | 1987; 1992/2013 |
Guarantor: | Brandywine Operating Partnership, L.P. | | Title Vesting: | Fee |
Mortgage Rate: | 7.7875% | | Property Manager: | BDN Management Inc. (borrower-related) |
Note Date: | June 1, 2023 | | Current Occupancy (As of)(4): | 80.6% (5/17/2023) |
Seasoning: | 2 months | | 12/31/2022 Occupancy: | 78.3% |
Maturity Date: | June 6, 2028 | | 12/31/2021 Occupancy(5): | 79.0% |
IO Period: | 60 months | | 12/31/2020 Occupancy(5): | 88.0% |
Loan Term (Original): | 60 months | | As-Is Appraised Value: | $428,000,000 |
Amortization Term (Original): | NAP | | As-Is Appraised Value Per SF: | $225.72 |
Loan Amortization Type: | Interest Only | | As-Is Appraisal Valuation Date: | March 30, 2023 |
Call Protection: | L(24),YM1(29),O(7) | | |
Lockbox Type: | Hard/Springing Cash Management | | Underwriting and Financial Information |
Additional Debt(1): | Yes | | TTM 4/30/2023 NOI: | $24,981,970 |
Additional Debt Type (Balance)(1): | Pari Passu ($180,833,333) | | TTM 12/31/2022 NOI: | $24,399,000 |
| | | TTM 12/31/2021 NOI(5): | $22,215,377 |
| | | TTM 12/31/2020 NOI(5): | $31,585,470 |
| | | U/W Revenues(4): | $57,815,225 |
| | U/W Expenses(4): | $25,392,147 |
Escrows and Reserves(2) | | U/W NOI(4): | $32,423,078 |
| Initial | Monthly | Cap | | U/W NCF(4): | $29,104,827 |
Taxes | $0 | Springing | NAP | | U/W DSCR based on NOI/NCF(1)(4): | 1.87x / 1.68x |
Insurance | $0 | Springing | NAP | | U/W Debt Yield based on NOI/NCF(1)(4): | 14.7% / 13.2% |
Replacement Reserve | $0 | Springing | NAP | | U/W Debt Yield at Maturity based on NOI/NCF(1)(4): | 14.7% / 13.2% |
TI/LC Reserve(3) | $25,000,000 | Springing | $25,000,000 | | Cut-off Date LTV Ratio(1): | 51.4% |
Leasing Reserves | $11,112,904 | $0 | NAP | | LTV Ratio at Maturity(1): | 51.4% |
| | | | | | | |
Sources and Uses |
Sources | | | | Uses | | |
Whole Loan Amount(1) | $220,000,000 | 89.9% | | Loan Payoff | $204,600,430 | 83.6% |
Borrower Equity | 24,825,039 | 10.1 | | Upfront Reserves(3) | 36,112,904 | 14.8 |
| | | | Closing Costs | 4,111,705 | 1.7 |
Total Sources | $244,825,039 | 100.0% | | Total Uses | $244,825,039 | 100.0% |
| (1) | The One & Two Commerce Square Mortgage Loan (as defined below) is part of the One & Two Commerce Square Whole Loan (as defined below), which is evidenced by 13 pari passu promissory notes with an aggregate principal balance as of the Cut-off Date of $220,000,000. The Cut-off Date Balance Per SF, Maturity Date Balance Per SF, U/W DSCR based on NOI/NCF, U/W Debt Yield based on NOI/NCF, U/W Debt Yield at Maturity based on NOI/NCF, Cut-off Date LTV Ratio and LTV Ratio at Maturity numbers presented above are based on the One & Two Commerce Square Whole Loan. |
| (3) | The borrowers delivered a letter of credit in lieu of cash for the $25,000,000 upfront tenant improvement and leasing reserve. |
| (4) | Based on the underwritten rent roll as of May 17, 2023, plus the lease for Fox Rothschild, which was executed on June 28, 2023, and is inclusive of tenants who have signed leases but are not yet in occupancy. All landlord obligations, free rent and gap rent outstanding at the time of loan closing was reserved by the borrowers. |
| (5) | The decline in revenue and occupancy was driven by three major tenants who gave notice to vacate in 2019 which brought the occupancy from 97.6% to the low 70%’s. The borrower sponsor was able to quickly backfill with new smaller tenants before the major tenants vacated their space. The borrower sponsor has since shifted its leasing strategy to focus on smaller tenants, which has helped solidify a granular rent roll and is expected to mitigate future concentration and rollover risks. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
105
Property Type: Office | Loan #7 | Cut-off Date Balance: | | $39,166,667 |
Property Subtype: CBD | One & Two Commerce Square | Cut-off Date LTV: | | 51.4% |
Address: 2001 and 2005 Market Street | | U/W NCF DSCR: | | 1.68x |
Philadelphia, PA 19103 | | U/W NOI Debt Yield: | | 14.7% |
The Mortgage Loan. The seventh largest mortgage loan (the “One & Two Commerce Square Mortgage Loan”) is part of a whole loan that is evidenced by 13 pari passu promissory notes, with an aggregate original principal balance of $220,000,000 (together, the “One & Two Commerce Square Whole Loan”). The One & Two Commerce Square Whole Loan is secured by a fee mortgage encumbering a 1,896,143 square foot office property located in Philadelphia, Pennsylvania (the “One & Two Commerce Square Property”). The One & Two Commerce Square Whole Loan was co-originated by Bank of America, National Association (“BANA”), JPMorgan Chase Bank, National Association (“JPMCB”) and Barclays Capital Real Estate Inc. (“Barclays”). The One & Two Commerce Square Mortgage Loan is evidenced by the controlling Note A-1 and the non-controlling Note A-12, with an aggregate original principal balance of $39,166,667. The remaining promissory notes comprising the One & Two Commerce Square Whole Loan are summarized in the below table. The One & Two Commerce Square Whole Loan will be serviced pursuant to the pooling and servicing agreement for the BANK 2023-BNK46 securitization trust. See “Description of the Mortgage Pool—The Whole Loans—The Serviced Pari Passu Whole Loans” and “Pooling and Servicing Agreement” in the prospectus.
Note Summary
Notes | Original Balance | Cut-off Date Balance | Note Holder | Controlling Piece |
A-1 | $30,833,333 | $30,833,333 | BANK 2023-BNK46 | Yes |
A-2 | 20,000,000 | 20,000,000 | BBCMS 2023-C20 | No |
A-3 | 12,500,000 | 12,500,000 | BANK5 2023-5YR2 | No |
A-4 | 10,000,000 | 10,000,000 | BBCMS 2023-C20 | No |
A-5 | 30,000,000 | 30,000,000 | BBCMS 2023-C20 | No |
A-6 | 22,500,000 | 22,500,000 | Benchmark 2023-V3 | No |
A-7 | 12,500,000 | 12,500,000 | Barclays | No |
A-8 | 8,333,333 | 8,333,333 | Barclays | No |
A-9 | 30,000,000 | 30,000,000 | Benchmark 2023-B39 | No |
A-10-1 | 12,500,000 | 12,500,000 | BANK5 2023-5YR2 | No |
A-10-2 | 12,500,000 | 12,500,000 | JPMCB | No |
A-11 | 10,000,000 | 10,000,000 | JPMCB | No |
A-12 | 8,333,333 | 8,333,333 | BANK 2023-BNK46 | No |
Total | $220,000,000 | $220,000,000 | | |
The Borrowers and Borrower Sponsor. The borrowers are Commerce Square Partners-Philadelphia Plaza, L.P. a Delaware limited partnership, and Philadelphia Plaza - Phase II, LP, a Pennsylvania limited partnership, each a special purpose, bankruptcy remote entity with a general partner that is a special purpose, bankruptcy remote Delaware limited liability company. Each general partner has two independent directors acting with respect to itself, the borrowers and certain related TRS subsidiary entities. Legal counsel to the borrowers delivered a non-consolidation opinion in connection with the origination of the One & Two Commerce Square Whole Loan. The borrowers are indirectly a joint venture between Brandywine Operating Partnership, L.P. and GIC. The borrower sponsor and non-recourse carveout guarantor of the One & Two Commerce Square Whole Loan is Brandywine Operating Partnership, L.P.
Brandywine Operating Partnership, L.P., is owned and controlled by Brandywine Realty Trust (“BRT”). BRT (NYSE: BDN / S&P: BBB-) is a large publicly traded, full-service integrated real estate companies in the United States, with a market capitalization of approximately $760 million as of June 2023. Organized as a real estate investment trust, BRT owns, develops, leases and manages a portfolio of 165 urban, town center and transit-oriented properties totaling 23.0 million square feet as of September 30, 2022, with a core focus in the Philadelphia, Pennsylvania, Austin, Texas and Washington, D.C. markets (excluding assets held for sale). BRT has completed over 6.3 million square feet of ground-up new development in the Philadelphia market, with over 8 million additional square feet in the pipeline.
GIC is a Singaporean sovereign wealth fund established in 1981. As the manager of Singapore’s foreign reserves, GIC is positioned across a wide range of asset classes and active strategies globally. These include equities, fixed income, real estate, private equity, venture capital and infrastructure. Headquartered in Singapore, GIC has a global work force of over 1,900 people in 11 key financial cities and has investments in over 40 countries.
The Property. The One & Two Commerce Square Property is comprised of twin 40-story, multi-tenant, office buildings connected by an open-air courtyard with media wall and 48,725 square feet of ground floor retail space. The One & Two Commerce Square Property was built on a 2.97-acre site, spanning an entire city block, in Philadelphia, Pennsylvania and totals 1,896,143 square feet of net rentable area.
The One & Two Commerce Square Property is a LEED-Silver certified building with terraces on the north and south sides of the building featuring unobstructed panoramic views of Philadelphia. Building amenities include a fitness center with locker rooms, conference facilities, BEX community lounge and work area. The One & Two Commerce Square Property features an underground parking garage, with parking for 519 vehicles.
Since 2015, the borrower sponsor has invested approximately $15 million at the One & Two Commerce Square Property in capital expenditures, including upgrading the building lobbies, updating the courtyard and courtyard fountain, modernizing the elevator systems and updating signage.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
106
Property Type: Office | Loan #7 | Cut-off Date Balance: | | $39,166,667 |
Property Subtype: CBD | One & Two Commerce Square | Cut-off Date LTV: | | 51.4% |
Address: 2001 and 2005 Market Street | | U/W NCF DSCR: | | 1.68x |
Philadelphia, PA 19103 | | U/W NOI Debt Yield: | | 14.7% |
As of May 17, 2023, and including a lease signed by Fox Rothschild on June 28, 2023, the One & Two Commerce Square Property was 80.6% leased to 91 tenants representing various industries including finance, law, insurance, pharmaceuticals, accounting, biotech and other. The largest tenant represents only 7.3% of net rentable area.
Major Tenants.
Price Water House Coopers LLP (138,413 square feet; 7.3% of NRA; 8.9% of underwritten rent). Price Water House Coopers LLP (“PwC”) is an international professional services company that provides audit, tax, and advisory services with approximately 328,000 employees across the world. PwC has one of the largest professional services networks in the world and is considered one of the Big Four accounting firms, along with Deloitte, EY and KPMG. PwC reported a gross revenue of $50.3 billion as for the trailing 12 months ending June 30, 2022.
PwC has been in occupancy at the One & Two Commerce Square Property since 1999, originally under a sublease, then under a direct lease commencing December 2013. PwC’s current lease has an expiration in April 2030, with three, five-year renewal options. PwC pays a base rent of $22.50 per square foot, with $0.50 per square foot annual increases. PwC occupies six floors of the One & Two Commerce Square Property. PwC subleases a portion of its space (23,037 square feet) to the Jewish Federation of Greater Philadelphia, which is co-terminus with the prime lease. PwC has no existing contraction or termination options.
Fox Rothschild (79,337 square feet; 4.2% of NRA; 4.6% of underwritten rent). Fox Rothschild is a 1,000-lawyer national law firm with 29 offices. Fox Rothschild practices in corporate law, financial services, labor and employment, litigation, real estate and taxation and wealth planning. Fox Rothschild was founded in Philadelphia in 1907. According to the National Law Journal’s 2023 NLJ 500 ranking of firms based on size, Fox Rothschild is ranked 52nd in the United States. On the 2022 Global 200 survey, Fox Rothschild ranked as the 91st highest grossing law firm in the world.
Fox Rothschild executed a lease after the origination of the One & Two Commerce Square Whole loan, in June 2023. Fox Rothschild is leasing portions of three floors at the One & Two Commerce Square Property and has a lease expiration in November 2040, with a rent commencement date of December 2024. Fox Rothschild pays a base rent of $20.00 per square foot, with 2% annual increases. Fox Rothschild has an option to contract one floor of its space on November 30, 2032, with a notice no later than November 30, 2031. Fox Rothschild has an option to terminate its space on November 30, 2035, with a notice no later than November 30, 2034 along with a payment of a termination fee. Fox Rothschild received $15,875,929 ($200.11 PSF) in tenant improvement and leasing commissions and 12 months of free rent (until November 2025), which were not reserved at loan origination. The metrics presented in this term sheet include income from the Fox Rothschild lease.
Stradley, Ronon, Stevens & Young (69,111 square feet; 3.6% of NRA; 4.8% of underwritten rent). Stradley, Ronon, Stevens & Young (“Stradley Ronon”) is a law firm that provides legal services on corporate & securities, litigation, education, investment management, employment & labor, financial services, real estate, tax, and others. Stradley Ronon has provided services in more than 230 markets, including 80 countries abroad with about 200 lawyers. Stradley Ronon was founded in Philadelphia and the One & Two Commerce Square Property serves as its headquarters.
Stradley Ronon has been in occupancy at the One & Two Commerce Square Property since 1988 and has expanded and renewed multiple times. Stradley Ronon currently occupies three floors under a lease dated November 2014 and expiring in December 2033, with two, five-year renewal options with 24 months’ notice. Stradley Ronon pays a base rent of $24.33 per square foot, with a 2.5% annual increase. Stradley Ronon has no existing contraction options but does have a termination right with notice by February 1, 2029 and payment of a termination fee, which if exercised would be effective January 31, 2031.
Pond Lehocky Giordano Disability (66,315 square feet; 3.5% of NRA; 3.6% of underwritten rent). Pond Lehocky Giordano Disability (“Pond Lehocky”) is a law firm in Pennsylvania that provides legal services on worker’s compensation, social security disability, long-term disability, short-term disability, and other legal needs. Pond Lehocky has grown rapidly since its inception and is now one of the largest workers’ compensation and disability firms in the United States, with over 200 employees, including more than 30 attorneys.
Pond Lehocky has been in occupancy at the One & Two Commerce Square Property for more than eight years and has a lease expiration in June 2028. Pond Lehocky pays a base rent of $19.13 per square foot, with 3% annual increases. Pond Lehocky occupies portions of three floors of the One & Two Commerce Square Property and currently subleases a portion of its space (15,838 square feet) to Morgan & Morgan Philadelphia, LLC through January 31, 2026. Pond Lehocky does not have any contraction or termination options.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
107
Property Type: Office | Loan #7 | Cut-off Date Balance: | | $39,166,667 |
Property Subtype: CBD | One & Two Commerce Square | Cut-off Date LTV: | | 51.4% |
Address: 2001 and 2005 Market Street | | U/W NCF DSCR: | | 1.68x |
Philadelphia, PA 19103 | | U/W NOI Debt Yield: | | 14.7% |
The following table presents certain information relating to the tenancy at the One & Two Commerce Square Property:
Tenant Summary(1)
Tenant Name | Credit Rating (Fitch/ Moody’s/ S&P)(2) | Tenant NRSF | % of NRSF | Annual U/W Base Rent PSF | Annual U/W Base Rent | % of Total Annual U/W Base Rent | Lease Exp. Date | Renewal Options | Term. Options |
PwC(3) | NR/NR/NR | 138,413 | 7.3% | $22.50 | $3,114,292 | 8.9% | 4/30/2030 | 3, 5-year | N |
Fox Rothschild(4) | NR/NR/NR | 79,337 | 4.2 | 20.00 | 1,586,740 | 4.6 | 11/30/2040 | None | Y(4) |
Stradley Ronon(5) | NR/NR/NR | 69,111 | 3.6 | 24.33 | 1,681,471 | 4.8 | 12/31/2033 | 2, 5-year | Y(5) |
Pond Lehocky (6) | NR/NR/NR | 66,315 | 3.5 | 19.13 | 1,268,937 | 3.6 | 6/30/2028 | 2, 5-year | N |
Wolters Kluwer Health, Inc.(7) | NR/A3/BBB+ | 65,389 | 3.4 | 19.61 | 1,282,442 | 3.7 | 3/31/2029 | 1, 5-year | Y(7) |
Subtotal/Wtd. Avg. | | 418,565 | 22.1% | $21.34 | $8,933,882 | 25.7% | | | |
Other Tenants | | 1,109,112 | 58.5% | $23.32 | $25,869,248 | 74.3% | | | |
Vacant | | 368,466 | 19.4 | 0.00 | 0 | 0.0 | | | |
Total/Wtd. Avg. | | 1,896,143 | 100.0% | $22.78(8) | $34,803,130 | 100.0% | | | |
| | | | | | | | | |
| (1) | Information is based on the underwritten rent roll dated May 17, 2023, plus the lease for Fox Rothschild, which was signed on June 28, 2023, and is inclusive of signed not occupied tenants, rent steps through June 2024 and straight-line rent steps through the lesser of the end of the loan term or the lease expiration date for investment grade tenants. |
| (2) | Certain ratings are those of the parent company whether or not the parent guarantees the lease. |
| (3) | PwC subleases a portion of its space (23,037 square feet) to the Jewish Federation of Greater Philadelphia. The sublease is coterminous with the PwC lease. |
| (4) | Fox Rothschild executed a lease after the origination of the One & Two Commerce Square Whole loan in June 2023 and has a rent commencement date of December 2024. Fox Rothschild has an option to contract one floor of its space on November 30, 2032, with a notice no later than November 30, 2031. Fox Rothschild has an option to terminate its space on November 30, 2035, with a notice no later than November 30, 2034 along with a payment of a termination fee. Fox Rothschild received $15,875,929 ($200.11 PSF) in tenant improvement and leasing commissions and 12 months of free rent (until November 2025), which were not reserved at loan closing. The metrics presented in this term sheet include income from the Fox Rothschild lease. |
| (5) | Stradley Ronon has a termination option for its space with notice by February 1, 2029 and payment of a termination fee, which if exercised would be effective January 31, 2031. |
| (6) | Pond Lehocky subleases a portion of its space (15,838 square feet) to Morgan & Morgan Philadelphia, LLC. The sublease expires on January 31, 2026. |
| (7) | Wolters Kluwer Health, Inc. has a termination option for its space on March 31, 2026, with a notice no later than September 30, 2024 and a payment of a termination fee. |
| (8) | Total/Wtd. Avg. Annual U/W Base Rent PSF excludes vacant space. |
The following table presents certain information relating to the lease rollover schedule at the One & Two Commerce Square Property:
Lease Expiration Schedule(1)(2)
Year Ending December 31, | No. of Leases Expiring | Expiring NRSF | % of Total NRSF Expiring | Cumulative Expiring NRSF | Cumulative % of Total NRSF Expiring | Annual U/W Base Rent Expiring | % of Total Annual U/W Base Rent Expiring | Annual U/W Base Rent PSF Expiring |
2023 & MTM | 10 | 24,801 | 1.3% | 24,801 | 1.3% | $479,707 | 1.4% | $19.34 |
2024 | 20 | 186,068 | 9.8% | 210,869 | 11.1% | 4,299,229 | 12.4% | 23.11 |
2025 | 6 | 26,192 | 1.4% | 237,061 | 12.5% | 716,231 | 2.1% | 27.35 |
2026 | 10 | 66,416 | 3.5% | 303,477 | 16.0% | 1,764,139 | 5.1% | 26.56 |
2027 | 10 | 129,306 | 6.8% | 432,783 | 22.8% | 2,671,319 | 7.7% | 20.66 |
2028 | 13 | 152,682 | 8.1% | 585,465 | 30.9% | 3,190,880 | 9.2% | 20.90 |
2029 | 11 | 186,387 | 9.8% | 771,852 | 40.7% | 4,238,676 | 12.2% | 22.74 |
2030 | 9 | 216,908 | 11.4% | 988,760 | 52.1% | 4,887,917 | 14.0% | 22.53 |
2031 | 10 | 107,603 | 5.7% | 1,096,363 | 57.8% | 2,868,384 | 8.2% | 26.66 |
2032 | 2 | 44,057 | 2.3% | 1,140,420 | 60.1% | 807,124 | 2.3% | 18.32 |
2033 | 10 | 164,271 | 8.7% | 1,304,691 | 68.8% | 4,396,628 | 12.6% | 26.76 |
2034 & Beyond(3) | 20 | 222,986 | 11.8% | 1,527,677 | 80.6% | 4,482,898 | 12.9% | 20.10 |
Vacant | 0 | 368,466 | 19.4% | 1,896,143 | 100.0% | 0 | 0.% | $0.00 |
Total/Wtd. Avg. | 131 | 1,896,143 | 100.0% | | | $34,803,130 | 100.0% | $22.78(4) |
| (1) | Information is based on the underwritten rent roll dated May 17, 2023, plus the lease for Fox Rothschild, which was signed on June 28, 2023, and is inclusive of signed not occupied tenants, rent steps through June 2024 and straight-line rent steps through the lesser of the end of the loan term or the lease expiration date for investment grade tenants. |
| (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 Expiration Schedule. |
| (3) | 2034 & Beyond is inclusive of variance square footage attributable to storage space for which no U/W Base Rent was attributed. |
| (4) | Total/Wtd. Avg. Annual U/W Base Rent PSF Expiring excludes vacant space. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Office | Loan #7 | Cut-off Date Balance: | | $39,166,667 |
Property Subtype: CBD | One & Two Commerce Square | Cut-off Date LTV: | | 51.4% |
Address: 2001 and 2005 Market Street | | U/W NCF DSCR: | | 1.68x |
Philadelphia, PA 19103 | | U/W NOI Debt Yield: | | 14.7% |
The following table presents historical occupancy percentages at the One & Two Commerce Square Property:
Historical Occupancy
2020(1) | 2021(1) | 2022(1) | 5/17/2023(2) |
88.0% | 79.0% | 78.3% | 80.6% |
| | | |
(1) | As provided by the borrower sponsor as of December 31 for each respective year. In 2019, three major tenants gave notice to vacate which brought the occupancy from 97.6% to the low 70%’s. The borrower sponsor was able to quickly backfill with new smaller tenants before the major tenants vacated their space. The borrower sponsor has since shifted their leasing strategy to focus on smaller tenants which has helped solidify a granular rent roll and is expected to mitigate future concentration and rollover risks. |
(2) | Current occupancy is based on the underwritten rent roll as of May 17, 2023, plus the lease for Fox Rothschild, which was signed on June 28, 2023, and is inclusive of signed not occupied tenants. |
Historical Performance and Underwritten Net Cash Flow. The following table presents certain information relating to the historical performance and underwritten net cash flow at the One & Two Commerce Square Property:
Cash Flow Analysis(1)
| 2020 | 2021(2) | 2021 | TTM 4/30/2023 | U/W | %(3) | U/W $ per SF |
In-Place Rent(4) | $35,849,499 | $27,922,144 | $29,078,215 | $28,539,075 | $32,313,734 | 45.4% | $17.04 |
Rent Steps and SL Rent(5) | 0 | 0 | 0 | 0 | 1,710,086 | 2.4 | 0.90 |
Signed Not Occupied Rent | 0 | 0 | 0 | 0 | 779,311 | 1.1 | 0.41 |
Gross-Up Vacant Rent | 0 | 0 | 0 | 0 | 8,426,263 | 11.8 | 4.44 |
Expense Recoveries | 21,434,786 | 19,357,798 | 19,208,229 | 17,638,845 | 20,479,789 | 28.8 | 10.80 |
Gross-Up Vacant Recoveries | 0 | 0 | 0 | 0 | 4,923,616 | 6.9 | 2.60 |
Gross Potential Rent | $57,284,285 | $47,279,942 | $48,286,444 | $46,177,920 | $68,632,798 | 96.4% | $36.20 |
Other Income(6) | 740,499 | 560,687 | 859,307 | 850,483 | 712,252 | 1.0 | 0.38 |
Net Parking Revenue | 1,230,091 | 905,626 | 1,605,872 | 1,774,756 | 1,820,054 | 2.6 | 0.96 |
Net Rental Income | $59,254,875 | $48,746,255 | $50,751,623 | $48,803,159 | $71,165,104 | 100.0% | $37.53 |
(Vacancy & Credit Loss) | 0 | 0 | 0 | 0 | (13,349,879) | (18.8) | (7.04) |
Effective Gross Income | $59,254,875 | $48,746,255 | $50,751,623 | $48,803,159 | $57,815,225 | 81.2% | $30.49 |
| | | | | | | |
Real Estate Taxes | 7,993,243 | 8,104,820 | 8,110,987 | 5,662,861 | 6,640,047 | 11.5 | 3.50 |
Insurance | 522,491 | 584,708 | 633,083 | 650,386 | 456,592 | 0.8 | 0.24 |
Other Expenses | 19,153,671 | 17,841,350 | 17,608,553 | 17,507,942 | 18,295,508 | 31.6 | 9.65 |
Total Expenses | $27,669,405 | $26,530,878 | $26,352,623 | $23,821,189 | $25,392,147 | 43.9% | $13.39 |
| | | | | | | |
Net Operating Income | $31,585,470 | $22,215,377 | $24,399,000 | $24,981,970 | $32,423,078 | 56.1% | $17.10 |
Replacement Reserves | 0 | 0 | 0 | 0 | 474,036 | 0.8 | 0.25 |
TI/LC | 0 | 0 | 0 | 0 | 2,844,215 | 4.9 | 1.50 |
Net Cash Flow | $31,585,470 | $22,215,377 | $24,399,000 | $24,981,970 | $29,104,827 | 50.3% | $15.35 |
| | | | | | | |
NOI DSCR(7) | 1.82x | 1.28x | 1.40x | 1.44x | 1.87x | | |
NCF DSCR(7) | 1.82x | 1.28x | 1.40x | 1.44x | 1.68x | | |
NOI Debt Yield(7) | 14.4% | 10.1% | 11.1% | 11.4% | 14.7% | | |
NCF Debt Yield(7) | 14.4% | 10.1% | 11.1% | 11.4% | 13.2% | | |
| (1) | Based on the underwritten rent roll dated May 17, 2023. |
| (2) | The decline in revenue was driven by three major tenants who gave notice to vacate in 2019 which brought the occupancy from 97.6% to the low 70%’s. The borrower sponsor was able to quickly backfill with new smaller tenants before the major tenants vacated their space. The borrower sponsor has since shifted its leasing strategy to focus on smaller tenants which has helped solidify a granular rent roll and is expected to mitigate future concentration and rollover risks. |
| (3) | % column represents percent of Net Rental Income for all revenue lines and represents percent of Effective Gross Income for the remainder of fields. |
| (4) | Includes income from Fox Rothschild, which executed a lease after the closing of the One & Two Commerce Square Whole loan in June 2023 and has a rent commencement date of December 2024, plus 12 months of abated rent, which was not reserved at loan closing. |
| (5) | Includes contractual rent steps taken through June 2024 and straight-line rent steps taken through the lesser of the end of the loan term or the lease expiration date for investment grade tenants. |
| (6) | Other Income includes parking income, termination fees, fitness center dues and other miscellaneous income. |
| (7) | Debt service coverage ratios and debt yields are based on the One & Two Commerce Square Whole Loan. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Office | Loan #7 | Cut-off Date Balance: | | $39,166,667 |
Property Subtype: CBD | One & Two Commerce Square | Cut-off Date LTV: | | 51.4% |
Address: 2001 and 2005 Market Street | | U/W NCF DSCR: | | 1.68x |
Philadelphia, PA 19103 | | U/W NOI Debt Yield: | | 14.7% |
Appraisal. The appraiser concluded to an “as-is” Appraised Value for the One & Two Commerce Square Property of $428,000,000 as of March 30, 2023.
Environmental Matters. According to the Phase I environmental report dated April 6, 2023, the One & Two Commerce Square Property maintains two active 3,500-gallon diesel underground storage tanks (“USTs”) located within the sub-grade of the One & Two Commerce Square Property parking garage. The most recent tank integrity tests (August 2, 2022 and June 28, 2022) reported that the USTs are not subject to any leaks. However, based on the age of the USTs systems and the potential for UST systems to impact the subsurface, the presence of the two active USTs represents a recognized environmental condition. The lender determined there is no impact to the One & Two Commerce Square Property given the lack of indication of any releases and the compliant nature of all above ground storage tanks. The borrowers maintain a pollution liability portfolio insurance policy from ACE American Insurance Company with a $20,000,000 limit. See “Description of the Mortgage Pool—Mortgage Pool Characteristics—Environmental Considerations” in the prospectus.
Market Overview and Competition. The One & Two Commerce Square Property is located in Philadelphia, Pennsylvania at the western edge of Center City, across the Schuylkill River from University City. The One & Two Commerce Square Property is approximately a 10-minute walk to the 30th Street Station, Philadelphia’s main transit hub, less than a half mile from Interstate 76 and in close proximity to Interstates 676 and 95. Center City Philadelphia is the commercial, financial and governmental core of the seventh largest metropolitan area in the U.S. According to a third-party data provider, the Philadelphia central business district office market is outperforming other major downtowns across the country, due to a number of factors including Philadelphia’s employment base driven by healthcare, education and government industries, along with high construction costs that have kept new office supply limited for decades.
The One & Two Commerce Square Property is located in the Philadelphia-Camden-Wilmington, PA-NJ-DE-MD metropolitan statistical area and the Market West office submarket. According to the appraisal, as of the fourth quarter of 2022, the Market West office submarket had an inventory of 28,770,887 square feet, a total vacancy of 13.8% and an average asking rent of $35.01 per square foot. The One & Two Commerce Square Property is considered a part of the trophy class of Philadelphia’s office market, which includes the top fifteen assets and top 19% of rentable area in the market. The trophy office market has historically commanded a 30% rent premium and average vacancy rate of 5.4%.
The 2022 population within a 0.25-, 0.50- and one-mile radius of the One & Two Commerce Square Property was 11,141, 28,932 and 96,595, respectively. The 2022 average household income within the same radii was $143,878, $155,817 and $149,005, respectively.
The following table presents certain information relating to the appraiser’s market rent conclusions for the One & Two Commerce Square Property:
Market Rent Summary
Category | Market Rent (PSF) | Lease Term (Yrs) |
Low Rise (1-9) | $20.00 | 5.0 |
Low Rise Large (1-9) | $19.00 | 10.0 |
Mid Rise 1 (10-17) | $22.00 | 5.0 |
Mid Rise 1 Large (10-17) | $21.00 | 10.0 |
Mid Rise 2 (18-29) | $24.00 | 5.0 |
Mid Rise 2 Large (18-29) | $23.00 | 10.0 |
High Rise (30-41) | $27.00 | 5.0 |
High Rise Large (30-41) | $26.00 | 10.0 |
Interior Retail | $30.00 | 10.0 |
Market Retail | $60.00 | 10.0 |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Office | Loan #7 | Cut-off Date Balance: | | $39,166,667 |
Property Subtype: CBD | One & Two Commerce Square | Cut-off Date LTV: | | 51.4% |
Address: 2001 and 2005 Market Street | | U/W NCF DSCR: | | 1.68x |
Philadelphia, PA 19103 | | U/W NOI Debt Yield: | | 14.7% |
The following table presents recent office leasing data at comparable properties with respect to the One & Two Commerce Square Property:
Comparable Office Leases(1)
Property | Year Built/ Renovated | Tenant | Lease Date / Term (yrs) | Lease Size (SF) | Base Rent PSF | Lease Type | Escalations | Free Rent (mos.) | TI PSF |
One & Two Commerce Square(2) | 1987, 1992 / 2013 | Fox Rothschild(2) | June-23 / 16.0 | 79,337 | $20.00 | NNN | 2.00%/yr | 12 | $125.00 |
Two Liberty Place | 1990 / NAP | FWM Holdings | Feb-22 / 11.0 | 5,799 | $46.50 | Base Plus Electric | 2.25%/yr | 12 | $82.00 |
1735 Market Street | 1990 / NAP | UBS Wealth Management | Aug-22 / 11.0 | 22,825 | $35.00 | NNN | 2.50%/yr | 12 | $90.00 |
1717 Arch Street | 1990 / NAP | Metlife Investment Management | Apr-22 / 5.4 | 20,903 | $33.75 | NNN | 2.50%/yr | 5 | $30.00 |
1600 Market Street | 1980 / 1997 | Security Risk Advisors | Apr-21 / 11.3 | 21,687 | $35.25 | Base Plus Electric | 2.25%/yr | 16 | $75.00 |
1700 Market Street | 1969 / 2018 | CommonGrounds | Nov-19 / 11.0 | 62,461 | $33.00 | Base Plus Electric | 2.25%/yr | 10 | $70.00 |
2222 Market Street | 2023 / NAP | Morgan Lewis | Feb-23 / 21.0 | 308,000 | $44.95 | NNN | 2.0%/yr | 12 | $90.00 |
1650 Arch Street | 1974 / 2001 | GSA | Oct -22 / 17.0 | 106,748 | $28.39 | Base Plus Electric | 2.0%/yr | N/A | $65.00 |
One Liberty Place | 1987 / NAP | JP Morgan Chase | Dec-22 / 11.0 | 33,172 | $42.64 | Base Plus Electric | 2.0%/yr | 12 | $70.00 |
| (1) | Information obtained from the appraisal unless otherwise indicated. |
| (2) | Information obtained from the underwritten rent roll dated May 17, 2023. Fox Rothschild executed a lease after the origination of the One & Two Commerce Square Whole Loan, in June 2023 and has a rent commencement date of December 2024. Fox Rothschild received $15,875,929 ($200.11 PSF) in tenant improvement and leasing commissions and 12 months of free rent (until November 2025), which were not reserved at loan origination. |
Escrows. At origination, the borrowers deposited (i) $9,200,744 for outstanding tenant improvement allowances and outstanding leasing commissions, and (ii) $1,912,160 for outstanding free rent and gap rent obligations.
Real Estate Taxes – The borrowers are required to deposit monthly to a real estate tax reserve 1/12th of the annual estimated real estate taxes during a Trigger Period (as defined below).
Insurance – The borrowers are required to deposit monthly 1/12th of the annual estimated insurance premiums to the insurance reserve during a Trigger Period unless insurance is maintained under an acceptable blanket policy.
Replacement Reserve – During a Trigger Period, the borrowers are required to deposit monthly approximately $39,503 to a reserve for replacements to the One & Two Commerce Square Property.
TI/LC Reserve – At origination, the borrowers provided a $25,000,000 letter of credit to be used for tenant improvements and leasing commissions (the “TI/LC Reserve”). During a Trigger Period, the borrowers are required to deposit monthly $237,018 for future tenant improvements and leasing commissions. Additionally, when (i) the balance of the TI/LC Reserve is less than $15,000,000 and (ii) the TI/LC Reserve Occupancy (as defined below) falls below 85%, excess cash will be deposited in the TI/LC Reserve until the balance returns to $25,000,000. Further, the non-recourse carveout guarantor has provided a guaranty of the borrower’s obligation to make deposits into the TI/LC Reserve in the amount of $20,000,000, which guaranty will be reduced by any amounts spent on tenant improvements and leasing commissions after the loan origination date.
A “Trigger Period” means the period commencing upon the occurrence of (i) an event of default, (ii) a bankruptcy action of the borrowers, (iii) the debt yield is less than 8.85% for two consecutive calendar quarters, or (iv) the debt service coverage ratio falls below 1.20x (based on a 30-year amortization schedule) for two consecutive calendar quarters. A Trigger Period will end (a) with respect to clause (i) above, if the cure of the event of default has been accepted by the lender and no other event of default the exists, (b) with respect to clause (ii) above, in the event such bankruptcy action was involuntary, such bankruptcy action is dismissed within 30 days, (c) with respect to clause (iii) above, the debt yield is greater than or equal to 8.85% for two consecutive calendar quarters, or (d) with respect to clause (iv) above, the debt service coverage ratio is greater than or equal to 1.20x (based on a 30-year amortization schedule) for two consecutive calendar quarters.
The “TI/LC Reserve Occupancy” means an amount on any date equal to (a) the leased net rentable area of the One & Two Commerce Square Property without giving effect to any lease which either has (i) an expiration date within 12 months of such date (after giving effect to any renewal or extension options) or (ii) a termination option (excluding customary termination options in connection with a casualty or condemnation) that may be validly exercised by the tenant under the applicable lease within 12 months of such date, divided by (b) the aggregate net rentable square footage of the One & Two Commerce Square Property.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Office | Loan #7 | Cut-off Date Balance: | | $39,166,667 |
Property Subtype: CBD | One & Two Commerce Square | Cut-off Date LTV: | | 51.4% |
Address: 2001 and 2005 Market Street | | U/W NCF DSCR: | | 1.68x |
Philadelphia, PA 19103 | | U/W NOI Debt Yield: | | 14.7% |
Lockbox and Cash Management. The One & Two Commerce Square Whole Loan is structured with a hard lockbox and springing cash management. All rents from the One & Two Commerce Square Property are required to be deposited directly to the lockbox account by tenants and, so long as a Trigger Period is not continuing, funds in the lockbox account will be transferred to the borrowers’ operating account. During a Trigger Period, the borrowers will not have access to the funds in the lockbox account and such funds will be transferred to the lender-controlled cash management account and disbursed according to the One & Two Commerce Square Whole Loan documents. During a Trigger Period, all excess cash is required to be either (i) during a period described under “TI/LC Reserves” above, deposited into the TI/LC Reserves, or (ii) when such period is not in effect, held by the lender as additional security for the One & Two Commerce Square Whole Loan; provided that excess cash will be disbursed at the direction of the borrowers in the event of shortfalls in certain monthly expense items.
Property Management. The One & Two Commerce Square Property is managed by BDN Management Inc., an affiliate of the One & Two Commerce Square borrowers.
Partial Release. Not permitted.
Real Estate Substitution. Not permitted.
Subordinate and Mezzanine Indebtedness. None.
Ground Lease. None.
Right of First Offer / Right of First Refusal. None.
Terrorism Insurance. The borrowers are required to obtain and maintain property insurance and business interruption insurance for 24 months plus a 12 month extended period of indemnity. Such insurance is required to cover perils of terrorism and acts of terrorism. If the Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA”) is in effect and continues to cover both foreign and domestic acts, the lender will accept terrorism insurance with coverage against acts which are “certified” within the meaning of TRIPRA. See “Risk Factors—Risks Relating to the Mortgage Loans—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the prospectus.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Retail | Loan #8 | Cut-off Date Balance: | $36,000,000 |
Property Subtype: Super Regional Mall | Brandon Mall | Cut-off Date LTV: | 54.7% |
Address: 175, 459, 303-675, 686 & 901 Brandon Town Center Drive | U/W NCF DSCR: | 2.33x |
Brandon, FL 33511 | | U/W NOI Debt Yield: | 19.2% |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg030.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Retail | Loan #8 | Cut-off Date Balance: | $36,000,000 |
Property Subtype: Super Regional Mall | Brandon Mall | Cut-off Date LTV: | 54.7% |
Address: 175, 459, 303-675, 686 & 901 Brandon Town Center Drive | U/W NCF DSCR: | 2.33x |
Brandon, FL 33511 | | U/W NOI Debt Yield: | 19.2% |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg031.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
114
Property Type: Retail | Loan #8 | Cut-off Date Balance: | $36,000,000 |
Property Subtype: Super Regional Mall | Brandon Mall | Cut-off Date LTV: | 54.7% |
Address: 175, 459, 303-675, 686 & 901 Brandon Town Center Drive | U/W NCF DSCR: | 2.33x |
Brandon, FL 33511 | | U/W NOI Debt Yield: | 19.2% |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg032.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
115
No. 8 – Brandon Mall |
|
Mortgage Loan Information | | Mortgaged Property Information |
Mortgage Loan Seller: | Wells Fargo Bank, National Association | | Single Asset/Portfolio: | Single Asset |
Credit Assessment (Moody’s/Fitch/KBRA): | NR/NR/NR | | Property Type – Subtype: | Retail – Super Regional Mall |
Original Principal Balance(1): | $36,000,000 | | Location: | Brandon, FL |
Cut-off Date Balance(1): | $36,000,000 | | Size(4): | 659,882 SF |
% of Initial Pool Balance: | 5.0% | | Cut-off Date Balance Per SF(1): | $183.37 |
Loan Purpose: | Acquisition | | Maturity Date Balance Per SF(1): | $183.37 |
Borrower Sponsor: | NADG (US) LLLP and North American Property Group | | Year Built/Renovated: | 1995/2022 |
Guarantor: | NADG (US) LLLP and North American Property Group | | Title Vesting: | Fee |
Mortgage Rate: | 7.6200% | | Property Manager: | Centrecorp Management Services, LLLP (borrower-related) |
Note Date: | May 24, 2023 | | Current Occupancy (As of)(5): | 70.4% (4/6/2023) |
Seasoning: | 2 months | | YE 2022 Occupancy(6): | 72.3% |
Maturity Date: | June 11, 2028 | | YE 2021 Occupancy(6): | 92.1% |
IO Period: | 60 months | | YE 2020 Occupancy: | 86.9% |
Loan Term (Original): | 60 months | | YE 2019 Occupancy: | 90.0% |
Amortization Term (Original): | NAP | | As-Is Appraised Value: | $221,220,000 |
Loan Amortization Type: | Interest Only | | As-Is Appraised Value Per SF: | $335.24 |
Call Protection(2): | L(26),D(27),O(7) | | As-Is Appraisal Valuation Date: | March 16, 2023 |
Lockbox Type: | Hard/Springing Cash Management | | Underwriting and Financial Information |
Additional Debt(1)(2): | Yes | | TTM NOI (3/31/2023): | $23,943,452 |
Additional Debt Type (Balance)(1)(2): | Pari Passu ($85,000,000) | | YE 2022 NOI: | $23,610,616 |
| | | YE 2021 NOI: | $21,968,288 |
| | YE 2020 NOI: | $19,220,830 |
Escrows and Reserves(3) | | U/W Revenues: | $35,463,843 |
| Initial | Monthly | Cap | | U/W Expenses: | $12,244,308 |
Taxes | $2,223,137 | $317,591 | NAP | | U/W NOI: | $23,219,535 |
Insurance | $0 | Springing | NAP | | U/W NCF: | $21,767,794 |
Replacement Reserves | $4,000,000 | $10,998 | NAP | | U/W DSCR based on NOI/NCF(1): | 2.48x / 2.33x |
Leasing Reserves | $4,000,000 | $109,980 | NAP | | U/W Debt Yield based on NOI/NCF(1): | 19.2% /18.0% |
Gap Rent Reserve | $136,312 | $0 | NAP | | U/W Debt Yield at Maturity based on NOI/NCF(1): | 19.2% / 18.0% |
Rent Concession Reserve | $89,507 | $0 | NAP | | Cut-off Date LTV Ratio(1): | 54.7% |
Existing TI/LC Reserve | $947,920 | $0 | NAP | | LTV Ratio at Maturity(1): | 54.7% |
| | | | | | | |
Sources and Uses |
Sources | | | | | Uses | | | |
Whole Loan Amount(1): | $121,000,000 | | 51.6% | | Purchase price | $220,000,000 | | 93.9% |
Sponsor Equity: | 113,322,437 | | 48.4 | | Upfront reserves | 11,396,876 | | 4.9 |
| | | | | Closing costs | 2,925,561 | | 1.2 |
| | | | | | | | |
Total Sources | $234,322,437 | | 100.0% | | Total Uses | $234,322,437 | | 100.0% |
| (1) | The Brandon Mall Mortgage Loan (as defined below) is part of the Brandon Mall Whole Loan (as defined below), which is comprised of three pari passu senior promissory notes with an aggregate original principal balance of $121,000,000. The Cut-off Date Balance Per SF, Maturity Date Balance Per SF, U/W DSCR based on NOI/NCF, U/W debt yield based on NOI/NCF, U/W debt yield at Maturity based on NOI/NCF, Cut-off Date LTV Ratio and Maturity Date LTV Ratio presented above are based on the aggregate Cut-off Date principal balance of the Brandon Mall Whole Loan. |
| (2) | See “The Mortgage Loan” section below for further discussion of additional mortgage debt. |
| (3) | See “Escrows” section below for further discussion of reserve requirements. |
| (4) | The Brandon Mall Property (as defined below) is part of a larger mall containing 1,155,045 square feet. |
| (5) | As of April 6, 2023, the Brandon Mall Property was 70.4% leased and occupancy excluding the Sears Space (as defined below) was 86.8%. |
| (6) | The decrease in occupancy between YE 2021 and YE 2022 was due to Sears vacating the Brandon Mall Property in 2021. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Retail | Loan #8 | Cut-off Date Balance: | $36,000,000 |
Property Subtype: Super Regional Mall | Brandon Mall | Cut-off Date LTV: | 54.7% |
Address: 175, 459, 303-675, 686 & 901 Brandon Town Center Drive | U/W NCF DSCR: | 2.33x |
Brandon, FL 33511 | | U/W NOI Debt Yield: | 19.2% |
The Mortgage Loan. The eighth largest mortgage loan (the “Brandon Mall Mortgage Loan”) is part of a whole loan (the “Brandon Mall Whole Loan”) secured by the fee interest in a 659,882 square foot super regional mall located in Brandon, Florida (the “Brandon Mall Property”). The Brandon Mall Whole Loan has an original aggregate principal balance of $121,000,000 and is comprised of three pari passu notes. The Brandon Mall Mortgage Loan, with an original principal balance of $36,000,000 is evidenced by the non-controlling Note A-2-1. The Brandon Mall Whole Loan will be serviced under the pooling and servicing agreement for the BANK5 2023-5YR2 securitization trust. See “Description of the Mortgage Pool—The Whole Loans—The Non-Serviced Pari Passu Whole Loans” and “Pooling and Servicing Agreement—Servicing of the Non-Serviced Mortgage Loans” in the Preliminary Prospectus.
Note Summary
Note | Original Balance | Cut-off Date Balance | Note Holder | Controlling Piece |
A-1 | $65,000,000 | $65,000,000 | BANK5 2023-5YR2 | Yes |
A-2-1 | 36,000,000 | 36,000,000 | BANK 2023-BNK46 | No |
A-2-2 | 20,000,000 | 20,000,000 | WFB | Yes |
Total | $121,000,000 | $121,000,000 | | |
The Borrower and Borrower Sponsors. The borrower is Brandon (Tampa) LP, a Delaware limited partnership with one independent director. The borrower is a joint venture between NADG Brandon LP (50.9%) and 14835514 Canada, Inc. (49.0%). Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of the Brandon Mall Whole Loan. The borrower sponsors and non-recourse carveout guarantors of the Brandon Mall Whole Loan are NADG (US) LLLP and North American Property Group (“NAPG”). NAPG does not have any direct ownership in the borrower.
NADG (US) LLLP and NAPG are affiliates of North American Development Group (“NADG”). NADG was founded in 1977 and currently has $5.7 billion in assets under management including over 25 million square feet of retail and mixed use space and 10,000 residential units. NADG has 14 offices across North America with over 300 professionals. NADG’s retail platform includes 65 properties ranging from outparcel pads to over 1.8 million square foot mixed-used developments. NADG is a large private owner of retail properties in North America and partners with well-known tenant brands.
14835514 Canada, Inc. is an affiliate of Canadian Post Corporation Pension Plan, which is one of the largest single-employer sponsor pension plans in Canada and reported total assets of $29.6 billion (CAD) as of December 31, 2022.
The Property. The Brandon Mall Property is a one-story, Class A super regional mall totaling 659,882 owned square feet, located in Brandon, Florida. The Brandon Mall Property is part of a larger mall containing 1,155,045 square feet, of which the remaining 495,163 square feet are not included in the collateral. The property is a traditional enclosed mall with multiple wings and entrances, containing a food court and department store anchors. Built in 1995 and most recently renovated in 2022, the property is situated on a 122.8-acre parcel and contains 2,897 parking spaces (4.4/1,000 square feet). The collateral anchor tenant is Dick’s Sporting Goods and non-collateral anchors include JCPenney, Macy’s and Dillard’s. Additional notable tenants include Apple, Books-A-Million, Sephora, Abercrombie & Fitch, Forever 21, Victoria’s Secret, and The Cheesecake Factory. The collateral also includes a 124,552 square foot vacant former Sears box (the “Sears Space”), which vacated the property in 2021, and a 6.8 acre parcel of undeveloped excess land. Between 2018 and 2022, the property averaged 87.2% occupancy (including the Sears Space) and 88.9% occupancy (excluding the Sears Space). As of April 6, 2023, the Brandon Mall Property was 70.4% leased to 156 tenants and occupancy excluding the Sears Space was 86.8%. See “Description of the Mortgage Pool–Mortgage Pool Characteristics–Property Types–Retail Properties” in the prospectus.
February 2023 TTM in-line sales PSF are $829 PSF, representing a 3.1% and 0.3% increase since 2021 and 2022, respectively. Excluding Apple, February 2023 TTM in-line sales PSF are $670 PSF, representing a 1.1% and 0.3% increase since 2021 and 2022, respectively. As of the February 2023 TTM, the in-line occupancy cost ratio is 11.1% including Apple and 13.8% excluding Apple. The table below provides an overview of the sales by tenancy type (partial year sales were excluded from the analysis).
Sales by Tenancy Type(1) |
Tenancy Type | 2020 Sales | 2020 PSF | 2021 Sales | 2021 PSF | 2022 Sales | 2022 PSF | TTM Sales(2) | TTM PSF(2) |
Major (> 10,000 SF) | 34,572,426 | $314 | 49,595,226 | $450 | 48,366,814 | $439 | 48,129,579 | $437 |
Inline (< 10,000 SF) | 138,474,795 | $490 | 227,001,685 | $804 | 233,368,159 | $826 | 234,051,719 | $829 |
Inline (< 10,000 SF) excluding Apple | 115,718,127 | $417 | 184,016,509 | $663 | 185,597,381 | $668 | 186,061,718 | $670 |
Total Sales | $288,765,348 | $441 | $460,613,420 | $705 | $467,332,354 | $718 | $468,243,016 | $719 |
(1) Based on the underwritten rent roll dated April 6, 2023.
(2) TTM is as of February 28, 2023.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
117
Property Type: Retail | Loan #8 | Cut-off Date Balance: | $36,000,000 |
Property Subtype: Super Regional Mall | Brandon Mall | Cut-off Date LTV: | 54.7% |
Address: 175, 459, 303-675, 686 & 901 Brandon Town Center Drive | U/W NCF DSCR: | 2.33x |
Brandon, FL 33511 | | U/W NOI Debt Yield: | 19.2% |
Major Tenants.
Dick’s Sporting Goods (“Dick’s”) (Fitch/Moody’s/S&P: NR/Baa3/BBB; 45,000 square feet; 6.8% of net rentable area; 5.2% of underwritten base rent; 1/31/2028 lease expiration). Founded in 1948, Dick’s (NYSE: DKS) is a retailer serving athletes and outdoor enthusiasts. Today, the company operates over 850 Dick’s Sporting Goods, Golf Galaxy, Public Lands, Moosejaw, Going Going Gone! and Warehouse Sale stores. Dick’s has been a tenant at the property since 2007 and has no termination or extension options.
Victoria’s Secret (Fitch/Moody’s/S&P: NR/Ba3/BB-; 11,129 square feet; 1.7% of net rentable area; 3.5% of underwritten base rent; 1/31/2028 lease expiration). Victoria’s Secret (NYSE: VSCO) is a Fortune 500 specialty retailer of modern, fashion-inspired collections including signature bras, panties, lingerie, casual sleepwear, athleisure and swim, fragrances and body care. Today Victoria’s Secret has more than 30,000 associates across approximately 1,360 retail stores in approximately 70 countries. Victoria’s Secret has been a tenant at the property since 2017 and does not have any extension or termination options.
The Cheesecake Factory (10,203 square feet; 1.5% of net rentable area; 3.5% of underwritten base rent; 1/31/2028 lease expiration). In 1972, Evelyn and Oscar Overton opened the first Cheesecake Factory in Los Angeles, California. Today, the company has over 225 locations worldwide with more than 40,000 employees. The Cheesecake Factory has been a tenant at the property since 2006 and has 2, 5-year extension options and no termination options.
The following table presents a summary regarding the major tenants at the Brandon Mall Property:
Major Tenants
Tenant Name | Credit Rating (Fitch/Moody’s/ S&P)(1) | Tenant NRSF | % of NRSF | Annual U/W Rent(2)(3) | % of Total Annual U/W Rent | Annual U/W Rent PSF(2)(3) | | Ext. Options |
Term. Option (Y/N) | Lease Expiration Date |
Anchor Tenants | | | | | | | | | |
Dick’s | NR/Baa3/BBB | 45,000 | 6.8% | $925,036 | 5.2% | $20.56 | N | 1/31/2028 | None |
Total/Wtd. Avg. | | 45,000 | 6.8% | $925,036 | 5.2% | $20.56 | | | |
| | | | | | | | | |
Major Tenants | | | | | | | | | |
The Cheesecake Factory | NR/NR/NR | 10,203 | 1.5% | $628,993 | 3.5% | $61.65 | N | 1/31/2028 | 2 x 5Yr |
Victoria’s Secret | NR/Ba3/BB- | 11,129 | 1.7% | $626,674 | 3.5% | $56.31 | N | 1/31/2028 | None |
Books-A-Million | NR/NR/NR | 17,383 | 2.6% | $385,398 | 2.2% | $22.17 | N | 1/31/2028 | 1 x 5Yr |
Champs Sports | NR/NR/NR | 6,792 | 1.0% | $373,385 | 2.1% | $54.97 | N | 4/30/2025 | None |
Forever 21 | NR/NR/NR | 11,179 | 1.7% | $373,168(4) | 2.1% | $33.38(4) | Y(5) | MTM | None |
American Eagle Outfitters | NR/NR/NR | 6,128 | 0.9% | $369,838 | 2.1% | $60.35 | N | MTM | None |
Aeropostale | NR/NR/NR | 3,081 | 0.5% | $358,800 | 2.0% | $116.46 | N | 1/31/2025 | None |
Foot Locker | NR/Ba1/BB+ | 5,517 | 0.8% | $346,150 | 2.0% | $62.74 | N | 6/30/2024 | None |
Zales Jewelers | NR/NR/NR | 1,620 | 0.2% | $341,592 | 1.9% | $210.86 | N | 6/30/2028 | None |
Total/Wtd. Avg. | | 73,032 | 11.1% | $3,803,998 | 21.4% | $52.09 | | | |
| | | | | | | | | |
Non-Major Tenants | | 346,606 | 52.5% | $13,008,497 | 73.3% | $37.53 | | | |
| | | | | | | | | |
Occupied Collateral Total | | 464,638 | 70.4% | $17,737,531 | 100.0% | $38.17 | | | |
Vacant Space | | 195,244 | 29.6% | | | | | | |
Total/Wtd. Avg. | | 659,882 | 100.0% | | | | | | |
| (1) | Certain ratings are those of the parent company whether or not the parent guarantees the lease. |
| (2) | Annual U/W Rent and Annual U/W Rent PSF includes Percentage In-Lieu rents totalling $1,035,097. |
| (3) | Annual U/W Rent and Annual U/W Rent PSF includes $633,474 of rent steps through June 2024. |
| (4) | Forever 21’s Annual UW Rent and Annual UW Rent PSF represents Percentage In-Lieu based on the tenant’s 2022 sales. |
| (5) | Forever 21 has the right to terminate its lease if annual sales drop below $2,215,720 within 60 days of January 31st of each year. The tenant reported TTM 2/28/2023 sales of $3,109,737. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
118
Property Type: Retail | Loan #8 | Cut-off Date Balance: | $36,000,000 |
Property Subtype: Super Regional Mall | Brandon Mall | Cut-off Date LTV: | 54.7% |
Address: 175, 459, 303-675, 686 & 901 Brandon Town Center Drive | U/W NCF DSCR: | 2.33x |
Brandon, FL 33511 | | U/W NOI Debt Yield: | 19.2% |
The following table presents a summary of sales and occupancy costs for certain tenants at the Brandon Mall Property.
Sales and Occupancy Cost Summary(1)
| 2020 Sales (PSF) | 2021 Sales (PSF) | 2022 Sales (PSF) | TTM 2/28/2023 Sales (PSF) | TTM Occupancy Cost |
Dick’s | $246 | $350 | $318 | $318 | 6.8% |
The Cheesecake Factory | $890 | $1,281 | $1,348 | $1,356 | 6.8% |
Victoria’s Secret | $677 | $899 | $869 | $857 | 11.4% |
Books-A-Million | $132 | $211 | $210 | $209 | 10.6% |
Champs Sports | $529 | $733 | $600 | $573 | 17.0% |
Forever 21 | $231 | $341 | $289 | $278 | 12.0% |
American Eagle Outfitters | $519 | $754 | $673 | $672 | 15.0% |
Aeropostale | NAV | $771 | $644 | $641 | 18.2% |
Foot Locker | $930 | $1,140 | $1,089 | $1,072 | 10.1% |
| (1) | Information obtained from the borrower. |
The following table presents certain information relating to the lease rollover schedule at the Brandon Mall Property
Lease Expiration Schedule(1)(2)
Year Ending December 31, | No. of Leases Expiring | Expiring NRSF | % of Total NRSF | Cumulative Expiring NRSF | Cumulative % of Total NRSF | Annual U/W Base Rent | % of Total Annual U/W Base Rent | Annual U/W Base Rent PSF |
MTM | 6 | 31,676 | 4.8% | 31,676 | 4.8% | $1,488,466 | 8.4% | $46.99 |
2023 | 25 | 43,654 | 6.6% | 75,330 | 11.4% | $692,689 | 3.9% | $15.87 |
2024 | 40 | 94,780 | 14.4% | 170,110 | 25.8% | $3,183,895 | 18.0% | $33.59 |
2025 | 30 | 66,949 | 10.1% | 237,059 | 35.9% | $3,039,267 | 17.1% | $45.40 |
2026 | 18 | 30,648 | 4.6% | 267,707 | 40.6% | $1,496,886 | 8.4% | $48.84 |
2027 | 14 | 33,158 | 5.0% | 300,865 | 45.6% | $1,709,275 | 9.6% | $51.55 |
2028 | 19 | 121,532 | 18.4% | 422,397 | 64.0% | $4,662,317 | 26.3% | $38.36 |
2029 | 3 | 5,916 | 0.9% | 428,313 | 64.9% | $214,123 | 1.2% | $36.19 |
2030 | 3 | 3,360 | 0.5% | 431,673 | 65.4% | $212,621 | 1.2% | $63.28 |
2031 | 3 | 13,892 | 2.1% | 445,565 | 67.5% | $324,196 | 1.8% | $23.34 |
2032 | 3 | 11,636 | 1.8% | 457,201 | 69.3% | $312,502 | 1.8% | $26.86 |
2033 | 3 | 7,437 | 1.1% | 464,638 | 70.4% | $401,292 | 2.3% | $53.96 |
2034 & Beyond | 0 | 0 | 0.0% | 464,638 | 70.4% | $0 | 0.0% | $0.00 |
Vacant | 0 | 195,244 | 29.6% | 659,882 | 100.0% | $0 | 0.0% | $0.00 |
Total/Weighted Average | 167 | 659,882 | 100.0% | | | $17,737,531 | 100.0% | $38.17(3) |
| (1) | Information is based on the underwritten rent roll as of April 6, 2023. |
| (2) | Certain tenants may have lease termination options that are exercisable prior to the stated expiration date of the subject lease or leases which are not considered in the lease rollover schedule. |
| (3) | Total/Weighted Average Annual U/W Rent PSF Rolling excludes vacant space. |
The following table presents historical occupancy percentages at the Brandon Mall Property:
Historical Occupancy
12/31/2019(1) | 12/31/2020(1) | 12/31/2021(1) | 12/31/2022(1)(2) | 4/6/2023(3)(4) |
90.0% | 86.9% | 92.1% | 72.3% | 70.4% |
(1) | Information obtained from the Brandon Mall Borrower. |
(2) | The decrease in occupancy between December 31, 2021 and December 31, 2022 was due to Sears vacating the Brandon Mall Property in 2021. |
(3) | Information obtained from the underwritten rent roll. |
(4) | As of April 6, 2023, the Brandon Mall Property was 70.4% leased and occupancy excluding the Sears Space was 86.8%. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
119
Property Type: Retail | Loan #8 | Cut-off Date Balance: | $36,000,000 |
Property Subtype: Super Regional Mall | Brandon Mall | Cut-off Date LTV: | 54.7% |
Address: 175, 459, 303-675, 686 & 901 Brandon Town Center Drive | U/W NCF DSCR: | 2.33x |
Brandon, FL 33511 | | U/W NOI Debt Yield: | 19.2% |
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and underwritten net cash flow at the Brandon Mall Property:
Cash Flow Analysis
| 2020 | 2021 | 2022 | TTM 3/31/2023 | U/W | %(1) | U/W $ per SF |
Base Rent | $17,425,925 | $16,116,863 | $17,637,209 | $17,512,573 | $17,737,531(2)(3) | 45.1% | $26.88 |
Grossed Up Vacant Space | 0 | 0 | 0 | 0 | 3,861,046 | 9.8 | 5.85 |
Gross Potential Rent | $17,425,925 | $16,116,863 | $17,637,209 | $17,512,573 | $21,598,577 | 54.9% | $32.73 |
Other Income(4) | 228,518 | 295,780 | 439,119 | 459,494 | 459,494 | 1.2 | 0.70 |
Percentage Rent | 213,614 | 2,102,120 | 2,338,675 | 2,516,930 | 2,203,179 | 5.6 | 3.34 |
Specialty Leasing | 1,326,484 | 1,726,698 | 2,106,896 | 2,210,192 | 2,210,192 | 5.6 | 3.35 |
Total Recoveries | 13,925,509 | 13,834,550 | 14,199,569 | 14,027,378 | 12,853,447 | 32.7 | 19.48 |
Net Rental Income | $33,120,050 | $34,076,012 | $36,721,468 | $36,726,567 | $39,324,889 | 100.0% | $59.59 |
Less Free Rent & Credit Loss | 4,508,571 | 1,730,075 | 1,368,804 | 808,256 | 0 | 0.0 | 0.00 |
(Vacancy & Credit Loss) | 0 | 0 | 0 | 0 | (3,861,046)(5) | (17.9) | (5.85) |
Effective Gross Income | $28,611,480 | $32,345,937 | $35,352,664 | $35,918,311 | $35,463,843 | 90.2% | $53.74 |
| | | | | | | |
Real Estate Taxes | 3,513,617 | 3,493,756 | 3,800,806 | 3,965,981 | 3,500,000 | 9.9 | 5.30 |
Insurance | 209,159 | 677,746 | 618,915 | 606,215 | 1,293,363 | 3.6 | 1.96 |
Management Fee | 1,144,459 | 1,293,837 | 1,414,107 | 1,465,109 | 1,063,915 | 3.0 | 1.61 |
Other Operating Expenses | 4,523,415 | 4,912,309 | 5,908,220 | 5,937,554 | 6,387,030 | 18.0 | 9.68 |
Total Operating Expenses | $9,390,649 | $10,377,649 | $11,742,048 | $11,974,859 | $12,244,308 | 34.5% | $18.56 |
| | | | | | | |
Net Operating Income | $19,220,830(6) | $21,968,288(6) | $23,610,616 | $23,943,452 | $23,219,535 | 65.5% | $35.19 |
TI/LC | 0 | 0 | 0 | 0 | 1,319,764 | 3.7 | 2.00 |
Capital Expenditures | 0 | 0 | 0 | 0 | 131,976 | 0.4 | 0.20 |
Net Cash Flow | $19,220,830 | $21,968,288 | $23,610,616 | $23,943,452 | $21,767,794 | 61.4% | $32.99 |
| | | | | | | |
NOI DSCR(7) | 2.06x | 2.35x | 2.53x | 2.56x | 2.48x | | |
NCF DSCR(7) | 2.06x | 2.35x | 2.53x | 2.56x | 2.33x | | |
NOI Debt Yield(7) | 15.9% | 18.2% | 19.5% | 19.8% | 19.2% | | |
NCF Debt Yield(7) | 15.9% | 18.2% | 19.5% | 19.8% | 18.0% | | |
| (1) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (2) | U/W Base Rent includes Percentage In-Lieu rents totalling $1,035,097, which were underwritten based on TTM sales as of February 28, 2023. |
| (3) | U/W Base Rent includes $633,474 of rent steps through June 2024. |
| (4) | Other Income includes janitorial, media revenue, termination fees, and other miscellaneous items. |
| (5) | Represents the underwritten economic vacancy %. The Brandon Mall Property was 70.4% occupied as of April 6, 2023. Occupancy excluding the Sears Space was 86.8%. |
| (6) | The increase in Net Operating Income from 2020 to 2021 was driven by a decrease in free rent and credit loss. |
| (7) | Debt service coverage ratios and debt yields are based on the Brandon Mall Whole Loan. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
120
Property Type: Retail | Loan #8 | Cut-off Date Balance: | $36,000,000 |
Property Subtype: Super Regional Mall | Brandon Mall | Cut-off Date LTV: | 54.7% |
Address: 175, 459, 303-675, 686 & 901 Brandon Town Center Drive | U/W NCF DSCR: | 2.33x |
Brandon, FL 33511 | | U/W NOI Debt Yield: | 19.2% |
Appraisal. The appraiser concluded to an “As-is” value for the Brandon Mall Property of $221,220,000 as of March 16, 2023.
Environmental Matters. According to the Phase I environmental site assessment dated March 14, 2023, there was no evidence of any recognized environmental conditions at the Brandon Mall Property.
Market Overview and Competition. The Brandon Mall Property is located in Brandon, Florida, approximately 10.0 miles east of the Tampa central business district. According to a third party market research report, the property is located at the highly trafficked intersection of Interstate-75 and Brandon Boulevard, which had a daily traffic count of approximately 84,990 vehicles. The property is located in an area that benefits from a convergence of highway infrastructure that includes Interstate 75, State Road 60 and the Selmon Expressway. The area is suburban in nature and has experienced significant population and economic growth over the past 20 years as the Tampa MSA continues to expand. Between 2010 and 2022, the population within a 2-, 5- and 10- mile radius grew 23.3%, 23.2%, and 26.4%, respectively.
Within a one-, three- and five-mile radius of the Brandon Mall Property, the 2022 average household income was approximately $69,414, $78,069, and $81,816, respectively; and within the same radii, the 2022 estimated population was 12,872, 101,084, and 218,619, respectively.
According to a third party market research report, the property is situated within the East Tampa submarket of the larger Tampa/St. Petersburg retail market. As of May 2023, the submarket reported total inventory of approximately 14.9 million square feet with a 3.1% vacancy rate and average rents of $25.04 per square foot.
The following table presents certain information relating to the appraiser’s market rent conclusions for the Brandon Mall Property:
Market Rent Summary(1)
| Market Rent (PSF) | Lease Term (Yrs.) | Rent Increase Projections | New Tenant Improvements |
Shops/Inline 0-999 SF | $60.00 | 3 | 2.0% | $15.00 |
Shops/Inline 1-3,000 SF | $38.00 | 5 | 2.0% | $20.00 |
Shops/Inline 3-8,000 SF | $30.00 | 5 | 2.0% | $15.00 |
Shops/Inline > 8,000 SF | $25.00 | 5 | 2.0% | $10.00 |
Jewelry | $120.00 | 10 | 2.0% | $25.00 |
Restaurant | $50.00 | 10 | Varies | $50.00 |
Food Court | $140.00 | 5 | 2.0% | $25.00 |
Kiosk | $350.00 | 3 | 2.0% | $0.00 |
Anchor | $20.00 | 10 | Varies | $10.00 |
ATM | $7,100 | 5 | 2.0% | $0.00 |
Large Anchor (Sears) | $12.50 | 10 | None | $5.00 |
(1) | Information obtained from the appraisal. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Retail | Loan #8 | Cut-off Date Balance: | $36,000,000 |
Property Subtype: Super Regional Mall | Brandon Mall | Cut-off Date LTV: | 54.7% |
Address: 175, 459, 303-675, 686 & 901 Brandon Town Center Drive | U/W NCF DSCR: | 2.33x |
Brandon, FL 33511 | | U/W NOI Debt Yield: | 19.2% |
The table below presents certain information relating to comparable retail centers pertaining to the Brandon Mall Property identified by the appraiser:
Competitive Set(1)
Property Name | Year Built/Renovated | Total NRA | Total Occupancy(2) | Anchor / Major Tenants | Distance to Brandon Mall Property |
Brandon Mall | 1995/2022 | 659,882(3)(4) | 70.4%(3)(4)(5) | Macy’s, Dillard’s, JCPenney, Dick’s | |
International Plaza and Bay Street | 2001/NAP | 855,281 | 97.8% | Nordstrom, Dillard’s, Neiman Marcus | 15.3 miles |
Westshore Plaza | 1967/2001 | 1,093,846 | 88.0% | Dick’s, Macy’s, JCPenney, AMC 14 | 14.8 miles |
Citrus Park Town Center | 1999/NAP | 619,158 | 91.0% | JCPenney, Macy’s, Dillard’s, Regal Cinemas, Dick’s | 25.2 miles |
Westfield Countryside Mall | 1975/NAP | 724,220 | 88.0% | JCPenney, Macy’s, Dillard’s, CMX Cinemas, Whole Foods | 31.2 miles |
Tyrone Square Mall | 1972/1998 | 711,556 | 90.0% | JCPenney, Macy’s, Dillard’s, Dick’s, DSW, PetSmart | 34.0 miles |
The Mall at University Town Center | 2014/NAP | 886,000(1) | 98.8% | Dillard’s, Macy’s, Saks Fifth Avenue | 44.6 miles |
Weighted Average | | | 92.3%(6) | | |
| (1) | Information obtained from the appraisal, unless otherwise specified. |
| (2) | Based on a third party market research report, unless otherwise specified. |
| (3) | Based on the underwritten rent roll as of April 4, 2023. |
| (4) | Total NRA and Total Occupancy excludes non-collateral anchor tenants (Macy’s, Dillard’s, and JCPenney). |
| (5) | Excluding the Sears Space the property was 86.8% occupied. Total Occupancy including the non-collateral anchors and excluding the Sears Space was 93.1%. |
| (6) | Excludes the Brandon Mall Property. |
Escrows.
Real Estate Taxes – The loan documents require an upfront deposit of $2,223,137 and ongoing monthly deposits of $317,591 for real estate taxes.
Insurance – The loan documents do not require ongoing monthly insurance reserves; provided (i) no event of default is continuing, (ii) the borrower maintains insurance coverage for the Brandon Mall Property as part of blanket or umbrella coverage reasonably approved by the lender, and (iii) provides the lender with evidence of the renewals of the insurance policies and paid receipts for the payment of the insurance premiums no later than 10 business days prior to the expiration dates of the policies. If such conditions are not satisfied, the loan documents require ongoing monthly deposits in an amount equal to 1/12th of the insurance premiums that the lender reasonably estimates will be payable during the next ensuing 12 months.
Replacement Reserve – The loan documents require an upfront deposit of $4,000,000 and ongoing monthly deposits of $10,998 for replacement reserves.
TI/LC Reserve – The loan documents require an upfront deposit of $4,000,000 and ongoing monthly deposits of $109,980 for tenant improvements and leasing commissions reserves.
Gap Rent Reserve – The loan documents require an upfront deposit of $136,312 for gap rent related to Azteca D’Oro (0.8% net rentable area; 1.5% of underwritten base rent).
Rent Concession Reserve – The loan documents require an upfront deposit of $89,507 for outstanding rent concessions related to Popeyes (0.1% net rentable area; 0.5% of underwritten base rent).
Existing TI/LC Reserve – The loan documents require an upfront deposit of $947,920 for outstanding tenant improvements and leasing commissions related to 5 tenants.
Lockbox and Cash Management. The Brandon Mall Whole Loan is structured with a hard lockbox and springing cash management. The borrower is required to deposit all rents into a lender controlled lockbox account within one business day of receipt, and to direct all tenants to make direct rent deposits into the lockbox account. As long as a Cash Trap Event Period (as defined below) is not in effect, all funds in the lockbox account are required to be distributed to the borrower. During the continuance of a Cash Trap Event Period, all funds in the cash management account are required to be disbursed in accordance with the cash management waterfall set
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Retail | Loan #8 | Cut-off Date Balance: | $36,000,000 |
Property Subtype: Super Regional Mall | Brandon Mall | Cut-off Date LTV: | 54.7% |
Address: 175, 459, 303-675, 686 & 901 Brandon Town Center Drive | U/W NCF DSCR: | 2.33x |
Brandon, FL 33511 | | U/W NOI Debt Yield: | 19.2% |
forth in the loan documents, with any excess funds required to be held as additional security in an excess cash flow subaccount controlled by the lender for so long as the Cash Trap Event Period continues.
A “Cash Trap Event Period” will commence upon the earlier of the following:
| (i) | the occurrence of an event of default under the loan documents; |
| (ii) | the net cash flow debt service coverage ratio (“NCF DSCR”) is below 1.50x (assuming a hypothetical 30-year amortization); |
| (iii) | the net cash flow debt yield (“NCF DY”) is below 12.0%; |
| (iv) | the occurrence of an Anchor Tenant Trigger (as defined below) with respect to two or more anchor tenants; or |
| (v) | tenants occupying less than or equal to 75% of the gross leasable square footage at the property (excluding the Sears Space) are open for business and operating at the property for more than 30 consecutive days (a “Gross Floor Area Trigger”). |
A Cash Trap Event Period will end upon the occurrence of the following:
| ● | with regard to clause (i), the cure of such event of default; |
| ● | with regard to clause (ii), the NCF DSCR being at least 1.55x for two consecutive calendar quarters; |
| ● | with regard to clause (iii), the NCF DY being at least 12.5% for two consecutive calendar quarters; |
| ● | with regard to clause (iv), 90 days following the date that an Anchor Tenant Trigger Cure (as defined below) occurred and no more than one Anchor Tenant Trigger is ongoing; or |
| ● | with regard to clause (v), 90 days following the date that the Gross Floor Area Trigger has ended. |
An “Anchor Tenant Trigger” will commence upon the occurrence of any of the following:
| (i) | if Macy’s, Dillard’s, JCPenney, and/or the largest replacement tenant (by leased square footage) occupying the Sears Space (each an “Anchor Tenant”) goes dark or fails to occupy all of its space (excluding due to casualty, condemnation or remodelling not to exceed 90 days); |
| (ii) | an Anchor Tenant vacates a majority of its space (excluding due to casualty, condemnation or remodelling not to exceed 90 days); |
| (iii) | an Anchor Tenant’s space being identified on a store closure list or otherwise announced for closure; |
| (iv) | an Anchor Tenant or its corporate parent files, as a debtor, or otherwise becomes involved, in a bankruptcy or similar insolvency proceeding; or |
| (v) | with respect to the Sears Space, until the Sears Space Releasing Conditions (as defined below) are met. For the avoidance of doubt, an Anchor Tenant Trigger is in effect with respect to the Sears Space as of the date hereof. |
An “Anchor Tenant Trigger Cure” will commence upon the occurrence of any of the following:
| ● | with regard to clauses (i-ii), such Anchor Tenant is occupying its space and has resumed normal business operations for at least 90 days or Replacement Anchor Conditions (as defined below) have been satisfied; |
| ● | with regard to clause (iii), the Anchor Tenant ceases to be identified on a store closure list or the applicable store closure list is reversed, is occupying their space and has resumed normal business operations for at least 90 days or the Replacement Anchor Conditions have been satisfied; |
| ● | with regard to clause (iv), (a) with respect to the Sears Space, (i) such Anchor Tenant or a replacement anchor tenant has assumed such lease, such assumption has been approved by the appropriate bankruptcy court having jurisdiction over such matter and such Anchor Tenant is no longer involved in any bankruptcy or insolvency proceeding or (ii) the Replacement Anchor Conditions have been satisfied and (b) with respect to the Macy’s space, the Dillard’s space, and the JCPenney space, Macy’s, Dillard’s, JC Penney, one or more third party tenants or owner/operators occupies and conducts business at the respective space during normal business hours (in substantially the same or better manner as such store was operating prior to its involvement in the bankruptcy or insolvency proceeding); |
| ● | with regard to clause (v), the Sears Space Releasing Conditions are met; or |
| ● | with regard to clause (i-iv) and (v) (following the satisfaction of the Sears Space Releasing Conditions), at any time after 14 months have passed since the commencement of an Anchor Tenant Trigger, if (a) no event of default is continuing, (b) The NCF DSCR is at least 1.55x for two consecutive calendar quarters, and (c) the NCF DY is at least 12.5% for two consecutive calendar quarters. |
“Replacement Anchor Conditions” means, with respect to the Macy’s space, the Dillard’s space, and the JCPenney’s space, lender has determined that a sufficient amount of the applicable Anchor Tenant space is occupied with one or more replacement anchor tenants sufficient enough to satisfy the majority of the co-tenancy or similar provisions of the leases at the property, each having been open for business for at least 90 consecutive days.
“Sears Space Releasing Conditions” means (i) the execution of a lease or leases for at least (a) 75,000 SF or (b) at least 50,000 SF of the Sears Space, provided such lease or leases have a gross rent of at least $20 per SF, with a term, terms and conditions reasonably satisfactory to lender, (ii) with respect to such replacement lease, the term of such lease has commenced, such replacement tenant is paying full, unabated rent (or borrower has funded a reserve for any rent abatement) and (iii) borrower (as landlord under the applicable lease), has completed all landlord obligations for tenant improvements, leasing expenses, or otherwise to such replacement tenant’s satisfaction.
Real Estate Substitution. Not permitted.
Property Management. The Brandon Mall Property is managed by Centrecorp Management Services, LLLP, an affiliate of the borrower.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Retail | Loan #8 | Cut-off Date Balance: | $36,000,000 |
Property Subtype: Super Regional Mall | Brandon Mall | Cut-off Date LTV: | 54.7% |
Address: 175, 459, 303-675, 686 & 901 Brandon Town Center Drive | U/W NCF DSCR: | 2.33x |
Brandon, FL 33511 | | U/W NOI Debt Yield: | 19.2% |
Subordinate and Mezzanine Indebtedness. None.
Ground Lease. None.
Rights of First Offer / Rights of First Refusal. None.
Letter of Credit. None.
Terrorism Insurance. The loan documents require that the “all risk” insurance policy required to be maintained by the borrower provides coverage for terrorism in an amount equal to the full replacement cost of the property, as well as business interruption insurance covering no less than the 18-month period following the occurrence of a casualty event, together with a 6-month extended period of indemnity.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
124
Property Type: Retail | Loan #9 | Cut-off Date Balance: | $33,000,000 |
Property Subtype: Super Regional Mall | Cumberland Mall | Cut-off Date LTV: | 48.9% |
Address: 2860 Cumberland Mall Southeast | U/W NCF DSCR: | 1.66x |
Atlanta, GA 30339 | | U/W NOI Debt Yield: | 13.8% |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
125
Property Type: Retail | Loan #9 | Cut-off Date Balance: | $33,000,000 |
Property Subtype: Super Regional Mall | Cumberland Mall | Cut-off Date LTV: | 48.9% |
Address: 2860 Cumberland Mall Southeast | U/W NCF DSCR: | 1.66x |
Atlanta, GA 30339 | | U/W NOI Debt Yield: | 13.8% |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg034.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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No. 9 – Cumberland Mall |
|
Mortgage Loan Information | | Mortgaged Property Information |
Mortgage Loan Seller: | Morgan Stanley Mortgage Capital Holdings LLC | | Single Asset/Portfolio: | Single Asset |
Credit Assessment | Baa2(sf)/NR/NR | | Property Type – Subtype: | Retail – Super Regional Mall |
(Moody’s/Fitch/KBRA): | | | Location: | Atlanta, GA |
Original Principal Balance(1): | $33,000,000 | | Size: | 709,318 SF |
Cut-off Date Balance(1): | $33,000,000 | | Cut-off Date Balance Per SF(1): | $253.76 |
% of Initial Pool Balance: | 4.6% | | Maturity Date Balance Per SF(1): | $253.76 |
Loan Purpose: | Refinance | | Year Built/Renovated: | 1973/2006-2016 |
Borrower Sponsor: | BPR Nimbus LLC | | Title Vesting: | Fee |
| | | Property Manager: | Brookfield Properties Retail |
Guarantor: | BPR Nimbus LLC | | | Inc. (borrower-related) |
Mortgage Rate: | 7.8700% | | Current Occupancy (As of): | 98.7% (3/31/2023) |
Note Date: | April 14, 2023 | | YE 2022 Occupancy | 96.5% |
Seasoning: | 3 months | | YE 2021 Occupancy: | 97.9% |
Maturity Date: | May 1, 2028 | | YE 2020 Occupancy: | 95.8% |
IO Period: | 60 months | | YE 2019 Occupancy: | 97.9% |
Loan Term (Original): | 60 months | | Appraised Value: | $368,000,000 |
Amortization Term (Original): | NAP | | Appraised Value Per SF: | $518.81 |
Loan Amortization Type: | Interest Only | | Appraisal Valuation Date: | February 28, 2023 |
Call Protection: | L(27),D(29),O(4) | | | |
Lockbox Type: | Hard/Springing Cash Management | | | |
Additional Debt: | Yes | | Underwriting and Financial Information |
Additional Debt Type | | | TTM 1/31/2023 NOI: | $24,065,640 |
(Balance)(1)(2): | Pari Passu ($147,000,000) | | YE 2022 NOI: | $24,323,229 |
| | | YE 2021 NOI: | $23,224,824 |
| | YE 2020 NOI: | $18,694,979 |
| | | U/W Revenues: | $32,871,677 |
Escrows and Reserves(3) | | U/W Expenses: | $8,090,891 |
| Initial | Monthly | Cap | | U/W NOI: | $24,780,787 |
Taxes | $0 | Springing | NAP | | U/W NCF: | $23,863,869 |
Insurance | $0 | Springing | NAP | | U/W DSCR based on NOI/NCF(1): | 1.73x / 1.66x |
Replacement Reserve | $0 | Springing | NAP | | U/W Debt Yield based on NOI/NCF(1): | 13.8% / 13.3% |
TI/LC Reserve | $1,987,019 | Springing | $1,415,412 | | U/W Debt Yield at Maturity based on | 13.8% / 13.3% |
Gap Rent Reserve | $267,919 | $0 | NAP | | NOI/NCF(1): | |
Anchor Tenant Reserve | $0 | Springing | NAP | | Cut-off Date LTV Ratio(1): | 48.9% |
| | | | | LTV Ratio at Maturity(1): | 48.9% |
| | | | | | | |
Sources and Uses |
Sources | | | | | Uses | | | |
Whole loan amount | $180,000,000 | | 100.0% | | Loan payoff | $160,491,051 | | 89.2% |
| | | | | Return of Equity | 15,615,412 | | 8.7 |
| | | | | Reserves | 2,254,938 | | 1.3 |
| | | | | Closing Costs | 1,638,600 | | 0.9 |
Total Sources | $180,000,000 | | 100.0% | | Total Uses | $180,000,000 | | 100.0% |
| (1) | The Cumberland Mall Mortgage Loan (as defined below) is part of the Cumberland Mall Whole Loan (as defined below), which is comprised of twelve pari passu senior promissory notes with an aggregate original principal balance of $180,000,000. The Cut-off Date Balance Per SF, Maturity Date Balance Per SF, U/W DSCR based on NOI/NCF, U/W Debt Yield based on NOI/NCF, U/W Debt Yield at Maturity based on NOI/NCF, Cut-off Date LTV Ratio and LTV Ratio at Maturity presented above are based on the aggregate Cut-off Date principal balance of the Cumberland Mall Whole Loan. |
| (2) | See “The Mortgage Loan” for a discussion of additional indebtedness. |
| (3) | See “Escrows” below for further discussion of reserve requirements. |
The Mortgage Loan. The ninth largest mortgage loan (the “Cumberland Mall Mortgage Loan”) is part of a whole loan (the Cumberland Mall Whole Loan”) comprised of twelve pari passu senior promissory notes with an aggregate original principal balance of $180,000,000. The Cumberland Mall Whole Loan is secured by the fee simple interest in Cumberland Mall, a 709,318 square foot enclosed, super regional mall located in Atlanta, Georgia (the “Cumberland Mall Property”). The Cumberland Mall Whole Loan was originated by Morgan Stanley Bank, N.A. (“MSBNA”), Deutsche Bank AG, acting through its New York Branch (“DBNY”) and Bank of Montreal (“BMO”). The non-controlling notes A-6-2 and A-7, with an aggregate original principal balance of $33,000,000, represent the Cumberland Mall Mortgage Loan and will be included in the BANK 2023-BNK46 securitization trust. The remaining Cumberland Mall pari passu notes have been included in securitizations or are currently held by DBNY and BMO and are expected to be contributed to one or more future securitization transactions. The Cumberland Mall Whole Loan will be serviced pursuant to the pooling and servicing
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
127
Property Type: Retail | Loan #9 | Cut-off Date Balance: | $33,000,000 |
Property Subtype: Super Regional Mall | Cumberland Mall | Cut-off Date LTV: | 48.9% |
Address: 2860 Cumberland Mall Southeast | U/W NCF DSCR: | 1.66x |
Atlanta, GA 30339 | | U/W NOI Debt Yield: | 13.8% |
agreement for the BMARK 2023-V2 trust. See “Description of the Mortgage Pool—The Whole Loans—The Non-Serviced Pari Passu Whole Loans” and “Pooling and Servicing Agreement-Servicing of the Non-Serviced Mortgage Loans” in the prospectus.
Whole Loan Note Summary
Notes | Original Balance | Cut-off Date Balance | Note Holder | Controlling Piece |
A-1 | $20,000,000 | $20,000,000 | Benchmark 2023-V2 | Yes |
A-2 | 20,000,000 | 20,000,000 | Benchmark 2023-V2 | No |
A-3 | 15,000,000 | 15,000,000 | DBNY | No |
A-4 | 10,000,000 | 10,000,000 | DBNY | No |
A-5 | 7,000,000 | 7,000,000 | DBNY | No |
A-6-1 | 30,000,000 | 30,000,000 | MSWF 2023-1 | No |
A-6-2 | 10,000,000 | 10,000,000 | BANK 2023-BNK46 | No |
A-7 | 23,000,000 | 23,000,000 | BANK 2023-BNK46 | No |
A-8 | 15,000,000 | 15,000,000 | Benchmark 2023-V2 | No |
A-9 | 12,500,000 | 12,500,000 | BMO | No |
A-10 | 10,000,000 | 10,000,000 | Benchmark 2023-V2 | No |
A-11 | 7,500,000 | 7,500,000 | BMO | No |
Total | $180,000,000 | $180,000,000 | | |
The Borrowers and Borrower Sponsor. The borrowers are Cumberland Mall, LLC and Cumberland FS Anchor Parcel Owner LLC, each a Delaware limited liability company that is owned and controlled by affiliates of Brookfield Properties Retail Holding LLC (“Brookfield Properties”) and CBRE Investment Management. Each borrower is structured to be a single purpose bankruptcy-remote entity, having two independent directors in its organizational structure. Legal counsel to the borrowers delivered a non-consolidation opinion in connection with the origination of the Cumberland Mall Whole Loan. The borrower sponsor and non-recourse carveout guarantor is BPR Nimbus LLC, an affiliate of Brookfield Properties. Cumberland FS Anchor Parcel Owner LLC owns a parcel that includes the Dick’s Sporting Goods, Round 1 and Planet Fitness stores, and Cumberland Mall, LLC owns the remainder of the Cumberland Mall Property.
Brookfield Properties develops and operates real estate investments on behalf of Brookfield Asset Management, which is one of the largest alternative asset managers in the world. Formerly known as General Growth Properties, Inc., Brookfield Properties is owned by affiliates of Brookfield Asset Management and ranks among the largest retail real estate companies in the United States. Its portfolio of retail properties spans the nation, encompassing over 200 retail centers and representing over 155 million square feet of retail space. Brookfield Properties is focused exclusively on managing, leasing and redeveloping retail properties.
CBRE Investment Management is a leading investment management firm that delivers sustainable investment solutions across real assets categories, geographies, risk profiles and execution formats to clients, people and communities. CBRE is responsible for more than $148.9 billion of assets under management with over 1,000 team members and over 30 offices worldwide.
The Property. The Cumberland Mall Property is a 709,318 SF super regional mall located approximately 11 miles from downtown Atlanta, where more than 900,000 vehicles pass daily. The Cumberland Mall Property hosts a diverse tenant mix of over 100 shops and restaurants, meeting different customer needs. The immediate area of the Cumberland Mall Property has seen significant growth, including proximity to the Atlanta Braves stadium, which is located on the other side of the highway and holds over 41,000 people.
The Cumberland Mall Property was originally built in 1973, was expanded in 2006 and renovated in 2016. As of March 31, 2023, the Cumberland Mall Property is 98.7% leased to a diverse mix of tenants and has historically averaged approximately 98.0% occupancy since 2016. The Cumberland Mall Property has a strong mix of national tenants and is anchored by Macy’s (non-collateral), Costco, Round 1 Bowling & Amusement, and Dick’s Sporting Goods. Costco opened in 2006 along with a 77,000 SF lifestyle center on the north side of the Cumberland Mall Property, attracting major national tenants and signature restaurants such as Cheesecake Factory, P.F. Chang’s, Buffalo Wild Wings, and Maggiano’s. In 2019, the borrower sponsor invested approximately $30.0 million on replacing the former Sears box with Dick’s Sporting Goods, Planet Fitness, and Round 1 Bowling & Amusement. Additionally, in late 2021, Brookfield Properties received entitlements to develop 300 residential units, 60,000 SF of additional retail space, and up to 500,000 SF of office space proximate to the Cumberland Mall Property, allowing the Cumberland Mall Property to draw more people to the destination. The multifamily development is currently underway and expected to be completed in the second quarter of 2024.
The Cumberland Mall Property has shown a consistent growth in sales. Prior to the start of the COVID-19 pandemic, 2019 in-line sales PSF at the Cumberland Mall Property were $779 PSF and January 2023 TTM in-line sales PSF are $874 PSF, representing a 12.1% increase since 2019. Excluding Apple, in-line sales in 2019 were $518 PSF and January 2023 TTM in-line sales are at $610 PSF, representing a 17.7% increase since 2019. As of the January 2023 TTM, the in-line occupancy cost ratio is 8.3% including Apple and 11.9% excluding Apple. The table below provides an overview of the sales by tenancy type (partial year sales were excluded from the analysis).
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Retail | Loan #9 | Cut-off Date Balance: | $33,000,000 |
Property Subtype: Super Regional Mall | Cumberland Mall | Cut-off Date LTV: | 48.9% |
Address: 2860 Cumberland Mall Southeast | U/W NCF DSCR: | 1.66x |
Atlanta, GA 30339 | | U/W NOI Debt Yield: | 13.8% |
Sales by Tenancy Type(1)
Tenancy Type | 2019 Sales | 2019 PSF | 2020 Sales | 2020 PSF | 2021 Sales | 2021 PSF | 2022 Sales | 2022 PSF | TTM Sales(3) | TTM PSF(3) |
Anchor (2) | $192,000,000 | $1,302 | $217,000,000 | $1,472 | $298,000,000 | $987 | $306,400,000 | $1,015 | $306,400,000 | $1,015 |
Major (> 10,000 SF) | $31,977,014 | $345 | $22,889,170 | $247 | $33,119,265 | $358 | $35,424,084 | $383 | $35,534,676 | $384 |
Inline (< 10,000 SF) | $163,360,834 | $779 | $130,277,728 | $602 | $188,490,676 | $863 | $197,104,268 | $863 | $199,518,244 | $874 |
Inline (< 10,000 SF) excluding Apple | $105,197,133 | $518 | $99,277,330 | $473 | $135,305,482 | $639 | $135,029,048 | $609 | $135,224,292 | $610 |
Total Sales | $384,992,566 | $858 | $368,079,113 | $808 | $516,265,996 | $843 | $535,342,263 | $861 | $537,827,202 | $865 |
| (1) | Based on the underwritten rent roll dated March 31, 2023. |
| (2) | 2019 and 2020 Anchor sales do not include Dick’s Sporting Goods and Round 1 Bowling & Amusement sales. |
| (3) | TTM is as of January 31, 2023. |
Major Tenants.
Round 1 Bowling & Amusement (“Round 1”) (83,600 SF; 11.8% of NRA; 7.2% of underwritten base rent). Round 1 is a multi-entertainment facility offering bowling, arcade games, billiards, karaoke, ping pong, darts, and other entertainment activities in an indoor facility complex. Round 1 opened its first U.S. location in Los Angeles in 2010 and has grown its presence in the United States to over 50 locations, with approximately 2,466 employees. At the Cumberland Mall Property, Round 1 occupies 83,600 SF through February 2031 and has two, five-year extension options. Round 1 has a sales based termination option as described in the “Major Tenants” table below.
Costco (147,409 SF; 20.8% of NRA; 5.8% of underwritten base rent). Costco is an American multinational corporation, which operates a chain of membership-only big-box retail stores. As of April 2022, Costco was the fifth largest retailer in the world. Costco is ranked #11 on the Fortune 500 rankings of the largest United States corporations by total revenue. In the United States, Costco’s main competitors operating membership warehouses are Sam’s Club and BJ’s Wholesale Club. Costco employs 304,000 employees worldwide and has an average store size of 146,000 SF. As of February 2023, Costco had nearly 123 million members. Costco has three, 10-year extension options through November 2056. Costco leases the pad from the borrowers and owns its improvements.
H&M (24,655 SF; 3.5% of NRA; 4.0% of underwritten base rent). H&M offers collections for women, men, teenagers, children and babies, with a product range that includes sportswear, underwear, cosmetics, accessories and shoes. H&M is present in 76 markets around the world. At the Cumberland Mall Property, H&M occupies 24,655 SF through January 2032 and has two, three-year extension options. H&M has a sales based termination option as described in the “Major Tenants” table below.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
129
Property Type: Retail | Loan #9 | Cut-off Date Balance: | $33,000,000 |
Property Subtype: Super Regional Mall | Cumberland Mall | Cut-off Date LTV: | 48.9% |
Address: 2860 Cumberland Mall Southeast | U/W NCF DSCR: | 1.66x |
Atlanta, GA 30339 | | U/W NOI Debt Yield: | 13.8% |
The following table presents a summary regarding the major tenants at the Cumberland Mall Property:
Major Tenants(1)
Tenant Name | Credit Rating (Moody’s/ Fitch/ S&P)(2) | Tenant NRSF | % of NRSF | Annual U/W Gross Rent PSF | Annual U/W Gross Rent | % of Total Annual U/W Gross Rent | Lease Expiration Date | Extension Options | Termination Option (Y/N) |
Major Tenants | | | | | | | | |
Round 1(3) | NR/NR/NR | 83,600 | 11.8% | $16.75 | $1,400,000 | 7.2% | 2/28/2031 | 2, 5-year | Y |
Costco | NR/Aa3/A+ | 147,409 | 20.8% | $7.62 | $1,122,880 | 5.8% | 11/30/2026 | 3, 10-year | N |
H&M(4) | NR/NR/NR | 24,655 | 3.5% | $31.43 | $775,000 | 4.0% | 1/31/2032 | 2, 3-year | Y |
Dick’s Sporting Goods(5) | NR/Baa3/BBB | 70,984 | 10.0% | $10.84 | $769,783 | 4.0% | 1/31/2031 | 3, 5-year | Y |
Foot Locker(6) | NR/NR/NR | 5,990 | 0.8% | $95.25 | $570,548 | 3.0% | 4/30/2023 | None | Y |
Champs Sports | NR/NR/NR | 7,610 | 1.1% | $71.64 | $545,180 | 2.8% | 1/31/2027 | None | N |
Maggiano’s Little Italy | NR/NR/NR | 16,375 | 2.3% | $33.28 | $544,960 | 2.8% | 11/30/2026 | 1, 5-year | N |
The Cheesecake Factory | NR/NR/NR | 11,112 | 1.6% | $45.00 | $500,040 | 2.6% | 1/31/2027 | None | N |
DSW | NR/NR/NR | 14,664 | 2.1% | $30.69 | $450,000 | 2.3% | 1/31/2024 | None | N |
Kids Foot Locker | NR/NR/NR | 3,955 | 0.6% | $98.39 | $389,132 | 2.0% | 7/31/2025 | None | N |
Total Major Tenants | | 386,354 | 54.5% | $18.29 | $7,067,524 | 36.5% | | | |
| | | | | | | | | |
Non-Major Tenants | | 314,073 | 44.3% | $39.08 | $12,273,048 | 63.5% | | | |
Occupied Collateral Total | 700,427 | 98.7% | $27.61 | $19,340,571 | 100.0% | | | |
| | | | | | | | |
Vacant Space | 8,891 | 1.3% | | | | | | |
| | | | | | | | |
Collateral Total | 709,318 | 100.0% | | | | | | |
| | | | | | | | | |
| | | | | | | | | | | |
| (1) | Information is based on the underwritten rent roll as of March 31, 2023. |
| (2) | Certain ratings are those of the parent entity, whether or not the parent entity guarantees the lease. |
| (3) | Round 1 may elect to terminate its lease if between March 2026 and March 2027 Round 1’s net sales fail to exceed $7,500,000. Round 1 has 90 days following such one year period to terminate its lease by providing the landlord with 180 days’ prior notice and payment of a termination fee equal to the unamortized portion of its construction allowance and the broker fee paid by the landlord to Round 1’s broker. |
| (4) | H&M may terminate its lease if (x) its net sales fail to exceed $7,050,000 between January 1, 2027 and December 31, 2027 or (y) its net sales fail to exceed $7,755,000 between January 1, 2029 and December 31, 2029, in either case by providing 365 days’ prior written notice to the landlord within 180 days following the expiration of such 12-month period and payment of a termination fee equal to 50% of the unamortized portion of its construction allowance (amortized on a straight line basis over 10 years commencing on the date H&M opened for business at the Cumberland Mall Property). |
| (5) | Dick’s Sporting Goods (“DSG”) may terminate its lease if Foot Locker prohibits or otherwise restricts DSG’s use of its leased premises via Foot Locker’s exclusivity right and such prohibition or restriction continues for 15 days following written notice from DSG to the landlord. |
| (6) | Foot Locker’s lease expired on April 30, 2023. Foot Locker is still open and operating in its leased space while it continues negotiations for a lease extension with the landlord. However, there is no assurance that Foot Locker will continue to operate its space or that its lease will be renewed. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
130
Property Type: Retail | Loan #9 | Cut-off Date Balance: | $33,000,000 |
Property Subtype: Super Regional Mall | Cumberland Mall | Cut-off Date LTV: | 48.9% |
Address: 2860 Cumberland Mall Southeast | U/W NCF DSCR: | 1.66x |
Atlanta, GA 30339 | | U/W NOI Debt Yield: | 13.8% |
The following table presents certain information relating to the lease rollover schedule at the Cumberland Mall Property:
Lease Expiration Schedule(1)(2)
Year Ending March 31 | No. of Leases Expiring | Expiring NRSF | % of Total NRSF | Cumulative Expiring NRSF | Cumulative % of Total NRSF | Annual U/W Gross Rent | % of Total Annual U/W Gross Rent | Annual U/W Gross Rent PSF |
MTM | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2023 | 13 | 31,286 | 4.4 | 31,286 | 4.4 | 1,648,945 | 8.5 | 52.71 |
2024 | 22 | 61,639 | 8.7 | 92,925 | 13.1 | 2,705,967 | 14.0 | 43.90 |
2025 | 25 | 71,897 | 10.1 | 164,822 | 23.2 | 3,388,785 | 17.5 | 47.13 |
2026 | 16 | 212,606 | 30.0 | 377,428 | 53.2 | 3,745,098 | 19.4 | 17.62 |
2027 | 13 | 78,272 | 11.0 | 455,700 | 64.2 | 2,523,930 | 13.0 | 32.25 |
2028 | 7 | 16,070 | 2.3 | 471,770 | 66.5 | 585,446 | 3.0 | 36.43 |
2029 | 2 | 1,750 | 0.2 | 473,520 | 66.8 | 222,148 | 1.1 | 126.94 |
2030 | 5 | 31,797 | 4.5 | 505,317 | 71.2 | 897,754 | 4.6 | 28.23 |
2031 | 3 | 154,872 | 21.8 | 660,189 | 93.1 | 2,169,783 | 11.2 | 14.01 |
2032 | 5 | 27,448 | 3.9 | 687,637 | 96.9 | 1,212,381 | 6.3 | 44.17 |
2033 | 2 | 12,190 | 1.7 | 699,827 | 98.7 | 240,334 | 1.2 | 19.72 |
2034 & Beyond | 1 | 600 | 0.1 | 700,427 | 98.7 | 0 | 0.0 | 0.00 |
Vacant | 0 | 8,891 | 1.3 | 709,318 | 100.0 | 0 | 0.0 | 0.00 |
Total/Wtd. Avg.(3) | 114 | 709,318 | 100.0% | | | $19,340,571 | 100.0% | $27.61 |
| (1) | Information obtained from the underwritten rent roll as of March 31, 2023. |
| (2) | Certain tenants may have lease termination options that are exercisable prior to the stated expiration date of the subject lease or leases that are not considered in the Lease Expiration Schedule. |
| (3) | Total/Wtd. Avg. Annual UW Gross Rent PSF excludes vacant space. |
The following table presents historical occupancy percentages at the Cumberland Mall Property:
Historical Occupancy
12/31/2020(1) | 12/31/2021(1) | 12/31/2022(1) | 3/31/2023(2) |
95.8% | 97.9% | 96.5% | 98.7% |
(1) | Provided by the borrower sponsor. |
(2) | Based on the underwritten rent roll. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
131
Property Type: Retail | Loan #9 | Cut-off Date Balance: | $33,000,000 |
Property Subtype: Super Regional Mall | Cumberland Mall | Cut-off Date LTV: | 48.9% |
Address: 2860 Cumberland Mall Southeast | U/W NCF DSCR: | 1.66x |
Atlanta, GA 30339 | | U/W NOI Debt Yield: | 13.8% |
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and underwritten net cash flow at the Cumberland Mall Property:
Cash Flow Analysis
| 2020 | 2021 | 2022 | TTM 1/31/2023 | U/W | %(1) | U/W $ per SF |
Gross Potential Rent(2) | $15,531,763 | $17,006,998 | $18,513,247 | $18,799,674 | $20,331,631 | 75.1% | $28.66 |
Reimbursements | 5,994,957 | 5,870,712 | 6,146,884 | 6,196,689 | 6,757,614 | 24.9 | 9.53 |
Net Rental Income | $21,526,721 | $22,877,709 | $24,660,131 | $24,996,362 | $27,089,245 | 100.0% | $38.19 |
Other Income(3) | 4,628,949 | 7,743,164 | 7,318,910 | 7,181,902 | 6,974,670 | 25.7 | 9.83 |
(Vacancy & Concessions) | (725,673) | (301,427) | 213,345 | 162,892 | (1,192,237) | (5.9) | (1.68) |
Effective Gross Income | $25,429,997 | $30,319,446 | $32,192,386 | $32,341,156 | $32,871,677 | 121.3% | $46.34 |
| | | | | | | |
Real Estate Taxes | 2,156,904 | 2,134,003 | 2,048,295 | 2,320,374 | 2,380,704 | 7.2 | 3.36 |
Insurance | 104,252 | 127,683 | 144,771 | 200,596 | 177,580 | 0.5 | 0.25 |
Other Operating Expenses | 4,473,862 | 4,832,936 | 5,676,091 | 5,754,545 | 5,532,607 | 16.8 | 7.80 |
Total Operating Expenses | $6,735,018 | $7,094,622 | $7,869,157 | $8,275,516 | $8,090,891 | 24.6% | $11.41 |
| | | | | | | |
Net Operating Income | $18,694,979 | $23,224,824 | $24,323,229 | $24,065,640 | $24,780,787 | 75.4% | $34.94 |
Replacement Reserves | 0 | 0 | 0 | 0 | 177,330 | 0.5 | 0.25 |
TI/LC | 0 | 0 | 0 | 0 | 739,588 | 2.2 | 1.04 |
Net Cash Flow | $18,694,979 | $23,224,824 | $24,323,229 | $24,065,640 | $23,863,869 | 72.6% | $33.64 |
| | | | | | | |
NOI DSCR(4) | 1.30x | 1.62x | 1.69x | 1.68x | 1.73x | | |
NCF DSCR(4) | 1.30x | 1.62x | 1.69x | 1.68x | 1.66x | | |
NOI Debt Yield(4) | 10.4% | 12.9% | 13.5% | 13.4% | 13.8% | | |
NCF Debt Yield(4) | 10.4% | 12.9% | 13.5% | 13.4% | 13.3% | | |
| (1) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (2) | UW Gross Potential Rent includes $321,854 of rent steps through May 2024. |
| (3) | Other Income is comprised of parking income and miscellaneous income. |
| (4) | Debt service coverage ratios and debt yields are based on the Cumberland Mall Whole Loan. |
Appraisal. According to the appraisal, the Cumberland Mall Property had an “As Is” appraised value of $368,000,000 as of February 28, 2023.
Environmental Matters. According to the Phase I environmental site assessment dated March 1, 2023, there was no evidence of any recognized environmental conditions at the Cumberland Mall Property.
Market Overview and Competition. The Cumberland Mall Property is located within the Atlanta-Sandy Springs-Alpharetta, Georgia Metropolitan Statistical Area (the “Atlanta MSA”) in Cobb County, Georgia. Cobb County has an estimated 2022 population of 766,149, with a population of 206,763 in a five-mile radius of the Cumberland Mall Property. The largest employers in Cobb County include the Cobb County Schools with approximately 17,750 employees, Wellstar Health System with roughly 15,000 employees, and Home Depot with about 13,000 employees. As of September 2022, Cobb County’s unemployment rate was 2.2%, 0.5% lower relative to the same period of the prior year and 1.1% below the national average. The average household income in Cobb County is $123,521.
The live, work, play environment surrounding the Cumberland Mall Property and Truist Park has drawn high-income renters and large corporations to the submarket in recent years. The submarket benefits from a base of large office users (approximately 31 million SF of office space) and has welcomed new expansions and relocations from major companies including new office headquarters for Thyssenkrupp and Papa John’s. Furthermore, the surrounding area features a strong mix of manufacturing companies and healthcare-related firms such as WellStar Health System and Aveanna Healthcare. Apartment rents in the immediate area surrounding the Cumberland Mall Property have increased substantially over the last few quarters (outpacing the metro average) at a trailing 12-month growth of 19.7%.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
132
Property Type: Retail | Loan #9 | Cut-off Date Balance: | $33,000,000 |
Property Subtype: Super Regional Mall | Cumberland Mall | Cut-off Date LTV: | 48.9% |
Address: 2860 Cumberland Mall Southeast | U/W NCF DSCR: | 1.66x |
Atlanta, GA 30339 | | U/W NOI Debt Yield: | 13.8% |
The following table presents certain information relating to the appraisal’s market rent conclusion for the Cumberland Mall Property:
Market Rent Summary(1)
| Market Rent (PSF) | Lease Term (Yrs) | New Tenant Allowance PSF | Rent Increase Projection |
Anchor | $7.00 | 10 | $50.00 | 10% Mid-term |
Lifestyle Major | $20.00 | 10 | $50.00 | 10% Mid-term |
Lifestyle Inline | $40.00 | 10 | $50.00 | 10% Mid-term |
Major | $25.00 | 10 | $50.00 | 10% Mid-term |
Fitness Center | $10.00 | 10 | $50.00 | 10% Mid-term |
1st Fl <1,000 SF | $110.00 | 7 | $50.00 | 2.5% Annual |
1st Fl 1,000 - 2,499 SF | $57.50 | 7 | $50.00 | 2.5% Annual |
1st Fl 2,500 - 5,000 SF | $40.00 | 7 | $50.00 | 2.5% Annual |
1st Fl >5,000 SF | $42.50 | 7 | $50.00 | 2.5% Annual |
2nd Fl <1,000 SF | $150.00 | 7 | $50.00 | 2.5% Annual |
2nd Fl 1,000 - 2,499 SF | $48.00 | 7 | $50.00 | 2.5% Annual |
2nd Fl 2,500 - 5,000 SF | $40.00 | 7 | $50.00 | 2.5% Annual |
2nd Fl >5,000 SF | $30.00 | 7 | $50.00 | 2.5% Annual |
Jewelry | $75.00 | 7 | $50.00 | 2.5% Annual |
Food Court | $200.00 | 7 | $50.00 | 2.5% Annual |
Restaurant | $38.00 | 7 | $150.00 | 2.5% Annual |
Kiosk | $0.00 | 10 | $0.00 | Flat |
(1) | Information obtained from the appraisal. |
The table below presents leasing data at comparable retail properties with respect to the Cumberland Mall Property:
Comparable Leases(1)
Property Name | Year Built/Renovated or Expanded | Total NRA | Total Occupancy | Estimated # of Customers | Anchor / Major Tenants |
Cumberland Mall | 1973/2006-2016 | 709,318(2) | 98.7%(2) | 2,348,739 | Round 1, Dick’s Sporting Goods, Costco |
Town Center at Cobb | 1986/1995 | 1,281,436 | 90.0% | 1,325,138 | Belk, Macy’s, JCPenney |
Perimeter Mall(3) | 1971/2017 | 1,551,000 | 85.0% | 2,558,246 | Dillard’s, Nordstrom, Von Maur, Macy’s |
Arbor Place | 1999/NAP | 1,219,096 | 88.4% | 783,958 | Belk, Dillard’s, JCPenney, Macy’s (Backstage), Regal Cinemas |
North Point Mall | 1993/2021 | 1,337,180 | 90.0% | 1,172,182 | Dillard’s, JCPenney, Macy’s, Von Maur, AMC Theaters |
Wtd. Avg. | | | 88.2%(4) | 1,519,669(4) | |
| (1) | Information obtained from the appraisal. |
| (2) | Information obtained from the underwritten rent roll as of March 31, 2023. |
| (3) | Perimeter Mall is owned by the borrower sponsor. |
| (4) | Excludes the Cumberland Mall Property. |
Escrows. At loan origination, the borrowers deposited approximately $1,987,019 into a TI/LC reserve and $267,919 into a gap rent reserve.
Real Estate Tax Reserve – On each due date during a Cash Management Period (as defined below), the borrowers are required to fund 1/12th of the taxes that the lender reasonably estimates will be payable over the next-ensuing 12-month period.
Insurance Reserve – On each due date during a Cash Management Period, the borrowers are required to fund 1/12th of the insurance premiums that the lender reasonably estimates will be required for the renewal of the insurance coverage. These deposits will be waived as long as an acceptable blanket policy is in effect, which was the case as of the origination date.
Replacement Reserve – During the continuance of a Cash Management Period, the borrowers are required to pay on each monthly payment date (subject to the Replacement Reserve Threshold (as defined below)) an amount equal to 1/12th of $0.25 per owned leasable square foot at the Cumberland Mall Property (which is initially estimated to be $14,744).
The “Replacement Reserve Threshold” means 24 times the replacement reserve monthly deposit (initially $353,853).
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
133
Property Type: Retail | Loan #9 | Cut-off Date Balance: | $33,000,000 |
Property Subtype: Super Regional Mall | Cumberland Mall | Cut-off Date LTV: | 48.9% |
Address: 2860 Cumberland Mall Southeast | U/W NCF DSCR: | 1.66x |
Atlanta, GA 30339 | | U/W NOI Debt Yield: | 13.8% |
TI / LC Reserve — During the continuance of a Cash Management Period, the borrowers are required to pay on each monthly payment date (subject to the Rollover Reserve Threshold (as defined below)) an amount equal to 1/12th of $1.00 per owned leasable square foot at the Cumberland Mall Property (which initially will be $58,976).
The “Rollover Reserve Threshold” means 24 times the rollover reserve monthly deposit (initially $1,415,412).
Anchor Tenant Reserve — During the continuance of an Anchor Tenant Trigger Event (as defined below), the borrowers are required to pay on each monthly payment date an amount equal to all initial excess cash flow (subject to the individual anchor threshold amount (which is equal to the product of $50.00 and the aggregate amount of gross leasable square footage of the applicable Anchor Tenant (as defined below) space as of the origination date) for all Anchor Tenants other than Costco) for tenant improvements and leasing commissions, budgeted construction costs, required landlord work and other related costs associated with re-tenanting the applicable space or any other space at the Cumberland Mall Property.
“Anchor Tenant Trigger Event” means any Anchor Tenant (i) has “gone dark” (i.e., ceased to be in occupancy or otherwise ceased to utilize the demised premises for business purposes until such time as such Anchor Tenant operates its business at the Cumberland Mall Property for a period of no less than thirty consecutive days during normal business hours), other than (A) a temporary closure in connection with a restoration, repair or renovation, (B) any other temporary closure with a duration of less than sixty days, (C) a temporary closure in compliance with applicable law, regulations and/or governmental mandates, or (D) a temporary closure by reason of civil unrest, (ii) is the subject of a bankruptcy proceeding (until such time as such bankruptcy is dismissed or the Anchor Tenant has emerged from bankruptcy or, if the premises occupied by such Anchor Tenant are leased from the borrowers, such lease is (x) accepted and affirmed by such Anchor Tenant in the applicable bankruptcy proceeding or (y) assumed by a replacement Anchor Tenant), (iii) has vacated its premises (or has given written notice of its intention to vacate) (until such time as such Anchor Tenant has reoccupied its premises or rescinded any notice of intent to vacate, if applicable), (iv) has terminated, cancelled or surrendered its Anchor Lease (as defined below) (or delivered written notice of its intent to do so) (until such time as such Anchor Tenant has rescinded any notice of intent to terminate, cancel or surrender such Anchor Tenant premises, if applicable), or (v) fails to renew its Anchor Lease within the applicable renewal option period (until such time as such Anchor Tenant renews and/or extend its Anchor Lease pursuant to the terms thereof) provided in such Anchor Lease.
An “Anchor Tenant” means Macy’s, Costco, Round 1 or Dick’s Sporting Goods.
An “Anchor Lease” means a lease with an Anchor Tenant.
Lockbox and Cash Management. The Cumberland Mall Whole Loan is structured with a hard lockbox and springing cash management. The borrowers are required to cause all rents to be deposited directly into a lender-controlled lockbox account. The Cumberland Mall Whole Loan documents also require that all rents received by the borrowers or property manager be deposited into the lockbox account within two business days of receipt. During the continuance of a Cash Management Period, funds on deposit in the lockbox account are required to be swept on a daily basis into a lender-controlled cash management account, and applied to pay monthly debt service, required reserves and budgeted or approved property expenses. During the continuance of a Cash Sweep Period (as defined below) (but not during a Cash Management Period), an amount equal to all excess cash flow is required to be reserved by cash management bank for the benefit of the lender, and during an Anchor Tenant Trigger Event certain excess cash flow is required to be reserved as described above under “Escrows —Anchor Tenant Reserve.”
A “Cash Management Period” will commence upon the occurrence of a Debt Yield Event (Cash Management Period) (as defined below) and will last until the debt yield is equal to or greater than 11.0% for two consecutive calendar quarters.
A “Cash Sweep Period” will commence upon the occurrence of an event of default or Debt Yield Event (Cash Sweep Period) (as defined below) and will last until the applicable event of default is cured and/or the debt yield is greater than 10.5% for two consecutive calendar quarters, as applicable. During a Cash Sweep Period, all excess cash flow is required to be reserved in a lender-controlled account and the lender has certain approval rights with respect to the annual budget, material leases, and collection of lease termination payments. Solely for purposes of determining whether a Cash Sweep Period has been cured in the case of a Cash Sweep Period due to a Debt Yield Event (Cash Sweep Period), the denominator in the calculation of debt yield will equal the then aggregate outstanding principal balance of the Cumberland Mall Whole Loan as of such date, less any funds then on deposit with the lender or servicer in the excess cash flow reserve fund, provided that, following any such calculation giving credit to amounts in the excess cash flow reserve fund, such amounts will remain in the excess cash flow reserve fund and cannot be withdrawn or released for any reason until a Cash Sweep Period no longer exists without giving credit to amounts in the excess cash flow reserve fund (and all amounts in the excess cash flow reserve fund in excess of the amount so credited will be released to borrowers).
A “Debt Yield Event (Cash Management Period)” will mean the determination that the debt yield is less than 11.0% as of the end of any two consecutive calendar quarters.
A “Debt Yield Event (Cash Sweep Period)” will mean the determination that the debt yield is less than 10.5% as of the end of any two consecutive calendar quarters.
Property Management. The Cumberland Mall Property is managed by Brookfield Properties Retail Inc., an affiliate of the borrowers.
Partial Release. The borrowers may obtain the release of (A) one or more vacant, non-income producing and unimproved (or improved only by landscaping, surface parking or utility facilities that are either readily re-locatable or will continue to serve the Cumberland Mall Property) parcels (including “air rights” parcels but excluding any Anchor Tenant parcel) or outlots, including, without
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
134
Property Type: Retail | Loan #9 | Cut-off Date Balance: | $33,000,000 |
Property Subtype: Super Regional Mall | Cumberland Mall | Cut-off Date LTV: | 48.9% |
Address: 2860 Cumberland Mall Southeast | U/W NCF DSCR: | 1.66x |
Atlanta, GA 30339 | | U/W NOI Debt Yield: | 13.8% |
limitation, certain pre-approved release parcels set forth in the Cumberland Mall Whole Loan documents or (B) any Expansion Parcel (as defined below), including any Anchor Tenant parcel that is an Expansion Parcel, upon satisfaction of specified conditions including, among other things, that (i) there is no event of default, (ii) the parcel subject to the release is not necessary for the remaining Cumberland Mall Property to comply with zoning or legal requirements, (iii) confirmation that the release will not result in the downgrade, withdrawal or qualification of the then current rating assigned to any class of certificates (provided that such confirmation will not be required for release of an Expansion Parcel or if the rating agency has waived review or failed to respond within 30 days to a request for such confirmation), (iv) the release will not result in a loan-to-value ratio that does not comply with REMIC guidelines, provided that the borrowers may prepay the Cumberland Mall Whole Loan, without any prepayment fee or yield maintenance premium, to achieve such condition, and (v) the release will not result in a material diminution in the value of the Cumberland Mall Property.
Real Estate Substitution. In addition, the borrowers are permitted to obtain the release of collateral parcels (an “Exchange Parcel”) from the lien of the mortgage in exchange for the substitution of new parcels in which the borrowers acquire a fee or leasehold interest (each, an “Acquired Parcel”) as collateral for the Cumberland Mall Whole Loan upon 20 days prior notice, subject to the satisfaction of certain conditions, including among other things, that: (i) the Exchange Parcel (unless it is an Expansion Parcel) is vacant, non-income producing and unimproved or improved only by landscaping, surface parking or utility facilities that are readily relocatable or that will continue to serve the Cumberland Mall Property (and the borrowers are able to make certain zoning representations as to the Acquired Parcel to the same extent as made with respect to the Exchange Parcel), (ii) the Acquired Parcel is reasonably equivalent in value to the Exchange Parcel, as established by a letter of value from the appraiser which appraised the Cumberland Mall Property or an appraiser of comparable experience selected by the borrowers, (iii) with respect to the Acquired Parcel, the borrowers have delivered, among other things (a) an environmental report indicating no hazardous substances except for nominal amounts (except as permitted under clause (d) below), (b) security documents creating a mortgage lien on the Acquired Parcel, and title insurance, (c) if the Acquired Parcel is improved, subject to certain exceptions, a property condition report indicating that the Acquired Parcel is in good condition and (d) if repairs are recommended by the property condition report or if the environmental report discloses the presence of hazardous materials at the Acquired Parcel, in each case in an amount equal to or greater than $10,000,000, cash or an indemnity from the guarantor, certain of its affiliates, or an entity otherwise meeting ratings or financial tests set forth in the Cumberland Mall Whole Loan documents, in an amount equal to 125% of any estimated repairs or remediation costs, as applicable, (iv) the substitution will not result in a loan-to-value ratio that does not comply with REMIC guidelines, provided that the borrowers may prepay the Cumberland Mall Whole Loan, without any prepayment fee or yield maintenance premium, to achieve such condition, (v) the borrowers acquire fee or leasehold title in the Acquired Parcel and (vi) the lender has received a rating agency confirmation from the applicable rating agencies, unless the applicable rating agency declines or fails to respond to the request for such confirmation.
Acquired Expansion Parcels. The borrowers have the right, at their own expense, to acquire one or more parcels of land that constitutes an integral part of, or adjoins, the Cumberland Mall Property, including any Anchor Tenant premises, which land was not owned by the borrowers on the origination date (such acquired land, an “Expansion Parcel”), to become additional collateral for the Cumberland Mall Whole Loan, upon satisfaction of specified conditions including, among other things, that (i) there is no event of default, (ii) the borrowers acquire a fee simple or leasehold interest in the applicable Expansion Parcel, and (iii) the borrowers satisfy similar conditions as are set forth under clause (iii) under “Real Estate Substitution” with respect to the Expansion Parcel.
Subordinate and Mezzanine Indebtedness. Not permitted.
Right of First Offer/Right of First Refusal. The largest tenant, Costco, which ground leases its premises, has a right of first refusal to purchase its leased premises (approximately 13.395 acres at the Cumberland Mall Property) if the landlord receives a bona fide offer to purchase such leased premises. Costco has not entered into a subordination, non-disturbance and attornment agreement. Such right of first refusal may apply to a foreclosure or deed in lieu of foreclosure as well as to subsequent transfers.
Ground Lease. None.
Letter of Credit. None.
Terrorism Insurance. The borrowers are permitted to obtain (and as of the origination date did obtain) terrorism coverage through Liberty IC Casualty LLC (“Liberty”), a licensed captive insurance company controlled by Brookfield Properties, as an acceptable insurer of perils of terrorism and acts of terrorism as required in the Cumberland Mall Whole Loan documents, so long as, among other requirements, (i) such policy together with any other terrorism policy which meets the requirements of the Cumberland Mall Whole Loan documents, provide terrorism insurance consistent with the terms of the all-risk insurance policy, in an amount equal to full replacement cost and 36 months of business income coverage, (ii) the deductible is no higher than $1,000,000 plus that calculated under the Terrorism Risk Insurance Program Reauthorization Act of 2019 or successor act (“TRIPRA”), and (iii) any covered losses in excess of the deductible covered by Liberty which are not reinsured by the Federal Government under TRIPRA and paid to Liberty must be reinsured with a cut-through endorsement acceptable to the lender and the rating agencies from insurers which meet the ratings criteria in the Cumberland Mall Whole Loan documents. If TRIPRA or a substantially similar government program is not in effect, then the borrowers will be required to carry terrorism insurance in the amounts above to the extent commercially available, but will not be required to spend more for such coverage than two (2) times the annual allocable amount of the total insurance premium that is then payable with respect to the property and business income insurance policies required under the Cumberland Mall Whole Loan documents (without giving effect to the cost of the terrorism components of such policies). See “Risk Factors—Risks Relating to the Mortgage Loans—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the prospectus.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Office | Loan #10 | Cut-off Date Balance: | $32,000,000 |
Property Subtype: CBD | 1825 K Street NW | Cut-off Date LTV: | 53.0% |
Address: 1825 K Street Northwest | U/W NCF DSCR: | 1.74x |
Washington, DC 20006 | | U/W NOI Debt Yield: | 13.4% |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg035.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
136
Property Type: Office | Loan #10 | Cut-off Date Balance: | $32,000,000 |
Property Subtype: CBD | 1825 K Street NW | Cut-off Date LTV: | 53.0% |
Address: 1825 K Street Northwest | U/W NCF DSCR: | 1.74x |
Washington, DC 20006 | | U/W NOI Debt Yield: | 13.4% |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg036.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
137
Property Type: Office | Loan #10 | Cut-off Date Balance: | $32,000,000 |
Property Subtype: CBD | 1825 K Street NW | Cut-off Date LTV: | 53.0% |
Address: 1825 K Street Northwest | U/W NCF DSCR: | 1.74x |
Washington, DC 20006 | | U/W NOI Debt Yield: | 13.4% |
![](https://capedge.com/proxy/FWP/0001539497-23-001319/n3701tsimg037.jpg)
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
138
No. 10 – 1825 K Street NW |
|
Mortgage Loan Information | | Mortgaged Property Information |
Mortgage Loan Seller: | JPMorgan Chase Bank, National | | Single Asset/Portfolio: | Single Asset |
| Association | | Property Type – Subtype: | Office – CBD |
Credit Assessment | NR/NR/NR | | Location: | Washington, DC |
(Moody’s/Fitch/KBRA): | | | Size: | 260,419 SF |
Original Principal Balance(1): | $32,000,000 | | Cut-off Date Balance Per SF(1): | $161.28 |
Cut-off Date Balance(1): | $32,000,000 | | Maturity Date Balance Per SF(1): | $161.28 |
% of Initial Pool Balance: | 4.4% | | Year Built/Renovated: | 1966/2019 |
Loan Purpose: | Refinance | | Title Vesting: | Fee |
Borrower Sponsor: | The Morris and Gwendolyn Cafritz | | Property Manager: | Borger Management, Inc. |
| Foundation | | Current Occupancy (As of): | 73.3% (6/1/2023) |
Guarantor: | The Morris and Gwendolyn Cafritz | | YE 2022 Occupancy: | 83.8% (12/31/2022) |
| Foundation | | YE 2021 Occupancy: | 83.4% (12/31/2021) |
Mortgage Rate: | 7.5470% | | YE 2020 Occupancy: | 88.5% (12/31/2020) |
Note Date: | June 26, 2023 | | YE 2019 Occupancy: | 90.1% (12/31/2019) |
Seasoning: | 1 month | | As-Is Appraised Value(4): | $79,200,000 |
Maturity Date: | July 5, 2028 | | As-Is Appraised Value Per SF: | $304.13 |
IO Period: | 60 months | | As-Is Appraisal Valuation Date: | March 30, 2023 |
Loan Term (Original): | 60 months | | | |
Amortization Term (Original): | NAP | | |
Loan Amortization Type: | Interest Only | | Underwriting and Financial Information |
Call Protection(2): | L(25),D(31),O(4) | | TTM NOI (2/28/2023)(5): | $8,038,020 |
Lockbox Type: | Hard/Springing Cash Management | | YE 2022 NOI: | $8,196,848 |
Additional Debt(1): | Yes | | YE 2021 NOI: | $7,352,090 |
Additional Debt Type (Balance)(1): | Pari Passu ($10,000,000) | | YE 2020 NOI: | $7,091,631 |
| | | U/W Revenues: | $9,767,529 |
| | | U/W Expenses: | $4,124,341 |
Escrows and Reserves(3) | | U/W NOI(5): | $5,643,188 |
| Initial | Monthly | Cap | | U/W NCF: | $5,591,105 |
Taxes | $672,650 | $143,193 | NAP | | U/W DSCR based on NOI/NCF(1): | 1.76x / 1.74x |
Insurance | $0 | Springing | NAP | | U/W Debt Yield based on NOI/NCF(1): | 13.4% / 13.3% |
Replacement Reserve | $4,341 | $4,341 | NAP | | U/W Debt Yield at Maturity based on | 13.4% / 13.3% |
TI/LC Reserve | $3,000,000 | $37,978 | NAP | | NOI/NCF: | |
Free Rent Reserve | $619,462 | $0 | NAP | | Cut-off Date LTV Ratio(1)(4): | 53.0% |
Outstanding TI Reserve | $191,188 | $0 | NAP | | LTV Ratio at Maturity(1)(4): | 53.0% |
| | | | | | | |
Sources and Uses |
Sources | | | | | Uses | | | |
Whole Loan Amount: | $42,000,000 | | 69.6% | | Loan Payoff | $52,780,814 | | 87.5% |
Borrower Sponsor Equity: | 18,354,493 | | 30.4 | | Upfront Reserves | 4,487,641 | | 7.4 |
| | | | | Closing Costs | 3,086,038 | | 5.1 |
Total Sources: | $60,354,493 | | 100.0% | | Total Uses | $60,354,493 | | 100.0% |
| (1) | The 1825 K Street NW Mortgage Loan (as defined below) is part of the 1825 K Street NW Whole Loan (as defined below) with an original aggregate principal balance of $42,000,000. Cut-off Date Balance Per SF, Maturity Date Balance Per SF, U/W DSCR based on NOI/NCF, U/W Debt Yield based on NOI/NCF, U/W Debt Yield at Maturity based on NOI/NCF, Cut-off Date LTV Ratio and LTV Ratio at Maturity presented above are based on the 1825 K Street Whole Loan. |
| (2) | The 1825 K Street NW Whole Loan is permitted to be (a) defeased after the end of the two-year period commencing on the closing date of the securitization of the last portion of the 1825 K Street NW Whole Loan to be securitized (the “Permitted Defeasance Date”) or (b) if the Permitted Defeasance Date has not occurred by August 5, 2026, prepaid with the payment of a yield maintenance premium. The assumed defeasance lockout period of 25 payments is based on the closing date of the BANK 2023-BNK46 transaction in August 2023. The actual lockout period may be longer. |
| (3) | See “Escrows” below for further discussion of reserve information. |
| (4) | The appraisal also provides for a concluded land value of $48,250,000 as of March 30, 2023. Based solely on the appraised land value, the 1825 K Street NW Whole Loan results in a Cut-off Date LTV Ratio and LTV Ratio at Maturity of 87.0%. |
| (5) | The decline in U/W NOI from TTM NOI is primarily attributable to (i) 45,930 SF of space vacated at the 1825 K Street NW Property (as defined below) since September 2022 for which space the borrower sponsor is actively pursuing leasing opportunities and (ii) 5,126 SF of space expected to be vacated in January 2024 which space has been marked vacant in the lender underwriting. At origination of the 1825 K Street NW Whole Loan, the borrower deposited $3,000,000 into a TI/LC Reserve (in addition to ongoing collections of approximately $1.75 PSF annually) to cover costs related to any future spec space build-outs (subject to a cap of $750,000), tenant improvement allowances and leasing commission costs for the 1825 K Street NW Property. |
The Mortgage Loan. The tenth largest mortgage loan (the “1825 K Street NW Mortgage Loan”) is evidenced by a promissory note in the original principal amount of $32,000,000 and secured by a first priority fee mortgage encumbering a 260,419 SF office property located in Washington, DC (the “1825 K Street NW Property”). The 1825 K Street NW Mortgage Loan is part of a whole loan which is comprised of two pari passu notes, with an original aggregate principal balance of $42,000,000 (the “1825 K Street NW Whole Loan”).
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
139
Property Type: Office | Loan #10 | Cut-off Date Balance: | $32,000,000 |
Property Subtype: CBD | 1825 K Street NW | Cut-off Date LTV: | 53.0% |
Address: 1825 K Street Northwest | U/W NCF DSCR: | 1.74x |
Washington, DC 20006 | | U/W NOI Debt Yield: | 13.4% |
The 1825 K Street NW Mortgage Loan is evidenced by the controlling note A-1. The 1825 K Street NW Whole Loan will be serviced under the pooling and servicing agreement for the BANK 2023-BNK46 securitization trust. See “Description of the Mortgage Pool—The Whole Loans—The Serviced Pari Passu Whole Loans” and “Pooling and Servicing Agreement” in the prospectus.
Whole Loan Note Summary
Notes | Original Balance | Cut-off Date Balance | | Note Holder | Controlling Note |
A-1 | $32,000,000 | $32,000,000 | | BANK 2023-BNK46 | Yes |
A-2 | 10,000,000 | 10,000,000 | | JPMCB(1) | No |
Total | $42,000,000 | $42,000,000 | | | |
| (1) | Expected to be contributed to one or more future securitization trusts. |
The Borrower and Borrower Sponsor. The borrower is 1825 K LLC, a single-purpose Delaware limited liability company with two independent directors in its organizational structure.
The borrower sponsor and non-recourse carveout guarantor is The Morris and Gwendolyn Cafritz Foundation. The Morris and Gwendolyn Cafritz Foundation is a charitable organization committed to improving the quality of life for all Washington, DC metropolitan area residents. The Morris and Gwendolyn Cafritz Foundation is the legacy of Morris Cafritz, one of Washington’s leading commercial and residential real estate builders in the early 1920s through the 1960s. As of the trailing-twelve months ending April 30, 2022, the Morris and Gwendolyn Cafritz Foundation awarded approximately $21.7 million in grants to 431 non-profit organizations. Additionally, as of the trailing-twelve months ending April 30, 2022, the Morris and Gwendolyn Cafritz Foundation had a total asset value of approximately $478.4 million and total revenues of approximately $81.7 million. The Morris and Gwendolyn Cafritz Foundation owns a total of three office properties totaling approximately 591,705 SF with a weighted average occupancy rate of 88.1% (inclusive of the 1825 K Street NW Property) and six apartment complexes with 1,284 units, all of which are located in the Washington DC area. The Morris and Gwendolyn Cafritz Foundation has owned the 1825 K Street NW Property since its initial construction in 1966 and has invested approximately $7.2 million since 2013 in capital improvements. At origination of the 1825 K Street NW Whole Loan, the Morris and Gwendolyn Cafritz Foundation provided approximately $18.4 million in additional cash equity demonstrating its long-term commitment to the asset.
The Property. The 1825 K Street NW Property is a 13-story, 260,419 SF office property located in Washington, DC, approximately 0.5 miles from The White House and within close proximity to a number of government agencies and public organizations such as the United States Treasury, the United States Trade Representative, the World Bank and the International Monetary Fund. The 1825 K Street NW Property is situated on a 0.58-acre site, was constructed in 1966 and substantially renovated in 2019. From 2013 through 2022, the borrower sponsor invested approximately $7.2 million in capital improvements which included upgrading the common areas, elevators, HVAC, exterior areas and repairing the parking garage, among other capital improvements. The 1825 K Street NW Property features amenities such as a fitness center, a cycling room, conference centers, a concierge, a 24-hour lobby attendant and a three level below grade parking garage with an aggregate of 200 total parking spaces, resulting in a parking ratio of 0.77 per 1,000 SF of space.
From 2013 through 2022, the average occupancy at the 1825 K Street NW Property was 87.4%. As of June 1, 2023, the 1825 K Street NW Property was 73.3% leased to a diverse roster of 40 tenants representing a variety of sectors such as finance, legal, pharmaceutical, healthcare and charitable organizations. The tenant roster has demonstrated an ongoing long term commitment to 1825 K Street NW Property as highlighted by its weighted average occupancy term of 17.8 years (excluding month-to-month leases comprising approximately 0.7% of NRA and 0.3% of underwritten base rent) and 14.3 (excluding The Morris and Gwendolyn Cafritz Foundation (the borrower sponsor), which has been at the 1825 K Street NW Property since initial construction in 1966, and month-to-month leases). With the exception of the largest tenant, the Union of Concerned Scientists, (10.4% of NRA, 16.3% of underwritten rent), no individual tenant at the 1825 K Street NW Property comprises over 5.3% of NRA or 7.4% of underwritten base rent. In addition to traditional office space, the 1825 K Street NW Property features 15,355 SF of ground floor retail space (7.4% of underwritten base rent), with tenants including FedEx, Amalgamated Bank of New York, South Decatur, Inc. and Educations Writers Association. According to the borrower sponsor, utilization rates at the 1825 K Street NW Property have been ramping up since the COVID-19 pandemic, with utilization rates reaching approximately 59% as a percentage of 2019 utilization as of May 2023, representing an approximately 57.3% annualized increase since May 2020. Furthermore, since April 2022, the borrower sponsor executed nine leases at the 1825 K Street NW Property, representing 8.2% of NRA and 9.9% of underwritten base rent. As of June 1, 2023, the weighted average office and retail rent PSF at the 1825 K Street NW Property was $49.31 (which, according to the appraisal, is approximately 9.7% lower than gross asking rents in the Washington DC Office Submarket (as defined below)) and $44.76 (approximately 10.5% lower than the appraisal concluded market rent), respectively.
Major Tenants.
Union of Concerned Scientists (27,007 SF, 10.4% of NRA, 16.3% of underwritten rent). The Union of Concerned Scientists is a national non-profit organization founded over 50 years ago by both scientists and students at the Massachusetts Institute of Technology. Representatives of the Union of Concerned Scientists interact directly with members of Congress and administration officials to advocate for security-related campaigns with a focus on arms control, nuclear weapons policy and missile defense. The Union of Concerned Scientists further communicates directly with key decisionmakers at the national, state and local level to advocate for change in public policy and corporate practice. The Union of Concerned Scientists mission is to use rigorous, independent science to solve the planet’s most pressing problems. The Union of Concerned Scientists is comprised of nearly 250 scientists, analysts, strategic communicators
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
140
Property Type: Office | Loan #10 | Cut-off Date Balance: | $32,000,000 |
Property Subtype: CBD | 1825 K Street NW | Cut-off Date LTV: | 53.0% |
Address: 1825 K Street Northwest | U/W NCF DSCR: | 1.74x |
Washington, DC 20006 | | U/W NOI Debt Yield: | 13.4% |
and policy experts and is funded by both individuals and independent foundations. The Union of Concerned Scientists has been at the 1825 K Street NW Property since May 2018 and its lease is structured with no termination options, one, five-year renewal option and expires on April 30, 2026.
TD International, LLC (13,731 SF, 5.3% of NRA, 7.4% of underwritten rent). Founded in 1999, TD International, LLC delivers a decisive information advantage to their clients through strategic advisory, risk intelligence, complex investigations, due diligence, and compliance technology. TD International, LLC’s blend of commercial and intelligence experience enables it to evaluate people, assets, and transactions within the broader geopolitical and commercial context. TD International, LLC advises its clients through geopolitical, regulatory and reputational risks that impact global operations. In addition to 11,477 square feet of space (the “Original Leased Space”) demised under its lease dated May 21, 2018 (the “Lease”), TD International, LLC took occupancy of 2,647 square feet of space (the “First Expansion Space”) in July 2019 pursuant to the first amendment to the Lease. However, pursuant to the second amendment to the Lease, TD International, LLC is expected to lease 2,254 square feet of space (the “Second Expansion Space”) on the fourth floor of the 1825 K Street NW Property. According to the borrower sponsor, the Second Expansion Space is undergoing a build-out, which is anticipated to be completed in the third quarter of 2023. Upon completion of the build-out of the Second Expansion Space, the borrower anticipates TD International, LLC will vacate the First Expansion Space and occupy the Second Expansion Space. The lender’s underwriting is based on the anticipated completion, and the relocation by TD International, LLC, to the Second Expansion Space from the First Expansion Space. TD International, LLC is currently benefitting from a free rent period with respect to the Second Expansion Space, through November 2023. The borrower was required at loan origination to reserve a total of $619,462 for free rent, which includes $35,605.68 reserved for TD International, LLC. TD International, LLC has the right to terminate its leased space on December 31, 2025 by giving notice by December 31, 2024 with payment of: (i) an amount equal to the unamortized free rent allowance (which will accrue interest at a rate of 6% per annum), (ii) the cost of required turnkey work subject to the “Turnkey Cap” as defined in the TD International, LLC lease documents, (iii) brokerage commissions and (iv) legal fees. TD International, LLC has been at the 1825 K Street NW Property since December 2018 and its lease is structured with one, five-year renewal option and expires on December 31, 2029.
Local Initiatives Support Corp (11,742 SF, 4.5% of NRA, 6.6% of underwritten rent). Local Initiatives Support Corp, founded in 1979 by the Ford Foundation, is a non-profit community development financial institution that supports community development initiatives across the United States. Local Initiatives Support Corp works with Congress and other federal agencies to establish and safeguard funding sources, policies, programs and strategies in hopes to spur neighborhood revitalization in urban and rural communities throughout the United States. Local Initiatives Support Corp acts as an intermediary connecting community partnerships with both public and private resources in underinvested places. Local Initiatives Support Corp receives its funding from banks, corporations, foundations and government agencies and uses that funding to provide financing (loans, grants and equity) and technical and management assistance to local partners and developers. Local Initiatives Support Corp has been at the 1825 K Street NW Property since March 1995. Local Initiatives Support Corp lease is structured with no termination options and expires on February 29, 2032.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
141
Property Type: Office | Loan #10 | Cut-off Date Balance: | $32,000,000 |
Property Subtype: CBD | 1825 K Street NW | Cut-off Date LTV: | 53.0% |
Address: 1825 K Street Northwest | U/W NCF DSCR: | 1.74x |
Washington, DC 20006 | | U/W NOI Debt Yield: | 13.4% |
The following table presents certain information relating to the tenancy at the 1825 K Street NW Property:
Major Tenants(1)
Tenant Name | Credit Rating (Moody’s / Fitch/ S&P)(2) | Tenant NRSF | % of NRSF | Annual U/W Base Rent PSF | Annual U/W Base Rent | % of Total Annual U/W Base Rent | Lease Expiration Date | Ext. Options | Term. Option (Y/N) |
Major Tenants | | | | | | | | |
Union of Concerned Scientists | NR/NR/NR | 27,007 | 10.4% | $56.31 | $1,520,676 | 16.3% | 4/30/2026 | 1, 5-year | N |
TD International, LLC(3) | NR/NR/NR | 13,731 | 5.3% | $50.12 | $688,133 | 7.4% | 12/31/2029 | 1, 5-year | Y(4) |
Local Initiatives Support Corp | NR/NR/NR | 11,742 | 4.5% | $52.44 | $615,739 | 6.6% | 2/29/2032 | None | N |
The Morris & Gwendolyn Cafritz Foundation(5) | NR/NR/NR | 11,329 | 4.4% | $50.95 | $577,243 | 6.2% | 6/30/2037 | 1, 5-year | N |
BBGM/Architects & Interiors(6) | NR/NR/NR | 10,555 | 4.1% | $47.41 | $500,372 | 5.4% | 1/31/2030 | None | N |
Amalgamated Bank of New York - Retail | NR/NR/NR | 9,565 | 3.7% | $41.66 | $398,516 | 4.3% | 12/31/2027 | None | N |
Association of Maternal & Child | NR/NR/NR | 8,250 | 3.2% | $52.81 | $435,666 | 4.7% | 9/30/2027 | None | N |
Community Wealth Partners(7) | NR/NR/NR | 7,818 | 3.0% | $34.06 | $266,254 | 2.8% | 5/31/2029 | None | Y(8) |
Chief Executives Organization | NR/NR/NR | 6,725 | 2.6% | $52.22 | $351,204 | 3.8% | 7/31/2025 | None | N |
Ashcraft and Gerel LLP | NR/NR/NR | 6,467 | 2.5% | $54.75 | $354,037 | 3.8% | 12/31/2025 | None | N |
Total Major Tenants | 113,189 | 43.5% | $50.43 | $5,707,841 | 61.1% | | | |
| | | | | | | | |
Non-Major Tenants(9) | 77,708 | 29.8% | $46.79 | 3,636,222 | 38.9% | | | |
| | | | | | | | |
Occupied Collateral Total | 190,897 | 73.3% | $48.95 | 9,344,063 | 100.0% | | | |
| | | | | | | | |
Vacant Space | 69,522 | 26.7% | | | | | | |
| | | | | | | | |
Collateral Total | 260,419 | 100.0% | | | | | | |
| | | | | | | | | |
| (1) | Based on the underwritten rent roll as of June 1, 2023, inclusive of contractual rent steps through June 2024. |
| (2) | In certain instances, ratings provided are those of the parent company of the entity shown, whether or not the parent company guarantees the lease. |
| (3) | In addition to 11,477 square feet of Original Leased Space demised under its Lease dated May 21, 2018, TD International, LLC took occupancy of 2,647 square feet of its First Expansion Space in July 2019 pursuant to the first amendment to the Lease. However, pursuant to the second amendment to the Lease, TD International, LLC is expected to lease 2,254 square feet of its Second Expansion Space on the fourth floor of the 1825 K Street NW Property. According to the borrower sponsor, the Second Expansion Space is undergoing a build-out, which is anticipated to be completed in the third quarter of 2023. Upon completion of the build-out of the Second Expansion Space, the borrower anticipates TD International, LLC will vacate the First Expansion Space and occupy the Second Expansion Space. The lender’s underwriting is based on the anticipated completion, and the relocation by TD International, LLC, to the Second Expansion Space from the First Expansion Space. TD International, LLC is currently benefitting from a free rent period with respect to the Second Expansion Space, through November 2023. The borrower was required at loan origination to reserve a total of $619,462 for free rent, which includes $35,605.68 reserved for TD International, LLC. |
| (4) | TD International, LLC has the right to terminate its leased space on December 31, 2025 by giving notice by December 31, 2024 with payment of: (i) an amount equal to the unamortized free rent allowance (which will accrue interest at a rate of 6% per annum), (ii) the cost of required turnkey work subject to the “Turnkey Cap” as defined in the TD International, LLC lease documents, (iii) brokerage commissions and (iv) legal fees. |
| (5) | The Morris & Gwendolyn Cafritz Foundation is the borrower sponsor and non-recourse carveout guarantor. |
| (6) | BBGM/Architects & Interiors is currently benefitting from rent abatements with respect to 50% of the monthly base rent obligations through December 2024. The borrower was required at loan origination to reserve a total of $619,462 for free rent, which includes $349,396.81 reserved for BBGM/Architects & Interiors. |
| (7) | Community Wealth Partners is subject to (i) 7,624 SF of office space expiring on May 31, 2029 (the “Office Space”) and (ii) 194 SF of storage space that is month-to-month. Community Wealth Partners has subleased the Office Space to Consigli Construction Co., Inc., as the subtenant. Lender underwriting for the Office Space is reflective of the applicable sublease rent (which, in certain instances, are below the prime lease rent). |
| (8) | Community Wealth Partners has the right to terminate its lease on October 31, 2025 by giving notice by October 31, 2024 with payment of: (i) an amount equal to the unamortized free rent allowance (which will accrue interest at a rate of 6% per annum), (ii) an amount equal to the extension period free rent allowance, (iii) brokerage commissions and (iv) legal fees. |
| (9) | Non-Major Tenants is inclusive of 2,581 SF of subleased space. Lender underwriting is reflective of the applicable sublease rents (which, in certain instances, are below the prime lease rent). |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
142
Property Type: Office | Loan #10 | Cut-off Date Balance: | $32,000,000 |
Property Subtype: CBD | 1825 K Street NW | Cut-off Date LTV: | 53.0% |
Address: 1825 K Street Northwest | U/W NCF DSCR: | 1.74x |
Washington, DC 20006 | | U/W NOI Debt Yield: | 13.4% |
The following table presents certain information relating to the lease rollover schedule at the 1825 K Street NW Property:
Lease Expiration Schedule(1)(2)(3)
Year Ending December 31 | No. of Leases Expiring | Expiring NRSF | % of Total NRSF | Cumulative Expiring NRSF | Cumulative % of Total NRSF | Annual U/W Base Rent | % of Total Annual U/W Base Rent | Annual U/W Base Rent PSF |
MTM | 3 | 1,746 | 0.7% | 1,746 | 0.7% | $25,910 | 0.3% | $14.84 |
2023 | 1 | 2,653 | 1.0% | 4,399 | 1.7% | $135,064 | 1.4% | $50.91 |
2024 | 3 | 3,918 | 1.5% | 8,317 | 3.2% | $195,242 | 2.1% | $49.83 |
2025 | 10 | 34,442 | 13.2% | 42,759 | 16.4% | $1,689,758 | 18.1% | $49.06 |
2026 | 4 | 33,703 | 12.9% | 76,462 | 29.4% | $1,831,596 | 19.6% | $54.35 |
2027 | 5 | 26,536 | 10.2% | 102,998 | 39.6% | $1,263,489 | 13.5% | $47.61 |
2028 | 2 | 6,424 | 2.5% | 109,422 | 42.0% | $265,872 | 2.8% | $41.39 |
2029 | 4 | 26,418 | 10.1% | 135,840 | 52.2% | $1,187,387 | 12.7% | $44.95 |
2030 | 4 | 21,512 | 8.3% | 157,352 | 60.4% | $1,025,431 | 11.0% | $47.67 |
2031 | 2 | 10,474 | 4.0% | 167,826 | 64.4% | $531,332 | 5.7% | $50.73 |
2032 | 1 | 11,742 | 4.5% | 179,568 | 69.0% | $615,739 | 6.6% | $52.44 |
2033 | 0 | 0 | 0.0% | 179,568 | 69.0% | $0 | 0.0% | $0.00 |
2034 & Beyond | 1 | 11,329 | 4.4% | 190,897 | 73.3% | $577,243 | 6.2% | $50.95 |
Vacant | 0 | 69,522 | 26.7% | 260,419 | 100.0% | $0 | 0.0% | $0.00 |
Total/Weighted Average(4) | 40 | 260,419 | 100.0% | | | $9,344,063 | 100.0% | $48.95 |
| (1) | Information is based on the underwritten rent roll dated June 1, 2023, inclusive contractual rent steps through June 2024. |
| (2) | Certain tenants may have lease termination options that are exercisable prior to the originally stated expiration date of the related lease and are not considered in the rollover schedule. |
| (3) | Inclusive of 10,205 SF of subleased space. Lender underwriting is reflective of the applicable sublease rents (which, in certain instances, are below the prime lease rent). |
| (4) | Weighted Average Annual U/W Base Rent PSF excludes vacant space. |
The following table presents historical occupancy percentages at the 1825 K Street NW Property:
Historical Occupancy(1)(2)
2018 | 2019 | 2020 | 2021 | 2022(3) | 6/1/2023(3)(4) |
87.0% | 90.1% | 88.5% | 83.4% | 83.8% | 73.3% |
| (1) | Based on information provided by the borrower sponsor unless otherwise indicated. |
| (2) | Represents the year-end occupancy for each respective year unless otherwise indicated. |
| (3) | The decline in occupancy from 2022 to June 1, 2023 is primarily attributable to (i) 45,930 SF of space vacated at the 1825 K Street NW Property since September 2022 for which space the borrower sponsor is actively pursuing leasing opportunities and (ii) 5,126 SF of space expected to be vacated in January 2024 which space has been marked vacant in the lender underwriting. At origination of the 1825 K Street NW Whole Loan, the borrower deposited $3,000,000 into a TI/LC Reserve (in addition to ongoing collections of approximately $1.75 PSF annually) to cover costs related to any future spec space build-outs (subject to a cap of $750,000), tenant improvement allowances and leasing commission costs for the 1825 K Street NW Property. |
| (4) | Based on the underwritten rent roll as of June 1, 2023. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
143
Property Type: Office | Loan #10 | Cut-off Date Balance: | $32,000,000 |
Property Subtype: CBD | 1825 K Street NW | Cut-off Date LTV: | 53.0% |
Address: 1825 K Street Northwest | U/W NCF DSCR: | 1.74x |
Washington, DC 20006 | | U/W NOI Debt Yield: | 13.4% |
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and underwritten net cash flow at the 1825 K Street NW Property:
Cash Flow Analysis(1)
| 2020 | 2021 | 2022 | T-12 (2/28/2023) | U/W | %(2) | U/W $ per SF |
Base Rent | $11,122,972 | $11,090,478 | $11,761,564 | $11,714,227 | $9,344,063(3) | 72.9% | $35.88 |
Vacant Income | 0 | 0 | 0 | 0 | 3,067,241 | 23.9 | 11.78 |
Total Reimbursements | 347,787 | 249,310 | 190,816 | 191,618 | 161,974 | 1.3 | 0.62 |
Parking Income | 231,374 | 80,176 | 173,313 | 180,576 | 240,000 | 1.9 | 0.92 |
Gross Potential Income | $11,702,133 | $11,419,964 | $12,125,693 | $12,086,421 | $12,813,278 | 100.0% | $49.20 |
Vacancy | 0 | 0 | 0 | 0 | (3,067,241) | (23.9) | (11.78) |
Other | 46,280 | 9,058 | 41,464 | 48,109 | 21,492 | 0.2 | 0.08 |
Effective Gross Income | $11,748,413 | $11,429,022 | $12,167,157 | $12,134,530 | $9,767,529 | 76.2% | $37.51 |
| | | | | | | |
Real Estate Taxes | 2,107,077 | 2,150,978 | 1,493,729 | 1,400,773 | 1,873,350 | 19.2 | 7.19 |
Insurance | 88,435 | 85,830 | 76,534 | 86,293 | 91,050 | 0.9 | 0.35 |
Management Fee | 217,614 | 203,100 | 211,022 | 216,841 | 293,026 | 3.0 | 1.13 |
Other Operating Expenses | 2,243,656 | 1,637,024 | 2,189,024 | 2,392,603 | 1,866,915 | 19.1 | 7.17 |
Total Operating Expenses | $4,656,782 | $4,076,932 | $3,970,309 | $4,096,510 | $4,124,341 | 42.2% | $15.84 |
| | | | | | | |
Net Operating Income(4) | $7,091,631 | $7,352,090 | $8,196,848 | $8,038,020 | $5,643,188 | 57.8% | $21.67 |
Replacement Reserves | 0 | 0 | 0 | 0 | 52,084 | 0.5 | 0.20 |
TI/LC | 0 | 0 | 0 | 0 | 0(5) | 0.0 | 0.00 |
Net Cash Flow | $7,091,631 | $7,352,090 | $8,196,848 | $8,038,020 | $5,591,105 | 57.2% | $21.47 |
| | | | | | | |
NOI DSCR(6) | 2.21x | 2.29x | 2.55x | 2.50x | 1.76x | | |
NCF DSCR(6) | 2.21x | 2.29x | 2.55x | 2.50x | 1.74x | | |
NOI Debt Yield(6) | 16.9% | 17.5% | 19.5% | 19.1% | 13.4% | | |
NCF Debt Yield(6) | 16.9% | 17.5% | 19.5% | 19.1% | 13.3% | | |
| (1) | Certain items such as interest expense, interest income, depreciation, amortization, abatements, debt service payments and any other non-recurring items were excluded from the historical presentation and are not included in the underwritten cash flow. |
| (2) | Represents (i) percent of Gross Potential Income for all revenue fields and Vacancy and (iii) percent of Effective Gross Income for all other fields. |
| (3) | Based on the underwritten rent roll as of June 1, 2023, inclusive of contractual rent steps through June 2024. |
| (4) | The decline in U/W NOI from T-12 (2/28/2023) NOI is primarily attributable to (i) 45,930 SF of space vacated at the 1825 K Street NW Property since September 2022 for which space the borrower sponsor is actively pursuing leasing opportunities and (ii) 5,126 SF of space expected to be vacated in January 2024 which space has been marked vacant in the lender underwriting. At origination of the 1825 K Street NW Whole Loan, the borrower deposited $3,000,000 into a TI/LC Reserve (in addition to ongoing collections of approximately $1.75 PSF annually) to cover costs related to any future spec space build-outs (subject to a cap of $750,000), tenant improvement allowances and leasing commission costs for the 1825 K Street NW Property. |
| (5) | U/W TI/LC is inclusive of a $455,732 credit applied against future TI/LC costs based on the availability of the $3.0 million upfront TI/LC Reserve. |
| (6) | The NOI DSCR, NCF DSCR, NOI Debt Yield and NCF Debt Yield are based on the 1825 K Street NW Whole Loan. |
Appraisal. The appraisal concluded to an “as is” appraised value for the 1825 K Street NW Property of $79,200,000 and a land value of $48,250,000 as of March 30, 2023.
Environmental Matters. According to a Phase I environmental report dated as of April 12, 2023 (the “ESA”), the 1825 K Street NW Property has a 12,000-gallon heating oil underground storage tank (“UST”) that has a “permanently out of use” status. According to the ESA, the current UST, which passed tightness testing in 2007, was reportedly installed in 1989 and replaced previously a installed UST in the same location, which was reportedly installed in 1969. The ESA noted that while no documented releases were identified for either UST, the absence of tank closure documentation and sampling results represents a continuing REC at the 1825 K Street NW Property. In connection with the foregoing, the ESA recommended that tank closure documentation and sampling results for the former USTs be obtained and reviewed to confirm that the USTs have been properly removed/decommissioned in accordance with governmental regulations and to rule out a release. The borrower maintains a pollution liability insurance policy from SiriusPoint Specialty Insurance Corporation with a $2,000,000 aggregate limit. See “Description of the Mortgage Pool—Environmental Considerations” in the prospectus.
Market Overview and Competition. The 1825 K Street NW Property is located in Washington, DC, within close proximity to a number of government agencies and public organizations such as The White House, the United States Treasury, the United States Trade Representative, the World Bank and the International Monetary Fund. The 1825 K Street NW Property is also located in close proximity to the George Washington University, which had a total undergraduate enrollment of 11,502 students as of the 2021-2022 academic year. The 1825 K Street NW Property is situated within the Washington-Arlington-Alexandria, DC-VA-MD-WV Metropolitan Statistical Area (the “Washington DC MSA”). The Washington DC MSA has an area population of approximately 6.5 million, representing an
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
144
Property Type: Office | Loan #10 | Cut-off Date Balance: | $32,000,000 |
Property Subtype: CBD | 1825 K Street NW | Cut-off Date LTV: | 53.0% |
Address: 1825 K Street Northwest | U/W NCF DSCR: | 1.74x |
Washington, DC 20006 | | U/W NOI Debt Yield: | 13.4% |
approximately 1.2% annualized increase since 2010. The median household income in the Washington DC MSA is $113,904 and according to the appraisal is forecasted to increase by 14.1% over the next five years. The Washington DC MSA has approximately 3.4 million employees with the top three employment sectors featuring Prof/Scientific/Tech Services, Public Administration and Health Care/Social Assistance which represent a combined total of approximately 42% of the workforce.
The 1825 K Street NW Property is further situated within the Metropolitan Washington DC Central Business District office submarket (the “Washington DC CBD Office Submarket”). As of year-end 2022, the Washington DC CBD Office Submarket had an inventory of approximately 48.1 million SF, an overall occupancy rate of 82.6% and gross asking rents of $54.48 per SF. Inventory levels have remained relatively flat in the Washington DC CBD Office Submarket with 356,709 SF (approximately 0.7% of total inventory) added since the start of 2021, and according to the appraisal, by year-end 2027 an additional 181,317 SF (approximately 0.4% of total inventory) is expected to be added. Net absorptions in the Washington DC CBD Office Submarket totaled 70,699 SF as of year-end 2022, improving from approximately negative 1.4 million SF as of year-end 2021. According to the appraisal, this positive trend of net absorptions is largely expected to continue through 2027.
The table below presents leasing data at comparable office properties with respect to the 1825 K Street NW Property:
Comparable Leases(1)
Property | Year Built / Renovated | Rentable Area (SF) | Tenant Name | Tenant Size (SF) | Lease Date | Rent PSF | Lease Type |
1825 K Street NW(2) | 1966 / 2019 | 260,419 | Various | 175,542(3) | Various | $49.31(3) | Various |
Tower Building | 1929 / 1997 | 120,519 | Ctr for Democracy and Tech | 9,873 | Feb-22 | $57.00 | Full Service |
Flagship of Farragut Square | 1983 / NAP | 183,043 | Columbia National RE Finance | 3,250 | Aug-22 | $51.50 | Full Service |
1400 Eye Street, NW | 1983 / 2009 | 175,127 | Service Year Exchange | 8,088 | Apr-22 | $45.00 | Full Service |
1120 G Street, NW | 1982 / 2022 | 133,802 | SABIC Plastics | 2,824 | Feb-23 | $56.00 | Full Service |
750 17th Street, NW | 1989 / 2015 | 136,452 | Patomak Global Partners | 7,460 | Mar-23 | $61.00 | Full Service |
1250 Connecticut Avenue NW | 1963 / 2019 | 174,905 | Radio Free Europe | 9,829 | Feb-23 | $57.00 | Full Service |
| (1) | Information obtained from the appraisal. |
| (2) | Information based on the underwritten rent roll as of June 1, 2023, other than year built / renovated and lease type. |
| (3) | Tenant Size (SF) and Rent PSF for the 1825 K Street NW Property are inclusive solely of occupied office tenants. |
The following table presents certain information relating to the appraisal’s market rent conclusions for the 1825 K Street NW Property:
Market Rent Summary(1)
Category | Market Rent (PSF) | Reimbursements | Annual Escalation | Tenant Improvements PSF (New/Renewal) | Average Lease Term | Leasing Commissions (New) | Leasing Commissions (Renewal) |
Lower Level | $30.00 | FS - Base Year Stop | 2.50% /Yr | $75.00 / $37.50 | 91 Months | 6.00% | 4.00% |
Office | $46.50 | FS - Base Year Stop | 2.50% /Yr | $75.00 / $37.50 | 91 Months | 6.00% | 4.00% |
Retail | $50.00 | Net | 3.00% /Yr | $75.00 / $37.50 | 120 Months | 6.00% | 4.00% |
| (1) | Information obtained from the appraisal. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
145
Property Type: Office | Loan #10 | Cut-off Date Balance: | $32,000,000 |
Property Subtype: CBD | 1825 K Street NW | Cut-off Date LTV: | 53.0% |
Address: 1825 K Street Northwest | U/W NCF DSCR: | 1.74x |
Washington, DC 20006 | | U/W NOI Debt Yield: | 13.4% |
The table below presents data relating to comparable sales with respect to the 1825 K Street NW Property:
Comparable Sales(1)
Property | Location | Year Built / Renovated | Rentable Area (SF) | Occupancy | Sale Date | Sale Price PSF | Cap Rate |
1825 K Street NW(2) | Washington, DC | 1966 / 2019 | 260,419 | 73.3% | NAP | NAP | NAP |
2021 K Street, NW | Washington, DC | 1972 / NAP | 159,981 | 83.0% | Jan-23 | $489.43 | 6.5% |
1776 Wilson Boulevard | Arlington, VA | 2012 / NAP | 137,826 | 87.0% | Oct-22 | $457.82 | 7.4% |
1801 L St NW | Washington, DC | 1988 / NAP | 199,659 | 78.3% | Jul-22 | $324.30 | 6.0% |
Georgetown Center | Washington, DC | 1988 / 2021 | 184,822 | 100.0% | Apr-22 | $495.07 | 5.4% |
2300 N Street, NW | Washington, DC | 1986 / 2015 | 287,559 | 82.0% | Jan-22 | $531.20 | 5.3% |
| (1) | Information obtained from the appraisal. |
| (2) | Information based on the underwritten rent roll as of June 1, 2023, other than location and year built / renovated. |
Escrows.
Real Estate Taxes – At origination, the borrower deposited $672,650 into a real estate tax reserve and on each monthly payment date the borrower is required to deposit into a tax reserve an amount equal to 1/12 of the estimated annual taxes, currently estimated to be approximately $143,193.
Insurance – On each monthly payment date the borrower is required to make ongoing monthly deposits into a reserve for insurance premiums in an amount equal to 1/12 of the insurance premiums that the lender estimates will be payable for the renewal of coverage upon the expiration of the insurance policies. Notwithstanding the foregoing, the borrower is not required to reserve for insurance premiums, provided that no event of default is continuing under the 1825 K Street NW Whole Loan documents, and the borrower provides the lender with satisfactory evidence that the insurance coverage for the 1825 K Street NW Property is included in blanket policies approved by the lender in its reasonable discretion.
Replacement Reserve – At origination, the borrower deposited $4,341 into a replacement reserve and on each monthly payment date the borrower is required to deposit $4,341 into a replacement reserve.
TI/LC Reserve – At origination, the borrower deposited $3,000,000 into a TI/LC reserve and on each monthly due date the borrower is required to deposit (i) $37,978 (approximately $1.75 PSF annually) and (ii) any lease termination fees, contraction fees or any other payments received in connection with the termination of any lease at the 1825 K Street NW Property into a TI/LC reserve.
Free Rent Reserve – At origination, the borrower deposited $619,462 into a free rent reserve to be used to cover free rent, gap rent or rent abatements for six tenants at the 1825 K Street NW property.
Outstanding TI Reserve – At origination, the borrower deposited $191,188 into an outstanding TI reserve to cover outstanding tenant improvement obligations and/or leasing commissions for four tenants at the 1825 K Street NW property.
Lockbox and Cash Management. The 1825 K Street NW Whole Loan is structured with a hard lockbox and springing cash management. The borrower and property manager are required to direct the tenants to pay rent directly into the lockbox account and to deposit any rents otherwise received in such account within one business day after receipt. On each business day, all funds in the lockbox account will be swept to an account designated by the borrower, unless a Cash Sweep Event (as defined below) is continuing, in which case such funds in the lockbox account are required to be swept each business day to a lender-controlled cash management account. Funds in the cash management account may be applied by lender in such order and priority as Lender determines with excess funds (i) to be deposited into an excess cash flow reserve account held by the lender as cash collateral for the 1825 K Street NW Whole Loan or (ii) if the borrower has cured the applicable Cash Sweep Event, disbursed to the borrower.
A “Cash Sweep Event” means the occurrence of any of the following: (i) an event of default, (ii) a bankruptcy action of the borrower, (iii) a bankruptcy action of the affiliate manager or (iv) the debt service coverage ratio based on the trailing three-month period immediately preceding the date of determination being less than 1.35x (a “DSCR Trigger Event”).
A Cash Sweep Event may be cured upon the following: (a) with respect to clause (i) above, the acceptance by the lender of a cure of such event of default in accordance with the 1825 K Street NW Whole Loan documents; (b) with respect to clause (ii) above, the dismissal of an involuntary petition within 90 days after the filing, provided that the bankruptcy action was involuntarily filed and did not cause any material adverse consequences to the 1825 K Street NW Whole Loan or 1825 K Street NW Property as determined by lender in its reasonable discretion; (c) with respect to clause (iii) above, if the borrower replaces the property manager with a “Qualified Manager” (as defined in the 1825 K Street NW Whole Loan documents) under a replacement management agreement; or (d) with respect to clause (iv) above, the achievement of a debt service coverage ratio for the 1825 K Street NW Whole Loan of 1.35x or greater
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
146
Property Type: Office | Loan #10 | Cut-off Date Balance: | $32,000,000 |
Property Subtype: CBD | 1825 K Street NW | Cut-off Date LTV: | 53.0% |
Address: 1825 K Street Northwest | U/W NCF DSCR: | 1.74x |
Washington, DC 20006 | | U/W NOI Debt Yield: | 13.4% |
for two consecutive quarters based upon the trailing 3-month period immediately preceding the date of determination or payment of the Low DSCR Security Payment (as defined below); provided, however, (1) no event of default may be continuing, (2) a cure of a Cash Sweep Event resulting from an event of default or a bankruptcy action of an affiliated manager may occur no more than a total of two times in the aggregate during the term of the 1825 K Street NW Whole Loan, (3) a cure of a Cash Sweep Event resulting from a DSCR Trigger Event may occur an unlimited number of times during the term of the 1825 K Street NW Whole Loan, (4) the borrower will have paid all of the lender’s reasonable expenses incurred in connection with such cure of a Cash Sweep Event, including reasonable attorney’s fees and expenses, and (5) the borrower will have no right to cure a Cash Sweep Event caused by a bankruptcy action of the borrower other than as described in clause (ii) above.
A ”Low DSCR Security Payment” means an amount which, if used to reduce the outstanding principal balance of the 1825 K Street NW Whole Loan upon the occurrence of a DSCR Trigger Event, would be sufficient to cause the calculation of debt service coverage ratio of the 1825 K Street NW Whole Loan for such period to equal or exceed 1.35x. Any Low DSCR Security Payment must be in the form of a cash deposit or letter of credit.
Property Management. The 1825 K Street NW Property is managed by Borger Management, Inc., a third-party of the borrower.
Mezzanine Loan and Preferred Equity. None.
Release of Property. Not permitted.
Letter of Credit. None.
Right of First Offer/Right of First Refusal. None.
Real Estate Substitution. Not permitted.
Subordinate and Mezzanine Indebtedness. None.
Ground Lease. None.
Terrorism Insurance. The borrower is required to maintain terrorism insurance in an amount equal to the full replacement cost of the 1825 K Street NW Property, as well as 18 months of rental loss and/or business interruption coverage. See “Risk Factors—Risks Relating to the Mortgage Loans—Terrorism Insurance May Not Be Available for All Mortgaged Properties” in the prospectus.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
147
No. 11 – Prada Waikiki |
|
Mortgage Loan Information | | Mortgaged Property Information |
Mortgage Loan Seller: | Wells Fargo Bank, National Association | | Single Asset/Portfolio: | Single Asset |
Credit Assessment (Moody’s/Fitch/KBRA): | NR/NR/NR | | Property Type – Subtype: | Retail – Single Tenant |
Original Principal Balance: | $27,000,000 | | Location: | Honolulu, HI |
Cut-off Date Balance: | $26,981,699 | | Size: | 5,840 SF |
% of Initial Pool Balance: | 3.7% | | Cut-off Date Balance Per SF: | $4,620.15 |
Loan Purpose: | Refinance | | Maturity Date Balance Per SF: | $4,011.55 |
Borrower Sponsors: | Yoko Kimura, Akiko Kimura, the Akiko Kimura Revocable Living Trust Dated 05/22/92, Yuko Kimura-Drye, and the Yuko Kimura-Drye Revocable Living Trust Dated 05/22/92 | | Year Built/Renovated: | 1995/2023 |
Guarantors: | Yoko Kimura, Akiko Kimura, the Akiko Kimura Revocable Living Trust Dated 05/22/92, Yuko Kimura-Drye, and the Yuko Kimura-Drye Revocable Living Trust Dated 05/22/92 | | Title Vesting: | Fee |
Mortgage Rate: | 6.7280% | | Property Manager: | Self-Managed |
Note Date: | June 30, 2023 | | Current Occupancy (As of): | 100.0% (8/1/2023) |
Seasoning: | 1 month | | YE 2022 Occupancy: | 100.0% |
Maturity Date: | July 1, 2033 | | YE 2021 Occupancy: | 100.0% |
IO Period: | 0 months | | YE 2020 Occupancy: | 100.0% |
Loan Term (Original): | 120 months | | YE 2019 Occupancy: | 100.0% |
Amortization Term (Original): | 360 months | | As-Is Appraised Value(2): | $60,500,000 |
Loan Amortization Type: | Amortizing Balloon | | As-Is Appraised Value Per SF: | $10,359.59 |
Call Protection: | L(25),D(91),O(4) | | As-Is Appraisal Valuation Date: | May 22, 2023 |
Lockbox Type: | Springing | | Underwriting and Financial Information |
Additional Debt: | None | | YE 2022 NOI(3): | $2,834,431 |
Additional Debt Type (Balance): | NAP | | YE 2021 NOI(3): | $1,960,149 |
| | | YE 2020 NOI(4): | $1,868,945 |
| | | YE 2019 NOI(4): | $2,331,265 |
| | | U/W Revenues: | $3,121,592 |
| | | U/W Expenses: | $242,686 |
Escrows and Reserves | | U/W NOI: | $2,878,906 |
| Initial | Monthly | Cap | | U/W NCF: | $2,876,512 |
Taxes(1) | $0 | Springing | NAP | | U/W DSCR based on NOI/NCF: | 1.37x / 1.37x |
Insurance | $0 | $2,686 | NAP | | U/W Debt Yield based on NOI/NCF: | 10.7% / 10.7% |
Replacement Reserves | $0 | $0 | NAP | | U/W Debt Yield at Maturity based on NOI/NCF: | 12.3% / 12.3% |
TI/LC | $0 | $0 | NAP | | Cut-off Date LTV Ratio: | 44.6% |
| | | | | LTV Ratio at Maturity: | 38.7% |
| | | | | | |
| | | | | | | |
Sources and Uses |
Sources | | | | | Uses | | | |
Original Mortgage Loan Amount | $27,000,000 | | 100.0% | | Loan Payoff(5) | $24,861,111 | | 92.1% |
| | | | | Closing Costs | 711,728 | | 2.6 |
| | | | | Return of Equity | 1,427,162 | | 5.3 |
| | | | | | | | |
Total Sources | $27,000,000 | | 100.0% | | Total Uses | $27,000,000 | | 100.0% |
| (1) | As long as (i) no event of default or cash trap event period is continuing, (ii) the Prada USA Corp. (“Prada”) lease is in full force and effect, (iii) Prada is obligated to pay all taxes directly to the applicable taxing authority and provides payment evidence to the lender prior to the due date, and (iv) there has been no material reduction in the credit rating of Prada, the borrower is not required to make deposits to the tax reserve account. |
| (2) | The appraisal also included a Hypothetical Go Dark value of $45,100,000 as of May 22, 2023, which results in a Cut-off Date LTV Ratio of 59.8%. |
| (3) | The increase in NOI from YE 2021 to YE 2022 was primarily due to an $876,000 free rent adjustment that was included in 2021. |
| (4) | The decrease in NOI from YE 2019 to YE 2020 was primarily due to the tenant deferring its rent for four months from April 1, 2020 to July 31, 2020 due to COVID-19. |
| (5) | The loan proceeds pay-off an existing CMBS loan securitized in WFRBS 2014-C19. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
148
Property Type: Retail | Loan #11 | Cut-off Date Balance: | | $26,981,699 |
Property Subtype: Single Tenant Address: 2174 & 2176 Kalakaua Avenue Honolulu, HI 96815 | Prada Waikiki | Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: | | 44.6% 1.37x 10.7% |
The Mortgage Loan. The eleventh largest mortgage loan (the “Prada Waikiki Mortgage Loan”) is evidenced by the first priority fee interest encumbering a single tenant retail property totaling 5,840 square feet located in Honolulu, Hawaii (the “Prada Waikiki Property”).
The Borrower and Borrower Sponsors. The borrower is K Properties, Inc. a Hawaii corporation and single purpose entity. The borrower sponsors and nonrecourse carveout guarantors are Yoko Kimura, Akiko Kimura, the Akiko Kimura Revocable Living Trust Dated 05/22/92, Yuko Kimura-Drye, and the Yuko Kimura-Drye Revocable Living Trust Dated 05/22/92. Yoko Kimura is the President of K Properties, Inc. which was founded in 1998.
The Property. The Prada Waikiki Property consists of a single tenant, two-story retail property totaling 5,840 square feet, located in Honolulu, Hawaii. Built in 1995, the property is situated on an 0.11-acre site, and has no parking on site, which is typical of retail storefront properties in the area. The Prada Waikiki Property was renovated in 2023 at the tenant’s sole cost. The interior finishes include glass windows, stone tile, and floor to ceiling mirrors throughout, and a portion of the ground floor is vaulted through the second floor. The Prada Waikiki Property also includes a 500 square foot patio, which is not included in the net rentable area. As of August 1, 2023, the Prada Waikiki Property is 100.0% leased to Prada USA Corp.
Major Tenant.
Largest Tenant: Prada USA Corp. (5,840 square feet; 100.0% of net rentable area; 100.0% of underwritten base rent; 12/31/2035 lease expiration) – Prada is 100% owned by The Prada Group, which was founded in 1913 and owns luxury brands including Prada, Miu Miu, Church’s, Car Shoe, Pasticceria Marchesi and Luna Rossa. The parent company does not guaranty the lease. Prada has been a tenant at the Prada Waikiki Property since 1995 and recently renewed its lease early, for a 10-year term, commencing on January 1, 2026. The lease has no termination options and one, 5-year renewal option.
The following table presents certain information relating to the tenancy at the Prada Waikiki Property:
Major Tenant(1)
Tenant Name | Credit Rating (Fitch/ Moody’s/ S&P) | Tenant NRSF | % of NRSF | Annual U/W Base Rent PSF | Annual U/W Base Rent | % of Total Annual U/W Base Rent | Lease Expiration Date | Ext. Options | Term. Option (Y/N) |
Major Tenant | | | | | | | | |
Prada USA Corp. | NR/NR/NR | 5,840 | 100.0% | $521.10 | $3,043,200 | 100.0% | 12/31/2035 | 1, 5-year | N |
| 5,840 | 100.0% | $521.10 | $3,043,200 | 100.0% | | | |
| | | | | | | | |
Occupied Collateral Total | 5,840 | 100.0% | $521.10 | $3,043,200 | 100.0% | | | |
| | | | | | | | |
Vacant Space | 0 | 0.0% | | | | | | |
| | | | | | | | |
Collateral Total | 5,840 | 100.0% | | | | | | |
| | | | | | | | | |
| (1) | Based on the underwritten rent roll as of August 1, 2023. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
149
Property Type: Retail | Loan #11 | Cut-off Date Balance: | | $26,981,699 |
Property Subtype: Single Tenant Address: 2174 & 2176 Kalakaua Avenue Honolulu, HI 96815 | Prada Waikiki | Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: | | 44.6% 1.37x 10.7% |
The following table presents certain information relating to the lease rollover schedule at the Prada Waikiki Property:
Lease Expiration Schedule(1)
Year Ending December 31, | No. of Leases Expiring | Expiring NRSF | % of Total NRSF | Cumulative Expiring NRSF | Cumulative % of Total NRSF | Annual U/W Base Rent | % of Total Annual U/W Base Rent | Annual U/W Base Rent PSF |
MTM | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2023 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2024 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2025 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2026 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2027 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2028 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2029 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2030 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2031 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2032 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2033 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2034 & Beyond | 1 | 5,840 | 100.0% | 5,840 | 100.0% | $3,043,200 | 100.0% | $521.10 |
Vacant | 0 | 0 | 0.0% | 5,840 | 100.0% | $0 | 0.0% | $0.00 |
Total/Weighted Average | 1 | 5,840 | 100.0% | | | $3,043,200 | 100.0% | $521.10 |
| (1) | Information obtained from the underwritten rent roll as of August 1, 2023. |
The following table presents historical occupancy percentages at the Prada Waikiki Property:
Historical Occupancy
12/31/2019(1) | 12/31/2020(1) | 12/31/2021(1) | 12/31/2022(1) | 8/1/2023(2) |
100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
| (1) | Information obtained from the borrower sponsor. |
| (2) | Information obtained from the underwritten rent roll as of August, 1, 2023. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
150
Property Type: Retail | Loan #11 | Cut-off Date Balance: | | $26,981,699 |
Property Subtype: Single Tenant Address: 2174 & 2176 Kalakaua Avenue Honolulu, HI 96815 | Prada Waikiki | Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: | | 44.6% 1.37x 10.7% |
Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating results and the underwritten net cash flow at the Prada Waikiki Property:
Cash Flow Analysis
| 2019 | 2020 | 2021 | 2022 | U/W | %(1) | U/W $ per SF |
Base Rent | $2,510,640 | $2,041,487 | $3,043,200 | $3,043,200 | $3,043,200 | 93.0% | $521.10 |
Grossed Up Vacant Space | 0 | 0 | 0 | 0 | 0 | 0.0% | 0.00 |
Gross Potential Rent | $2,510,640 | $2,041,487 | $3,043,200 | $3,043,200 | $3,043,200 | 93.0% | $521.10 |
Other Income | 0 | 0 | 0 | 0 | 0 | 0.0 | 0.00 |
Total Recoveries | 0 | 0 | 0 | 0 | 230,552 | 7.0 | 39.48 |
(Free Rent Adjustment) | 0 | 0 | (876,000) | 0 | 0 | 0.0 | 0.00 |
Net Rental Income | $2,510,640 | $2,041,487 | $2,167,200 | $3,043,200 | $3,273,752 | 100.0% | $560.57 |
(Vacancy & Credit Loss) | 0 | 0 | 0 | 0 | (152,160) | (5.0) | (26.05) |
Collection Loss | 0 | 0 | 0 | 0 | 0 | 0.0 | 0.00 |
Effective Gross Income | $2,510,640 | $2,041,487 | $2,167,200 | $3,043,200 | $3,121,592 | 95.4% | $534.52 |
| | | | | | | |
Real Estate Taxes | 75,243 | 96,937 | 114,210 | 115,486 | 121,438 | 3.9 | 20.79 |
Insurance | 20,381 | 20,621 | 20,675 | 23,189 | 27,600 | 0.9 | 4.73 |
Management Fee | 82,878 | 54,154 | 71,239 | 68,722 | 93,648 | 3.0 | 16.04 |
Other Operating Expenses | 873 | 830 | 927 | 1,372 | 0 | 0.0 | 0.00 |
Total Operating Expenses | $179,375 | $172,542 | $207,051 | $208,769 | $242,686 | 7.8% | $41.56 |
| | | | | | | |
Net Operating Income | $2,331,265(2) | $1,868,945(2) | $1,960,149(3) | $2,834,431(3) | $2,878,906 | 92.2% | $492.96 |
Replacement Reserves | 0 | 0 | 0 | 0 | 2,394 | 0.1 | 0.41 |
TI/LC | 0 | 0 | 0 | 0 | 0 | 0.0 | 0.00 |
Net Cash Flow | $2,331,265 | $1,868,945 | $1,960,149 | $2,834,431 | $2,876,512 | 92.1% | $492.55 |
| | | | | | | |
NOI DSCR | 1.11x | 0.89x | 0.93x | 1.35x | 1.37x | | |
NCF DSCR | 1.11x | 0.89x | 0.93x | 1.35x | 1.37x | | |
NOI Debt Yield | 8.6% | 6.9% | 7.3% | 10.5% | 10.7% | | |
NCF Debt Yield | 8.6% | 6.9% | 7.3% | 10.5% | 10.7% | | |
| (1) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (2) | The decrease in Net Operating Income from 2019 to 2020 was primarily due to the tenant deferring its rent for four months from April 1, 2020 to July 31, 2020 due to COVID-19. |
| (3) | The increase in Net Operating Income from 2021 to 2022 was primarily due to an $876,000 free rent adjustment that was included in 2021. |
Market Overview and Competition. The Prada Waikiki Property is located in Honolulu, Hawaii, within the Waikiki Resort District. The area is densely developed and within walking distance of shopping, restaurant, and entertainment activities. Kalakaua Avenue, on which the property is located, is Waikiki’s major thoroughfare. Waikiki, which is approximately 3.0 miles south of downtown Honolulu, is the center of Hawaii’s tourist industry. The Prada Waikiki Property is located within 0.5 miles of numerous hotels including the Hyatt Regency Waikiki Beach Resort, the Moana Surfrider, a Westin Resort & Spa, Sheraton Waikiki, and the Outrigger Reef Waikiki Beach Resort. Additionally, it is located approximately 0.4 miles from Waikiki Beach. According to the appraisal, within a 1-, 3- and 5- mile radius of the Prada Waikiki Property, the estimated 2022 population is 49,432, 201,181, and 296,745, respectively, and the 2022 average household income is $84,438, $107,011, and $113,761, respectively.
According to a third party research report, the Prada Waikiki Property is situated within the Waikiki retail submarket. The submarket reports a total inventory of approximately 2.3 million square feet with a 7.9% vacancy rate and average market rents of $66.66 per square foot. There is currently nothing under construction in the submarket. The appraiser identified four lease comparables with rents of $500.00 per square foot for the first floor high street retail leases and $120.00 to $145.00 per square foot for second floor space.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
151
Property Type: Retail | Loan #11 | Cut-off Date Balance: | | $26,981,699 |
Property Subtype: Single Tenant Address: 2174 & 2176 Kalakaua Avenue Honolulu, HI 96815 | Prada Waikiki | Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: | | 44.6% 1.37x 10.7% |
The following table presents certain information relating to the appraiser’s market rent conclusions for the Prada Waikiki Property:
Market Rent Summary(1)
| Ground Floor | 2nd Floor |
Market Rent (PSF) | $550 | $146 |
Lease Term (Years) | 10 | 10 |
Lease Type | NNN | NNN |
Rent Increase Projection | 3.0%/Year | 3.0%/Year |
Tenant Improvements | $0.00 | $0.00 |
Free Rent (months) | 0 | 0 |
| (1) | Information obtained from the appraisal. |
The table below presents certain information relating to comparable sales pertaining to the Prada Waikiki Property identified by the appraiser:
Comparable Sales(1)
Property Name | Location | Year Built/Renovated | Rentable Area (SF) | Interest Transferred | Sale Date | Sale Price | Sale Price (PSF) |
First Hawaiian Bank Waikiki Branch 2181 Kalakaua Avenue Condo Unit A | Honolulu, HI | 1967 / NAP | 7,413 | Leased Fee | Oct-2019 | $72,000,000 | $9,713 |
| | | | | | | |
Chrome Hearts 2184 Kalakaua Avenue | Honolulu, HI | 1935 / NAP | 3,050 | Leased Fee | Nov-2018 | $30,000,000 | $9,836 |
| | | | | | | |
Luxury Storefront Retail Building 8379 Melrose Avenue | West Hollywood, CA | 1951 / NAP | 3,275 | Leased Fee | Apr-2022 | $19,200,000 | $5,863 |
| | | | | | | |
M&Ms Store 1600 Broadway | New York, NY | 2005 / NAP | 25,693 | Leased Fee | Feb-2022 | $191,500,000 | $7,453 |
| | | | | | | |
Williams Sonoma Union Square 340 Post Street | San Francisco, CA | 1923 / NAP | 14,475 | Leased Fee | Dec-2021 | $63,000,000 | $4,352 |
| | | | | | | |
Luxury Boutique Retail Building 457-459 North Rodeo Drive | Beverly Hills, CA | 1945 / 2011 | 11,925 | Fee Simple/Freehold | Nov-2020 | $122,000,000 | $10,231 |
| | | | | | | |
Retail Storefront Building 449-453 North Beverly Drive | Beverly Hills, CA | 1921 / NAP | 6,020 | Fee Simple/Freehold | Jun-2020 | $30,000,000 | $4,983 |
| (1) | Information obtained from the appraisal. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
152
Property Type: Retail | Loan #11 | Cut-off Date Balance: | | $26,981,699 |
Property Subtype: Single Tenant Address: 2174 & 2176 Kalakaua Avenue Honolulu, HI 96815 | Prada Waikiki | Cut-off Date LTV: U/W NCF DSCR: U/W NOI Debt Yield: | | 44.6% 1.37x 10.7% |
The following table presents certain information relating to comparable leases on Kalakaua Avenue, for the Prada Waikiki Property:
Comparable Kalakaua High Street Retail Leases(1)
Lease Start Date | Total GLA (SF) | First Floor Rent | Second Floor Rent | Lease Term | TI/FR |
Prada Waikiki (Subject) January 2022 | 5,840(2) | $521.10(2) | $521.10(2) | 120(2) | None |
Late 2022 | 4,480 | $500.00 | $120.00 | 120 | None |
Late 2022 | 2,205 | $500.00 | $120.00 | 120 | None |
March 2021 | 5,399 | $500.00 | $145.00 | 120 | None |
December 2019 | 2,247 | $500.00 | $145.00 | 120 | None |
| (1) | Information obtained from the appraisal. |
| (2) | Information obtained from the underwritten rent roll as of August 1, 2023. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
153
No. 12 – 22330 Glenn Drive |
|
Mortgage Loan Information | | Mortgaged Property Information |
Mortgage Loan Seller: | JPMorgan Chase Bank, National | | Single Asset/Portfolio: | Single Asset |
| Association | | Property Type – Subtype: | Office – Suburban |
Credit Assessment | NR/NR/NR | | Location: | Sterling, VA |
(Moody’s/Fitch/KBRA): | | | Size(2): | 167,440 SF |
Original Principal Balance: | $26,340,000 | | Cut-off Date Balance Per SF: | $157.31 |
Cut-off Date Balance: | $26,340,000 | | Maturity Date Balance Per SF: | $157.31 |
% of Initial Pool Balance: | 3.7% | | Year Built/Renovated: | 2016/NAP |
Loan Purpose: | Recapitalization | | Title Vesting: | Fee |
Borrower Sponsor: | Office Properties Income Trust | | Property Manager: | The RMR Group LLC |
Guarantor: | Office Properties Income Trust | | Current Occupancy (As of): | 100.0% (8/1/2023) |
Mortgage Rate: | 8.1390% | | YE 2022 Occupancy: | 100.0% (12/31/2022) |
Note Date: | June 23, 2023 | | YE 2021 Occupancy: | 100.0% (12/31/2021) |
Seasoning: | 1 month | | YE 2020 Occupancy: | 100.0% (12/31/2020) |
Maturity Date: | July 1, 2028 | | YE 2019 Occupancy: | 100.0% (12/31/2019) |
IO Period: | 60 months | | As-Is Appraised Value: | $45,000,000 |
Loan Term (Original): | 60 months | | As-Is Appraised Value Per SF: | $268.75 |
Amortization Term (Original): | NAP | | As-Is Appraisal Valuation Date: | May 4, 2023 |
Loan Amortization Type: | Interest Only | | | |
Call Protection: | L(24),YM1(29),O(7) | | |
Lockbox Type: | Hard/Springing Cash Management | | Underwriting and Financial Information |
Additional Debt: | None | | YE 2022 NOI: | $3,786,674 |
Additional Debt Type (Balance): | NAP | | YE 2021 NOI: | $3,772,716 |
| | | YE 2020 NOI: | $3,882,634 |
| | | YE 2019 NOI(3): | $4,096,752 |
| | | U/W Revenues: | $5,726,916 |
| | | U/W Expenses: | $1,740,634 |
Escrows and Reserves | | U/W NOI: | $3,986,281 |
| Initial | Monthly | Cap | | U/W NCF: | $3,952,793 |
Tax Reserve(1) | $0 | Springing | NAP | | U/W DSCR based on NOI/NCF: | 1.83x / 1.82x |
Insurance Reserve(1) | $0 | Springing | NAP | | U/W Debt Yield based on NOI/NCF: | 15.1% / 15.0% |
Replacement Reserve(1) | $0 | Springing | NAP | | U/W Debt Yield at Maturity based on | 15.1% / 15.0% |
TI/LC Reserve(1) | $0 | Springing | NAP | | NOI/NCF: | |
| | | | | Cut-off Date LTV Ratio: | 58.5% |
| | | | | LTV Ratio at Maturity: | 58.5% |
| | | | | | | |
Sources and Uses |
Sources | | | | | Uses | | | |
Mortgage Loan Amount: | $26,340,000 | | 100.0% | | Paydown of Corporate Revolver(4): | $26,041,100 | | 98.9% |
| | | | | Closing Costs: | 298,900 | | 1.1 |
Total Sources: | $26,340,000 | | 100.0% | | Total Uses: | $26,340,000 | | 100.0% |
| | | | | | | | |
| (1) | On each monthly payment date during the continuance of a Cash Sweep Event (as defined below), the borrower is required to (i) deposit into a tax reserve an amount equal to 1/12 of the estimated annual taxes, (ii) deposit into an insurance reserve an amount equal to 1/12 of estimated insurance premiums; provided that the requirement is conditionally waived so long as no event of default is continuing and the borrower maintains a blanket insurance policy in accordance with the 22330 Glenn Drive Mortgage Loan (as defined below) documents, (iii) deposit approximately $2,791 in a Replacement Reserve and (iv) deposit approximately $27,907 into a TI/LC Reserve. A “Cash Sweep Event” means, without limitation, a period commencing upon (a) an event of default under the 22330 Glenn Drive Mortgage Loan documents, (b) a bankruptcy action of the borrower or property manager, (c) the debt service coverage ratio based on the trailing three-month period immediately preceding the date of determination being less than 1.35x or (d) the GSA (as defined below) tenant or any replacement tenant in accordance with the 22330 Glenn Drive Mortgage Loan documents that occupies a material portion of the net rentable area at the 22330 Glenn Drive Property, or any guarantor of the GSA tenant or such replacement tenants guarantor (a “Major Tenant”) (i) fails to timely exercise its right to renew its lease, (ii) provides the borrower or property manager with written notice of its intent to terminate its lease or the date the applicable lease is terminated, surrendered or otherwise cancelled prior to its then current expiration date, (iii) “goes dark”, or discontinues its business at a material portion of the 22330 Glenn Drive Property (as defined below) or otherwise provides written notice of its intention to do the same, (iv) is in monetary or non-monetary default under the Major Tenant lease or (v) is subject to a bankruptcy action. |
| (2) | According to the borrower sponsor, the square footage at the 22330 Glenn Drive Property is comprised of approximately 65% office, 25% sensitive compartmented information (“SCIF”) and 10% data center space. |
| (3) | YE 2019 NOI consists of 2018 utility reimbursements (approximately $409,000) and a 2018 base rent credit to the GSA (approximately $127,000). |
| (4) | Loan proceeds, less closing costs and stub interest, were returned to the borrower sponsor and are expected to be allocated towards the paydown of a corporate level revolving debt facility in conjunction with the merger of Office Properties Income Trust, the current borrower sponsor, and Diversified Healthcare Trust. In connection with such merger, the lender and the borrower sponsor entered into a debt commitment letter, pursuant to which, subject to the terms and conditions of the debt commitment letter, the lender has committed to provide a senior secured bridge facility to the subsidiaries of the borrower sponsor. See “Description of the Mortgage Pool—Additional Indebtedness—Other Secured Indebtedness” in the prospectus for additional information. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Office | Loan #12 | Cut-off Date Balance: | | $26,340,000 |
Property Subtype: Suburban | 22330 Glenn Drive | Cut-off Date LTV: | | 58.5% |
Address: 22330 Glenn Drive | | U/W NCF DSCR: | | 1.82x |
Sterling, VA 20164 | | U/W NOI Debt Yield: | | 15.1% |
The Mortgage Loan. The twelfth largest mortgage loan (the “22330 Glenn Drive Mortgage Loan”) is evidenced by a single promissory note in the original principal amount of $26,340,000 and secured by a first priority fee mortgage encumbering a 167,440 SF single tenant office property located in Sterling, Virginia (the “22330 Glenn Drive Property”).
The Borrowers and Borrower Sponsor. The borrower is Sterling Park LLC, a Delaware limited liability company. The borrower is a single purpose bankruptcy-remote entity with two independent directors in its organizational structure.
The borrower sponsor and nonrecourse carveout guarantor is Office Properties Income Trust (NASDAQ: OPI). Office Properties Income Trust is a publicly traded REIT focused on owning, operating and leasing buildings primarily occupied by single tenants and those with high credit quality characteristics. Office Properties Income Trust has 157 properties in its portfolio, spanning approximately 20.9 million SF and overall occupancy rate of 90.5%. Office Properties Income Trust has entered into a definitive merger agreement with Diversified Healthcare Trust (NASDAQ: DHC) which is expected to close in the third quarter of 2023. See “Description of the Mortgage Pool—Additional Indebtedness— Other Secured Indebtedness” in the prospectus for additional information.
The Property. The 22330 Glenn Drive Property is a Class A, 3-story single tenant office property comprised of 167,440 SF located in Sterling, Virginia. The 22330 Glenn Drive Property was built to suit in 2016 for its sole tenant, the United States Government; (Moody’s/ Fitch/S&P:Aaa/AAA/AA+) (the “GSA”). The 22330 Glenn Drive Property features 1,065 surface parking spaces resulting in a parking ratio of approximately 6.36 spaces per 1,000 SF and sits on an approximately 13.19-acre parcel of land. According to the borrower sponsor, the square footage at the 22330 Glenn Drive Property is comprised of approximately 65% office space, approximately 25% SCIF space and approximately 10% of data center space. Additionally, according to the borrower sponsor, the 22330 Glenn Drive Property is utilized around the clock by the GSA, with employees working in three separate shifts over the course of each day. The GSA lease is structured with no termination options, one, 10-year renewal option and expires on August 16, 2031. In the event the GSA tenant exercises its renewal option, the GSA will have the option to purchase the 22330 Glenn Drive Property upon the expiration of its fully extended lease term in August 2041 for $75.0 million.
The following table presents certain information relating to the tenancy at the 22330 Glenn Drive Property:
Sole Tenant(1)
Tenant Name | Credit Rating (Moody’s/ Fitch/ S&P)(2) | Tenant NRSF | % of NRSF | Annual U/W Base Rent PSF(3) | Annual U/W Base Rent(3) | % of Total Annual U/W Base Rent(3) | Lease Expiration Date | Ext. Options | Term. Option (Y/N) |
Sole Tenant | | | | | | | | |
GSA(4)(5) | Aaa/AAA/AA+ | 167,440 | 100.0% | $31.44 | $5,263,845 | 100.0% | 8/16/2031 | 1, 10-year | N |
Occupied Collateral Total | 167,440 | 100.0% | $31.44 | $5,263,845 | 100.0% | | | |
| | | | | | | | |
Vacant Space | 0 | 0.0% | | | | | | |
| | | | | | | | |
Collateral Total | 167,440 | 100.0% | | | | | | |
| (1) | Based on the underwritten rent roll as of August 1, 2023. |
| (2) | Credit Rating reflects the rating of the United States Government, which is the named entity on the lease. |
| (3) | Pursuant to the terms of the amended modified gross lease for GSA, effective January 1, 2023, GSA’s total annual rent is approximately $5,263,845 ($31.44 per SF), inclusive of payments associated with certain fixed operating costs, subject to CPI adjustments, as applicable. Lender underwriting for GSA’s in-place rent incorporates rental components of (i) shell rent of $3,313,728 ($19.79 per SF), (ii) operating costs of $1,187,328 ($7.09 per SF) adjusted based on the 2022 CPI index and further subject to annual CPI based adjustments, as applicable and (iii) certain other operating cost payments related to maintenance of GSA equipment and miscellaneous items of $762,789 ($4.56 per SF). |
| (4) | GSA has occupied 100.0% of the 22330 Glenn Drive Property since 2017. The GSA lease is structured with no termination options and expires on August 16, 2031. |
| (5) | In the event the GSA tenant exercises its renewal option, the GSA will have the option to purchase the 22330 Glenn Drive Property upon the expiration of its fully extended lease term in August 2041 for $75.0 million. See “Description of the Mortgage Pool–Tenant Issues–Purchase Options and Rights of First Refusal” in the prospectus for additional information. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
155
Property Type: Office | Loan #12 | Cut-off Date Balance: | | $26,340,000 |
Property Subtype: Suburban | 22330 Glenn Drive | Cut-off Date LTV: | | 58.5% |
Address: 22330 Glenn Drive | | U/W NCF DSCR: | | 1.82x |
Sterling, VA 20164 | | U/W NOI Debt Yield: | | 15.1% |
The following table presents certain information relating to the lease rollover schedule at the 22330 Glenn Drive Property:
Lease Expiration Schedule(1)(2)
Year Ending December 31 | No. of Leases Expiring | Expiring NRSF | % of Total NRSF | Cumulative Expiring NRSF | Cumulative % of Total NRSF | Annual U/W Base Rent(3) | % of Total Annual U/W Base Rent(3) | Annual U/W Base Rent PSF(3) |
MTM | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2023 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2024 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2025 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2026 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2027 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2028 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2029 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2030 | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2031 | 1 | 167,440 | 100.0% | 167,440 | 100.0% | $5,263,845 | 100.0% | $31.44 |
2032 | 0 | 0 | 0.0% | 167,440 | 100.0% | $0 | 0.0% | $0.00 |
2033 | 0 | 0 | 0.0% | 167,440 | 100.0% | $0 | 0.0% | $0.00 |
2034 & Beyond | 0 | 0 | 0.0% | 167,440 | 100.0% | $0 | 0.0% | $0.00 |
Vacant | 0 | 0 | 0.0% | 167,440 | 100.0% | $0 | 0.0% | $0.00 |
Total/Weighted Average | 1 | 167,440 | 100.0% | | | $5,263,845 | 100.0% | $31.44 |
| (1) | Based on the underwritten rent roll as of August 1, 2023. |
| (2) | GSA has occupied 100.0% of the 22330 Glenn Drive Property since 2017. The GSA lease is structured with no termination options and expires on August 16, 2031. |
| (3) | Pursuant to the terms of the amended modified gross lease for GSA, effective January 1, 2023, GSA’s total annual rent is approximately $5,263,845 ($31.44 per SF), inclusive of payments associated with certain fixed operating costs, subject to CPI adjustments, as applicable. Lender underwriting for GSA’s in-place rent incorporates rental components of (i) shell rent of $3,313,728 ($19.79 per SF), (ii) operating costs of $1,187,328 ($7.09 per SF) adjusted based on the 2022 CPI index and further subject to annual CPI based adjustments, as applicable and (iii) certain other operating cost payments related to maintenance of GSA equipment and miscellaneous items of $762,789 ($4.56 per SF). |
The following table presents historical occupancy percentages at the 22330 Glenn Drive Property:
Historical Occupancy(1)
2018 | 2019 | 2020 | 2021 | 2022 | 8/1/2023(2) |
100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
| (1) | GSA has occupied 100.0% of the 22330 Glenn Drive Property since 2017. The GSA lease is structured with no termination options and expires on August 16, 2031 |
| (2) | Based on the underwritten rent roll as of August 1, 2023. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Office | Loan #12 | Cut-off Date Balance: | | $26,340,000 |
Property Subtype: Suburban | 22330 Glenn Drive | Cut-off Date LTV: | | 58.5% |
Address: 22330 Glenn Drive | | U/W NCF DSCR: | | 1.82x |
Sterling, VA 20164 | | U/W NOI Debt Yield: | | 15.1% |
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and underwritten net cash flow at the 22330 Glenn Drive Property:
Cash Flow Analysis
| | 2019 | | | 2020 | | | 2021 | | | 2022 | | | U/W(1) | | | %(2) | | | U/W $ per SF | |
Rents in Place(3) | | $5,091,441 | | | $5,113,001 | | | $5,173,347 | | | $5,221,340 | | | $5,263,845 | | | 91.9 | % | | $31.44 | |
Reimbursements | | 395,725 | | | 430,328 | | | 389,029 | | | 491,305 | | | 463,071 | | | 8.1 | | | 2.77 | |
Other Income(4) | | 281,878 | | | 5,217 | | | 1,721 | | | (22,390 | ) | | 0 | | | 0.0 | | | 0.00 | |
Effective Gross Income | | $5,769,045 | | | $5,548,547 | | | $5,564,097 | | | $5,690,256 | | | $5,726,916 | | | 100.0 | % | | $34.20 | |
| | | | | | | | | | | | | | | | | | | | | |
Real Estate Taxes | | 361,041 | | | 357,264 | | | 340,970 | | | 316,606 | | | 320,982 | | | 5.6 | | | 1.92 | |
Insurance | | 27,489 | | | 33,948 | | | 28,383 | | | 24,164 | | | 23,624 | | | 0.4 | | | 0.14 | |
Management Fee | | 172,717 | | | 165,228 | | | 168,208 | | | 174,305 | | | 171,807 | | | 3.0 | | | 1.03 | |
Other Operating Expenses | | 1,111,045 | | | 1,109,473 | | | 1,253,820 | | | 1,388,506 | | | 1,224,221 | | | 21.4 | | | 7.31 | |
Total Operating Expenses | | $1,672,293 | | | $1,665,913 | | | $1,791,382 | | | $1,903,581 | | | $1,740,634 | | | 30.4 | % | | $10.40 | |
| | | | | | | | | | | | | | | | | | | | | |
Net Operating Income | | $4,096,752 | | | $3,882,634 | | | $3,772,716 | | | $3,786,674 | | | $3,986,281 | | | 69.6 | % | | $23.81 | |
Capital Expenditures | | 0 | | | 0 | | | 0 | | | 0 | | | 33,488 | | | 0.6 | | | 0.20 | |
TI/LC | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0.0 | | | 0.00 | |
Net Cash Flow | | $4,096,752 | | | $3,882,634 | | | $3,772,716 | | | $3,786,674 | | | $3,952,793 | | | 69.0 | % | | $23.61 | |
| | | | | | | | | | | | | | | | | | | | | |
NOI DSCR | | 1.88 | x | | 1.79 | x | | 1.74 | x | | 1.74 | x | | 1.83 | x | | | | | | |
NCF DSCR | | 1.88 | x | | 1.79 | x | | 1.74 | x | | 1.74 | x | | 1.82 | x | | | | | | |
NOI Debt Yield | | 15.6 | % | | 14.7 | % | | 14.3 | % | | 14.4 | % | | 15.1 | % | | | | | | |
NCF Debt Yield | | 15.6 | % | | 14.7 | % | | 14.3 | % | | 14.4 | % | | 15.0 | % | | | | | | |
| (1) | Based on the underwritten rent roll as of August 1, 2023. |
| (2) | Represents (i) percent of Effective Gross Income for all revenue fields, and (ii) percent of Effective Gross Income for all other fields. |
| (3) | Pursuant to the terms of the amended modified gross lease for GSA, effective January 1, 2023, GSA’s total annual rent is approximately $5,263,845 ($31.44 per SF), inclusive of payments associated with certain fixed operating costs, subject to CPI adjustments, as applicable. Lender underwriting for GSA’s in-place rent incorporates rental components of (i) shell rent of $3,313,728 ($19.79 per SF), (ii) operating costs of $1,187,328 ($7.09 per SF) adjusted based on the 2022 CPI index and further subject to annual CPI based adjustments, as applicable, and (iii) certain other operating cost payments related to maintenance of GSA equipment and miscellaneous items of $762,789 ($4.56 per SF). |
| (4) | 2019 Other Income consists of 2018 utility reimbursements (approximately $409,000) and 2018 base rent credit to the GSA (approximately $127,000). |
Appraisal. The appraisal concluded to an “as is” appraised value for the 22330 Glenn Drive Property of $45,000,000 and a land value of $25,900,000 as of May 4, 2023.
Environmental Matters. According to the Phase I environmental site assessments dated May 11, 2023, there was no evidence of any recognized environmental conditions at the 22330 Glenn Drive Property.
Market Overview and Competition. The 22330 Glenn Drive Property is located in Sterling, Virginia, within the Washington D.C. core based statistical area, (the “Washington CBSA”). The Washington CBSA is the seventh most populous metropolitan area in the United States, with a population of approximately 6.3 million as of year-end 2022, representing an approximately 0.8% annualized growth rate since 2012. The median annual household income in the Washington CBSA is $101,304, which is approximately 52.5% higher than the United States average. From 2012 through 2022, the unemployment rate in the Washington CBSA decreased at an average annual rate of approximately 4.7% and as of November 2022 the unemployment rate was approximately 3.1%. The largest employers in the Washington CBSA include District of Columbia Government (25,551 employees), Fairfax Country Public Schools (24,700 employees), Montgomery County Public Schools (24,589 employees) and Naval Support Activity Washington (24,000 employees). According to the appraisal, the unemployment rate in the Washington CBSA is forecasted to remain steady at approximately 3.0% through 2027, while the United States average unemployment rate is expected to reach approximately 4.0% by 2027.
The 22330 Glenn Drive Property is further situated within the Loudoun County office market (the “Loudoun County Office Market”). According to the appraisal, demand for space in the Loudoun County Office Market is primarily attributable to government agencies, government contractors, attorneys, accounting firms, associations, as well as private enterprises that need to be located in close proximity to the other branches of the United States Government. The vacancy rate in the Loudoun County Office Market was 14.1% in the first quarter of 2023, representing a 40 basis point decline from the first quarter of 2022. The Class A vacancy rate in the Loudoun County Office Market was 12.4%, while Class B product saw vacancy rates peak at 20.1% in the first quarter of 2023. Additionally, as of the first quarter of 2023, net absorption in the Loudoun County Office Market totaled 58,183 SF, broken out between a positive net absorption of 62,796 SF for Class A product, and a negative net absorption of 4,613 SF for Class B product, representing the second highest overall net absorption in Northern Virginia. According to the appraisal, direct Class A asking rents in the Loudoun County Office Market were $30.85 as of the first quarter of 2023, representing an approximately 1.3% increase from 2022 and 15.1%
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Office | Loan #12 | Cut-off Date Balance: | | $26,340,000 |
Property Subtype: Suburban | 22330 Glenn Drive | Cut-off Date LTV: | | 58.5% |
Address: 22330 Glenn Drive | | U/W NCF DSCR: | | 1.82x |
Sterling, VA 20164 | | U/W NOI Debt Yield: | | 15.1% |
increase from 2018. There has been no new supply delivered to the Loudoun County Office Market since 2017 and according to the appraisal, there are no properties currently in the construction pipeline.
According to the appraisal, the Washington D.C. CBSA ranks as the second most powerful technology hub in the United States, behind New York City, with 9.2% of its workforce in the technology sector. According to the appraisal, Loudoun County is dubbed as “Data Center Alley” given its proximity to Interstate 270 Technology Corridor which is home to over 200 information technology companies, over 190 life science companies and approximately 25 million SF of data center inventory. Over 70% of the worlds internet traffic passes through Loudoun County’s digital infrastructure, demonstrating an ongoing demand for data center space in the area. In recent years, Amazon has become a dominant player in the Loudoun County data center market, purchasing large tracts of land under its Vadata arm to expand Amazon Web Services’ cloud computing operations.
The table below presents leasing data at comparable office properties with respect to the 22330 Glenn Drive Property:
Comparable Leases(1)
Property/Location | Year Built | Rentable Area (SF) | Tenant Name | Tenant Size (SF) | Lease Term | Rent PSF | Lease Type |
22330 Glenn Drive(2) | 2016 | 167,440 | GSA | 167,440 | 13.9 | $31.44 | Modified Gross |
14291 Park Meadow Drive | 2007 | 123,426 | Peraton Corp. | 77,749 | 7.25 | $35.09 | Full Service |
4840 Westfields Boulevard | 2007 | 105,833 | Koniag Government Services | 22,485 | 10.80 | $33.00 | Full Service |
45101 Warp Drive | 2001 | 163,290 | Northrop Grumman | 163,290 | 11.50 | $22.00 | Full Service |
19775 Belmont Executive Plaza | 2007 | 119,614 | The Providencia Group | 12,198 | 3.25 | $28.32 | Full Service |
12701 Fair Lakes Circle | 1988 | 249,109 | Boeing (Renewal) | 118,780 | 7.90 | $29.00 | Full Service |
12730 Fair Lakes Circle | 2003 | 152,507 | Avaya | 19,176 | 5.90 | $31.50 | Full Service |
| (1) | Information obtained from the appraisal. |
| (2) | Information based on the underwritten rent roll other than year built and lease type. |
The following table presents certain information relating to the appraisal’s market rent conclusions for the 22330 Glenn Drive Property:
Market Rent Summary(1)
Category | Market Rent (PSF) | Lease Term (Years) | Lease Type | Rent Increase (Projection) |
Office | $30.00 | 7 | Full Service | 2.75% per year |
GSA Renewal | $31.05 | 10 | Full Service | Flat |
| (1) | Information obtained from the appraisal. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
158
No. 13 – Mariposa Shopping Center |
|
Mortgage Loan Information | | Mortgaged Property Information |
Mortgage Loan Seller: | Morgan Stanley Mortgage Capital Holdings LLC | | Single Asset/Portfolio: | Single Asset |
Credit Assessment | NR/NR/NR | | Property Type – Subtype: | Retail – Anchored |
(Moody’s/Fitch/KBRA): | | | Location: | Nogales, AZ |
Original Principal Balance(1): | $25,000,000 | | Size: | 255,574 SF |
Cut-off Date Balance(1): | $25,000,000 | | Cut-off Date Balance Per SF: | $97.82 |
% of Initial Pool Balance: | 3.5% | | Maturity Date Balance Per SF: | $97.82 |
Loan Purpose: | Refinance | | Year Built/Renovated: | 1991-1994/NAP |
Borrower Sponsor: | Mark Vakili | | Title Vesting: | Fee |
Guarantors: | Mark Vakili and The Vakili Family Trust | | Property Manager: | CommPros Commercial Property |
| Dated August 2, 1999 | | | Management, Inc. |
Mortgage Rate: | 6.7100% | | | (borrower-related) |
Note Date: | June 15, 2023 | | Current Occupancy (As of): | 92.4% (5/22/2023) |
Seasoning: | 1 month | | YE 2022 Occupancy | 90.1% |
Maturity Date: | July 1, 2033 | | YE 2021 Occupancy: | 83.2% |
IO Period: | 120 months | | YE 2020 Occupancy: | 86.3% |
Loan Term (Original): | 120 months | | YE 2019 Occupancy: | 88.9% |
Amortization Term (Original): | NAP | | Appraised Value: | $38,500,000 |
Loan Amortization Type: | Interest Only | | Appraised Value Per SF: | $150.64 |
Call Protection: | L(25),D(91),O(4) | | Appraisal Valuation Date: | May 15, 2023 |
Lockbox Type: | Soft/Springing Cash Management | | | |
Additional Debt: | None | | Underwriting and Financial Information |
Additional Debt Type | NAP | | Annualized T3 3/31/2023 NOI(2): | $1,930,547 |
(Balance): | | | YE 2022 NOI: | $1,856,153 |
| | | YE 2021 NOI: | $1,724,661 |
Escrows and Reserves | | YE 2020 NOI: | $1,753,619 |
| Initial | Monthly | Cap | | U/W Revenues: | $3,492,501 |
Taxes | $91,008 | $18,202 | NAP | | U/W Expenses: | $879,858 |
Insurance | $0 | Springing(1) | NAP | | U/W NOI(2): | $2,612,642 |
Deferred Maintenance: | $125,313 | $0 | NAP | | U/W NCF: | $2,407,408 |
Replacement Reserve | $0 | $3,195 | $76,672 | | U/W DSCR based on NOI/NCF: | 1.54x / 1.42x |
TI/LC Reserve | $337,358 | $14,057 | $337,358 | | U/W Debt Yield based on NOI/NCF: | 10.5% / 9.6% |
Five Below Gap Rent: | $58,680 | $0 | NAP | | U/W Debt Yield at Maturity based on | |
Five Below Outstanding TI: | $90,000 | $0 | NAP | | NOI/NCF: | 10.5% / 9.6% |
Five Below Free Rent: | $33,750 | $0 | NAP | | Cut-off Date LTV Ratio: | 64.9% |
Old Navy Abated Rent: | $159,695 | $0 | NAP | | LTV Ratio at Maturity: | 64.9% |
| | | | | | | |
Sources and Uses |
Sources | | | | Uses | | |
Mortgage loan amount | $25,000,000 | 100.0% | | Loan payoff | $19,003,510 | 76.0% |
| | | | Return of Equity | 4,547,392 | 18.2 |
| | | | Reserves | 895,803 | 3.6 |
| | | | Closing Costs | 553,294 | 2.2 |
Total Sources | $25,000,000 | 100.0% | | Total Uses | $25,000,000 | 100.0% |
| (1) | Springing monthly deposits of 1/12th of the insurance premiums are required upon (i) an event of default; (ii) blanket policies are not approved by the lender; (iii) the borrower does not provide evidence of policy renewal and of payment of premiums no later than 10 days prior to the expiration dates of the then-current policies. |
| (2) | The increase in NOI from Annualized T3 3/31/2023 to U/W is primarily due to new leases with Old Navy, Five Below and Kids Club representing $449,962 of underwritten rent. |
The Mortgage Loan. The thirteenth largest mortgage loan (the “Mariposa Shopping Center Mortgage Loan) is evidenced by a single promissory note in the original principal amount of $25,000,000 and secured by a first priority fee mortgage encumbering an anchored retail property totaling 255,574 square feet and located in Nogales, Arizona (the “Mariposa Shopping Center Property”).
The Borrowers and Borrower Sponsor. The borrowers for the Mariposa Shopping Center Mortgage Loan are Mariposa Shopping Center Investments, LLC and MMV Alex Properties LLC, each a Delaware limited liability company having two independent directors in its organizational structure, jointly and severally, as tenants in common. Legal counsel to the borrowers delivered a non-consolidation opinion in connection with the origination of the Mariposa Shopping Center Mortgage Loan. The borrower sponsor is Mark Vakili, and the non-recourse carveout guarantors are Mark Vakili and The Vakili Family Trust Dated August 2, 1999.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
159
Property Type: Retail Property Subtype: Anchored | Loan #13 | Cut-off Date Balance: | | $25,000,000 |
Address: 204-340 West Mariposa Road | Mariposa Shopping Center | Cut-off Date LTV: | | 64.9% |
Nogales, AZ 85621 | | U/W NCF DSCR: | | 1.42x |
| | U/W NOI Debt Yield: | | 10.5% |
Mark Vakili has over 37 years of commercial real estate experience which includes owning and operating commercial properties throughout the United States, with a focus on neighborhood retail centers across the Midwest. Mark Vakili is the President and 33% owner of CommPros Commercial Property Management, Inc. (“CommPros”), a real estate management company founded in 1986 and headquartered in Newport Beach, California. CommPros manages over 2.5 million square feet of retail spaces across 12 properties in states such as Arizona, California, Colorado, Michigan, South Carolina, and Texas. Mark Vakili, along with his wife, Mitra Vakili, are the sole trustees and beneficiaries of The Vakili Family Trust Dated August 2, 1999.
The Property. The Mariposa Shopping Center Property is a 255,574 square foot anchored retail center located in Nogales, Arizona, approximately 70 miles south of Tucson, Arizona and 85 miles southwest of Bisbee, Arizona. Originally built in 1991-1994, the Mariposa Shopping Center Property is comprised of three single-story buildings and one stand-alone pad site totaling 5,028 square feet. The Mariposa Shopping Center Property is situated on a 27.3 acre site and contains 1,672 surface parking spaces (6.5 spaces per 1,000 square feet). The borrower sponsor acquired the Mariposa Shopping Center Property in 2005 for $26.5 million and over the past five years, has invested an additional $6.4 million in capital improvements, tenant improvements, and leasing commissions. The Mariposa Shopping Center Property is anchored by JC Penney Co., Hobby Lobby Stores, and Ross Dress For Less. As of May 22, 2023, the Mariposa Shopping Center Property was 92.4% occupied by 21 tenants.
Major Tenants.
JC Penney Co. (49,520 SF; 19.4% of NRA, 14.0% of underwritten base rent). JC Penney Co. is an American department store chain that was founded in 1902, and operates over 650 stores across the United States and Puerto Rico. Departments inside JC Penney Co. stores include mens, womens, boys, girls, baby, bedding, home, fine jewelry, shoes, lingerie, The Salon by InStyle and JCPenney Beauty. JC Penney Co. has anchored the Mariposa Shopping Center Property since 1992, has a lease expiration date of October 31, 2028 and has 2, 5-year extension options remaining. During any extension period, JC Penney Co. may terminate its lease on 12 months written notice, unless such extension was exercised to nullify a landlord termination after the occurrence of a casualty. JC Penney Co. is currently in an extension period, and accordingly such termination option is currently exercisable.
Hobby Lobby Stores (“Hobby Lobby”) (50,213 SF, 19.6% of NRA, 13.3% of underwritten base rent). Hobby Lobby is an American company founded in 1972 and operates a chain of arts and crafts stores throughout the United States. The company provides products under various categories that include home decors and frames, crafts and hobbies, scrapbook and paper crafts, fabric and sewing products, yarn and needle art products, beads and jewelry, baking and party supplies, floral and wedding supplies, wearable arts, seasonal and novelty products, and gift cards. Hobby Lobby has more than 900 locations nationwide and 43,000 employees operating in 48 states. Hobby Lobby has anchored the Mariposa Shopping Center Property since 2018, has a lease expiration date of August 1, 2028, and has 3, 5-year extension options remaining. Hobby Lobby has been marketing its space for sublease since 2019, prior to the onset of the COVID-19 pandemic, but has remained open and operating.
Ross Dress For Less (31,544 SF, 12.3% of NRA, 12.0% of underwritten base rent). Ross Dress For Less is a chain of off-price department stores that offers a selection of women’s and men’s apparel, accessories, footwear and furniture. Ross Dress For Less has more than 100,000 employees and 1,693 stores in 40 states, District of Columbia and Guam. Ross Dress For Less has anchored the Mariposa Shopping Center Property since 2002, has a lease expiration date of January 31, 2029, and has 4, 5-year extension options remaining.
Marshalls (21,000 SF, 8.2% of NRA, 11.3% of underwritten rent). Marshalls is a retail American department store chain, and one of the main subsidiaries of The TJX Companies Inc., an off-price apparel and home fashions retailer in the United States and worldwide. At the end of fiscal year 2023, the TJX Companies, Inc. reported nearly 4,800 stores across nine countries and three continents, and five branded e-commerce sites, with approximately 329,000 associates. Along with Marshalls, The TJX Companies Inc. operates as TJ Maxx, HomeGoods, Sierra, and HomeSense. Marshalls has anchored the Mariposa Shopping Center Property since 2018, has a lease expiration date of November 30, 2028 and has 4, 5-year extension options remaining. Marshalls has the right to terminate its lease if gross sales during the period from November 8, 2022 through November 7, 2023 are less than $6,000,000, upon notice delivered within 30 days of the expiration of such period, and payment of a termination fee. Marshalls is not required to report its sales, unless it elects to exercise such termination option; accordingly we cannot assure you that such termination option will not be exercisable.
Old Navy (20,058 SF, 7.8% of NRA, 10.4% of underwritten rent). Old Navy is a family clothing store offering items under its own brand name at discounted prices. Founded in 1994, Old Navy has grown to more than 1,200 stores throughout the United States and Canada. Old Navy is owned by The Gap Inc. (NYSE: GPS). The Gap Inc. operates under four primary brands: Gap, Banana Republic, Old Navy and Athleta. Founded in 1969, The Gap Inc. is headquartered in San Francisco, California, and has business operations across the United States, Asia, the Middle East, Europe, and Africa. The Gap Inc. has approximately 95,000 employees and operates approximately 3,000 company-operated stores, over 500 franchise stores and 35 e-commerce sites. Old Navy has anchored the Mariposa Shopping Center Property since 2023, has a lease expiration date of January 31, 2033 and has 3, 5-year extension options remaining. Old Navy has a one-year rent abatement expiring in January 2024, for which $159,695 was reserved with the lender. Old Navy has the right to terminate its lease if its gross sales during the period from February 4, 2027 through February 3, 2028 do not exceed $3,000,000, upon notice and payment of a termination fee.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Retail Property Subtype: Anchored | Loan #13 | Cut-off Date Balance: | | $25,000,000 |
Address: 204-340 West Mariposa Road | Mariposa Shopping Center | Cut-off Date LTV: | | 64.9% |
Nogales, AZ 85621 | | U/W NCF DSCR: | | 1.42x |
| | U/W NOI Debt Yield: | | 10.5% |
The following table presents a summary regarding the major tenants at the Mariposa Shopping Center Property:
Major Tenants(1)
Tenant Name | Credit Rating (Fitch/ Moody’s/ S&P)(2) | Tenant NRSF | % of NRSF | Annual U/W Gross Rent PSF | Annual U/W Gross Rent | % of Total Annual U/W Gross Rent | Lease Expiration Date | Extension Options | Termination Option (Y/N) |
Major Tenants | | | | | | | | |
JC Penney Co. | NR/NR/NR | 49,520 | 19.4% | $7.43 | $368,000 | 14.0% | 10/31/2028 | 2, 5-Year | Y(3) |
Hobby Lobby Stores(4) | NR/NR/NR | 50,213 | 19.6% | $7.00 | $351,491 | 13.3% | 8/1/2028 | 3, 5-Year | N |
Ross Dress For Less(5) | NR/A2/BBB+ | 31,544 | 12.3% | $10.00 | $315,440 | 12.0% | 1/31/2029 | 4, 5-Year | N |
Marshalls | NR/A2/A | 21,000 | 8.2% | $14.20 | $298,200 | 11.3% | 11/30/2028 | 4, 5-Year | Y(6) |
Old Navy(7) | NR/Ba3/BB | 20,058 | 7.8% | $13.65 | $273,762 | 10.4% | 1/31/2033 | 3, 5-Year | Y(8) |
Total Major Tenants | | 172,335 | 67.4% | $9.32 | $1,606,893 | 61.0% | | | |
| | | | | | | | | |
Non-Major Tenants | | 63,927 | 25.0% | $16.06 | $1,026,576 | 39.0% | | | |
Occupied Collateral Total | 236,262 | 92.4% | $11.15 | $2,633,469 | 100.0% | | | |
| | | | | | | | |
Vacant Space | 19,312 | 7.6% | | | | | | |
| | | | | | | | |
Collateral Total | 255,574 | 100.0% | | | | | | |
| | | | | | | | | |
| (1) | Information is based on the underwritten rent roll as of May 22, 2023. |
| (2) | Certain ratings are those of the parent entity, whether or not the parent entity guarantees the lease. |
| (3) | During any extension period, JC Penney Co. may terminate its lease on 12 months written notice, unless such extension was exercised to nullify a landlord termination after the occurrence of a casualty. JC Penney Co. is currently in an extension period, and accordingly such termination option is currently exercisable. |
| (4) | Hobby Lobby has been marketing its space for sublease since 2019, prior to the onset of the COVID-19 pandemic, but has remained open and operating. |
| (5) | Ross Dress For Less pays an additional 2.0% of gross sales in excess of its minimum rent, which is not included in Annual U/W Gross Rent in the above table. |
| (6) | Marshalls has the right to terminate its lease if gross sales during the period from November 8, 2022 through November 7, 2023 are less than $6,000,000, upon notice delivered within 30 days of the expiration of such period, and payment of a termination fee. Marshalls is not required to report its sales, unless it elects to exercise such termination option; accordingly we cannot assure you that such termination option will not be exercisable. |
| (7) | Old Navy has a one year rent abatement expiring in January 2024, for which $159,695 was reserved at loan origination with the lender. |
| (8) | Old Navy has the right to terminate its lease if its gross sales during the period from February 4, 2027 through February 3, 2028 do not exceed $3,000,000, upon notice and payment of a termination fee. |
The following table presents a summary of sales and occupancy costs for certain tenants at the Mariposa Shopping Center Property:
Tenant Sales(1)(2)
| 2019 Sales (PSF) | 2020 Sales (PSF) | 2021 Sales (PSF) | 2022 TTM Sales (PSF)(3) | Occupancy Cost(4) |
JC Penney Co. | $183.28 | $80.19 | $126.71 | $140.54 | 7.6% |
Ross Dress For Less | $761.74 | $335.27 | $567.53 | $757.14 | 1.8% |
(1) | Information obtained from the borrowers. |
(2) | Tenants shown on the Major Tenants table above and not included on the Tenant Sales table are not required to report sales. |
(3) | 2022 TTM Sales for JC Penney Co. and Ross Dress For Less are for TTM 11/30/2022 and TTM 4/30/2023, respectively. |
(4) | Occupancy cost based on underwritten base rent and any applicable reimbursements divided by most recent reported sales. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Retail Property Subtype: Anchored | Loan #13 | Cut-off Date Balance: | | $25,000,000 |
Address: 204-340 West Mariposa Road | Mariposa Shopping Center | Cut-off Date LTV: | | 64.9% |
Nogales, AZ 85621 | | U/W NCF DSCR: | | 1.42x |
| | U/W NOI Debt Yield: | | 10.5% |
The following table presents certain information relating to the lease rollover schedule at the Mariposa Shopping Center Property:
Lease Expiration Schedule(1)(2)
Year Ending March 31 | No. of Leases Expiring | Expiring NRSF | % of Total NRSF | Cumulative Expiring NRSF | Cumulative % of Total NRSF | Annual U/W Gross Rent | % of Total Annual U/W Gross Rent | Annual U/W Gross Rent PSF |
MTM | 0 | 0 | 0.0% | 0 | 0.0% | $0 | 0.0% | $0.00 |
2023 | 1 | 1,800 | 0.7% | 1,800 | 0.7% | $41,868 | 1.6% | $23.26 |
2024 | 4 | 20,260 | 7.9% | 22,060 | 8.6% | $288,078 | 10.9% | $14.22 |
2025 | 2 | 3,188 | 1.2% | 25,248 | 9.9% | $57,155 | 2.2% | $17.93 |
2026 | 4 | 19,500 | 7.6% | 44,748 | 17.5% | $285,716 | 10.8% | $14.65 |
2027 | 2 | 2,151 | 0.8% | 46,899 | 18.4% | $39,419 | 1.5% | $18.33 |
2028 | 5 | 128,761 | 50.4% | 175,660 | 68.7% | $1,197,031 | 45.5% | $9.30 |
2029 | 1 | 31,544 | 12.3% | 207,204 | 81.1% | $315,440 | 12.0% | $10.00 |
2030 | 0 | 0 | 0.0% | 207,204 | 81.1% | $0 | 0.0% | $0.00 |
2031 | 0 | 0 | 0.0% | 207,204 | 81.1% | $0 | 0.0% | $0.00 |
2032 | 0 | 0 | 0.0% | 207,204 | 81.1% | $0 | 0.0% | $0.00 |
2033 | 2 | 29,058 | 11.4% | 236,262 | 92.4% | $408,762 | 15.5% | $14.07 |
2034 & Beyond | 0 | 0 | 0.0% | 236,262 | 92.4% | $0 | 0.0% | $0.00 |
Vacant | 0 | 19,312 | 7.6% | 255,574 | 100.0% | $0 | 0.0% | $0.00 |
Total/Wtd. Avg.(3) | 21 | 255,574 | 100.0% | | | $2,633,469 | 100.0% | $11.15 |
| (1) | Information obtained from the underwritten rent roll as of May 22,2023. |
| (2) | Certain tenants may have lease termination options that are exercisable prior to the stated expiration date of the subject lease or leases that are not considered in the Lease Expiration Schedule. |
| (3) | Total/Wtd. Avg. Annual UW Gross Rent PSF excludes vacant space. |
The following table presents historical occupancy percentages at the Mariposa Shopping Center Property:
Historical Occupancy
12/31/2019(1) | 12/31/2020(1) | 12/31/2021(1) | 12/31/2022(1) | 5/22/2023(2) |
88.9% | 86.3% | 83.2% | 90.1% | 92.4% |
(1) | Provided by the borrower sponsor. |
(2) | Based on the underwritten rent roll. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Retail Property Subtype: Anchored | Loan #13 | Cut-off Date Balance: | | $25,000,000 |
Address: 204-340 West Mariposa Road | Mariposa Shopping Center | Cut-off Date LTV: | | 64.9% |
Nogales, AZ 85621 | | U/W NCF DSCR: | | 1.42x |
| | U/W NOI Debt Yield: | | 10.5% |
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and underwritten net cash flow at the Mariposa Shopping Center Property:
Cash Flow Analysis
| | 2020 | | 2021 | | 2022 | | Annualized T3 3/31/2023(1) | | U/W(1) | | %(2) | | U/W $ per SF | |
Gross Potential Rent | | $1,922,312 | | $2,058,296 | | $2,055,648 | | $2,193,382 | | $2,940,429 | | 80.7% | | $11.51 | |
Reimbursements | | 474,343 | | 508,158 | | 552,991 | | 458,848 | | 703,102 | | 19.3 | | 2.75 | |
Net Rental Income | | $2,396,655 | | $2,566,453 | | $2,608,640 | | $2,652,230 | | $3,643,531 | | 100.0% | | $14.26 | |
Other Income(3) | | 191,848 | | 4,173 | | 99,351 | | 3,695 | | 220,878 | | 6.1 | | 0.86 | |
(Vacancy & Concessions) | | 0 | | 0 | | 0 | | 0 | | (371,909) | | (12.6) | | (1.46) | |
Effective Gross Income | | $2,588,503 | | $2,570,626 | | $2,707,990 | | $2,655,925 | | $3,492,501 | | 95.9% | | $13.67 | |
| | | | | | | | | | | | | | | |
Real Estate Taxes | | 297,468 | | 250,241 | | 224,097 | | 274,655 | | 224,097 | | 6.4 | | 0.88 | |
Insurance | | 58,909 | | 62,791 | | 68,302 | | 76,840 | | 90,321 | | 2.6 | | 0.35 | |
Management Fee | | 90,661 | | 98,674 | | 98,773 | | 102,282 | | 104,775 | | 3.0 | | 0.41 | |
Other Operating Expenses | | 387,846 | | 434,259 | | 460,666 | | 271,601 | | 460,666 | | 13.2 | | 1.80 | |
Total Operating Expenses | | $834,884 | | $845,965 | | $851,837 | | $725,378 | | $879,858 | | 25.2% | | $3.44 | |
| | | | | | | | | | | | | | | |
Net Operating Income | | $1,753,619 | | $1,724,661 | | $1,856,153 | | $1,930,547 | | $2,612,642 | | 74.8% | | $10.22 | |
Replacement Reserves | | 0 | | 0 | | 0 | | 0 | | 38,336 | | 1.1 | | 0.15 | |
TI/LC | | 0 | | 0 | | 0 | | 0 | | 166,898 | | 4.8 | | 0.65 | |
Net Cash Flow | | $1,753,619 | | $1,724,661 | | $1,856,153 | | $1,930,547 | | $2,407,408 | | 68.9% | | $9.42 | |
| | | | | | | | | | | | | | | |
NOI DSCR | | 1.03x | | 1.01x | | 1.09x | | 1.14x | | 1.54x | | | | | |
NCF DSCR | | 1.03x | | 1.01x | | 1.09x | | 1.14x | | 1.42x | | | | | |
NOI Debt Yield | | 7.0% | | 6.9% | | 7.4% | | 7.7% | | 10.5% | | | | | |
NCF Debt Yield | | 7.0% | | 6.9% | | 7.4% | | 7.7% | | 9.6% | | | | | |
| (1) | The increase in Gross Potential Rent and Net Operating Income from Annualized T3 3/31/2023 to UW is primarily due to new leases with Old Navy, Five Below and Kids Club representing $449,962 of underwritten rent. |
| (2) | Represents (i) percent of Net Rental Income for all revenue fields, (ii) percent of Gross Potential Rent for Vacancy & Credit Loss and (iii) percent of Effective Gross Income for all other fields. |
| (3) | Other Income is comprised of miscellaneous income and percentage rent paid by Ross Dress For Less and Nationwide Vision Partners for a total of $217,000. |
Market Overview and Competition. The Mariposa Shopping Center Property is located in Nogales, Arizona, in the Santa Cruz County retail submarket within the Santa Cruz and Pima counties retail market, approximately 70 miles south of Tucson, Arizona and 85 miles southwest of Bisbee, Arizona. The Mariposa Shopping Center Property is well situated along West Mariposa Road, within the primary commercial corridor and reports an average daily traffic count of approximately 12,326 vehicles per day. Regional access to the Mariposa Shopping Center Property is provided by Interstate 19 and State Route 82. Interstate 19 has access ramps immediately to the east and to the west of the property, providing highway access in all directions. Interstate 19 is the main highway in the area that provides access between Mexico and the United States.
Nogales is the reginal hub for Santa Cruz County. The city’s economy is based on the healthcare, retail trade, and transportation/warehousing industries. Nogales’ economy thrives on international trade, manufacturing, tourism, and related services. It is also home to America’s largest port of entry for Mexican produce, with more than 5 billion pounds of fruits and vegetables entering through Nogales’ a Mariposa Port each year. The city of Nogales is also a major retail destination for thousands of Mexican shoppers looking to buy quality, affordable American apparel and products. The estimated 50,000 Mexican consumers crossing the border daily generate more than 60% of Nogales’ sales tax revenue.
According to the appraisal, as of the fourth quarter of 2022, the Santa Cruz County and Pima counties retail market had approximately 58.6 million square feet of retail space inventory, overall vacancy in the market was approximately 6.2% and asking rent was $14.60 PSF. According to the appraisal, as of the fourth quarter of 2022, the Santa Cruz County retail submarket had approximately 2.4 million square feet of retail space inventory, overall vacancy in the submarket was approximately 7.3% and asking rent was $9.22 PSF. According to the appraisal, the estimated 2022 population within a one-, three- and five-mile radius of the Mariposa Shopping Center Property was 2,804, 20,154 and 22,020, respectively. The 2022 estimated average household income within a one-, three- and five-mile radius of the Mariposa Shopping Center was $48,095, $48,744 and $51,435, respectively.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
163
Property Type: Retail Property Subtype: Anchored | Loan #13 | Cut-off Date Balance: | | $25,000,000 |
Address: 204-340 West Mariposa Road | Mariposa Shopping Center | Cut-off Date LTV: | | 64.9% |
Nogales, AZ 85621 | | U/W NCF DSCR: | | 1.42x |
| | U/W NOI Debt Yield: | | 10.5% |
The following table presents certain information relating to the appraisal’s market rent conclusion for the Mariposa Shopping Center Property:
Market Rent Summary(1)
| Market Rent (PSF) | Lease Term (Yrs) | Tenant Allowance PSF (New/Renewal) | Rent Increase Projection |
Anchor | $7.50 | 10 | $15.00 / $5.00 | 3.0% annually |
Jr. Anchor | $15.00 | 10 | $20.00 / $5.00 | 3.0% annually |
Inline | $18.00 | 5 | $20.00 / $5.00 | 3.0% annually |
Inline Premium | $31.25 | 5 | $40.00 / $5.00 | 3.0% annually |
Storage | $0.00 | 10 | $0.00 / $0.00 | None |
(1) | Information obtained from the appraisal. |
The table below presents anchor leasing data at comparable retail properties with respect to the Mariposa Shopping Center Property:
Comparable Leases(1)
Property Name | Year Built | Total NRA | Tenant | Tenant Size | Lease Start Date | Lease Term (months) | Annual Base Rent PSF | Lease Type |
Mariposa Shopping Center(2) Nogales, AZ | 1991-1994 | 255,574 | JC Penney Co. Hobby Lobby Stores Ross Dress For Less | 49,520 50,213 31,544 | Nov. 2023 Jul. 2018 Feb. 2024 | 60 120 60 | $7.43 $7.00 $10.00 | NNN NNN NNN |
Embassy Plaza Tucson, AZ | 1981 | 102,951 | Wal-Mart | 37,175 | Jan. 2021 | 60 | $9.00 | NNN |
Rolling Hills Square Tucson, AZ | 1979 | 114,102 | Fry’s Food Store | 52,069 | Apr. 2021 | 36 | $4.32 | NNN |
5th & Pan American Highway Douglas, AZ | 1992 | 53,874 | 99 Cent Only Stores | 22,943 | Jan. 2022 | 60 | $6.00 | NNN |
Metro Parkway Retail Phoenix, AZ | 1996 | 49,783 | Mind 24/7 | 49,783 | Mar. 2022 | 120 | $4.75 | NNN |
Plaza 75 Phoenix, AZ | 1975 | 126,496 | Black Friday Deals – Capital Asset Management, LLC | 27,434 | Mar. 2023 | 84 | $10.00 | NNN |
| (1) | Information obtained from the appraisal. |
| (2) | Information other than Year Built is obtained from the underwritten rent roll as of May 22, 2023. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
164
Property Type: Retail Property Subtype: Anchored | Loan #13 | Cut-off Date Balance: | | $25,000,000 |
Address: 204-340 West Mariposa Road | Mariposa Shopping Center | Cut-off Date LTV: | | 64.9% |
Nogales, AZ 85621 | | U/W NCF DSCR: | | 1.42x |
| | U/W NOI Debt Yield: | | 10.5% |
The table below presents junior anchor leasing data at comparable retail properties with respect to the Mariposa Shopping Center Property:
Comparable Leases(1)
Property Name | Year Built | Total NRA | Tenant | Tenant Size | Lease Start Date | Lease Term (months) | Annual Base Rent PSF | Lease Type |
Mariposa Shopping Center(2) Nogales, AZ | 1991-1994 | 255,574 | Marshalls Old Navy Dollar Tree Stores | 21,000 20,058 14,800 | Nov. 2018 Feb. 2023 Feb. 2016 | 120 120 120 | $14.20 $13.65 $11.00 | NNN NNN NNN |
Chaos Elite Tucson, AZ | 2002 | 25,000 | Chaos Elite | 8,000 | Jun. 2022 | 36 | $16.00 | NNN |
Promenade at Casa Grande Casa Grande, AZ | 2008 | 300,000 | Homegoods | 24,627 | Sep. 2022 | 120 | $13.00 | NNN |
Wilmot Shopping Center AZ | 1974 | 59,357 | Ross Dress for Less | 21,492 | Nov. 2022 | 119 | $14.65 | NNN |
Grant Park Tucson, AZ | 1972 | 64,652 | Mind 24-7 | 22,500 | Apr. 2023 | 36 | $12.00 | NNN |
Broadway Parc Tucson, AZ | 2004 | 11,287 | Bullfrog Spas | 11,287 | Apr. 2023 | 48 | $14.00 | NNN |
| (1) | Information obtained from the appraisal. |
| (2) | Information other than Year Built is obtained from the underwritten rent roll as of May 22, 2023. |
The table below presents in-line leasing data at comparable retail properties with respect to the Mariposa Shopping Center Property:
Comparable Leases(1)
Property Name | Year Built | Total NRA | Tenant | Tenant Size | Lease Start Date | Lease Term (months) | Annual Base Rent PSF | Lease Type |
Mariposa Shopping Center(2) Nogales, AZ | 1991-1994 | 255,574 | Nextcare Urgent Care Washington Federal Bank Dragon Restaurant | 3,028 2,000 3,628 | Apr. 2018 Aug. 2021 Jan. 2022 | 120 60 36 | $30.00 $33.95 $11.58 | NNN NNN NNN |
Green Valley Village Green Valley, AZ | 1974 | 17,447 | Confidential | 2,249 | Aug. 2022 | 48 | $14.00 | NNN |
The Shops at Oro Vista Oro Valley, AZ | 2006 | 12,667 | Dollhouse Salon & Vintage Boutique | 1,333 | Oct. 2022 | 36 | $22.00 | NNN |
Broadway Boulevard Retail Tucson, AZ | 1979 | 9,412 | Confidential | 3,520 | Oct. 2022 | 60 | $20.00 | NNN |
Centre Pointe Plaza Tucson, AZ | 1985 | 37,432 | Big Save | 2,640 | Nov. 2022 | 36 | $15.00 | NNN |
Plaza at Williams Centre Tucson, AZ | 1987 | 108,914 | Apricot Lane Bo | 1,120 | Dec. 2022 | 120 | $17.00 | NNN |
Tucson Village at Sam Hughes Tucson, AZ | 1953 | 20,724 | Movement Culture | 2,650 | Mar. 2023 | 36 | $15.60 | NNN |
| (1) | Information obtained from the appraisal. |
| (2) | Information other than Year Built is obtained from the underwritten rent roll as of May 22, 2023. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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No. 14 – Hampton Inn Kearny Mesa |
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Mortgage Loan Information | | Mortgaged Property Information |
Mortgage Loan Seller: | Bank of America, National Association | | Single Asset/Portfolio: | Single Asset |
Credit Assessment (Moody’s/Fitch/KBRA): | NR/NR/NR | | Property Type – Subtype: | Hospitality – Limited Service |
Original Principal Balance: | $24,635,000 | | Location: | San Diego, CA |
Cut-off Date Balance: | $24,635,000 | | Size: | 146 Rooms |
% of Initial Pool Balance: | 3.4% | | Cut-off Date Balance Per Room: | $168,733 |
Loan Purpose: | Refinance | | Maturity Date Balance Per Room: | $156,672 |
Borrower Sponsor: | Jeffrey A. Carlstead | | Year Built/Renovated: | 1989/2016 |
Guarantor: | Jeffrey A. Carlstead | | Title Vesting(3): | Fee/Leasehold |
Mortgage Rate: | 8.2950% | | Property Manager: | Carlstead, Inc. |
Note Date: | July 18, 2023 | | | (borrower-related) |
Seasoning: | 0 months | | Current Occupancy (As of): | 72.7% (4/30/2023 TTM) |
Maturity Date: | August 1, 2033 | | YE 2022 Occupancy: | 71.4% |
IO Period: | 24 months | | YE 2021 Occupancy: | 54.8% |
Loan Term (Original): | 120 months | | YE 2020 Occupancy: | 44.6% |
Amortization Term (Original): | 360 months | | Appraised Value(4): | $37,900,000 |
Loan Amortization Type: | Interest Only, Amortizing Balloon | | Appraised Value Per Room(4): | $259,589 |
Call Protection: | L(24),D(89),O(7) | | Appraisal Valuation Date(4): | January 27, 2025 |
Lockbox Type: | Hard/In Place Cash Management | | Underwriting and Financial Information |
Additional Debt: | None | | TTM NOI (4/30/2023): | $3,463,504 |
Additional Debt Type (Balance): | NAP | | YE 2022 NOI: | $3,460,188 |
| | | YE 2021 NOI: | $1,704,738 |
| | | YE 2020 NOI: | $818,813 |
| | | U/W Revenues: | $7,189,923 |
| | | | | U/W Expenses: | $3,614,546 |
Escrows and Reserves | | U/W NOI: | $3,575,377 |
| Initial | Monthly | Cap | | U/W NCF: | $3,184,036 |
Taxes: | $79,734 | $15,947 | NAP | | U/W DSCR based on NOI/NCF: | 1.60x / 1.43x |
Insurance: | $25,556 | $6,992 | NAP | | U/W Debt Yield based on NOI/NCF: | 14.5% / 12.9% |
FF&E Reserve: | $0 | (1) | NAP | | U/W Debt Yield at Maturity based on NOI/NCF: | 15.6% / 13.9% |
Immediate Repairs: | $10,380 | $0 | NAP | | Cut-off Date LTV Ratio(4): | 65.0% |
Other Reserves(2): | $2,973,613 | Springing | NAP | | LTV Ratio at Maturity(4): | 60.4% |
| | | | | | | |
Sources and Uses |
Sources | | | | Uses | | |
Loan Amount | $24,635,000 | 100.0% | | Loan Payoff | $18,102,027 | 73.5% |
| | | | Return of Equity | 3,209,455 | 13.0 |
| | | | Upfront Reserves | 3,089,282 | 12.5 |
| | | | Closing Costs | 234,236 | 1.0 |
Total Sources | $24,635,000 | 100.0% | | Total Uses | $24,635,000 | 100.0% |
| (1) | The monthly FF&E Reserve collected will be 4% of the previous month’s total gross revenue, initially approximately $23,966. |
| (2) | Other Reserves consists of an upfront PIP Reserve ($2,951,765) and Ground Rent Reserve ($21,848). On any date a new property improvement plan (“PIP”) is imposed by the franchisor pursuant to the franchise agreement, an amount equal to 100% of the sum required to pay for such new PIP will be deposited in the PIP Reserve by the borrower. Monthly amounts for the Ground Rent Reserve spring upon the occurrence of any of the following triggers: (i) an event of default, (ii) the borrower fails to pay all ground rent and provide evidence of payment as and when required under the ground lease, (iii) a default under the ground lease or (iv) the borrower fails to maintain in the Ground Rent Reserve an amount equal to 1/4 of the ground rent due for the ensuing twelve months. |
| (3) | The Hampton Inn Kearny Mesa Property (as defined below) currently has a total of 147 parking spaces split between 37 located on the fee simple parcel and 110 available via a ground lease on an adjacent parcel. Local zoning ordinances require one space per guestroom, or 146 spaces. In order to comply with the zoning code, the borrower leases the remaining parking spaces from the adjacent parcel to the north (Al Bahr Temple of San Diego). The ground lease has been in effect since the Hampton Inn Kearny Mesa Property opened in 1989 and has a current lease expiration of April 22, 2028, with two, ten-year renewal options remaining. |
| (4) | The appraised value represents the “Prospective Market Value Upon Completion” which assumes that the scheduled PIP has been completed as of January 27, 2025. See “Description of the Mortgage Pool—Redevelopment, Renovation and Expansion” in the prospectus. At origination, the borrower reserved $2,951,765 for the full cost of the PIP. The Appraised Value Per Room, Cut-off Date LTV Ratio and LTV Ratio at Maturity based on the as-is value of $32,200,000 are $220,548, 76.5% and 71.0%, respectively. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Hospitality | Loan #14 | Cut-off Date Balance: | | $24,635,000 |
Property Subtype: Limited Service | Hampton Inn Kearny Mesa | Cut-off Date LTV: | | 65.0% |
Address: 5434 Kearny Mesa Road | | UW NCF DSCR: | | 1.43x |
San Diego, CA 92111 | | UW NOI Debt Yield: | | 14.5% |
The Mortgage Loan. The fourteenth largest mortgage loan (the “Hampton Inn Kearny Mesa Mortgage Loan”) is evidenced by a promissory note in the original principal amount of $24,635,000. The Hampton Inn Kearny Mesa Mortgage Loan is secured by a first priority fee and leasehold mortgage on a 146-room limited service hotel located in San Diego, California (the “Hampton Inn Kearny Mesa Property”).
The Borrower and the Borrower Sponsor. The borrower is Carlstead, LLC, a bankruptcy remote entity and single-purpose Delaware limited liability company with one independent director. The borrower sponsor and non-recourse carveout guarantor is Jeffrey A. Carlstead.
Jeffrey A. Carlstead developed the Hampton Inn Kearny Mesa Property in 1989 and has managed it since then. Prior to opening the Hampton Inn Kearny Mesa Property, Mr. Carlstead served as the president and chief operating officer of Calmark Hospitality Inc., an owner and manager of 47 hotels (various brands) in California, Arizona and Nevada. Prior to Calmark Hospitality Inc., Mr. Carlstead was the president of Inn Development and Management, Inc., a developer, owner and manager of 19 hotels in Illinois, Indiana and Minnesota.
The Property. The Hampton Inn Kearny Mesa Property is a five-story 146-room, limited service hotel that contains approximately 67,760 square feet of gross building area and is located on a 0.80-acre site in San Diego, California. The Hampton Inn Kearny Mesa Property was developed by the borrower sponsor in 1989 and was most recently renovated in 2016. The 2016 renovations included approximately $1.1 million ($7,534 per room) in improvements to the entrance/front desk areas, breakfast bar/lobby, corridors/elevators/stairwells, exteriors, meeting rooms, public restrooms, recreational facilities, guest rooms and guest baths. The Hampton Inn Kearny Mesa Property is one of four flagged hotels in the Kearny Mesa submarket.
The Hampton Inn Kearny Mesa Property unit mix consists of 60 king rooms and 86 queen/queen rooms. Each guestroom includes a flat-screen television with premium channels, telephone, desk with chair, dresser, nightstands, lamps and lounge chair. Hotel amenities include a breakfast dining area, a market pantry, a guest laundry area, a fitness center, an outdoor pool and approximately 1,076 square feet of meeting space. The Hampton Inn Kearny Mesa Property also offers 147 parking spaces (1.0 space per room).
Demand segmentation is 45% commercial, 45% leisure and 10% meeting/group. The top accounts in 2022 included ALE Solutions (494 room nights), AT&T (488 room nights), CRS Temporary Housing (395 room nights), Tesla SpaceX (171 room nights) and Northrop Grumman (136 room nights).
The Hampton Inn Kearny Mesa Property will be undergoing a borrower sponsor-initiated PIP to comply with the current Hampton Inn brand standards. The expected cost of the PIP is $2.95 million ($20,218 per key), which was escrowed in full by the borrower at loan origination. The PIP is estimated to commence within the months following loan origination and the renovations are expected to be completed within 12-18 months. The majority of the PIP costs are attributed to converting the guest baths to stand-up showers and common area updates.
The Hampton Inn Kearny Mesa Property has a total of 147 parking spaces, 37 located on the fee simple parcel and 110 available via a ground lease on an adjacent parcel. In order to comply with the zoning code, the borrower leases the 110 parking spaces from the adjacent parcel to the north of the Hampton Inn Kearny Mesa Property. The ground lease has been in effect since the Hampton Inn Kearny Mesa Property opened in 1989 and has a current lease expiration of April 22, 2028, with two, ten-year renewal options remaining. The ground lease annual base rent has been underwritten to $103,744 based on the 10-year average minimum rent payment over the 10 year loan term. The annual ground lease payment is paid through April 22, 2023, at an amount of $78,554. The Hampton Inn Kearny Mesa Mortgage Loan becomes full recourse to the borrower and guarantor if the ground lease is terminated, cancelled, or otherwise ceases to exist.
The Hampton Inn Kearny Mesa Property has operated under a franchise agreement with Hilton Franchise Holding LLC since 1989 and has a current franchise expiration date of June 30, 2034. The Hampton Inn Kearny Mesa Mortgage Loan is structured with a cash flow sweep twenty four months prior to the franchise agreement expiration date. The Hampton Inn Kearny Mesa Mortgage Loan becomes full recourse to the borrower and guarantor if the franchise agreement is terminated, surrendered, or otherwise cancelled, in each case without lender’s prior written consent.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Hospitality | Loan #14 | Cut-off Date Balance: | | $24,635,000 |
Property Subtype: Limited Service | Hampton Inn Kearny Mesa | Cut-off Date LTV: | | 65.0% |
Address: 5434 Kearny Mesa Road | | UW NCF DSCR: | | 1.43x |
San Diego, CA 92111 | | UW NOI Debt Yield: | | 14.5% |
The following table presents historical occupancy, ADR, and RevPAR penetration rates of the Hampton Inn Kearny Mesa Property:
Historical Occupancy, ADR, RevPAR(1)
| Hampton Inn Kearny Mesa Property | Competitive Set(2) | Penetration Factor |
Year | Occupancy | ADR | RevPAR | Occupancy | ADR | RevPAR | Occupancy | ADR | RevPAR |
12/31/2021 | 54.8% | $143.29 | $78.47 | 79.1% | $129.44 | $102.45 | 69.2% | 110.7% | 76.6% |
12/31/2022 | 71.4% | $174.41 | $124.45 | 80.7% | $160.25 | $129.36 | 88.4% | 108.8% | 96.2% |
TTM 4/30/2023 | 72.6% | $178.24 | $129.41 | 80.3% | $166.29 | $133.46 | 90.5% | 107.2% | 97.0% |
Source: Third party research report
| (1) | Variances between the underwriting, the appraisal and the industry report data with respect to Occupancy, ADR and RevPAR at the Hampton Inn Kearny Mesa Property are attributable to variances in reporting methodologies and/or timing differences. |
| (2) | According to a third party research report, the competitive set includes the following hotels: Hilton Garden Inn San Diego Mission Valley Stadium, Ramada Suites by Wyndham San Diego (currently being redeveloped to multifamily use), La Quinta Inns & Suites San Diego SeaWorld/Zoo, Holiday Inn Express & Suites San Diego Mission Valley, SpringHill Suites San Diego Mission Valley and TownePlace Suites San Diego Central. Only Hilton Garden Inn San Diego Mission Valley Stadium and TownePlace Suites San Diego Central are located within Kearny Mesa. |
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and Underwritten Net Cash Flow at the Hampton Inn Kearny Mesa Property:
Cash Flow Analysis
| | 2019 | | 2020(1) | | 2021(1) | | 2022(1) | | TTM 4/30/2023 | | U/W | | % of U/W Total Revenue(2) | | U/W $ per Room | |
Occupancy | | 78.6% | | 44.6% | | 54.8% | | 71.4% | | 72.7% | | 72.8% | | | | | |
ADR | | $141.53 | | $110.06 | | $143.29 | | $174.41 | | $178.09 | | $177.79 | | | | | |
RevPAR | | $111.19 | | $49.08 | | $78.48 | | $124.46 | | $129.40 | | $129.40 | | | | | |
| | | | | | | | | | | | | | | | | |
Room Revenue | | $5,923,622 | | $2,619,681 | | $4,112,000 | | $6,630,070 | | $6,895,329 | | $6,895,329 | | 95.9% | | $47,228 | |
Other Revenue(3) | | 214,264 | | 147,453 | | 201,592 | | 278,467 | | 294,594 | | 294,594 | | 4.1 | | 2,018 | |
Total Revenue | | $6,137,886 | | $2,767,134 | | $4,313,592 | | $6,908,537 | | $7,189,923 | | $7,189,923 | | 100.0% | | $49,246 | |
| | | | | | | | | | | | | | | | | |
Room Expense | | 1,442,180 | | 738,964 | | 1,077,203 | | 1,471,771 | | 1,585,632 | | 1,380,359 | | 20.0 | | 9,455 | |
Other Department Expense | | 19,757 | | 8,539 | | 10,722 | | 10,436 | | 10,713 | | 10,713 | | 3.6 | | 73 | |
Total Department Expenses | | $1,461,937 | | $747,503 | | $1,087,925 | | $1,482,207 | | $1,596,345 | | $1,391,072 | | 19.3% | | $9,528 | |
Gross Operating Income | | $4,675,949 | | $2,019,631 | | $3,225,667 | | $5,426,330 | | $5,593,578 | | $5,798,851 | | 80.7% | | $39,718 | |
| | | | | | | | | | | | | | | | | |
Total Undistributed Expenses | | 1,613,581 | | 977,402 | | 1,301,582 | | 1,760,928 | | 1,920,090 | | 1,873,781 | | 26.1 | | 12,834 | |
Gross Operating Profit | | $3,062,368 | | $1,042,229 | | $1,924,085 | | $3,665,402 | | $3,673,488 | | $3,925,070 | | 54.6% | | $26,884 | |
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Total Fixed Charges | | 219,393 | | 223,416 | | 219,347 | | 205,214 | | 209,984 | | 349,693 | | 4.9 | | 2,395 | |
Total Operating Expenses | | $3,294,911 | | $1,948,321 | | $2,608,854 | | $3,448,349 | | $3,726,419 | | $3,614,546 | | 50.3% | | $24,757 | |
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Net Operating Income | | $2,842,975 | | $818,813 | | $1,704,738 | | $3,460,188 | | $3,463,504 | | $3,575,377 | | 49.7% | | $24,489 | |
Ground Rent Payment(4) | | 77,932 | | 72,738 | | 71,142 | | 74,813 | | 74,813 | | 103,744 | | 1.4 | | 711 | |
FF&E | | 0 | | 0 | | 0 | | 0 | | 0 | | 287,597 | | 4.0 | | 1,970 | |
Net Cash Flow | | $2,765,043 | | $746,075 | | $1,633,596 | | $3,385,375 | | $3,388,691 | | $3,184,036 | | 44.3% | | $21,808 | |
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NOI DSCR | | 1.27x | | 0.37x | | 0.76x | | 1.55x | | 1.55x | | 1.60x | | | | | |
NCF DSCR | | 1.24x | | 0.33x | | 0.73x | | 1.52x | | 1.52x | | 1.43x | | | | | |
NOI DY | | 11.5% | | 3.3% | | 6.9% | | 14.0% | | 14.1% | | 14.5% | | | | | |
NCF DY | | 11.2% | | 3.0% | | 6.6% | | 13.7% | | 13.8% | | 12.9% | | | | | |
| (1) | The increases in Occupancy, ARD, RevPAR and Net Operating Income from 2020 were due to the effects of the novel coronavirus on the hospitality industry in 2020 and the subsequent recovery in 2021 and 2022. |
| (2) | % of U/W Total Revenue for Room Expense and Other Department Expenses are based on their corresponding revenue line items. All other line items represent percent of Total Revenue. |
| (3) | Other Revenue includes parking revenue, suite shop revenue, telephone revenue, vending machine revenue, guest laundry revenue and miscellaneous. |
| (4) | The Ground Rent Payment is determined based on the greater of a minimum rent and a percentage rent formula based on annual room revenue, less commissions, less credit card fees, less $1,000,000. That subtotal is then multiplied by 2% and then given a 20% discount to determine the annual base rent of the ground lease. The ground lease annual base rent has been underwritten to the 10-year average minimum rent payment over the loan term. The annual ground lease payment is paid through April 22, 2023 at an amount of $78,554. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Hospitality | Loan #14 | Cut-off Date Balance: | | $24,635,000 |
Property Subtype: Limited Service | Hampton Inn Kearny Mesa | Cut-off Date LTV: | | 65.0% |
Address: 5434 Kearny Mesa Road | | UW NCF DSCR: | | 1.43x |
San Diego, CA 92111 | | UW NOI Debt Yield: | | 14.5% |
The Market. The Hampton Inn Kearny Mesa Property is located in the City and County of San Diego, in an area known as Kearny Mesa. The Kearny Mesa area is located near the eastern geographic portion of San Diego and is generally bounded by State Route 52 to the north, Interstate 805 to the west, Aero Drive to the South, and Interstate 15 to the east. Kearny Mesa is located between the communities of Clairemont to the west, Miramar/Mira Mesa to the north, Mission Valley to the south, and Tierrasanta to the east. The Hampton Inn Kearny Mesa Property is located approximately 8.5 miles northeast of the San Diego International Airport and about 9.0 miles north of the San Diego Convention Center.
San Diego County is the fifth most populated county in the United States and the second largest in the State of California, with approximately 3.3 million residents. San Diego is the United States’ third largest hub for the life-sciences sector and the region is being powered by a limited supply of specialized lab space. The San Diego market contains 514 hotels (approximately 65,000 rooms) and more than 84.3 million square feet of office space, as of the fourth quarter of 2022. The San Diego-Carlsbad Core Based Statistical Area is home to major employers including University of California, 32nd Street Naval Station, Marine Corps Community Services MCRD and Kaiser Permanente, each with more than 10,000 employees.
Demand generators for the market include the San Diego International Airport, the San Diego Convention Center, Petco Park, Marine Corps Air Station Miramar, University of San Diego, University of California, San Diego, San Diego State University, Mission Bay Park, SeaWorld, San Diego Zoo, The Gaslamp Quarter, LEGOLand, Snapdragon Stadium, Pechanga Arena, Westfield UTC and Westfield Mission Valley Regional Mall.
According to the appraisal, the estimated 2022 population within a one-, three- and five-mile radius of the Hampton Inn Kearny Mesa Property was 2,585, 83,040 and 265,106, respectively. The 2022 average household income within the same radii is $93,009, $113,610 and $121,777, respectively.
According to the appraisal, there are no directly competitive properties that are either proposed or under construction.
The following table presents certain information relating to the primary competitive properties to the Hampton Inn Kearny Mesa Property:
Competitive Property Summary(1)(2) |
Property Name | No. of Rooms | Year Built | Commercial | Meeting & Group | Leisure | Estimated 2022 Occupancy | Estimated 2022 ADR | Estimated 2022 RevPAR |
Hampton Inn Kearny Mesa | 146 | 1989 | 45% | 10% | 45% | 71.3% | $174.41 | $124.41 |
Hilton Garden Inn San Diego Mission Valley Stadium | 178 | 1991 | 50% | 20% | 30% | 80%-85% | $160-$170 | $130-$140 |
Ramada Suites by Wyndham San Diego(3) | 126 | 1988 | 30% | 15% | 55% | 80%-85% | $150-$160 | $120-$130 |
La Quinta Inns & Suites San Diego SeaWorld/Zoo | 166 | 1984 | 30% | 10% | 60% | 75%-80% | $140-$150 | $110-$120 |
Holiday Inn Express & Suites San Diego Mission Valley | 104 | 2015 | 35% | 15% | 50% | 80%-85% | $160-$170 | $130-$140 |
SpringHill Suites San Diego Mission Valley | 135 | 2016 | 50% | 15% | 35% | 80%-85% | $160-$170 | $130-$140 |
TownePlace Suites San Diego Central | 107 | 2019 | 45% | 15% | 40% | 80%-85% | $170-$180 | $130-$140 |
Total/Average | 962 | | | | | 79.3% | $162.18 | $128.61 |
Source: Appraisal
| (1) | Variances between the underwriting, the appraisal and the Historical Occupancy, ADR, RevPAR table above with respect to Occupancy, ADR and RevPAR at the Hampton Inn Kearny Mesa Property are attributable to variances in reporting methodologies and/or timing differences. |
| (2) | Only Hilton Garden Inn San Diego Mission Valley Stadium and TownePlace Suites San Diego Central are located within Kearny Mesa. |
| (3) | Ramada Suites by Wyndham San Diego is currently being redeveloped for multifamily use. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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No. 15 – Jacksonville Marriott |
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Mortgage Loan Information | | Mortgaged Property Information |
Mortgage Loan Seller: | Wells Fargo Bank, National Association | | Single Asset/Portfolio: | Single Asset |
Credit Assessment (Moody’s/Fitch/KBRA): | NR/NR/NR | | Property Type – Subtype: | Hospitality – Full Service |
Original Principal Balance: | $23,500,000 | | Location: | Jacksonville, FL |
Cut-off Date Balance: | $23,500,000 | | Size: | 255 Rooms |
% of Initial Pool Balance: | 3.3% | | Cut-off Date Balance Per Room: | $92,157 |
Loan Purpose: | Refinance | | Maturity Date Balance Per Room: | $83,277 |
Borrower Sponsors: | William J. Yung III, Martha Yung, William J. Yung IV, Joseph A. Yung, Julie A. Haught, Judith A. Yung, Jennifer A. Yung, Michelle M. Christensen and Scott A. Yung | | Year Built/Renovated: | 1986/2019; 2020 |
Guarantor: | CSC Holdings, LLC | | Title Vesting: | Fee |
Mortgage Rate: | 6.8370% | | Property Manager: | Crestview Management, LLC (borrower-related) |
Note Date: | June 1, 2023 | | Current Occupancy (As of): | 56.2% (5/31/2023) |
Seasoning: | 2 months | | YE 2022 Occupancy: | 47.4% |
Maturity Date: | June 11, 2033 | | YE 2021 Occupancy: | 50.4% |
IO Period: | 24 months | | YE 2020 Occupancy: | 31.7% |
Loan Term (Original): | 120 months | | YE 2019 Occupancy: | 65.1% |
Amortization Term (Original): | 360 months | | As-Is Appraised Value: | $51,300,000 |
Loan Amortization Type: | Interest Only, Amortizing Balloon | | As-Is Appraised Value Per Room: | $201,176 |
Call Protection: | L(26),D(90),O(4) | | As-Is Appraisal Valuation Date: | April 21, 2023 |
Lockbox Type: | Hard / Springing Cash Management | | Underwriting and Financial Information |
Additional Debt: | None | | TTM NOI (5/31/2023)(5): | $3,810,284 |
Additional Debt Type (Balance): | NAP | | YE 2022 NOI(5): | $2,756,152 |
| | | YE 2021 NOI(5): | $2,423,935 |
| | | YE 2020 NOI(5): | $410,804 |
| | | U/W Revenues: | $11,910,590 |
| | | U/W Expenses: | $8,123,262 |
| | U/W NOI: | $3,787,328 |
| | | | | U/W NCF: | $3,310,905 |
Escrows and Reserves | | U/W DSCR based on NOI/NCF: | 2.05x / 1.79x |
| Initial | Monthly | Cap | | U/W Debt Yield based on NOI/NCF: | 16.1% / 14.1% |
Taxes | $181,720 | $25,960 | NAP | | U/W Debt Yield at Maturity based on NOI/NCF: | 17.8% / 15.6% |
Insurance | $0 | Springing(1) | NAP | | Cut-off Date LTV Ratio: | 45.8% |
FF&E Reserve | $0 | $37,805(2) | NAP | | LTV Ratio at Maturity: | 41.4% |
Seasonality Reserve | $167,000 | Springing(3) | NAP | | | |
PIP Reserve | $0 | Springing(4) | NAP | | | |
| | | | | | | |
Sources and Uses |
Sources | | | | | Uses | | | |
Whole Loan amount | $23,500,000 | | 100.0% | | Loan payoff(6) | $14,484,860 | | 61.6% |
| | | | | Upfront Reserves | 348,720 | | 1.5 |
| | | | | Closing costs | 297,739 | | 1.3 |
| | | | | Return of Equity | 8,368,681 | | 35.6 |
Total Sources | $23,500,000 | | 100.0% | | Total Uses | $23,500,000 | | 100.0% |
| (1) | The mortgage loan documents require ongoing monthly insurance reserves in an amount equal to 1/12th of the insurance premiums that the lender estimates will be payable for the renewal of the coverage afforded by the policies upon the expiration thereof. Notwithstanding the above, the borrower’s obligation to make insurance reserve payments will be waived so long as (i) no event of default is continuing and (ii) the insurance policies maintained by borrower are part of a blanket or umbrella policy approved by the lender in its reasonable discretion. |
| (2) | The mortgage loan documents require ongoing monthly deposits in an amount equal the greater of (i) the then-existing FF&E Reserve monthly deposit for the prior period or (ii) greater of 1/12 or 4% of the underwritten revenue for the prior fiscal year or the amount required pursuant to the terms of the franchise agreement. |
| (3) | The mortgage loan documents require ongoing monthly deposits in an amount equal to 1/4 of the Seasonality Reserve Required Annual Balance (as defined below) to cover any debt service shortfalls in the months of June, July, August, September, December and January, provided however, that the borrowers are only required to make these deposits if the funds on deposit in the Seasonality Reserve are less than $167,000 (the “Seasonality Reserve Required Annual Balance”). For the monthly payments dates occurring in February, March, April and May, the borrowers are required to deposit $41,750 into the Seasonality Reserve account. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Hospitality | Loan #15 | Cut-off Date Balance: | | $23,500,000 |
Property Subtype: Full Service | Jacksonville Marriott | Cut-off Date LTV: | | 45.8% |
Address: 4670 Salisbury Road | | U/W NCF DSCR: | | 1.79x |
Jacksonville, FL 32256 | | U/W NOI Debt Yield: | | 16.1% |
| (4) | If, at any time, any Property Improvement Plan (“PIP”) work is required by the franchisor under the franchise agreement, within 15 days after receipt of notice from the franchisor with respect to such PIP work, the mortgage loan documents require a springing deposit in an amount equal to 110% of the estimated costs to complete such additional PIP work, as reasonably determined by the lender. |
| (5) | The increase in NOI from 2020 to 2021 and 2021 to 2022 was primarily due to the effect of the novel coronavirus on the hospitality industry in 2020, and the subsequent recovery in 2021, as well as a 19.2% increase in ADR from 2021 to 2022 and increased Food & Beverage revenue. The further increase in NOI from 2022 to TTM NOI was primarily driven by an additional 2.9% increase in ADR and an 8.8% increase in occupancy and increases to Food & Beverage and other revenue. |
| (6) | The loan proceeds were used to repay existing CMBS debt securitized in MSBAM 2013-C11. |
The Mortgage Loan. The fifteenth largest mortgage loan (the “Jacksonville Marriott Mortgage Loan”) is evidenced by a promissory note in the original principal balance of $23,500,000 and secured by the fee interest in a 255-room full-service hotel located in Jacksonville, Florida (the “Jacksonville Marriott Property”).
The Borrower and Borrower Sponsors. The borrower is CP Jacksonville, LLC, a single-purpose, Delaware limited liability company with one independent director. Legal counsel to the borrower delivered a non-consolidation opinion in connection with the origination of Jacksonville Marriott Mortgage Loan.
The borrower sponsors are William J. Yung III, Martha Yung, William J. Yung IV, Joseph A. Yung, Julie A. Haught, Judith A. Yung, Jennifer A. Yung, Michelle M. Christensen and Scott A. Yung. The non-recourse carveout guarantor is CSC Holdings, LLC, an affiliate of Columbia Sussex Corporation (“CSC”). Founded in 1972, CSC is a privately owned hospitality company headquartered in Crestview Hills, Kentucky. CSC currently owns 41 hotels across 18 states with major hospitality brands including Marriott, Hilton, and Hyatt.
CSC has had numerous foreclosures and deeds in lieu since 2009. For additional information please see “Description of the Mortgage Pool - Loan Purpose; Default History, Bankruptcy Issues and Other Proceedings” in the Preliminary Prospectus.
The Property. The Jacksonville Marriott Property is a nine-story, 255-room, full-service hotel located in Jacksonville, Florida. Built in 1986 and renovated between 2019 and 2020, the property operates under the Marriott Flag with a franchise agreement expiring on August 28, 2045. Since 2018, the borrower has spent approximately $16.0 million on capital expenditures, including upgrades to all public areas, hallways, and guestrooms. The Jacksonville Marriott’s amenities include 13,459 square feet of meeting space, a three-meal restaurant, an outdoor swimming pool, a fitness center, a business center, laundry service, a sundries shop, vending and ice machines and complimentary Wi-Fi. The Jacksonville Marriott Property guestroom configuration consists of a mix of king-bedded and double queen-bedded rooms. The guestrooms feature flat-screen televisions, high-speed internet, mini fridges, desks and floor-to-ceiling windows. Situated on an approximately 7.5-acre site, the property includes 381 surface parking spaces.
The following table presents certain information relating to the demand analysis with respect to the Jacksonville Marriott Property based on market segmentation for 2022:
Market Segmentation(1)
Commercial | Group | Leisure |
50.0% | 30.0% | 20.0% |
| (1) | Information obtained from the appraisal. |
The following table presents historical occupancy, ADR, and RevPAR penetration rates of Jacksonville Marriott Property:
Historical Occupancy, ADR, RevPAR(1) |
| | Competitive Set | | Jacksonville Marriott Property | | Penetration Factor |
Year | | Occupancy | ADR | RevPAR | | Occupancy | ADR | RevPAR | | Occupancy | ADR | RevPAR |
2021 | | 43.2% | $93.42 | $40.35 | | 26.7% | $114.98 | $30.70 | | 61.8% | 123.1% | 76.1% |
2022 | | 64.4% | $114.62 | $73.81 | | 50.1% | $139.99 | $70.19 | | 77.9% | 122.1% | 95.1% |
2/28/2023 TTM | | 69.0% | $129.97 | $89.72 | | 51.6% | $159.90 | $82.58 | | 74.8% | 123.0% | 92.0% |
| (1) | Information obtained from third party hospitality research reports dated March 17, 2023. The competitive set includes the following hotels: Country Inn & Suites Jacksonville I 95 South, Embassy Suites by Hilton Jacksonville Baymeadows, Courtyard Jacksonville Butler Boulevard, Hilton Garden inn Jacksonville JTB Deerwood Park, Holiday Inn Jacksonville East 295 Baymeadows, and Sheraton Jacksonville Hotel. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Hospitality | Loan #15 | Cut-off Date Balance: | | $23,500,000 |
Property Subtype: Full Service | Jacksonville Marriott | Cut-off Date LTV: | | 45.8% |
Address: 4670 Salisbury Road | | U/W NCF DSCR: | | 1.79x |
Jacksonville, FL 32256 | | U/W NOI Debt Yield: | | 16.1% |
Operating History and Underwritten Net Cash Flow. The following table presents certain information relating to the historical operating performance and underwritten net cash flow at Jacksonville Marriott Property:
Cash Flow Analysis
| 2020 | 2021 | 2022 | TTM 5/31/2023 | U/W | % of U/W Total Revenue(1) | U/W $ per Room |
Occupancy | 31.7% | 50.4% | 47.4% | 56.2% | 56.2% | | |
ADR | $127.76 | $132.83 | $158.30 | $162.87 | $162.87 | | |
RevPAR | $40.53 | $ 67.00 | $75.03 | $91.60 | $91.60 | | |
| | | | | | | |
Room Revenue | $3,782,724 | $6,235,575 | $6,983,218 | $8,525,896 | $8,525,896 | 71.6% | $33,435 |
Food & Beverage Revenue | 1,324,634 | 2,145,707 | 2,830,799 | 3,217,558 | 3,217,558 | 27.0 | 12,618 |
Other Revenue(2) | 92,732 | 218,335 | 152,176 | 167,136 | 167,136 | 1.4 | 655 |
Total Revenue | $5,200,090 | $8,599,616 | $9,966,193 | $11,910,590 | $11,910,590 | 100.0% | $46,708 |
| | | | | | | |
Room Expense | 981,902 | 1,359,409 | 1,695,754 | 1,950,700 | 1,950,700 | 22.9 | 7,650 |
Food & Beverage Expense | 780,957 | 1,161,663 | 1,332,277 | 1,507,368 | 1,507,368 | 46.8 | 5,911 |
Other Department Expense | 12,369 | 28,957 | 24,281 | 25,873 | 25,873 | 15.5 | 101 |
Total Department Expenses | $1,775,228 | $2,550,029 | $3,052,312 | $3,483,940 | $3,483,940 | 29.3% | $13,663 |
Gross Operating Income | $3,424,862 | $6,049,588 | $6,913,882 | $8,426,649 | $8,426,649 | 70.7% | $33,046 |
| | | | | | | |
Total Undistributed Expenses | 2,315,968 | 2,932,193 | 3,407,578 | 3,831,083 | 3,845,701 | 32.3 | 15,081 |
Gross Operating Profit | $1,108,894 | $3,117,395 | $3,506,304 | $4,595,567 | $4,580,949 | 38.5% | $17,965 |
| | | | | | | |
Property Taxes | 369,624 | 309,473 | 319,785 | 319,785 | 328,122 | 2.8 | 1,287 |
Insurance | 328,466 | 383,987 | 430,367 | 465,498 | 465,498 | 3.9 | 1,825 |
Total Operating Expenses | $4,789,286 | $6,175,681 | $7,210,042 | $8,100,306 | $8,123,262 | 68.2% | $31,856 |
| | | | | | | |
Net Operating Income | $410,804(3) | $2,423,935(3) | $2,756,152(3) | $3,810,284(3) | $3,787,328 | 31.8% | $14,852 |
FF&E | 0 | 0 | 0 | 0 | 476,424 | 4.0 | $1,868 |
Net Cash Flow | $410,804 | $2,423,935 | $2,756,152 | $3,810,284 | $3,310,905 | 27.8% | $12,984 |
| | | | | | | |
NOI DSCR | 0.22x | 1.31x | 1.49x | 2.06x | 2.05x | | |
NCF DSCR | 0.22x | 1.31x | 1.49x | 2.06x | 1.79x | | |
NOI DY | 1.7% | 10.3% | 11.7% | 16.2% | 16.1% | | |
NCF DY | 1.7% | 10.3% | 11.7% | 16.2% | 14.1% | | |
| (1) | % of U/W Total Revenue for Room Expense, Food & Beverage Expense, and Other Department Expenses are based on their corresponding revenue line items. All other line items represent percent of Total Revenue. |
| (2) | Other revenue consists primarily of gift shop revenue, rooftop rental income, attrition fees, and telephone and internet revenue. |
| (3) | The increase in NOI from 2020 to 2021 and 2021 to 2022 was primarily due to the effect of the novel coronavirus on the hospitality industry in 2020, and the subsequent recovery in 2021, as well as a 19.2% increase in ADR from 2021 to 2022 and increased Food & Beverage revenue. The further increase in NOI from 2022 to TTM NOI was primarily driven by an additional 2.9% increase in ADR and an 8.8% increase in occupancy, and increases to Food & Beverage and other revenue. |
Market Overview and Competition. The Jacksonville Marriott Property is located in Jacksonville, Florida, approximately 7 miles southeast of the Jacksonville CBD. The Jacksonville Marriott Property is within 14.3 miles of numerous regional recreational venues including TIAA Bank Field, home of the Jacksonville Jaguars, Jacksonville Beach and the University of North Florida, which had a fall 2022 enrollment of 16,517 students. The Jacksonville Marriott Property has access to all major cities along the eastern seaboard via Interstate 95 roughly 0.35 miles East. Interstate 295 is located 4.35 miles away and is a limited access highway that serves as the belt route for Jacksonville. Additionally, the Jacksonville Marriott Property is located approximately 17.7 miles from Jacksonville International Airport, 20.8 miles from Jaxport, one of the largest commercial cargo ports on the Atlantic Coast, and 14 miles from Mayport Naval Air Station.
According to the appraisal, the 2022 population within a three- and five-mile radius of the Jacksonville Marriott Property was 78,850 and 189,638, respectively, and the 2022 average household income within the same radii was $71,699 and $78,160, respectively.
According to a third-party research report, the property is located in the Jacksonville Bay Meadows/Butler Blvd submarket. The appraisal did not identify any new hotels under construction or planned for near term development that are expected to directly compete with the Jacksonville Marriott property.
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Property Type: Hospitality | Loan #15 | Cut-off Date Balance: | | $23,500,000 |
Property Subtype: Full Service | Jacksonville Marriott | Cut-off Date LTV: | | 45.8% |
Address: 4670 Salisbury Road | | U/W NCF DSCR: | | 1.79x |
Jacksonville, FL 32256 | | U/W NOI Debt Yield: | | 16.1% |
The table below presents certain information relating to comparable sales pertaining to Jacksonville Marriott Property identified by the appraisal:
Comparable Sales Summary(1) |
Property Name | Location | Year Built | Rooms | Sale Date | Sale Price / Room |
DoubleTree St. Augustine | 116 San Marco Avenue Saint Augustine, FL | 1973 | 97 | 12/2022 | $296,392 |
Hampton Inn Jacksonville-Downtown 1-95 | 1331 Prudential Drive Jacksonville, FL | 1998 | 118 | 11/2022 | $135,000 |
Homewood Suites / Hilton Garden Inn | 1201 Kings Avenue Jacksonville, FL | 2009 | 221 | 12/2021 | $176,471 |
Home2 Suites Savannah Airport | 860 Towne Center Blvd. Pooler, GA | 2018 | 107 | 6/2021 | $169,393 |
Home2 Suites Jacksonville Airport | 13475 Ranch Road Jacksonville, FL | 2019 | 106 | 8/2021 | $162,736 |
| (1) | Information obtained from the appraisal. |
THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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BANK 2023-BNK46 | Transaction Contact Information |
VI. Transaction Contact Information
Questions regarding this Structural and Collateral Term Sheet may be directed to any of the following individuals:
Wells Fargo Securities, LLC | |
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Brigid Mattingly | Tel. (312) 269-3062 |
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A.J. Sfarra | Tel. (212) 214-5613 |
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Sean Duffy | Tel. (312) 827-1518 |
BofA Securities, Inc. | |
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Leland F. Bunch, III | Tel. (646) 855-3953 |
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Danielle Caldwell | Tel. (646) 855-3421 |
Morgan Stanley & Co. LLC | |
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Nishant Kapur | Tel. (212) 761-1483 |
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Jane Lam | Tel. (212) 761-3507 |
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J.P. Morgan Securities LLC | |
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Kunal Singh | Tel. (212) 834-5467 |
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Harris Rendelstein | Tel. (212) 834-6737 |
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Derrick Fetzer | Tel. (212) 834-3111 |
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Avinash Sharma | Tel. (212) 834-3111 |
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THE INFORMATION IN THIS STRUCTURAL AND COLLATERAL TERM SHEET IS NOT COMPLETE AND MAY BE AMENDED PRIOR TO THE TIME OF SALE. THIS TERM SHEET IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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